<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
AMC ENTERTAINMENT INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2)
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
* Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE>
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
October 27, 1997
TO THE STOCKHOLDERS OF
AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. will be held at
the Independence Commons 20 Theatres, 19200 East 39th Street, Independence,
Missouri. The meeting will be held on December 2, 1997, at 11:00 a.m. local time
and will be followed by an informal lunch and a movie. The Board of Directors
cordially invites you to attend.
I hope you will attend the meeting in person, but whether or not you expect
to attend, please sign, date and return the enclosed proxy card now, so that
your shares will be represented at the meeting. If you do attend the meeting,
you will be entitled to vote in person.
Very truly yours,
[SIGNATURE]
S. H. Durwood
Chairman of the Board
<PAGE>
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD DECEMBER 2, 1997
------------------------
TO THE STOCKHOLDERS OF AMC ENTERTAINMENT INC.:
The Annual Meeting of Stockholders of AMC Entertainment Inc. (the "Company")
will be held at the Independence Commons 20 Theatres, 19200 East 39th Street,
Independence, Missouri. The meeting will be held on Tuesday, December 2, 1997,
at 11:00 a.m. local time for the following purposes:
1. To elect a Board of Directors for the upcoming year;
2. To consider and vote upon a proposal to ratify the appointment of Coopers
& Lybrand L.L.P. as independent public accountants for the Company for
the fiscal year ending April 2, 1998;
3. To consider and vote upon a proposal to amend Article FOURTH of the
Restated and Amended Certificate of Incorporation; and
4. To transact such other business as may properly come before the meeting.
The close of business on October 9, 1997, has been designated as the record
date for the determination of stockholders entitled to notice of and to vote at
the Annual Meeting of Stockholders and any adjournments thereof. A list of such
stockholders will be available for review in the office of the Company's
Secretary, on the 17th Floor of the Power and Light Building, located at 106
West 14th Street, Kansas City, Missouri, after October 28, 1997.
By order of the Board of Directors
[SIGNATURE]
Nancy L. Gallagher
Vice President and Secretary
Kansas City, Missouri
October 27, 1997
YOUR VOTE IS IMPORTANT
If you do not expect to attend the meeting in person, it is important that
your shares be represented. Please use the enclosed proxy to vote on the matters
to be considered at the meeting, sign and date the proxy and mail it promptly in
the enclosed envelope, which requires no postage if mailed in the United States.
Any stockholder may revoke his proxy at any time before the meeting by written
notice to such effect, by submitting a subsequently dated proxy or by attending
the meeting and voting in person.
1
<PAGE>
[LOGO]
AMC ENTERTAINMENT INC.
106 West 14th Street
Kansas City, Missouri 64105
PROXY STATEMENT
PROXIES, SOLICITATION AND VOTING:
This Proxy Statement is furnished in connection with the solicitation of the
enclosed proxy by the Board of Directors of AMC Entertainment Inc. (the
"Company") for use at the Annual Meeting of Stockholders to be held at 11:00
a.m. local time on Tuesday, December 2, 1997, at the Independence Commons 20
Theatres, 19200 East 39th Street, Independence, Missouri. This Proxy Statement
and the accompanying proxy are being mailed to stockholders on or about October
27, 1997.
The Board of Directors of the Company has established October 9, 1997, as
the record date for the meeting. Only stockholders of record at the close of
business on the record date are entitled to notice of and to vote at the Annual
Meeting of Stockholders and any adjournments thereof. At the close of business
on the record date, the Company had outstanding 13,388,184 shares of Common
Stock and 5,015,657 shares of Class B Stock. On all matters other than the
election of Directors, the shares of Common Stock and Class B Stock vote
together as if a single class, with each outstanding share of Common Stock
having one vote per share and each outstanding share of Class B Stock having ten
votes per share.
Properly executed and dated proxies which are received by the Company prior
to the Annual Meeting of Stockholders will be voted in accordance with the
instructions thereon. If a proxy is received with no instructions given with
respect to the matters to be acted upon, the shares represented by the proxy
will be voted (i) for the election of the nominees to the Company's Board of
Directors designated below, (ii) for the ratification of the appointment of
Coopers & Lybrand L.L.P. as independent public accountants of the Company for
the fiscal year ending April 2, 1998, and (iii) for the proposal to amend
Article FOURTH of the Restated and Amended Certificate of Incorporation. A proxy
may be revoked at any time by written notice to such effect received by the
Secretary of the Company before the proxy is voted at the Annual Meeting of
Stockholders, by delivery to the Company of a subsequently dated proxy or by a
vote cast in person at the Annual Meeting of Stockholders by written ballot.
The election of directors is determined by a plurality of the votes cast.
Votes that are withheld will be excluded entirely from the vote and will have no
effect. A favorable vote of a majority (based on voting power) of the shares of
Common Stock and Class B Stock voted in person or by proxy at the Annual Meeting
of Stockholders is required for the proposal to ratify the appointment of
Coopers & Lybrand L.L.P. as independent public accountants for the Company for
the fiscal year ending April 2, 1998. The favorable votes of a majority (based
on voting power) of the shares of outstanding Common Stock and Class B Stock
entitled to notice of and to vote at the Annual
2
<PAGE>
Meeting, voting in person or by proxy as a single class, and of a majority of
outstanding shares of Class B Stock, voting in person or by proxy as a separate
class, is required to approve the proposal to amend Article FOURTH of the
Restated and Amended Certificate of Incorporation. Abstentions and broker
non-votes are not counted in the calculation of the vote, except that
abstentions and broker non-votes will be counted and have the same effect as
votes against the proposal to amend Article FOURTH of the Restated and Amended
Certificate of Incorporation. The sole holder of the outstanding Class B Stock
has advised the Company of his intention to vote in favor of the Proposed
Amendments.
A proxy confers discretionary authority with respect to the voting of the
shares represented thereby on any other business that may properly come before
the meeting and any adjournments thereof. The Board of Directors is not aware
that any such other business is to be presented for action at the meeting and
does not itself intend to present any such other business. However, if any such
other business does come before the meeting, shares represented by proxies given
pursuant to this solicitation will be voted by the persons named in the proxy in
accordance with their best judgment. A proxy also confers discretionary
authority on the persons named therein to approve minutes of last year's Annual
Meeting of Stockholders, to vote on matters incident to the conduct of the
meeting and to vote on the election of any person as director if a nominee
herein named should decline or become unable to serve as a director for any
reason. The cost of the solicitation of proxies will be paid by the Company.
1. ELECTION OF DIRECTORS
Directors are elected annually, and each holds office until such director's
successor is duly elected and qualified or until such director's earlier
resignation or removal. The by-laws of the Company provide that the full Board
of Directors consists of seven (7) members. It is anticipated that seven (7)
directors will be elected at the meeting. Five (5) of those directors are to be
elected by the holders of Class B Stock, voting as a class, with each
outstanding share having one vote per share, and two (2) of those directors are
to be elected by the holders of Common Stock, voting as a class, with each
outstanding share having one vote per share.
It is intended that shares represented by the proxies will be voted in favor
of the election of the nominees named below who are to be elected by the holders
of Common Stock, unless otherwise directed by stockholders. Each nominee has
consented to being named as a nominee and to serve if elected. In the event any
nominee for director to be elected by the holders of Common Stock should decline
or shall become unable to serve as a director for any reason, it is intended
that the persons named in the proxy will vote for a substitute who will be
designated by the Board of Directors.
3
<PAGE>
DIRECTORS AND NOMINEES FOR DIRECTORS
The Company's Directors and nominees for Directors are as follows:
<TABLE>
<CAPTION>
YEAR FIRST
ELECTED OR
NAME AGE(1) POSITIONS APPOINTED
- --------------------- --------- ------------------------------------------------ ----------
<S> <C> <C> <C>
Stanley H. Durwood 77 Chairman of the Board, Chief Executive Officer 1983
and Director
Peter C. Brown 39 President, Chief Financial Officer and Director 1992
Philip M. Singleton 51 Executive Vice President, Chief Operating 1992
Officer and Director
Charles J. Egan, Jr. 65 Director 1986
Paul E. Vardeman 67 Director 1983
William T. Grant, II 47 Director 1996
John P. Mascotte 58 Director 1996
</TABLE>
- -------------------
(1)As of October 2, 1997.
American Multi-Cinema, Inc. ("AMC") is a wholly owned subsidiary of the
Company. The primary business of AMC is the operation of megaplex and multiplex
theatres, primarily in large metropolitan markets. There are no family
relationships between any Director or any Executive Officer of the Company. At
each Annual Meeting of Stockholders, the Company intends to nominate as
directors to be elected by the holders of Common Stock individuals who are not
officers or employees of the Company or its subsidiaries but who may be
incumbent directors.
NOMINEES FOR DIRECTORS
TO BE ELECTED BY HOLDERS OF CLASS B STOCK
Mr. Stanley H. Durwood has served as a Director of the Company from its
organization on June 14, 1983, and of AMC since August 2, 1968. Mr. Durwood has
served as Chairman of the Board of the Company and AMC since February 1986, and
has served as Chief Executive Officer of the Company since June 1983, and of AMC
since February 20, 1986. Mr. Durwood served as President of the Company (i) from
June 1983 through February 20, 1986, (ii) from May 1988 through June 1989, and
(iii) from October 6, 1995 to January 10, 1997. Mr. Durwood served as President
of AMC (i) from August 2, 1968 through February 20, 1986, (ii) from May 13, 1988
through November 8, 1990, and (iii) from October 6, 1995 to January 10, 1997.
Mr. Durwood is a graduate of Harvard University.
Mr. Peter C. Brown has served as a Director of the Company and AMC since
November 12, 1992. Mr. Brown was elected President of the Company on January 10,
1997. Mr. Brown served as Executive Vice President of the Company from August 3,
1994 to January 10, 1997. Mr. Brown has served as Executive Vice President of
AMC since August 3, 1994, and as Chief Financial Officer of the Company and AMC
since November 14, 1991. Mr. Brown served as Senior Vice President of the
Company and AMC from November 14, 1991 until his appointment as Executive Vice
President in August 1994. Mr. Brown served as Treasurer of the Company and AMC
from September 28,
4
<PAGE>
1992 through September 19, 1994. Mr. Brown is a graduate of the University of
Kansas. Mr. Brown also serves as Chairman of the Board of Trustees of
Entertainment Properties Trust, a recently formed Real Estate Investment Trust.
