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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 3, 1994
AMC ENTERTAINMENT INC.
(Exact Name of Registrant as specified in charter)
DELAWARE 0-12429 43-1304369
(State or other juris- (Commission (IRS Employer
diction of incorporation) File Number) Identification No.)
106 West 14th Street
Kansas City, Missouri
(Address of principal executive officers)
Registrant's telephone number, with area code: (816) 221-4000
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Item 5. OTHER EVENTS
On March 3, 1994, the Registrant consummated the public offering of
its $1.75 Cumulative Convertible Preferred Stock, 66 2/3 CENTS par value per
share (the "Convertible Preferred Stock"). Net proceeds to the Company, after
paying underwriting discounts and commissions but before paying other expenses
of the Offering, estimated at $900,000, were $96,489,277. Set forth as an
Exhibit hereto is the Certificate of Designations respecting the Convertible
Preferred Stock.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) and (b). Not applicable.
(c). Exhibits
4.1 Certificate of Designations relating to $1.75 Cumulative
Convertible Preferred Stock.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMC ENTERTAINMENT INC.
By: /s/ Richard L. Obert
----------------------
Richard L. Obert
Vice President and
Chief Accounting Officer
Date: April 7, 1994
-2-
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EXHIBIT 4.1
CERTIFICATE OF DESIGNATIONS
$ 1.75 CUMULATIVE CONVERTIBLE PREFERRED STOCK
($.66 2/3 Par Value)
of
AMC ENTERTAINMENT INC.
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Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
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AMC Entertainment Inc., a Delaware corporation (hereinafter called
the "Company"), pursuant to Section 151 of the General Corporation Law of the
State of Delaware (the "GCL") does hereby make this Certificate of Designations
and does hereby state and certify that, pursuant to the authority expressly
vested in the Board of Directors of the Company (the "Board of Directors") by
the Certificate of Incorporation, and pursuant to Section 141(c) of the GCL the
following resolution has been duly adopted:
RESOLVED, that pursuant to Article Fourth of the Restated and
Amended Certificate of Incorporation ("Certificate of Incorporation") (which
authorizes 10,000,000 shares of preferred stock, $.66 2/3 par value), the
designations, powers and preferences, and the relative participating, optional
and other special rights, and the qualifications, limitations and restrictions
thereof, of a series of $1.75 Cumulative Convertible Preferred Stock are fixed
as stated herein.
RESOLVED, that each share of the $1.75 Cumulative Convertible
Preferred Stock shall rank equally in all respects and shall be subject to the
following provisions:
Section 1. DESIGNATION; RANK. This series of preferred stock shall
be designated $1.75 Cumulative Convertible Preferred Stock, par value $.66 2/3
per share (the "Convertible Preferred"). The Convertible Preferred will rank,
with respect to dividend rights and rights on liquidation, winding up and
dissolution, (a) senior to all classes of common stock of the Company
(including, without limitation, the Common Stock and Class B Stock) and each
other class of
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capital stock or series of preferred stock established after the offering of
the Convertible Preferred by the Board of Directors that does not expressly
provide that it ranks senior to or on a parity with the Convertible Preferred
as to dividend rights and rights on liquidation, winding up and dissolution
(collectively referred to with the common stock of the Company as "Junior
Securities"), (b) on a parity with each other class of capital stock or series
of preferred stock issued by the Company established after the offering of the
Convertible Preferred by the Board of Directors that expressly provides that
such series will rank on a parity with the Convertible Preferred as to
dividend rights and rights on liquidation, winding up and dissolution
(collectively referred to as "Parity Securities") and (c) junior to each other
class of capital stock or series of preferred stock established after the
offering of the Convertible Preferred by the Board of Directors that expressly
provides that such series will rank senior to the Convertible Preferred as to
dividend rights and rights on liquidation, winding up and dissolution
(collectively referred to as "Senior Securities"). Pursuant to Section 6(b)
hereof, while any shares of Convertible Preferred are outstanding, the Company
may not issue, authorize or increase the authorized amount of, or issue or
authorize or increase any obligation or security convertible into or
evidencing a right to purchase, any additional class or series of (x) Senior
Securities, without the vote or consent of the holders of two-thirds of the
outstanding shares of Convertible Preferred and any Parity Securities, voting
together as a single class without regard to series, or (y) Parity Securities,
without the vote or consent of the holders of a majority of the outstanding
shares of Convertible Preferred and any Parity Securities, voting together as
a single class without regard to series. However, the Company may create
additional classes of Junior Securities, increase the authorized number of
shares of any Junior Security or issue any Junior Securities without the
consent of any holder of the outstanding shares of Convertible Preferred.
Section 2. AUTHORIZED NUMBER. The number of shares constituting
the Convertible Preferred shall be 4,600,000 shares.
Section 3. DIVIDENDS. Holders of shares of the Convertible
Preferred will be entitled to receive, when, as and if declared by the Board
of Directors out of funds of the Company legally available for payment, cash
dividends at an annual rate of $1.75 per share of Convertible Preferred,
payable in arrears on March 15, June 15, September 15 and December 15 of each
year, commencing June 15, 1994 (and, in the case of any accrued but unpaid
dividends, at such additional times and for such interim periods, if any, as
determined by the Board of Directors), except that if any such date is a
Saturday, Sunday or legal holiday, then such dividend shall be payable on the
next day that
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is not a Saturday, Sunday or legal holiday. Each dividend will be payable to
holders of record as they appear in the stock register of the Company on a
record date fixed by the Board of Directors, which shall be not more than 60
days nor less than 10 days before the payment date. Dividends will be
cumulative from the date of original issuance of the Convertible Preferred.
Dividends payable on the Convertible Preferred for each full dividend period
will be computed by annualizing the dividend rate and dividing by four.