Mr. Philip M. Singleton has served as a Director of the Company and AMC
since November 12, 1992. Mr. Singleton was elected President of AMC on January
10, 1997. Mr. Singleton has served as Executive Vice President of the Company
since August 3, 1994 and as Chief Operating Officer of the Company and AMC since
November 14, 1991. Mr. Singleton served as Executive Vice President of AMC from
August 3, 1994 to January 10, 1997. Mr. Singleton served as Senior Vice
President of the Company and AMC from November 14, 1991 until his appointment as
Executive Vice President in August 1994. Prior to November 14, 1991, Mr.
Singleton served as Vice President in charge of operations for the Southeast
Division of AMC from May 10, 1982. Mr. Singleton holds an undergraduate degree
from California State University, Sacramento, and an M.B.A. degree from the
University of South Florida.
Mr. Charles J. Egan, Jr., has served as a Director of the Company since
October 30, 1986. Mr. Egan is Vice President of Hallmark Cards, Incorporated,
and was General Counsel of such company until December 31, 1996. Hallmark Cards,
Incorporated is primarily engaged in the business of greeting cards and related
social expressions products, Crayola crayons and the production of movies for
television. Mr. Egan also serves as a member of the Board of Trustees, Treasurer
and Chairman of the Finance Committee of the Kansas City Art Institute. Mr. Egan
holds an A.B. degree from Harvard University and an LL.B. degree from Columbia
University.
Mr. Paul E. Vardeman has served as a Director of the Company since June 14,
1983. Mr. Vardeman is a director, officer and shareholder of the law firm of
Polsinelli, White, Vardeman & Shalton, P.C., Kansas City, Missouri and has been
associated with such law firm since 1982. Prior thereto, Mr. Vardeman served as
a Judge of the Circuit Court of Jackson County, Missouri. Mr. Vardeman holds
undergraduate and J.D. degrees from the University of Missouri-Kansas City.
TO BE ELECTED BY HOLDERS OF COMMON STOCK
Mr. William T. Grant, II has served as a Director of the Company since
November 14, 1996. Mr. Grant is Chairman of the Board, President, Chief
Executive Officer and a Director of LabONE, Inc. and Chairman of the Board,
Chief Executive Officer and a Director of Seafield Capital Corporation. Mr.
Grant served as President of Seafield Capital Corporation from 1990 to 1993, at
which time he became Chairman of the Board of Seafield Capital Corporation.
LabONE, Inc. provides risk appraisal laboratory testing services to the
insurance industries in the United States and Canada and is a subsidiary of
Seafield Capital Corporation. Seafield Capital Corporation is a holding company
whose subsidiaries operate primarily in the healthcare and insurance services
areas. Mr. Grant also serves on the board of directors of Commerce Bancshares,
Inc., Kansas City Power & Light Company, Business Men's Assurance Company of
America, Response Oncology, Inc. and SLH Corporation. Mr. Grant holds a B.A.
degree from the University of Kansas and an M.B.A. degree from the Wharton
School of Finance at the University of Pennsylvania.
Mr. John P. Mascotte has served as a Director of the Company since November
14, 1996. Mr. Mascotte has served as President and Chief Executive Officer of
BlueCross BlueShield of Kansas City since July 1, 1997. Prior thereto, Mr.
Mascotte served as Chairman of Johnson & Higgins of Missouri, Inc., a privately
held insurance broker, from January 1996 to June 30, 1997, and as Chairman of
the Board and Chief Executive Officer of The Continental Corporation, a
5
<PAGE>
large property-casualty insurer, from December 1982 through December 1995. Mr.
Mascotte is also currently a consultant to the First Episcopal District, African
Methodist Episcopal Church and was Chairman of the Heart of America 1996 United
Way General Campaign. Mr. Mascotte also serves on the board of directors of
Hallmark Cards, Incorporated, Business Men's Assurance Company of America and
American Home Products Corporation and is Vice Chairman of the Aspen Institute,
Chairman of LISC (Local Initiative Support Corp.) and a member of the Board of
Trustees of the New York Public Library. Mr. Mascotte holds B.S. degrees from
St. Joseph's College, Rensselaer, Indiana, and an LL.B. degree from the
University of Virginia. Mr. Mascotte is also a certified public accountant and a
chartered life underwriter.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR WILLIAM T. GRANT, II AND
JOHN P. MASCOTTE AS DIRECTORS OF THE COMPANY.
DIRECTORS' MEETINGS AND COMMITTEES
The Company has a 52/53 week fiscal year ending on the Thursday closest to
the last day of March. The Company's last full fiscal year began on March 29,
1996, and ended on April 3, 1997 ("fiscal 1997").
The Board of Directors of the Company held seven meetings and acted by
unanimous written consent to action 12 times in fiscal 1997. All directors
attended at least 75% of the aggregate number of meetings of the Board of
Directors and of Board Committees on which they served, except for Mr. Stanley
H. Durwood who attended 71% of the meetings of the Board of Directors. Mr.
Stanley H. Durwood missed two meetings while undergoing treatment for esophageal
cancer.
The Board of Directors has an Executive Committee, composed of Messrs.
Stanley H. Durwood, Peter C. Brown and Philip M. Singleton, an Audit Committee,
composed of Messrs. Charles J. Egan, Jr., William T. Grant, II and John P.
Mascotte, and a Compensation Committee, composed of Messrs. Charles J. Egan,
Jr., William T. Grant, II and John P. Mascotte. Other standing committees are
the Finance Committee, composed of Messrs. Peter C. Brown, Charles J. Egan, Jr.,
Paul E. Vardeman and William T. Grant, II; the Employee Benefits Committee,
composed of Messrs. Philip M. Singleton, Paul E. Vardeman and John P. Mascotte;
and the Stock Option Committee, composed of Messrs. Paul E. Vardeman, William T.
Grant, II and John P. Mascotte. The Company does not have a nominating
committee.
The principal responsibility of the Executive Committee is to have and
exercise, between meetings of the Board of Directors, all powers and authorities
of the Board of Directors in the management of the business and affairs of the
Company to the full extent allowed by the General Corporation Law of the State
of Delaware. The Executive Committee held no formal meetings during fiscal 1997;
however, the Executive Committee frequently meets on an informal basis.
The principal responsibilities of the Audit Committee are to (i) recommend
to the Board of Directors the accounting firm to serve as independent public
accountants of the Company and its subsidiaries, which accounting firm is to be
selected by the Board of Directors or recommended by it for stockholder
approval, (ii) act on behalf of the Board of Directors in meeting with the
independent public accountants and the appropriate corporate officers to review
matters relating to corporate financial reporting and accounting procedures and
policies, the adequacy of financial, accounting and operating controls, and the
scope of the respective audits of the independent public accountants, (iii)
review the results of the audit and submit to the Board of Directors of the
Company any recommendations the Audit Committee may have from time to time with
respect to
6
<PAGE>
financial reporting and accounting practices and policies, observed wrongdoing
and existing and potential future financial problems, and financial, accounting
and operations controls and safeguards, and (iv) approve all material
transactions between the Company or AMC and Durwood, Inc. or other related
parties. Certain transactions between the Company and members of the Durwood
family also must be approved by Messrs. William T. Grant, II and John P.
Mascotte. See "Legal Proceedings." The Audit Committee held four meetings during
fiscal 1997.
The principal responsibilities of the Compensation Committee are to (i)
review and recommend periodically the compensation to be paid to the Executive
Officers of the Company and its subsidiaries, including the amount and timing of
bonus payments and other incentive compensation awards, and (ii) oversee the
preparation of the reports and other information required to be disclosed in
connection with any filing under the Securities Act of 1933 or the Securities
Exchange Act of 1934. The Compensation Committee held 28 meetings during fiscal
1997.
COMPENSATION OF DIRECTORS
From March 29, 1996 through November 13, 1996, Messrs. Charles J. Egan, Jr.
and Paul E. Vardeman received prorated annual cash compensation of $20,000 each
for their service as members of the Boards of the Company and AMC and $24,000
each for their service as members of the Audit Committee of the Boards of the
Company and AMC. They also received $900 per hour for attending meetings of (i)
any board of directors on which they served, (ii) the Audit Committee after the
twelfth meeting during the fiscal year and (iii) any other committee on which
they served.
Effective November 14, 1996, each of the Company's non-employee directors
receives an annual fee of $32,000 for service on the Board of Directors and an
additional $4,000 for each committee of the Company's Board on which he serves,
and, in addition, receives $1,500 and $1,000, respectively, for each Board and
Board committee meeting which he attends.
For fiscal 1997, Messrs. Charles J. Egan, Jr., William T. Grant, II, John P.
Mascotte and Paul E. Vardeman received $141,900, $64,000, $61,000 and $131,300,
respectively, for their services.
The Board of Directors has also authorized that Messrs. Charles J. Egan, Jr.
and Paul E. Vardeman be paid reasonable compensation for their services as
members of a special committee (the "Special Committee") appointed to consider
the merger of the Company and Durwood, Inc. For fiscal 1997, Messrs. Charles J.
Egan, Jr. and Paul E. Vardeman each received $35,000 for their services related
to the Special Committee.
7
<PAGE>
EXECUTIVE OFFICERS
The Company's and its subsidiaries' Executive Officers are as follows:
<TABLE>
<CAPTION>
YEARS ASSOCIATED
NAME AGE(1) POSITIONS WITH COMPANY(1)
- ------------------------- ----------- --------------------------------------- ---------------------
<S> <C> <C> <C>
Stanley H. Durwood(2) 77 Chairman of the Board, Chief Executive 51(3)
Officer and Director (the Company and
AMC)
Peter C. Brown(2) 39 President (the Company)(4), Executive 6
Vice President (AMC); Chief Financial
Officer and Director (the Company and
AMC)
Philip M. Singleton(2) 51 President (AMC)(4); Executive Vice 22(3)
President (the Company), Chief
Operating Officer and Director (the
Company and AMC)
Richard T. Walsh 44 Senior Vice President (AMC) 21(3)
Richard J. King 48 Senior Vice President (AMC) 25(3)
Rolando B. Rodriguez 37 Senior Vice President (AMC) 22(3)
Richard L. Obert 58 Senior Vice President -- Chief 8
Accounting and Information Officer (the
Company and AMC)
Charles P. Stilley 43 President (AMC Realty, Inc.) 16(3)
Richard M. Fay 48 President (AMC Film Marketing) 2
</TABLE>
- -------------------
(1)As of October 2, 1997.
(2)For biographical information of these Executive Officers, see "Directors
and Nominees for Directors."
(3)Includes years with the predecessor of the Company.
(4)Prior to January 10, 1997, Messrs. Brown and Singleton were serving as
Executive Vice Presidents of both the Company and AMC. They were appointed to
their present positions as Presidents of the Company and AMC, respectively, on
January 10, 1997.
All current Executive Officers of the Company and its subsidiaries hold such
offices at the pleasure of the Board of Directors, subject, in the case of
Messrs. Durwood, Brown, Singleton and Fay, to rights under their respective
employment agreements.
Mr. Richard T. Walsh has served as Senior Vice President in charge of
operations for the West Division of AMC since July 1, 1994. Previously, Mr.
Walsh served as Vice President in charge of operations for the Central Division
of AMC from June 10, 1992, and as Vice President in charge of operations for the
Midwest Division of AMC from December 1, 1988.
8
<PAGE>
Mr. Richard J. King has served as Senior Vice President in charge of
operations for the Northeast Division of AMC since January 4, 1995. Previously,
Mr. King served as Vice President in charge of operations for the Northeast
Division of AMC from June 10, 1992, and as Vice President in charge of
operations for the Southwest Division of AMC from October 30, 1986.
Mr. Rolando B. Rodriguez has served as Senior Vice President in charge of
operations for the South Division of AMC since April 2, 1996. Previously, Mr.
Rodriguez served as Vice President and South Division Operations Manager of AMC
from July 1, 1994, as Assistant South Division Operations Manager of AMC from
February 12, 1993, as South Division Senior Operations Manager from March 29,
1992, and as South Division Operations Manager from August 6, 1989.
Mr. Richard L. Obert has served as Senior Vice President - Chief Accounting
and Information Officer of the Company and AMC since November 9, 1995, and prior
thereto served as Vice President and Chief Accounting Officer of the Company and
AMC from January 9, 1989.
Mr. Charles P. Stilley has served as President of AMC Realty, Inc., a wholly
owned subsidiary of AMC, since February 9, 1993, and prior thereto served as
Senior Vice President of AMC Realty, Inc. from March 3, 1986.
Mr. Richard M. Fay has served as President - AMC Film Marketing, a division
of AMC, since September 8, 1995. Previously, Mr. Fay served as Senior Vice
President and Assistant General Sales Manager of Sony Pictures from 1994 until
joining AMC. From 1991 to 1994, Mr. Fay served as Vice President and Head Film
Buyer for the eastern division of United Artists Theatre Circuit, Inc.
EXECUTIVE COMPENSATION AND COMPENSATION PLANS
The following table provides certain summary information concerning
compensation paid or accrued by the Company and its subsidiaries to or on behalf
of the Company's Chief Executive Officer and each of the four other most highly
compensated Executive Officers of the Company and its subsidiaries (determined
as of the end of the last fiscal year and hereafter referred to as the "Named
Executive Officers") for the last three fiscal years ended April 3, 1997, March
28, 1996 and March 30, 1995, respectively.
9
<PAGE>
SUMMARY COMPENSATION TABLE*
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ---------------
------------------------------------------------ AWARDS-
OTHER(1) SECURITIES ALL(2)
ANNUAL UNDERLYING OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS COMPENSATION OPTIONS/SARS(#) COMPENSATION
- --------------------------- ----------- --------- --------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood 1997 $ 527,322 $ -- $ N/A 65,000 $ --
Chief Executive 1996 492,634 275,000 N/A -- --
Officer 1995 452,088 108,949 N/A 22,500 --
Peter C. Brown 1997 271,364 25,500 N/A 4,500 4,976
Chief Financial 1996 257,439 137,500 N/A -- 4,726
Officer 1995 234,836 55,433 N/A 4,500 4,657
Philip M. Singleton 1997 303,125 28,500 N/A 4,500 5,003
Chief Operating 1996 285,311 154,000 N/A -- 4,686
Officer 1995 273,247 64,149 N/A 4,500 4,663
Richard T. Walsh 1997 223,073 41,545 N/A 2,250 4,964
Senior Vice President 1996 207,204 80,000 N/A 2,250 4,620
1995 200,855 35,500 217,112 -- 63,464
Richard M. Fay 1997 294,369 32,650 N/A 2,250 1,464
President--AMC Film 1996 150,049 55,000 66,283 -- --
Marketing 1995 -- -- -- -- --
</TABLE>
- -------------------
(1)N/A denotes not applicable. Fiscal 1996 includes a lump sum payment of
$50,000 paid to Mr. Richard M. Fay for costs associated with relocation. Fiscal
1995 includes a lump sum payment and gross up of taxes on moving expenses
totaling $209,408 paid to Mr. Richard T. Walsh. For the years presented,
excluding Mr. Richard M. Fay in 1996 and Mr. Richard T. Walsh in 1995,
perquisites and other personal benefits did not exceed the lesser of $50,000 or
10% of total annual salary and bonus.
(2)For fiscal 1997, All Other Compensation includes AMC's contributions
under AMC's 401(k)Plan and the Non-Qualified Deferred Compensation Plan, both of
which are defined contribution plans, in the aggregate amount of $4,976 for Mr.
Peter C. Brown, $5,003 for Mr. Philip M. Singleton, $4,964 for Mr. Richard T.
Walsh and $1,464 for Mr. Richard M. Fay. For fiscal 1996, All Other Compensation
includes AMC's contributions under such plans in the aggregate amount of $4,726
for Mr. Peter C. Brown, $4,686 for Mr. Philip M. Singleton and $4,620 for Mr.
Richard T. Walsh. For fiscal 1995, All Other Compensation includes AMC's
contributions to such plans in the amount of $4,657 for Mr. Peter C. Brown,
$4,663 for Mr. Philip M. Singleton and $4,786 for Mr. Richard T. Walsh. In
addition, moving expense for Mr. Richard T. Walsh is included in the amount of
$58,678.
*As of April 3, 1997, the Named Executive Officers held performance share
awards under the Company's 1994 Stock Option and Incentive Plan entitling them
to receive shares of the Company's Common Stock at the end of a performance
period upon satisfaction of performance goals. See "Long-Term Incentive Plan."
The number of shares issuable to each such person (and the
10
<PAGE>
value of such shares as of April 3, 1997) under awards in effect as of April 3,
1997, upon attainment of threshold, target and maximum performance goals is as
follows: Threshold -- Mr. Stanley H. Durwood -- 30,000 shares ($596,250); Mr.
Peter C. Brown -- 6,000 shares ($119,250); Mr. Philip M. Singleton -- 6,000
shares ($119,250); Mr. Richard T. Walsh -- 3,000 shares ($59,625); and Mr.
Richard M. Fay -- 2,000 shares ($39,750); Target -- Mr. Stanley H. Durwood --
45,000 shares ($894,375); Mr. Peter C. Brown -- 9,000 shares ($178,875); Mr.
Philip M. Singleton -- 9,000 shares ($178,875); Mr. Richard T. Walsh -- 4,500
shares ($89,438) and Mr. Richard M. Fay -- 3,000 shares ($59,625); Maximum --
Mr. Stanley H. Durwood -- 90,000 shares ($1,788,750); Mr. Peter C. Brown --
18,000 shares ($357,750); Mr. Philip M. Singleton -- 18,000 shares ($357,750);
Mr. Richard T. Walsh -- 9,000 shares ($178,875); and Mr. Richard M. Fay -- 6,000
shares ($119,250).
OPTION GRANTS
The following table provides certain information concerning individual
grants of stock options made during the last completed fiscal year under the AMC
Entertainment Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan")
to each of the Named Executive Officers.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS/SARS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(2)
OPTIONS/SARS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ------------------------ ------------- --------------- ----------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Stanley H. Durwood...... 42,500 41.16% $ 24.500 04/02/06 $ 654,837 $1,659,484
22,500 21.79% 26.375 05/15/06 373,208 945,788
Peter C. Brown.......... 4,500 4.36% 26.375 05/15/06 74,642 189,158
Philip M. Singleton..... 4,500 4.36% 26.375 05/15/06 74,642 189,158
Richard T. Walsh........ 2,250 2.18% 26.375 05/15/06 37,321 94,579
Richard M. Fay.......... 2,250 2.18% 18.500 11/07/06 26,178 66,340
</TABLE>
- -------------------
(1)The stock options granted during the fiscal year ended April 3, 1997 are
eligible for exercise based upon a vesting schedule. After the first anniversary
of the grant date, 50% of the options will be eligible for exercise. After the
second anniversary of the grant date, all options are fully vested. Vesting of
options will accelerate upon the optionee's death, disability or retirement, or
upon the optionee's termination of employment within one year after the
occurrence of certain
change in control events. The Compensation Committee of the Company's Board of
Directors may permit accelerated exercise of options if certain extraordinary
events occur, such as a merger or liquidation of the Company, the sale of
substantially all of the assets of the Company, a subsidiary or a division, or a
change in control of the Company. With the consent of the Compensation
Committee, optionees may satisfy tax withholding obligations by electing to have
shares otherwise issuable upon exercise of an option withheld.
11
<PAGE>
(2)These columns show the hypothetical gains of "option spreads" of the
outstanding options granted based on assumed annual compound stock appreciation
rates of five percent and ten percent over the options' terms. The five percent
and ten percent assumed rates of appreciation are mandated by the rules of the
Securities and Exchange Commission (the "SEC") and do not represent the
Company's estimate or projections of the future prices of the Company's Common
Stock.
OPTION EXERCISES AND HOLDINGS
The following table provides information with respect to the Named Executive
Officers concerning the exercise of options during the last fiscal year and
unexercised options held as of April 3, 1997.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
IN-THE-MONEY OPTIONS/
OPTIONS/SARS AT FY- END(#) SARS AT FY-END($)(1)
SHARES ACQUIRED VALUE -------------------------- ------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE PRICE EXERCISABLE UNEXERCISABLE
- ------------------ --------------- ------------- ----------- ------------- --------- ---------- ------------
(SHARES)
<S> <C> <C> <C> <C> <C> <C> <C>
Stanley H.