Dividends payable for any period less than a full dividend period or for that
portion of any period greater than a full dividend period will be computed on
the basis of a 360-day year consisting of twelve 30-day months. The
Convertible Preferred will not be entitled to any dividend, whether payable in
cash, property or stock, in excess of full cumulative dividends. No interest,
or sum of money in lieu of interest, will be payable in respect of any accrued
and unpaid dividends.
No full dividends may be declared or paid or funds set apart for
the payment of dividends on any Parity Securities for any period unless full
cumulative dividends shall have been paid or set apart for such payment on the
Convertible Preferred. If full cumulative dividends are not paid in full, or
declared in full and sums set apart for the payment thereof, upon the
Convertible Preferred and upon any other Parity Securities, all dividends
declared upon shares of Convertible Preferred and any such Parity Securities
will be declared and paid pro rata so that in all cases the amount of
dividends declared per share on the Convertible Preferred and on such other
Parity Securities will bear to each other the same ratio that accrued and
unpaid dividends per share on the shares of Convertible Preferred and such
other Parity Securities bear to each other. No dividends may be paid or set
apart for such payment on Junior Securities (except dividends on Junior
Securities payable in additional shares of Junior Securities or rights to
acquire Junior Securities) and no Junior Securities may be repurchased,
redeemed or otherwise retired, nor may funds be set apart for payment with
respect thereto, if full dividends have not been paid on the Convertible
Preferred. Accumulated unpaid dividends will not bear interest.
Section 4. LIQUIDATION RIGHTS. In the event of any voluntary
or involuntary liquidation, dissolution or winding up of the Company, before
any payment or distribution of assets is made on any Junior Securities,
including, without limitation, the Common Stock and Class B Stock of the
Company, but after payment or provision for payment of the Company's debts and
other liabilities, the holders of the Convertible Preferred shall receive a
liquidation preference of $25.00 per share and shall be entitled to receive
all accrued and unpaid dividends through the date of distribution, and the
holders of any Parity
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Securities shall be entitled to receive the full respective liquidation
preferences (including any premium) to which they are entitled and shall
receive all accrued and unpaid dividends with respect to their respective
shares through and including the date of distribution. If, upon such a
voluntary or involuntary liquidation, dissolution or winding up of the
Company, the assets of the Company are insufficient to pay in full the amounts
described above as payable with respect to the Convertible Preferred and any
Parity Securities, the holders of the Convertible Preferred and such Parity
Securities will share ratably in any such distribution of assets of the
Company, first in proportion to their respective liquidation preferences,
until such preferences are paid in full, and then in proportion to their
respective amounts of accrued but unpaid dividends. After payment of any such
liquidation preference and accrued dividends, the shares of Convertible
Preferred will not be entitled to any further participation in any
distribution of assets by the Company. Neither the sale or transfer of all or
substantially all the assets of the Company, nor the merger or consolidation
of the Company into or with any other corporation or a merger of any other
corporation with or into the Company, nor any dissolution, liquidation,
winding up or reorganization of the Company immediately followed by
reincorporation of another corporation, will be deemed to be a liquidation,
dissolution or winding up of the Company.
Section 5. OPTIONAL REDEMPTION.
(a) Shares of the Convertible Preferred may not be redeemed
by the Company on or prior to March 15, 1997. After March 15, 1997,
the Company, at its option, may redeem the shares of Convertible Preferred, in
whole or in part, out of funds legally available therefor, at any time or from
time to time, subject to the notice provisions and provisions for partial
redemption described below, during the twelve-month periods beginning
immediately after March 15 in each of the following years at the following
redemption prices per share (expressed as a percentage of the $25.00 liquidation
preference thereof) plus accrued and unpaid dividends, if any, up to but
excluding the date fixed for redemption (the "Redemption Date"), whether or not
declared (the "Redemption Price"):
<TABLE>
YEAR REDEMPTION PRICE
<S> <C>
1997......................... 104%
1998......................... 103
1999......................... 102
2000......................... 101
2001 and thereafter.......... 100%
</TABLE>
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(b) In the event the Company shall redeem shares of
Convertible Preferred, notice of such redemption shall be given by first class
mail, postage prepaid, not less than 30 days nor more than 60 days prior to
the Redemption Date, to each holder of record of the shares of Convertible
Preferred to be redeemed, at such holder's address as the same appears in the
stock register of the Company. Each such notice shall state (i) the
Redemption Date, (ii) the number of shares of Convertible Preferred to be
redeemed and, if less than all the shares held by such holder is to be
redeemed, the number of such shares to be redeemed from such holder, (iii) the
Redemption Price, (iv) the place or places where certificates for such shares
of Convertible Preferred are to be surrendered for payment of the Redemption
Price, (v) the then current Conversion Price (as defined in Section 7 hereof)
and (vi) that dividends on the shares of Convertible Preferred to be redeemed
shall cease to accrue on such Redemption Date. In order to facilitate the
redemption of the Convertible Preferred, the Board of Directors may fix a
record date for determination of holders of shares of Convertible Preferred to
be redeemed, which shall not be less than 30 days nor more than 60 days prior
to the Redemption Date with respect thereto. If, on the Redemption Date,
funds necessary for the redemption shall be available therefor, and shall have
been irrevocably deposited or set aside, then, notwithstanding that the
certificates evidencing any shares of Convertible Preferred so called for
redemption shall not have been surrendered (unless the Company defaults in
making payment of the Redemption Price), the dividends with respect to the
shares so called for redemption shall cease to accrue after the Redemption
Date, such shares shall no longer be deemed outstanding, all rights of the
holders of such shares as stockholders of the Company shall cease, and all
rights whatsoever with respect to the shares so called for redemption (except
the right of the holders to receive the Redemption Price without interest upon
surrender of their certificates therefor) shall terminate.