Durwood........... -- -- -- 22,500 $ 26.375 $ -- $ --
21,250 21,250 24.500 -- --
22,500 -- 11.750 182,813 --
Peter C. Brown.... -- -- -- 4,500 26.375 -- --
4,500 -- 11.750 36,563 --
112,500 37,500 9.250 1,195,313 398,438
Philip M.
Singleton......... -- -- -- 4,500 26.375 -- --
4,500 -- 11.750 36,563 --
112,500 37,500 9.250 1,195,313 398,438
Richard T.
Walsh............. -- -- -- 2,250 26.375 -- --
1,125 1,125 14.500 6,047 6,047
22,500 7,500 9.375 236,250 78,750
Richard M. Fay.... -- -- -- 2,250 18.500 -- 3,094
</TABLE>
- -------------------
(1) Values for "in-the-money" outstanding options represent the positive spread
between the respective exercise prices of the outstanding options and the
value of the Company's Common Stock as of April 3, 1997.
LONG-TERM INCENTIVE PLAN
The following table provides certain information concerning shares
("Performance Shares") issuable at the end of a performance period ending April
2, 1998 (the "Performance Period") at
12
<PAGE>
Threshold, Target and Maximum levels of performance under performance stock
awards approved by the Compensation Committee during the last completed fiscal
year for each of the Named Executive Officers.
LONG-TERM INCENTIVE PLANS-AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF (1) PERFORMANCE OR ESTIMATED FUTURE PAYOUT UNDER
SHARES, UNITS OTHER PERIOD NON-STOCK PRICE-BASED PLANS
OR OTHER UNTIL MATURATION ---------------------------------------------
NAME RIGHTS(#) OR PAYOUT THRESHOLD(#) TARGET(#) MAXIMUM(#)
- ---------------------- --------------- ----------------- --------------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Stanley H. Durwood.... -- -- -- -- --
Peter C. Brown........ -- -- -- -- --
Philip M. Singleton... -- -- -- -- --
Richard T. Walsh...... -- -- -- -- --
Richard M. Fay........ 6,000 2 years 2,000 3,000 6,000
</TABLE>
- -------------------
(1)Maximum number of shares issuable under awards made during the fiscal
year.
A participant's eligibility to receive up to one-half of the maximum number
of Performance Shares issuable under an award is based upon changes in the
"private market value per share" of the Company's Common Stock ("PMVPS") over
the Performance Period. PMVPS is determined on a fully diluted basis (assuming
exercise of all outstanding shares of the Company's $1.75 Cumulative Convertible
Preferred Stock, the Company's Class B stock, options and other rights to
acquire shares of the Company's Common Stock), based on a multiple of theatre
EBITDA (theatre EBITDA is consolidated EBITDA less National Cinema Network, Inc.
EBITDA), plus the book value of National Cinema Network, Inc., plus cash and
equivalents, investments and investments in other long-term assets, less
corporate borrowings, capital lease obligations and the carrying value of
minority interests. EBITDA is earnings before interest, taxes, depreciation and
amortization. National Cinema Network, Inc. is a subsidiary of the Company.
A participant's eligibility to receive up to the remaining one-half of the
maximum number of Performance Shares issuable under an award is based upon
changes in "total return to stockholders" ("TRS"), which is measured by
increases in the market value of an investment in shares of Common Stock of the
Company, assuming reinvestment of any dividends received.
PMVPS and TRS are referred to individually and collectively herein as
"Performance Criterion" and "Performance Criteria," respectively.
Such Performance Criteria will be measured against changes in the Standard
and Poor's 500 Index ("S&P 500") over the Performance Period. Required
achievement levels over the Performance Period for both PMVPS and TRS are as set
forth below:
Maximum: 2,000 basis points higher than the percentage change in the S&P
500 over the Performance Period;
Target: 750 basis points higher than the percentage change in the S&P
500 over the Performance Period;
13
<PAGE>
Threshold: No difference between the percentage change in the S&P 500 and
the percentage change in the Performance Criterion over the Performance Period.
Generally, no shares will be issued with respect to performance over the
Performance Period as measured by a Performance Criterion if such performance
does not at least meet the Threshold achievement level over the Performance
Period. If performance as so measured by a Performance Criterion falls between
the Threshold and Target achievement levels, the number of Performance Shares
issuable under an Award with respect to that Performance Criterion will be
determined to the nearest whole number of shares, so that the actual Award will
be at the same percentage between the Threshold and Target award levels as the
actual achievement level falls between the Threshold and Target achievement
levels. Similarly, if performance falls between Target and Maximum achievement
levels, the number of Performance Shares will be determined to the nearest whole
number of shares, so that the actual award will be at the same percentage
between the Target and Maximum award levels as the actual achievement level
falls between the Target and Maximum levels. In no event will the number of
Performance Shares issuable under an award with respect to a Performance
Criterion exceed the number of Performance Shares issuable upon attaining the
Maximum achievement level over the Performance Period with respect to such
Performance Criterion.
The right to receive Performance Shares will be accelerated and such
Performance Shares issued, based on the achievement levels of the Performance
Criteria measured to the date of termination, in the event of a participant's
death, disability or retirement, or termination of employment within one year
after the occurrence of certain change of control events. The Compensation
Committee of the Board of Directors of the Company may waive performance goals
if certain extraordinary events occur, such as a merger or liquidation of the
Company, the sale of substantially all of the assets of the Company, a
subsidiary or a division, or a change in control of the Company.
With the consent of the Compensation Committee, a Grantee may satisfy his
tax withholding obligations by electing to have Performance Shares otherwise
issuable withheld.
Until Performance Shares are issued, participants have no dividend or voting
rights with respect to Performance Shares.
DEFINED BENEFIT RETIREMENT AND SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS
AMC sponsors a defined benefit retirement plan (the "Retirement Plan") which
provides benefits to certain employees of AMC and its subsidiaries based upon
years of credited service and the highest consecutive five-year average annual
remuneration for each participant. For purposes of calculating benefits, average
annual compensation is limited by Section 401(a)(17) of the Internal Revenue
Code, and is based upon wages, salaries and other amounts paid to the employee
for personal services, excluding certain special compensation. A participant
earns a vested right to an accrued benefit under the Retirement Plan upon
completion of five years of vesting service.
AMC also sponsors a Supplemental Executive Retirement Plan to provide the
same level of retirement benefits that would have been provided under the
Retirement Plan had the federal tax law not been changed in the Omnibus Budget
Reconciliation Act of 1993, which reduced the amount of compensation which can
be taken into account in a qualified retirement plan from $235,840 (in 1993)
(the "Old Limit"), to $160,000 (in 1997).
14
<PAGE>
The following table shows the total estimated annual pension benefits
(without regard to minimum benefits) payable to a covered participant under
AMC's Retirement Plan and the Supplemental Executive Retirement Plan, assuming
retirement in calendar 1997 at age 65 payable in the form of a single life
annuity. The benefits are not subject to any deduction for Social Security or
other offset amounts. The following table assumes the Old Limit would have been
increased to $260,000 in 1997.
<TABLE>
<CAPTION>
HIGHEST CONSECUTIVE YEARS OF CREDITED SERVICE
FIVE-YEAR AVERAGE -----------------------------------------------------
ANNUAL COMPENSATION 15 20 25 30 35
- -------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000.................................... $ 17,716 $ 23,621 $ 29,527 $ 35,432 $ 41,337
$150,000.................................... $ 21,466 $ 28,621 $ 35,777 $ 42,932 $ 50,087
$175,000.................................... $ 25,216 $ 33,621 $ 42,027 $ 50,432 $ 58,837
$200,000.................................... $ 28,966 $ 38,621 $ 48,277 $ 57,932 $ 67,587
$225,000.................................... $ 32,716 $ 43,621 $ 54,527 $ 65,432 $ 76,337
$260,000.................................... $ 37,966 $ 50,621 $ 63,277 $ 75,932 $ 88,587
</TABLE>
As of April 3, 1997, the years of credited service under the Retirement Plan
for each of the Named Executive Officers were: Mr. Peter C. Brown, 6 years; Mr.
Philip M. Singleton, 23 years; Mr. Richard T. Walsh, 22 years; and Mr. Richard
M. Fay, one year. The final amount distributed to Mr. Stanley H. Durwood in
fiscal 1995 from the Company's Retirement Plan was $42,067, and was not included
in the Summary Compensation Table. In addition, the benefit Mr. Stanley H.
Durwood accrued under the Supplemental Executive Retirement Plan in fiscal 1997
was $76,590 and is not included in the Summary Compensation Table.
AMC established a Retirement Enhancement Plan ("REP") with an effective date
of March 29, 1996 for the benefit of officers who from time to time may be
designated as eligible participants therein by the Board of Directors. The REP
is a non-qualified deferred compensation plan designed to provide an unfunded
retirement benefit to an eligible participant in an amount equal to (i) sixty
percent (60%) of his or her average compensation (including paid and deferred
incentive compensation) during the last three full years of employment, less
(ii) the sum of (A) such participant's benefits under the Retirement Plan and
Social Security, and (B) the amount of a straight life annuity commencing at the
participant's normal retirement date attributable to AMC's contributions under
the Supplemental Executive Retirement Plan, the 401(k) Savings Plan, the
Non-qualified Deferred Compensation Plan and the Executive Savings Plan. The
base amount in clause (i) will be reduced on a pro rata basis if the participant
completes fewer than twenty-five (25) years of service. The REP benefit vests
upon the Participant's attainment of age 55 or completion of fifteen (15) years
of service, whichever is later, and may commence to a vested participant
retiring on or after age 55 (who has participated in the plan for at least 5
years) on an actuarially reduced basis (6 2/3% for each of the first five years
by which commencement precedes age 65 and an additional 3 1/3% for each year by
which commencement precedes age 60). Benefits commence at a participant's normal
retirement date (i.e., the later of age 65 or the participant's completion of
five years of service with AMC) whether or not the participant continues to be
employed by AMC. The accrued benefit payable upon total and permanent disability
is not reduced by reason of early commencement. Participants become fully vested
in their rights under the REP if their employment is terminated without cause or
as a result of a change in control, as defined in the REP. No death, disability
or retirement benefit is payable prior to a participant's early retirement date
or prior to the date any severance payments to which the participant is entitled
cease.