Upon surrender in accordance with said notice of the certificates
for any such shares of Convertible Preferred so redeemed (properly endorsed or
assigned for transfer, if the Board of Directors shall so require and the
notice shall so state), such shares shall be redeemed by the Company at the
applicable Redemption Price. If fewer than all of the outstanding shares of
Convertible Preferred are to be redeemed, the shares to be redeemed shall be
selected by the Company from outstanding shares of Convertible Preferred not
previously called for redemption by lot or pro rata. If fewer than all the
shares of Convertible Preferred represented by any certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares without
cost to the holder thereof.
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In the event that the Company has failed to pay accrued and unpaid
dividends on the Convertible Preferred, the Convertible Preferred may not be
redeemed unless all outstanding shares of Convertible Preferred are
simultaneously redeemed or the outstanding shares of the Convertible Preferred
are redeemed on a pro rata basis.
Notwithstanding the foregoing, if notice of redemption has been
given pursuant to this subsection (b) and any holder of shares of Convertible
Preferred shall, prior to the close of business on the business day
immediately preceding the Redemption Date, give written notice to the Company
pursuant to Section 7(d) hereof of the conversion of any or all of the shares
to be redeemed held by such holder (accompanied by a certificate or
certificates for such shares, duly endorsed or assigned to the Company), then
(x) the Company shall not have the right to redeem such shares, (y) the
conversion of such shares to be redeemed shall become effective as provided in
Section 7, and (z) any funds that shall have been deposited for the payment of
the Redemption Price for such shares shall be returned to the Company
immediately after such conversion (subject to declared dividends payable to
holders of shares of Convertible Preferred on the dividend payment record date
for such dividends being so payable, to the extent set forth in Section 7
hereof, regardless of whether such shares are converted subsequent to such
dividend payment record date and prior to the related dividend payment date);
provided, however, that shares of Convertible Preferred called for redemption
will not be convertible after the close of business on the business day
immediately preceding the Redemption Date, unless the Company defaults in
payment of the Redemption Price.
Section 6. VOTING RIGHTS.
(a) Except as otherwise provided herein or as may be
required by Delaware law or provided by the resolution creating any other
series of preferred stock, the holders of shares of Convertible Preferred will
have no voting rights.
(b) So long as any shares of Convertible Preferred are
outstanding, the vote or consent of the holders of two-thirds of the
outstanding shares of Convertible Preferred and any Parity Securities, voting
together as a single class without regard to series, shall be necessary to
issue, authorize or increase the authorized amount of, or issue or authorize
or increase any obligation or security convertible into or evidencing a right
to purchase, any additional class or series of Senior Securities.
Furthermore, the vote or consent of the
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holders of a majority of the outstanding shares of Convertible Preferred and
any Parity Securities, voting together as a single class without regard to
series, shall be necessary to issue, authorize or increase the authorized
amount of, or issue or authorize or increase any obligation or security
convertible into or evidencing a right to purchase, any additional class or
series of Parity Securities. However, the Company may create additional
classes of Junior Securities, increase the authorized number of shares of any
Junior Security or issue any Junior Securities without the consent of any
holder of the Convertible Preferred. No such vote or consent of the holders
of the Convertible Preferred is required if, at or prior to the time when the
issuance of any such Senior or Parity Securities is to be made or any such
change is to take effect, as the case may be, provision is made for the
redemption of all of the Convertible Preferred at the time outstanding
pursuant to the terms of the Convertible Preferred.
The vote or consent of the holders of two-thirds of the outstanding
shares of Convertible Preferred, voting as a class, will be required to
authorize an amendment to the Certificate of Incorporation, whether or not
such holders are entitled to vote thereon by the Certificate of Incorporation,
if the amendment would increase the aggregate number of authorized shares of
such class, increase or decrease the par value of the shares of such class, or
alter or change the powers, preferences or special rights of the shares of
such class so as to affect them adversely.
(c) (i) In the event that dividends on the Convertible
Preferred, if any are then outstanding, remain unpaid in cash for six
full quarterly periods, the maximum authorized number of directors of
the Company will be increased by two, and holders of the Convertible
Preferred, voting separately as a class with the holders of shares of
any Parity Securities upon which like voting rights have been conferred
and are exercisable, shall be entitled to vote their shares of
Convertible Preferred to elect an additional two directors. So long as
any shares of Convertible Preferred shall be outstanding, the holders of
Convertible Preferred shall retain the right to vote and elect, with the
holders of any such Parity Securities, as a class, such number of
directors until any outstanding dividends on the Convertible Preferred
are paid in full or declared and set aside for payment. Such period is
hereinafter referred to as a "default period."
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(ii) So long as any shares of Convertible Preferred
shall be outstanding, during any default period, such voting right of
the holders of Convertible Preferred may be exercised initially at a
special meeting called pursuant to subparagraph (iii) below, at any
annual meeting of the stockholders of the Company or by written consent
of such holders pursuant to the GCL. The absence of a quorum of holders
of common stock of the Company (including, without limitation, the
Common Stock and Class B Stock) or any class thereof shall not affect
the exercise of such voting rights by the holders of Convertible
Preferred and Parity Securities.
(iii) Unless the holders of Convertible Preferred and
Parity Securities, if any are then outstanding, have, during an existing
default period, previously exercised their right to elect directors, the
Board of Directors may order, or any stockholder or stockholders owning
in the aggregate not less than 5% of the outstanding shares of
Convertible Preferred and Parity Securities may request, the calling of
a special meeting of holders of Convertible Preferred and Parity
Securities, which meeting shall thereupon be called by the President, a
Vice President or the Secretary of the Company. Notice of such meeting
and of any annual meeting at which holders of Convertible Preferred and
Parity Securities are entitled to vote pursuant to this paragraph shall
be given to each holder of record of Convertible Preferred by mailing a
copy of such notice to such holder at such holder's last address as the
same appears in the stock register of the Company. Such special meeting
shall be called for a time not later than 45 days after such order or
request, or in default of the calling of such meeting within 45 days
after such order or request, such meeting may be called on similar
notice by any stockholder or stockholders owning in the aggregate not
less than 5% of the outstanding shares of Convertible Preferred and
Parity Securities. Notwithstanding the provisions of this subparagraph,
no such special meeting shall be called during the period within 60 days
immediately preceding the date fixed for the next annual meeting of
stockholders.
(iv) During any default period, the holders of common
stock of the Company (including, without limitation, the Common Stock
and Class B Stock), and other classes of stock
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of the Company, if applicable, shall continue to be entitled to elect
that number of directors that such holders would be entitled to elect
under the Certificate of Incorporation and Bylaws as though no default
period had occurred. After the holders of Convertible Preferred and
Parity Securities, voting together separately as a class, shall have
exercised their right to elect two directors, (x) the directors so
elected by the holders of Convertible Preferred and Parity Securities
shall continue in office until the earlier of (A) such time as their
successors shall have been elected by such holders or (B) the expiration
of the default period, and (y) any vacancy in the Board of Directors
caused by the resignation, death or removal of a director elected by the
holders of the Convertible Preferred and any Parity Securities may be
filled by vote of the remaining director theretofore elected by the
holders of the Convertible Preferred and any Parity Securities.
References in this subparagraph to directors elected by the holders of a
particular class of stock shall include directors elected by such
directors to fill vacancies as provided in clause (y) of the foregoing
sentence.
(v) Immediately upon the expiration of a default
period, (x) the right of the holders of Convertible Preferred to elect
directors shall cease, (y) the term of any directors elected by the
holders of Convertible Preferred and Parity Securities as a class shall
terminate, and (z) the number of directors shall be such number as may
be provided for in the Certificate of Incorporation or Bylaws of the
Company irrespective of any increase made pursuant to the provisions of
subparagraph (i) of this subsection (c) (such number being subject,
however, to change thereafter in any manner provided by law or in the
Certificate of Incorporation or Bylaws of the Company).
Section 7. CONVERSION.
(a) RIGHT TO CONVERT. Each share of Convertible
Preferred will be convertible at any time at the option of the holder thereof
into such number of whole shares of Common Stock (calculated as to each
conversion to the nearest 1/100 of a share) as is equal to the liquidation
preference of such share of Convertible Preferred surrendered for conversion
divided by the initial conversion price of $14.50 per share of Common Stock,
subject to adjustment as described in Section 7(b) below (the "Conversion
Price"). Upon the surrender of
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any shares of Convertible Preferred for conversion, in lieu of issuing the
Common Stock issuable upon conversion of the Convertible Preferred, the
Company may, at its option, pay to the holder of such shares of Convertible
Preferred an amount in cash equal to the then Market Value (as defined in
Section 8(e)(v) below) of the number of shares of Common Stock (including any
fraction thereof) into which such shares of Convertible Preferred are then
convertible. Dividends shall cease to accrue on shares of Convertible
Preferred surrendered for conversion into Common Stock on the date such shares
are surrendered. No fractional shares of Common Stock shall be issued upon
the conversion of Convertible Preferred, but in lieu of any fractional shares
to which the holder of shares of Convertible Preferred would otherwise be
entitled, the Company shall, after aggregation of all fractional share
interests held by each holder into as many whole shares of Common Stock as is
possible and issuing such whole shares to the holder of such Convertible
Preferred surrendered for conversion, pay an amount of cash (computed to the
nearest cent) equal to any remaining fractional share interests multiplied by
the then Market Value of the Common Stock.
In the case of any share of Convertible Preferred that is
converted after any record date with respect to the payment of a dividend on
the Convertible Preferred and on or prior to the dividend payment date with
respect to such dividend, the dividend due on such dividend payment date shall
be payable to the holder of record of such share of Convertible Preferred as
of such record date notwithstanding such conversion on or prior to the
dividend payment date or the default by the Company in the payment of the
dividends due on such dividend payment date. Shares of Convertible Preferred
surrendered for conversion during the period from the close of business on any
record date with respect to the payment of a dividend on the Convertible
Preferred to the opening of business on the dividend payment date with respect
to such dividend shall (except in the case of shares of Convertible Preferred
that have been called for redemption on a Redemption Date within such period)
be accompanied by payment in immediately available funds or other funds
acceptable to the Company of an amount equal to the dividend payable on such
dividend payment date on the shares of Convertible Preferred being surrendered
for conversion. The dividend with respect to a share of Convertible Preferred
called for redemption on a Redemption Date during the period from the close of
business on any record date with respect to the payment of a dividend on the
Convertible Preferred to and including the dividend payment date with respect
to such dividend shall be payable on such dividend payment date to the holder
of record of such share of Convertible Preferred on such dividend record date
notwithstanding the conversion of such share of Convertible Preferred after
such record date and prior to such dividend payment date, and the
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holder converting such share of Convertible Preferred need not include a
payment of such dividend amount upon surrender of such share of Convertible
Preferred for conversion. Except as provided in this subsection, holders of
Convertible Preferred will not be entitled to any payment or adjustment on
account of accrued and unpaid dividends on shares of Convertible Preferred
surrendered for conversion or for dividends on the shares of Common Stock
issued upon such conversion.