15
<PAGE>
Presently, Mr. Stanley H. Durwood, Mr. Peter C. Brown and Mr. Philip M.
Singleton have been designated as eligible to participate in the REP. The amount
paid to Mr. Stanley H. Durwood with respect to fiscal 1997 under the REP was
$345,000. The estimated annual amounts that Mr. Brown and Mr. Singleton will be
eligible to receive under the REP at age 65 are $207,000 and $199,000,
respectively; such amounts are based on certain assumptions respecting their
future compensation amounts and the amounts of AMC contributions under other
plans. Actual amounts received by such individuals under the REP may be
different than those estimated.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS
Mr. Stanley H. Durwood has an employment agreement with the Company and AMC
dated January 26, 1996 retaining him as Chairman and Chief Executive Officer and
President. It provides for an annual base salary of no less than $500,000, plus
payments and awards under the Company's Executive Incentive Program ("EIP"), the
Incentive Plan and other bonus plans in effect for Executive Officers at a level
reflecting his position, plus such other amounts as may be paid under any other
compensatory arrangement as determined in the sole discretion of the
Compensation Committee. Mr. Durwood's current annual base salary is $540,000.
The Company has also agreed to use its best efforts to provide Mr. Durwood up to
$5,000,000 in life insurance and to pay the premiums thereon and taxes resulting
from such payment. Mr. Durwood's employment agreement has a term of three years
and is automatically extended one year on its anniversary date, January 26, so
that as of such date each year the agreement has a three-year term. The
employment agreement is terminable without severance if he engages in
intentional misconduct or a knowing violation of law or breaches his duty of
loyalty to the Company. The agreement also is terminable (i) by Mr. Durwood, in
the event of the Company's breach, and (ii) by the Company, without cause or in
the event of Mr. Durwood's death or disability, in each case with severance
payments equal to three times the sum of his annual base salary in effect at the
time of termination plus the average of annual incentive or discretionary cash
bonuses paid during the three fiscal years preceding the year of termination.
The Company may elect to pay such severance payments in monthly installments
over a period of three years or in a lump sum after discounting such amount to
its then present value. The aggregate amount payable under this employment
agreement, assuming termination with severance occurred as of October 2, 1997,
was approximately $1,763,000.
Messrs. Peter C. Brown and Philip M. Singleton each have employment
agreements with AMC dated September 26, 1994, providing for annual base salaries
of no less than $227,000 and $266,000, respectively, and bonuses resulting from
the EIP or other bonus arrangement, if any, as determined from time to time at
the sole discretion of the Compensation Committee upon the recommendation of the
Chairman of the Board. The current annual base salaries of Messrs. Brown and
Singleton are $293,000 and $312,000, respectively. Each employment agreement has
a term of two years. On each September 27, commencing in 1995, one year shall be
added to the term of each employment agreement, so that each employment
agreement shall always have a two-year term as of each anniversary date. Each
employment agreement terminates without severance upon such employee's
resignation, death or his disability as defined in his employment agreement, or
upon AMC's good faith determination that such employee has been dishonest or has
committed a breach of trust respecting AMC. AMC may terminate each employment
agreement at any time, with severance payments in an amount equal to twice the
annual base salary of such employee on the date of termination. Each employee
may terminate his
16
<PAGE>
employment agreement if Mr. Stanley H. Durwood shall fail to control AMC as
defined in the employment agreement and receive severance payments in an amount
equal to twice his annual base salary on the date of termination. AMC may elect
to pay any severance payments in a lump sum after discounting such amount to its
then present value, or over a two-year period. The aggregate value of all
severance benefits to be paid to such employee shall not exceed 299% of such
employee's "base amount" as defined in the Internal Revenue Code for the
five-year period immediately preceding the date of termination. The aggregate
amount payable under these employment agreements, assuming termination by reason
of a change of control and payment in a lump sum as of October 2, 1997, was
approximately $1,110,000.
Mr. Richard M. Fay has an employment agreement with AMC dated April 16,
1996, which provides for an annual base salary of $275,000 and, in the first
year of the employment agreement, an additional $50,000 for costs associated
with relocation. Mr. Fay's current annual base salary is $280,000. Mr. Fay is
also eligible to receive payments resulting from the EIP or other bonus
arrangement, if any, as determined from time to time in the sole discretion of
the Compensation Committee of the Board of Directors of AMC upon the
recommendation of the Chief Executive Officer of AMC. The employment agreement
has a term of three years, from September 8, 1995 through September 7, 1998. The
employment agreement terminates without severance upon Mr. Fay's resignation,
death or disability as defined in his employment agreement, or upon AMC's good
faith determination that Mr. Fay has been dishonest or has committed a breach of
trust respecting AMC. AMC may terminate the employment agreement at any time,
with severance payments in an amount equal to, at AMC's option, either (i) Mr.
Fay's base salary per month in effect at the time of termination, payable over
the remaining term of his employment, or (ii) the net present value of the
monthly payments described in (i) above, payable within 30 days of the date of
termination. Any severance payable to Mr. Fay shall be reduced by any wages,
compensation or income, cash or otherwise, received by Mr. Fay from sources
other than AMC during the remaining term of his employment agreement following
the date of termination. The aggregate amount payable under this employment
agreement, assuming termination with severance occurred as of October 2, 1997,
was approximately $246,000.
As permitted by the Incentive Plan, stock options and Performance Share
awards granted to participants thereunder provide for acceleration upon the
termination of employment within one year after the occurrence of certain change
in control events, whether such termination is voluntary or involuntary, or with
or without cause. See "Option Grants" and "Long-Term Incentive Plans." In
addition, the Compensation Committee may permit acceleration upon the occurrence
of certain extraordinary transactions which may not constitute a change of
control.
AMC maintains a severance pay plan for full-time salaried nonbargaining
employees with at least 90 days of service. For an eligible employee who is
subject to the Fair Labor Standards Act ("FLSA") overtime pay requirements (a
"nonexempt eligible employee"), the plan provides for severance pay in the case
of involuntary termination of employment due to layoff of the greater of two
weeks' basic pay or one week's basic pay multiplied by the employee's full years
of service up to no more than twelve weeks' basic pay. There is no severance pay
for a voluntary termination, unless up to two weeks' pay is authorized in lieu
of notice. There is no severance pay for an involuntary termination due to an
employee's misconduct. Only two weeks' severance pay is paid for an involuntary
termination due to substandard performance. For an eligible employee who is
exempt from the FLSA overtime pay requirements, severance pay is discretionary
(at the Department Head/Supervisor level), but will not be less than the amount
that would be paid to a nonexempt eligible employee.
17
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
THE REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS SHALL NOT
BE DEEMED INCORPORATED BY REFERENCE BY ANY GENERAL STATEMENT INCORPORATING BY
REFERENCE THIS PROXY STATEMENT INTO ANY FILING UNDER THE SECURITIES ACT OF 1933
OR UNDER THE SECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THAT THE
COMPANY SPECIFICALLY INCORPORATES THIS INFORMATION BY REFERENCE, AND SHALL NOT
OTHERWISE BE DEEMED FILED UNDER SUCH ACTS.
The Compensation Committee of the Boards of Directors of the Company and AMC
(the "Committee") is composed of three independent non-employee directors. The
Committee is responsible for developing the executive compensation strategy of
the Company and its subsidiaries and monitoring its implementation. In carrying
out its responsibilities, the Committee, among other things, reviews the
policies of comparable companies and consults with an independent compensation
consulting firm.
The following is a summary of the Committee's activities through the fiscal
year ended April 3, 1997.
COMPENSATION POLICY. The Company's executive compensation policy has five
overall objectives:
- To align the interests of Executive Officers and employees with those of
the Company and its stockholders.
- To link compensation to the performance of the Company as well as to the
individual contribution of each Executive Officer.
- To maintain total direct compensation (salary plus annual incentive plus
equity based compensation), when performance is at target levels, at rates
that are at the third quartile of the total direct compensation market for
comparable companies. Because of the relatively small number of motion
picture exhibition companies, this comparison has included companies
engaged in other businesses.
- To increase the alignment of the interests of executives and employees
with stockholder interests by providing a compensation package for
executives and employees that includes an appropriate portion of equity
based compensation. See "Stock Incentives."
- To compensate executives at a level which is competitive in the
marketplace so that the Company can continue to attract, motivate and retain
executives with outstanding abilities.
ANNUAL BASE SALARY. The annual base salary of the Company's Executive
Officers was reviewed and approved by the Committee. Annual base salaries for
the Company's Executive Officers are determined with reference to a "position
rate" for each of the Executive Officers. The position rate is determined by
evaluating the responsibilities of the position and comparing it with that of
similar positions in comparable companies as well as companies generally.
For fiscal 1997, the Committee approved percentage increases in annual base
salary for the top five most highly compensated Executive Officers that averaged
2.2%. The Committee approved percentage increases in annual base salary for
Executive Officers of 2.7% in the aggregate. The increases in annual base
salaries for Executive Officers were modest merit increases in keeping with the
Committee's policy.
ANNUAL INCENTIVE CASH BONUS. The Committee approved an Executive Incentive
Program (the "EIP") in fiscal 1994 as an incentive for executives to improve the
financial success of the
18
<PAGE>
Company. Eligible employees, including Executive Officers, are rewarded with
annual incentive cash bonuses if certain performance criteria are met and/or
exceeded. For fiscal 1997, the Committee determined that the performance
criteria for the annual incentive cash bonus would be based upon a combination
of three components; i.e., company, division and personal components, if
relevant to the participant. For fiscal 1997, the company component was based
upon achievement of an EBITDA (earnings before interest, taxes, depreciation and
amortization) target. The division component, which applies to division and film
office participants, was based upon achievement of a Division Operating Income
("DOI") target. DOI was defined as operating income less general and
administrative expenses and extraordinary expenses.
The Company attained only the threshold level of its established EBITDA
target in fiscal 1997. The three division and film office participants achieved
performance goals between the threshold and target levels of attainment, but no
participant group achieved the established EBITDA target in fiscal 1997.