(b) ANTIDILUTION PROVISIONS. The Conversion Price is
subject to adjustment from time to time as follows:
(i) In case the Company shall pay or make a dividend
or other distribution on any Common Stock of the Company in Common
Stock, the Conversion Price in effect at the opening of business on the
day following the record date for such dividend or other distribution
shall be reduced by multiplying such Conversion Price by a fraction the
numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the record date fixed for such
determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such
dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the date
fixed for such determination. For the purposes of this subparagraph,
the number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company. The Company will
not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
(ii) In case the Company shall issue rights, warrants
or other securities convertible into Common Stock to all holders of its
Common Stock, entitling them to subscribe for or purchase shares of
Common Stock at a price per share less than the current market price per
share (determined as provided in Section 7(b)(v) below) of the Common
Stock on the record date for such rights, warrants or convertible
securities, the Conversion Price in effect at the opening of business on
the day following the record date shall be reduced by multiplying such
Conversion Price by a fraction the numerator of which shall be the
number of shares of Common Stock outstanding at the close of business on
the date
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fixed for such determination plus the number of shares of Common Stock
that the aggregate of the offering price of the total number of shares
of Common Stock so offered for subscription or purchase would purchase
at such current market price and the denominator of which shall be the
number of shares of Common Stock outstanding at the close of business on
the record date fixed for such determination plus the number of shares
of Common Stock so offered for subscription or purchase, such reduction
to become effective immediately after the opening of business on the day
following the record date. For the purposes of this subparagraph, the
number of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company. The Company will
not issue any rights, warrants or convertible securities in respect of
shares of Common Stock held in the treasury of the Company.
(iii) In case the outstanding shares of Common Stock
shall be subdivided into a greater number of shares of Common Stock, the
Conversion Price in effect at the opening of business on the day
following the date upon which such subdivision becomes effective shall
be proportionately reduced, and conversely, in case the outstanding
shares of Common Stock shall each be combined into a smaller number of
shares of Common Stock, the Conversion Price in effect at the opening of
business on the day following the date upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the
opening of business on the day following the date upon which such
subdivision or combination becomes effective.
(iv) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common Stock evidences of its
indebtedness, shares of its capital stock (other than Common Stock) or
other assets (excluding those rights, warrants, convertible securities,
dividends or distributions referred to in sub-paragraph (i) or (ii) of
this subsection (b) and dividends or distributions in connnection with the
liquidation, dissolution or winding up of the Company or paid in cash out
of the current or retained earnings of the Company), then in each case the
Conversion Price shall be adjusted so that the Conversion Price shall
equal the price determined by multiplying the Conversion Price in effect
immediately
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prior to the close of business on the record date for the determination
of holders of Common Stock entitled to receive such distribution by a
fraction of which the numerator shall be the current market price per
share (determined as provided in Section 7(b)(v) below) of the Common
Stock on such record date less the then fair market value as determined
by the Board of Directors (whose determination shall be conclusive and
shall be described in a statement filed with the transfer agent for the
Convertible Preferred (the "Transfer Agent")) of the portion of the cash,
capital stock or other assets or evidences of indebtedness so distributed
(and for which an adjustment to the Conversion Price has not previously
been made pursuant to the terms of this subsection (b)) applicable to one
share of Common Stock and the denominator shall be such current market
price per share of the Common Stock, such adjustment to become effective
immediately prior to the opening of business on the day following such
record date.
(v) For the purpose of any computation under
subparagraphs (ii) and (iv) of this subsection (b), the current market
price per share of Common Stock on any day shall be deemed to be the
average of the last reported sale price (or closing bid price if no sale
occurred) for the 20 consecutive Trading Days (as defined below)
selected by the Board of Directors commencing no more than 30 Trading
Days before and ending no later than the day before the day in question
on the American Stock Exchange, Inc. (the "AMEX"), or, if the Common
Stock is not then traded on the AMEX, such other national securities
exchange on which the Common Stock is listed or admitted to trading or,
if the Common Stock is not then traded on any national securities
exchange, the Nasdaq National Market or any similar system of automated
dissemination of quotations of securities prices. As used herein, the
term "Trading Day" means, (x) if the Common Stock is not so listed or
admitted for trading but is quoted on the Nasdaq National Market or any
similar system of automated dissemination of quotations of securities
prices, days on which trades may be made on such system or, (y) if the
Common Stock is listed or admitted for trading on any national
securities exchange, days on which such national securities exchange is
open for business.
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(vi) No adjustment in the Conversion Price shall be
required unless such adjustment would require an increase or decrease of
at least 1% of such price; provided, however, that any adjustments that
by reason of this subparagraph are not required to be made shall be
carried forward and taken into account in any subsequent adjustment and
provided, further, that adjustment shall be required and made in
accordance with the provisions of this subsection (b) (other than this
subparagraph) not later than such time as may be required in order to
preserve the tax-free nature of a distribution to the holders of shares
of Common Stock. Anything in this paragraph to the contrary
notwithstanding, the Company may, from time to time, decrease the
Conversion Price by any amount for any period of at least 20 days, in
which case the Company shall give at least 15 days' notice of such
decrease. At its option, the Company also may make such other reduction
in the Conversion Price as the Board of Directors deems advisable to
avoid or diminish any income tax to holders of Common Stock resulting
from any dividend or distribution of stock (or rights to acquire stock)
or from any event treated as such for income tax purposes. All
calculations shall be made to the nearest cent.
(vii) Whenever the Conversion Price is adjusted as
herein provided, the Company shall promptly mail an officer's
certificate signed by the President or a Vice President and the Chief
Financial Officer of the Company setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts
requiring such adjustment and the manner of computing same, which
certificate shall constitute conclusive evidence, absent manifest error,
of the correctness of such adjustment. If the calculation of the
adjustment requires a determination by the Board of Directors, such
certificate shall include a copy of the resolution of the Board of
Directors relating to such determination. The certificate shall be
mailed to each holder of shares of Convertible Preferred at their last
address as the same appears in the stock register of the Company and to
the Transfer Agent for the Convertible Preferred.