According to the terms of the EIP, participants in the plan were only eligible
for a personal portion of the annual incentive cash bonus based on a percentage
of their annual base salary. Division and film office participants earned a pro
rated portion of their annual incentive cash bonuses, based on the particular
division or film office attainment, along with their personal portion of the
annual incentive cash bonus. The Committee reviewed and approved annual cash
incentive bonuses for Executive Officers, except Mr. Stanley H. Durwood, whose
bonus did not have a personal component, reflecting the threshold attainment
levels of the performance criteria relating to the company component (i.e., only
the personal portion) and the appropriate level of award for the division and
film office participants (i.e., personal portion plus division or film office
achievement).
STOCK INCENTIVES. At the Company's Annual Meeting of Stockholders held on
November 10, 1994, the Company's stockholders approved the AMC Entertainment
Inc. 1994 Stock Option and Incentive Plan (the "Incentive Plan"). Subsequently,
certain amendments to the Incentive Plan were approved by the stockholders.
Consistent with the Committee's policy of aligning the interests of its
executives with those of the stockholders, the Committee intends to use the
Incentive Plan to incorporate equity based awards into the ongoing compensation
package for executives and employees.
The Committee has made certain performance based stock awards (the
"Performance Shares") and grants of non-qualified stock options (the "Stock
Options") to certain Executive Officers and other employees. The Performance
Shares may be issuable to a participant at the end of a performance period
ending April 2, 1998. A participant's eligibility to receive the maximum number
of Performance Shares issuable under an award is based one-half upon increases
in "total return to stockholders" ("TRS") and one-half upon increases in the
"private market value per share" ("PMVPS"). The amount of the award is based, in
each case, on the extent to which increases in TRS or PMVPS exceed the increases
over the performance period in the Standard and Poor's 500 Index. See "Long-Term
Incentive Plan."
In addition, annual Stock Options will be granted, if annual performance
measurement thresholds are met, at the end of each fiscal year for a three-year
period. A participant's eligibility to be granted the maximum number of Stock
Options attainable is also based one-half upon increases in TRS and one-half
upon increases in PMVPS. The amount of the grant is based, in each case, on the
extent to which increases in TRS or PMVPS exceed the increases over the same
time period in the Standard and Poor's 500 Index. For fiscal 1997, participants
in the Incentive Plan earned no Stock Options attainable based upon the TRS
measurement and earned no Stock Options based upon the PMVPS measurement,
resulting in no grants to participants.
19
<PAGE>
CEO COMPENSATION. Mr. Stanley H. Durwood's fiscal 1997 annual base salary
was reviewed and approved by the Committee. See "Annual Base Salary." Mr.
Durwood received, at the beginning of fiscal 1997, a 2% increase in annual base
salary as a merit increase primarily based upon the Company's excellent
performance in fiscal 1996. Mr. Durwood received no annual incentive cash bonus
for fiscal 1997 because the Company attained only its threshold level of EBITDA
target under its performance goals. Mr. Durwood did not receive a personal
portion of the annual incentive cash bonus because his bonuses are based solely
on Company performance and do not have a personal performance component.
The Company established a Retirement Enhancement Plan (the "REP") with an
effective date of March 29, 1996 and designated Mr. Stanley H. Durwood and other
Executive Officers as participants in the REP. See "Defined Benefit Retirement
and Supplemental Executive Retirement Plans." Because Mr. Stanley H. Durwood's
participation requirements have been met, Mr. Durwood was paid $345,000 in
fiscal 1997 with the Committee's approval.
Mr. Stanley H. Durwood was granted no Stock Options as a participant in the
Incentive Plan during fiscal 1997. Pursuant to amendments to the Incentive Plan
approved by the Company's stockholders on November 14, 1996, the Committee
intends to introduce a performance based deferred compensation program under the
Incentive Plan in fiscal 1998 utilizing Performance Units. The Committee
presently intends that Mr. Stanley H. Durwood and other Executive Officers will
be participants in the performance based deferred compensation program.
IMPACT OF INTERNAL REVENUE CODE SECTION 162(M). During 1993, Section 162 of
the Internal Revenue Code of 1986, as amended (the "Code") was amended with
respect to the tax deductibility of executive compensation. Under the Code,
publicly-held companies such as the Company may not deduct compensation paid to
certain Executive Officers to the extent that an executive's compensation
exceeds $1,000,000 in any one year, unless such compensation is "performance
based." Although the Committee has attempted to design the Company's executive
compensation programs so that compensation received pursuant to the compensation
programs will be deductible under Section 162(m) of the Code, in certain
circumstances, it may not be possible or practicable or in the Company's best
interests to so qualify compensation programs. In any event, the Committee
anticipates that, in most instances, treatment under Section 162(m) of the Code
will not be an issue because generally no Executive Officer's non-performance
based compensation will exceed $1,000,000 in any one year.
COMPENSATION COMMITTEE
Charles J. Egan, Jr.
William T. Grant, II
John P. Mascotte
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Executive Committee recommended to the Compensation Committee for its
review and approval the annual base salaries and the personal portion of the
annual incentive cash bonuses of Executive Officers other than the Named
Executive Officers. The members of the Executive Committee were Messrs. Stanley
H. Durwood, Peter C. Brown and Philip M. Singleton.
20
<PAGE>
Mr Paul E. Vardeman, a member of the Compensation Committee until November
14, 1996, is a director, officer and shareholder of Polsinelli, White, Vardeman
& Shalton, P.C. During the last fiscal year, a subsidiary of AMC retained
Polsinelli, White, Vardeman & Shalton, P.C. to provide certain legal services.
STOCK PERFORMANCE GRAPH
THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED INCORPORATED BY REFERENCE BY
ANY GENERAL STATEMENT INCORPORATING BY REFERENCE THIS PROXY STATEMENT INTO ANY
FILING UNDER THE SECURITIES ACT OF 1933 OR UNDER THE SECURITIES EXCHANGE ACT OF
1934, EXCEPT TO THE EXTENT THAT THE COMPANY SPECIFICALLY INCORPORATES THIS
INFORMATION BY REFERENCE, AND SHALL NOT OTHERWISE BE DEEMED FILED UNDER SUCH
ACTS.
The following line graph compares the yearly percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return on the Standard and Poor's Corporation Composite 500
Index, along the lines representing two groups (the "peer group" and "former
peer group") of companies primarily engaged in the motion picture exhibition
industry, for the period of five fiscal years commencing April 2, 1992 and
ending April 3, 1997. The comparison assumes $100 was invested on April 2, 1992
in the Company's Common Stock and in each of the foregoing indices, and further
assumes the reinvestment of dividends.
The peer group companies include Carmike Cinemas, Inc., Cineplex Odeon
Corporation, GC Companies, Inc. and Regal Cinemas, Inc. The Company believes
that its addition of Regal Cinemas, Inc. to its peer group for fiscal 1997
better represents the universe of publicly held companies primarily engaged
nationwide in the motion picture exhibition industry.
Set forth below are four lines as follows: (i) the Company's Common Stock
performance for the past five fiscal years; (ii) the Standard and Poor's
Corporation Composite 500 Index performance for the past five fiscal years;
(iii) the "former peer group" performance (this group includes Carmike Cinemas,
Inc. and Cineplex Odeon Corporation for five years and GC Companies, Inc.'s
performance since its spin off from Harcourt General, Inc. in December 1993) for
the past five fiscal years; and (iv) the "peer group," which is the "former peer
group" plus Regal Cinemas, Inc. since July 1993 (the initial trading date of
Regal Cinemas, Inc's Common Stock), for the past five fiscal years.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AMC S&P 500 PEER GROUP FORMER PEER GROUP
<S> <C> <C> <C> <C>
1992 $100 $100 $100 $100
1993 $194 $116 $66 $66
1994 $261 $118 $115 $106
1995 $292 $136 $115 $96
1996 $593 $181 $164 $96
1997 $489 $214 $183 $107
</TABLE>
21
<PAGE>
LEGAL PROCEEDINGS
The following paragraphs summarize significant litigation and proceedings to
which the Company is a party.
IN RE: AMC SHAREHOLDER DERIVATIVE LITIGATION, CHANCERY COURT FOR NEW CASTLE
COUNTY, DELAWARE (CIVIL ACTION NO. 12855). On February 15, 1995, the court
ordered the consolidation of two derivative actions filed against four directors
of the Company, Messrs. Stanley H. Durwood, Edward D. Durwood, Paul E. Vardeman
and Charles J. Egan, Jr., and one of its former directors, Mr. Phillip Ean
Cohen. The two cases were originally filed on January 27, 1993, by Mr. Scott C.
Wallace and on April 16, 1993, by Mr. James M. Bird, respectively. On December
8, 1994, the court, pursuant to a stipulation by the parties, entered an order
approving Mr. Wallace's withdrawal as a derivative plaintiff, granting the
motion for intervention filed by Mr. Philip J. Bogosian, Auginco, Mr. Norman M.
Werther and Ms. Ellen K. Werther, and authorizing the filing of the intervenors'
complaint. The intervenors' complaint included substantially the same
allegations as the Wallace and Bird complaints. The two actions, as
consolidated, are referred to below as the "Derivative Action."
In the Derivative Action, plaintiffs alleged breach of fiduciary duties of
care, loyalty and candor, mismanagement, constructive fraud and waste of assets
in connection with, among other allegations, the provision of film licensing,
accounting and financial services by American Associated Enterprises ("AAE"), a
partnership beneficially owned by Mr. Stanley H. Durwood and members of his
family, to the Company, certain other transactions with affiliates of the
Company, termination payments to a former officer of the Company, certain
transactions between the Company and National Cinema Supply Corporation, and a
fee paid by a subsidiary of the Company to Mr. Cohen in connection with a
transaction between the Company and TPI Entertainment, Inc. The Derivative
Action sought unspecified money damages and equitable relief and costs,
including reasonable attorney's fees.