(c) CONSOLIDATION, MERGER OR SALE OF ASSETS. In case of
(i) any recapitalization or reclassification of shares of Common Stock (other
than a change in par value, or from par value to no par value, or from no par
value to
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par value, as a result of a subdivision or combination of the Common Stock),
(ii) any consolidation or merger of the Company with or into another person or
any merger of another person into the Company (other than a merger that does
not result in a reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), (iii) any sale or transfer
of all or substantially all of the assets of the Company or (iv) any
compulsory share exchange, pursuant to which any holders of Common Stock shall
be entitled to receive other securities, cash or other property, each holder
of a share of Convertible Preferred then outstanding shall have the right
thereafter to convert such share only into the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, sale,
transfer, recapitalization, reclassification or share exchange by a holder of
the number of shares of Common Stock of the Company into which such share of
Convertible Preferred might have been converted immediately prior to such
consolidation, merger, sale, transfer, recapitalization, reclassification or
share exchange. The company formed by such consolidation or resulting from
such merger or that acquires such assets or that acquires the Company's
shares, as the case may be, shall make provisions in its certificate or
articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments that, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the relevant adjustments provided for in this subsection (c) and subsection
(b) of this Section 7.
In case (x) the Company shall take any action that would result in
an adjustment to the Conversion Price, or (y) of any consolidation, merger or
share exchange to which the Company is a party and for which approval of any
stockholders of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company, or (z) of the voluntary or
involuntary dissolution, liquidation or winding up of the Company, then the
Company shall cause to be filed with the Transfer Agent for the Convertible
Preferred and shall cause to be mailed to all holders of shares of Convertible
Preferred at each such holder's last address as the same appears in the stock
register of the Company, at least 10 days prior to the applicable record or
effective date hereinafter specified, a notice stating (A) the date on which a
record is to be taken for the purpose of such actions or, if a record is not
to be taken, the date as of which the holders of Common Stock of record are to
be determined or (B) the date on which such consolidation, merger, share
exchange, sale, transfer, dissolution, liquidation or winding up is expected
to become effective and the date as of
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which it is expected that holders of Common Stock of record shall be entitled
to exchange their shares of Common Stock for securities, cash or other
property deliverable upon such consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up. Neither the failure to give
such notice nor any defect therein shall affect the legality or validity of
the proceedings described in subparagraphs (i) through (iv) of this subsection
(c).
(d) MECHANICS OF CONVERSION. Before any holder of
Convertible Preferred shall be entitled to convert the same into shares of
Common Stock and to receive certificates therefor, such holder shall surrender
the certificate or certificates for the Convertible Preferred to be converted,
duly endorsed and accompanied by any transfer instrument sufficient to
transfer the Convertible Preferred being converted to the Company free of any
adverse interest, at the office of the Transfer Agent for the Convertible
Preferred, and shall give written notice of conversion to the Company at such
office specifying the number (in whole shares) of shares of Convertible
Preferred to be converted and the name or names in which such holder wishes
the certificate or certificates of Common Stock to be issued. The Company
shall, within 10 days or as promptly as practicable after such delivery, issue
and deliver at such office to such holder of the Convertible Preferred (or to
any other person specified in the notice delivered by such holder) a
certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as aforesaid and a check payable to the holder
for any cash amounts payable as the result of a conversion into fractional
shares of Common Stock or, if the Company so elects, a check payable to the
holder for the cash amount payable in lieu of the delivery of shares of Common
Stock pursuant to Section 7(a) hereof together with written notice of the
Company's election to pay cash in lieu of delivering such shares of Common
Stock. Such conversion shall be deemed to have been effected immediately
prior to the close of business on the date on which the Company receives
notice and the shares of Convertible Preferred to be converted, and the person
or persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on such date of conversion, unless either (x)
the stock transfer books of the Company shall be closed on that date, in which
event such conversion shall be deemed to have been effected immediately prior
to the close of business on the next succeeding day on which such stock
transfer books are open, and such person or persons shall be deemed to have
become a holder or holders of record of Common Stock at the close of business
on such later date, but such conversion shall be at the Conversion Price in
effect on the date upon which such shares shall have been surrendered and such
notice received by the
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Company or (y) within 10 days after the Company receives such notice, the
Company delivers to the holder written notice of its election to pay cash in
lieu of delivering shares of Common Stock pursuant to Section 7(a) hereof. In
case any certificate for shares of the Convertible Preferred shall be
surrendered for conversion of only a part of the shares represented thereby,
the Company shall deliver within 10 days or as promptly as practicable
thereafter at such office, or upon the written order of the holder thereof, a
certificate or certificates for the number of shares of Convertible Preferred
represented by such surrendered certificate that are not being converted.
Notwithstanding the foregoing, the Company shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon such
conversion unless the certificates evidencing the Convertible Preferred are
either delivered to the Company or the Transfer Agent for the Convertible
Preferred or the Company or the Transfer Agent for the Convertible Preferred
shall have received evidence satisfactory to it evidencing that such
certificates have been lost, stolen or destroyed and the holder of such
Convertible Preferred executes an agreement satisfactory to the Company to
indemnify the Company from any loss incurred by it in connection with such
certificates.
The Company will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares
of Common Stock on conversions of shares of Convertible Preferred pursuant
hereto; provided, however, that the Company shall not be required to pay any
tax that may be payable in respect of any transfer involved in the issue or
delivery of shares of Common Stock in a name other than that of the holder of
the shares of Convertible Preferred to be converted, and no such issue or
delivery shall be made unless and until the person requesting such issue or
delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
(e) NO IMPAIRMENT. The Company will not, through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue
or sale of securities or any other voluntary action, avoid or seek to avoid
the observance or performance of any of the terms to be observed or performed
hereunder by the Company but will at all times in good faith assist in the
carrying out of all the provisions of this Section 7 and in the taking of all
such action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Convertible Preferred against
impairment.
Section 8. SPECIAL CONVERSION RIGHTS.
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(a) Upon the occurrence of a Change of Control (as defined
in Section 8(e) below) with respect to the Company, each holder of Convertible
Preferred shall have the right, at the holder's option, for a period of 30
days after the mailing of a Special Conversion Notice (as defined in Section
8(c) hereof) to convert all, but not less than all, of such holder's
Convertible Preferred into Common Stock of the Company at an adjusted
conversion price per share equal to the Special Conversion Price (as defined
in Section 8(e) below). The Company may, at its option, in lieu of providing
Common Stock upon any such special conversion, pay to the holder cash equal to
the Market Value (as defined in Section 8(e) below) of the Common Stock
multiplied by the number of shares of Common Stock into which such shares of
Convertible Preferred are convertible at an adjusted conversion price equal to
the Special Conversion Price. If the Company elects to pay the holder cash in
lieu of delivering shares of Common Stock as provided in the immediately
preceding sentence, the Company will deliver, within 10 days after the
conversion date, a check payable to the holder for the cash amount payable in
lieu of the delivery of shares of Common Stock together with written notice of
the Company's election to pay cash in lieu of delivering such shares. Shares
of Convertible Preferred that become convertible pursuant to a special
conversion right shall, unless so converted, remain convertible into the
number of shares of Common Stock that the holders of the Convertible Preferred
would have owned immediately after the Change of Control if the holders had
converted the Convertible Preferred immediately before the effective date of
the Change of Control, subject to adjustment as provided in Section 7 hereof.
(b) Upon the occurrence of a Fundamental Change (as defined
in Section 8(e) below) with respect to the Company, each holder of Convertible
Preferred shall have a special conversion right, at the holder's option, for a
period of 30 days after the mailing of a Special Conversion Notice by the
Company to the holders of the Convertible Preferred, to convert all, but not
less than all, of such holder's Convertible Preferred into the kind and amount
of cash, securities, property or other assets receivable upon such Fundamental
Change by a holder of the number of shares of Common Stock into which such
shares of Convertible Preferred would have been convertible immediately prior
to such Fundamental Change at an adjusted conversion price per share equal to
the Special Conversion Price. The Company or a successor corporation, as the
case may be, may, at its option and in lieu of providing the consideration as
required above upon such conversion, pay to the holder cash equal to the
Market Value of the Common Stock multiplied by the number of shares of Common
Stock into which such shares of Convertible Preferred are convertible at an
adjusted conver-
18
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sion price equal to the Special Conversion Price. If the Company elects to pay
the holder cash in lieu of delivering the consideration required upon such
conversion as provided in the immediately preceding sentence, the Company will
deliver, within 10 days after the conversion date, a check payable to the holder
for the cash amount payable in lieu of the delivery of such consideration
together with written notice of the Company's election to pay cash in lieu of
delivering such consideration. Shares of Convertible Preferred that become
convertible pursuant to a special conversion right shall, unless so converted,
remain convertible into the kind and amount of cash, securities, property or
other assets that the holders of the Convertible Preferred would have owned
immediately after the Fundamental Change if the holders had converted the
Convertible Preferred immediately before the effective date of the Fundamental
Change, subject to adjustment as provided in Section 7 hereof.
(c) Upon the occurrence of a Change of Control or a
Fundamental Change with respect to the Company, within 30 days after such
occurrence, the Company shall mail to each registered holder of Convertible
Preferred a notice of such occurrence (the "Special Conversion Notice")
setting forth the following: (i) the event constituting the Change of Control
or Fundamental Change, (ii) the conversion date with respect to exercise of
the applicable special conversion right, (iii) the Special Conversion Price,
(iv) the conversion rate (and related Conversion Price) then in effect under
Section 7 and the continuing conversion rights, if any, under Section 7, (v)
the name and address of the paying agent, (vi) that holders who want to
convert shares of Convertible Preferred must satisfy the requirements of
Section 7(d) (specifying such requirements) and must exercise such special
conversion right within the 30-day period after the mailing of such notice by
the Company, (vii) that exercise of such special conversion right shall be
irrevocable and no dividends on shares of Convertible Preferred (or portions
thereof) tendered for conversion shall accrue from and after the conversion
date and (viii) that the Company (or a successor corporation, if applicable)
may, at its option, elect to pay cash (specifying the amount thereof per
share) for all shares of Convertible Preferred tendered for conversion.
(d) A holder of Convertible Preferred must exercise the
special conversion right within the 30-day period after the mailing of the
Special Conversion Notice, and such special conversion right shall expire at
the end of such 30-day period. Such right must be exercised in accordance
with Section 7 to the extent the procedures in Section 7 are consistent with
the special provisions of this Section 8. Exercise of such conversion right
shall be irrevocable, to the extent permitted by applicable law, and dividends
on Convertible Preferred
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<PAGE>
tendered for conversion shall cease to accrue from and after the conversion
date. The conversion date with respect to the exercise of a special
conversion right arising upon a Change of Control or Fundamental Change shall
be the 30th day after the mailing of the Special Conversion Notice. In taking
any action in connection with any Change of Control or Fundamental Change or
related special conversion right, the Company will comply with all applicable
federal securities laws and regulations including, to the extent applicable,
Rules 13e-4 and 14e-1 under the Securities Exchange Act of 1934, as amended.