On October 10, 1996, counsel for the parties in the Derivative Action
entered into a Stipulation and Agreement of Compromise and Settlement (the
"Settlement Agreement") providing for, among other things (i) the dissolution of
AAE, the merger of Durwood, Inc. ("DI") into the Company (the "Merger") and the
sale, within 12 months thereafter, of 3,000,000 shares of Company Common Stock
by Mr. Stanley H. Durwood and his children (the "Durwood Family Stockholders")
in a public underwritten secondary offering (the "Secondary Offering") (which
will only be made by means of a prospectus), (ii) the payment by certain of the
defendants of an aggregate of approximately $1.3 million to persons who were
holders of Company Common Stock on January 2, 1996 (other than the defendants,
DI or the Durwood Family Stockholders), (iii) the nomination, for three annual
meetings, of two additional outside directors (initially, Messrs. William T.
Grant, II and John P. Mascotte (collectively, with their replacements, if any,
the "New Independent Directors")) to serve on the Company's Board of Directors,
which persons, to be nominated, must be serving on the board of another public
company or be a member of senior management of a publicly held company or a
privately held company with $50 million in annual revenues, (iv) that Messrs.
Stanley H. Durwood and Edward D. Durwood will cause the other Durwood Family
Stockholders to vote their shares with respect to the election and reelection of
the New Independent Directors in the same proportion as votes cast by all
stockholders not affiliated with the Company, its directors and officers, (v)
that the New Independent Directors will have the ability to approve or
disapprove (a) any proposed transaction between the Company and any of the
Durwood Family Stockholders, except with respect to compensation issues relating
to Mr. Stanley
22
<PAGE>
H. Durwood or any other Durwood Family Stockholder who is an officer of the
Company, which are to be governed by existing Company Board procedures, and (b)
the hiring and compensation of any person related to Mr. Stanley H. Durwood who
is not an officer of the Company, and (vi) that the New Independent Directors,
together with either Mr. Egan or Mr. Vardeman, are to have the ability to
approve or disapprove all other related-party transactions with all officers,
directors and ten percent stockholders of the Company. The Settlement Agreement
also provides for the discharge and release of all claims against the
defendants, the Durwood Family Stockholders and the Company relating to such
transactions, the proposed settlement, the Merger, the Secondary Offering and
indemnification of defendants for their expenses, except claims for fraud,
misrepresentation or omissions in connection with the Secondary Offering and
claims relating to the implementation of the settlement.
The Settlement Agreement provides that the Company will pay the cost of
providing notice of the settlement to its stockholders and for the fees of the
settlement administrator who will be responsible for distributing the settlement
amount to eligible stockholders.
The Settlement Agreement was approved by the Court of Chancery on October
16, 1997. Absent an appeal from the Court of Chancery, the settlement will
become final on or about November 17, 1997.
23
<PAGE>
SECURITY OWNERSHIP OF BENEFICIAL OWNERS
The following table sets forth certain information as of October 2, 1997,
with respect to beneficial owners of five percent or more of any class of the
Company's voting securities:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF BENEFICIAL BENEFICIALLY PERCENT OF
TITLE OF CLASS OWNER OWNED CLASS
- -------------------------- ----------------------------------- ----------------- -----------
<S> <C> <C> <C>
Common Stock Carol D. Journagan(1) 1,461,203 10.9%
1323 Granite Creek Drive
Blue Springs, MO 64015
Edward D. Durwood(1) 1,461,203 10.9%
3001 West 68th Street
Shawnee Mission, KS 66208
Thomas A. Durwood(1)(3) 1,461,203 10.9%
P.O. Box 7208
Rancho Santa Fe, CA 92067
Elissa D. Grodin(1) 1,461,203 10.9%
187 Chestnut Hill Road
Wilton, CT 06897
Brian H. Durwood(1) 1,461,203 10.9%
15840 SW Breccia
Beaverton, OR 97007
Peter J. Durwood(1) 1,461,203 10.9%
666 West End Avenue
New York, NY 10025
Class B Stock Stanley H. Durwood(2) 5,015,657 100.0%
106 West 14th Street
Kansas City, MO 64105
</TABLE>
- -------------------
(1)Each of Mrs. Carol D. Journagan, Mr. Edward D. Durwood, Mr. Thomas A.
Durwood, Mrs. Elissa D. Grodin, Mr. Brian H. Durwood and Mr. Peter J. Durwood
(together, the "Durwood Children" or "Durwood Child") beneficially own 1,461,203
shares of the Company's Common Stock. Except as noted below in this Note, in
Note (3) and under "Certain Transactions -- The Merger -- The Stock Agreement,"
each Durwood Child is believed to have sole voting and investment power with
respect to such shares.
Pursuant to the terms of an Escrow Agreement dated August 15, 1997, by and
among the Durwood Family Stockholders and Mercantile Bank of Kansas City (the
"Escrow Agreement"), the Durwood Family Stockholders have agreed to deposit in
escrow 3,000,000 shares of stock (500,000 shares by Mr. Stanley H. Durwood and
416,667 shares by each of the Durwood Children) that will be offered by them in
the Secondary Offering. A majority of the individual parties may cause the
shares held in escrow to be delivered to the managing underwriters in connection
with the Secondary Offering. As a result, each of the Durwood Children may be
deemed to share investment power over the 500,000 shares of the Company's Class
B Stock held under the Escrow Agreement that are owned of record by Mr. Stanley
H. Durwood as well as the shares held
24
<PAGE>
thereunder that are owned of record by the other Durwood Children. Each of the
Durwood Children has disclaimed any beneficial ownership of any shares of the
Company's Class B Stock held under the Escrow Agreement that are owned of record
by Mr. Stanley H. Durwood. In addition, each of the Durwood Children has
disclaimed any beneficial ownership of any shares held under the Escrow
Agreement that are owned of record by the other Durwood Children.
For a period for three years after the Merger, the Durwood Children have
agreed to give an irrevocable proxy to the Secretary and each Assistant
Secretary of the Company to vote their shares of Common Stock in the election of
directors for each candidate in the same proportionate manner as the aggregate
votes cast in such elections by other holders of Common Stock not affiliated
with the Company, its directors and officers. See "Certain Transactions -- The
Merger -- The Stock Agreement."
(2)Mr. Stanley H. Durwood beneficially owns 150 shares of the Company's
Common Stock and options that are presently exercisable to acquire 55,000 shares
of the Company's Common Stock, over which he has sole voting and investment
power, which constitute less than 1% of the outstanding shares of such class.
Mr. Stanley H. Durwood also beneficially owns 5,015,657 shares of the Company's
Class B Stock, which constitute 100% of the oustanding shares of such class. Mr.
Stanley H. Durwood has sole voting power over all of these shares of the
Company's Class B Stock and sole investment power over 4,515,657 of these
shares. As described above, Mr. Stanley H. Durwood may be deemed to share
investment power over 500,000 of these shares with the Durwood Children. The
Company's Class B Stock and Common Stock presently beneficially owned by Mr.
Stanley H. Durwood represent approximately 78.9% of the voting power of the
Company's stock, other than in the election of directors. Were all the shares of
the Company's Class B stock converted into Common Stock, there would be
approximately 18,403,841 shares of the Company's Common Stock outstanding, of
which shares Mr. Stanley H. Durwood would beneficially own 5,070,657 shares
(assuming such conversion and exercise of outstanding options), or approximately
27.5% of the outstanding number of shares of Common Stock.
The Company's Class B Stock beneficially owned by Mr. Stanley H. Durwood is
held under his Revocable Trust Agreement dated April 14, 1989, as amended, and
the 1992 Durwood, Inc. Voting Trust dated December 12, 1992. The 1992 Trust is
the record owner of the shares reported as beneficially owned, and Mr. Stanley
H. Durwood is the settlor and sole acting trustee of both trusts. The named
successor trustees are Mr. Charles J. Egan, Jr., a director of the Company, and
Mr. Raymond F. Beagle, Jr., the Company's general counsel. Under the terms of
his revocable voting trust (the 1992 Trust), Mr. Stanley H. Durwood has all
voting powers with respect to shares held therein during his lifetime.
Thereafter, all voting rights with respect to such shares vest in his successor
trustees and any additional trustees whom they might appoint, who shall exercise
such rights by majority vote. Unless revoked by Mr. Stanley H. Durwood or
otherwise terminated or extended in accordance with its terms, the 1992 Trust
will terminate in 2030.
As reported in the Schedule 13Ds filed by Mr. Stanley H. Durwood and the
Durwood Children, the Durwood Family Stockholders have entered into the Durwood
Family Settlement Agreement in which Mr. Stanley H. Durwood has agreed with the
Durwood Children that if the price per share to the public of the 2.5 million
shares of Company Common Stock proposed to be sold by the Durwood Children in
the Secondary Offering is less than $18, Mr. Stanley H. Durwood will pay the
Durwood Children the difference between such sale price and $18 (net of
applicable underwriting commissions), up to $20 million in aggregate amount, in
shares of Company Common Stock, as an adjustment to the original allocation of
shares to be received by the Durwood
25
<PAGE>
Children in the Merger. Mr. Stanley H. Durwood's holdings will diminish and the
Durwood Children's holdings will increase if the Durwood Children acquire
additional shares under such share adjustment. However, based on the number of
shares of Common Stock and Class B Stock outstanding at October 2, 1997, such
adjustment should not result in Mr. Stanley H. Durwood owning shares with less
than 50% of the combined voting power of the outstanding Company stock unless
the Durwood Family Stockholders determine to proceed with a Secondary Offering
of the family's shares at a price to the public of less than approximately $7.03
per share ($8.38 assuming full conversion of the Company's outstanding $1.75
Cumulative Convertible Preferred Stock). Mr. Stanley H. Durwood's voting control
also will be diluted if he is obligated to dispose of shares to honor tax and
other indemnity obligations made to the Durwood Children and the Company in
connection with the Merger and other related transactions, or if additional
shares of Common Stock are issued under the Company's existing employee benefit
plans.
Because of the Escrow Agreement, Mr. Stanley H. Durwood may be deemed to
share investment power over the 2,500,000 shares of the Company's Common Stock
held under the Escrow Agreement that are owned by the Durwood Children. However,
Mr. Stanley H. Durwood has disclaimed any beneficial ownership of any shares of
the Company's Common Stock owned of record by the Durwood Children.