(e) The following definitions shall apply to terms used
herein:
(i) The term "DI affiliates" means (x) Mr. Stanley
H. Durwood, his spouse and any of his lineal descendants and their
respective spouses (collectively, the "Durwood Family"), (y) any
controlled affiliate of any member of the Durwood Family and (z) any
trust for the benefit of one or more members of the Durwood Family
(whether or not any member of the Durwood Family is a trustee of such
trust) and no other person other than one or more charitable
organizations.
(ii) A "Change of Control" with respect to the
Company shall be deemed to have occurred at the first time after the
issuance of the Convertible Preferred that (x) a majority of the Board
of Directors of the Company, over a two-year period, is replaced from
the directors who constituted the Board of Directors of the Company at
the beginning of such period, which replacement shall not have been
approved by the Board of Directors of the Company (or replacement
directors approved by the Board of Directors of the Company), as
constituted at the beginning of such period, or (y) a person or entity
or group of persons or entities acting in concert as a partnership or
other group (other than the DI affiliates, any subsidiary of the
Company, 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 the Company or
any subsidiary of the Company or any person holding securities of the
Company for or pursuant to the terms of any such employee benefit plan)
shall, as a result of a tender or exchange offer, open-market purchases,
privately negotiated purchases or otherwise, have become the
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beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of securities of the Company representing 50% or more of the
combined voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors.
(iii) A "Fundamental Change" with respect to the
Company shall be deemed to have occurred after (x) the occurrence of any
transaction or event in connection with which (A) 66 2/3% or more of the
outstanding Common Stock or (B) securities of the Company representing
50% or more of the combined voting power of the then outstanding
securities of the Company ordinarily (and apart from rights accruing
under special circumstances) having the right to vote in the election of
directors is exchanged for, converted into, acquired for or constitutes
solely the right to receive cash, securities, property or other assets
(whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization
or otherwise) or (y) the conveyance, sale, lease, assignment, transfer
or other disposal of all or substantially all of the Company's property,
business or assets; provided, however, that a Fundamental Change will
not be deemed to have occurred with respect to either of the following
transactions or events: (1) any transaction or event in which more than
50% (by value as determined in good faith by the Board of Directors) of
the consideration received by holders of Common Stock consists of
Marketable Stock (as defined below) or (2) any consolidation or merger
of the Company in which the holders of Voting Stock (as defined below)
of the Company immediately prior to such transaction own, directly or
indirectly, 50% or more of the Voting Stock of the sole surviving
corporation (or of the ultimate parent of such sole surviving
corporation) outstanding at the time immediately after such
consolidation or merger.
(iv) The term "Voting Stock" means, with respect to
any person, capital stock of such person having general voting power
under ordinary circumstances to elect at least a majority of the board
of directors, managers or trustees of such person (irrespective of
whether or not at the time capital stock of
21
<PAGE>
any other class or classes shall have or might have voting power by
reason of the happening of any contingency).
(v) The term "Special Conversion Price" means the
higher of (x) the Market Value of the Common Stock or (y) $9.80
per share (which amount will, each time the Conversion Price is
adjusted, be adjusted so that the ratio of such amount to the Conversion
Price, after giving effect to any such adjustment, shall always be the
same as the ratio of $9.80 to the initial Conversion Price, without
giving effect to any such adjustment). As used herein, "Market Value"
of the Common Stock or any other Marketable Stock is the average of the
last reported sales prices of the Common Stock or such other Marketable
Stock, as the case may be, for the five trading days ending on the last
trading day preceding the date of the Fundamental Change, Change of
Control or conversion, as applicable.
(vi) The term "Marketable Stock" means the Common
Stock or common stock of any corporation that is the successor to all or
substantially all of the business or assets of the Company as a result
of a Fundamental Change or of the ultimate parent of such successor,
which is (or will, upon distribution thereof, be) listed or quoted on
the New York Stock Exchange, the AMEX, the Nasdaq National Market or any
similar system of automated dissemination of quotations of securities
prices in the United States.
Section 9. STATUS OF REACQUIRED SHARES. If shares of the
Convertible Preferred are redeemed pursuant to Section 5 hereof or converted
pursuant to Section 7 hereof, the shares so redeemed or converted shall, upon
compliance with any statutory requirements, assume the status of authorized
but unissued shares of preferred stock of the Company.
Section 10. RESERVATION AND ISSUANCE OF SHARES. So long as any
shares of Convertible Preferred remain outstanding, the Company agrees to keep
reserved for issuance in connection with the conversion of the Convertible
Preferred at all times a number of authorized but unissued shares of Common
Stock at least equal to the total number of shares of Common Stock issuable
upon conversion of all of the Convertible Preferred outstanding at such time.
The Company covenants and agrees that all shares of Common Stock which may be
22
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issued upon conversion of shares of Convertible Preferred will upon issue be
duly and validly issued, fully paid and non-assessable, free of all liens and
charges and not subject to any preemptive rights.
Section 11. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered by hand or when sent by telex or telecopier (with
receipt confirmed), provided a copy is also sent by express (overnight, if
possible) courier, addressed, (a) in the case of a holder of the Convertible
Preferred, to such holder's address of record and, (b) in the case of the
Company, to the Company's principal executive offices to the attention of the
Company's Secretary.
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IN WITNESS WHEREOF, AMC Entertainment, Inc. has caused this
Certificate of Designations to be duly executed by its duly authorized officer
and attested by its secretary this 24 day of February, 1994.
AMC ENTERTAINMENT INC.
By:_________________________________
Name: Edward D. Durwood
Title: President
ATTEST:
- -----------------------------
Name: Nancy Gallagher
Title: Secretary
24