(3)Mr. Thomas A. Durwood directly owns 1,315,083 shares of the Company's
Common Stock and indirectly owns 146,120 shares of the Company's Common Stock
through The Thomas A. and Barbara F. Durwood Family Investment Partnership, a
California limited partnership. Each of Mr. Thomas A. Durwood and his wife serve
as trustees of The Thomas A. Durwood and Barbara F. Durwood Family Trust, which
is the general partner of this partnership.
BENEFICIAL OWNERSHIP OF DIRECTORS AND OFFICERS
The following table sets forth certain information as of October 2, 1997
with respect to beneficial ownership by Directors and Executive Officers of the
Company's Common Stock and Class B Stock. The amounts set forth below include
the vested portion of 500,000 shares of Common Stock subject to options under
the Company's 1983 and 1984 Stock Option Plans and the
26
<PAGE>
1994 Incentive Plan held by Executive Officers. Unless otherwise indicated, the
persons named are believed to have sole voting and investment power over the
shares shown as beneficially owned by them.
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
BENEFICIAL PERCENT OF
TITLE OF CLASS NAME OF BENEFICIAL OWNER OWNERSHIP CLASS
- ------------------------ ------------------------ ------------------------------ ------------
<S> <C> <C> <C>
Common Stock Stanley H. Durwood 55,150(1)(2) *
Peter C. Brown 156,750(2) 1.2%
Philip M. Singleton 172,750(2) 1.3%
Richard T. Walsh 33,425(2) *
William T. Grant, II 1,500 *
John P. Mascotte 2,000 *
Paul E. Vardeman 300 *
All Directors and
Executive Officers as a
group (13 persons,
including the
individuals named above) 478,918(2) 3.5%
Class B Stock Stanley H. Durwood 5,015,657(1) 100.0%
</TABLE>
- -------------------
*Less than one percent.
(1)See Notes 1 and 2 under "Security Ownership of Beneficial Owners." As
stated therein, the shares of Class B Stock beneficially owned by Mr. Stanley H.
Durwood are convertible into Common Stock on a share-for-share basis. The number
and percentage of shares of Common Stock shown as beneficially owned do not give
effect to the conversion option.
(2)Includes shares subject to presently exercisable options to purchase
Common Stock under the Company's 1983 and 1984 Stock Option Plans and the 1994
Incentive Plan, as follows: Mr. Stanley H. Durwood - 55,000 shares; Mr. Peter C.
Brown - 156,750 shares; Mr. Philip M. Singleton - 156,750 shares; Mr. Richard T.
Walsh - 33,375 shares; and all Executive Officers as a group - 457,000 shares.
COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
Executive Officers and Directors, and persons who own more than 10% of the
Company's Common Stock and $1.75 Cumulative Convertible Preferred Stock, to file
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC") and the American Stock Exchange. Executive Officers,
Directors and greater-than-10% beneficial owners are required by SEC regulations
to furnish the Company with copies of all Section 16(a) forms they file. Based
solely on a review of the copies of such forms furnished to the Company, or
written representations that no Forms 5 were required, the Company believes that
during fiscal 1997 its Executive Officers, Directors and greater-than-10%
beneficial owners complied with all Section 16(a) filing requirements applicable
to them.
27
<PAGE>
CERTAIN TRANSACTIONS
Since their formation, the Company and AMC had been members of an affiliated
group of companies (the "DI affiliated group") beneficially owned by Mr. Stanley
H. Durwood and members of his family. Mr. Stanley H. Durwood was President,
Treasurer and the sole Director of DI and is the Chairman of the Board, Chief
Executive Officer and a Director of the Company and AMC. There have been
transactions involving the Company or its subsidiaries and the DI affiliated
group prior to the Merger. The Company intends to ensure that all transactions
with related parties are fair, reasonable and in the best interests of the
Company. In that regard, the Audit Committee of the Board of Directors of the
Company reviews all material proposed transactions between the Company and
related parties to determine that, in their best business judgment, such
transactions meet that standard. Pursuant to the Settlement Agreement, the New
Independent Directors approve or disapprove certain transactions between the
Company and members of the Durwood family. See "Legal Proceedings." The Audit
Committee consists of Messrs. Grant, Mascotte and Egan, none of whom are
officers or employees of the Company or AMC nor were stockholders, directors,
officers or employees of DI. Set forth below is a description of significant
transactions which have occurred since March 29, 1996 or involve receivables
that remain outstanding as of October 2, 1997.
THE MERGER
GENERAL. Upon the recommendation of a special committee of the Board of
Directors consisting of Messrs. Charles J. Egan, Jr. and Paul E. Vardeman, the
New Independent Directors and the Board of Directors approved an Agreement and
Plan of Merger and Reorganization dated as of March 31, 1997 (the "Merger
Agreement") providing for the Merger of the Company and DI. On August 15, 1997,
the Company's stockholders approved the Merger and the Merger was consummated on
that date.
Mr. Stanley H. Durwood has agreed to indemnify the Company for all losses
resulting from any breach by DI of the Merger Agreement or resulting from any
liability of DI and for all taxes attributable to DI prior to the effective time
of the Merger and all losses in connection therewith.
Mr. Stanley H. Durwood and Delta Properties, Inc. ("Delta"), a former
subsidiary of DI, have agreed, subject to certain limitations, to indemnify the
Company for any of DI's Merger expenses which were not paid prior to the
effective time of the Merger and for 50% of the Company's expenses in connection
with the Merger. This obligation of Mr. Stanley H. Durwood may be offset by
certain Credit Amounts (as defined below under "-- The Indemnification
Agreement.")
As promptly as practicable after March 31, 2000, the Company will pay Mr.
Stanley H. Durwood an amount equal to any Credit Amounts which have not been
used to offset various of his obligations to the Company under the Stock
Agreement, the Indemnification Agreement and the Registration Agreement, as such
terms are defined below. If such benefits are realized after such date, the
related Credit Amounts will be paid to Mr. Stanley H. Durwood when they are
realized. See "-- The Indemnification Agreement; -- The Stock Agreement; -- The
Registration Agreement; Secondary Offering."
For a period for three years after the Merger, the Durwood Children have
agreed to give an irrevocable proxy to the Secretary and each Assistant
Secretary of the Company to vote their shares of Common Stock in the election of
directors for each candidate in the same proportionate
28
<PAGE>
manner as the aggregate votes cast in such elections by other holders of Common
Stock not affiliated with the Company, its directors and officers. See
"--Certain Transactions -- The Merger -- The Stock Agreement."
THE REGISTRATION AGREEMENT; SECONDARY OFFERING. As a condition to the
Merger, the Company and the Durwood Family Stockholders have entered into a
registration agreement (the "Registration Agreement") pursuant to which the
Durwood Family Stockholders have agreed to sell at least 3,000,000 shares of
Common Stock in a registered Secondary Offering and the Company has agreed to
file a registration statement with respect to such shares so that the
registration statement becomes effective not more than twelve months and not
less than six months after the Merger. Consummation of the Secondary Offering is
subject to certain conditions and other rights of the parties. Subject to
certain conditions, the expenses of the Secondary Offering will be borne by Mr.
Stanley H. Durwood and Delta. This obligation may be offset by certain Credit
Amounts resulting from the realization by the Company of tax benefits from the
utilization of certain tax credits and operating loss carryforwards of DI. See
"-- The Indemnification Agreement."
THE INDEMNIFICATION AGREEMENT. In connection with the Merger, Mr. Stanley
H. Durwood, Delta and the Durwood Children have entered into a agreement (the
"Indemnification Agreement") agreeing to indemnify the Company from certain
losses and expenses. Mr. Stanley H. Durwood will indemnify the Company from
losses resulting from any breach by DI of its representations, warranties and
covenants in the Merger Agreement or based upon any liability of DI and for any
taxes (or losses incurred by the Company in connection therewith) attributable
to DI or its subsidiaries for taxable periods prior to the effective time of the
Merger, (ii) each of the Durwood Family Stockholders will (severally and not
jointly) indemnify the Company for any losses which it might incur as a result
of the breach by such party of certain tax related representations, warranties
and covenants made by such party in the Stock Agreement and (iii) subject to
certain conditions, Mr. Stanley H. Durwood and Delta will indemnify the Company
from and against all of DI's Merger expenses that were not paid prior to the
effective time of the Merger and 50% of the Company's Merger expenses.
Mr. Stanley H. Durwood's obligations (i) to pay DI's unpaid expenses and 50%
of the Company's Merger expenses, as required by the Indemnification Agreement,
(ii) to pay the Company's expenses in the Secondary Offering, as required by the
Registration Agreement and (iii) to pay a $2 million penalty and 100% of the
Company's Merger expenses if the Secondary Offering does not occur, as required
by the Stock Agreement, may be offset by certain credit amounts resulting from
net tax benefits realized by the Company from the utilization by the Company of
DI's alternative minimum tax credit carryforwards and Missouri operating loss
carryforwards ("Credit Amounts"). Any Credit Amount not so applied will be paid
to Mr. Stanley H. Durwood promptly after March 31, 2000. Any Credit Amount that
arises after March 31, 2000 also will be paid promptly to Mr. Stanley H.
Durwood. The maximum amount of Credit Amounts that Mr. Durwood could be paid or
could be used to offset his responsibilities to the Company is approximately
$1,100,000, reduced by any amounts utilized on separate DI income tax returns
for 1996 and the portion of 1997 prior to the effective time of the Merger.
In connection with the Merger, the Company has agreed to indemnify the
Durwood Children from losses resulting from any breach by the Company of any
representation, warranty, covenant or agreement made by it in the Merger
Agreement.
The foregoing indemnification obligations generally will lapse on March 31,
2000.
29
<PAGE>
THE STOCK AGREEMENT. As a condition precedent to the Merger, the Durwood
Family Stockholders entered into an agreement (the "Stock Agreement") which, for
three years, limits the ability of the Durwood Children to deposit shares in a
voting trust, solicit proxies, participate in election contests or make a
proposal concerning an extraordinary transaction involving the Company. Under
the Stock Agreement, the Durwood Children have also agreed, among other matters,
for a period of three years, (i) to grant an irrevocable proxy to the Secretary
and each Assistant Secretary of the Company to vote their shares of Common Stock
for each candidate to the Company's Board of Directors in the same proportion as
the aggregate votes cast by all other stockholders not affiliated with the
Company, its directors or officers and (ii) that the Company will have a right
of first refusal with respect to any such shares the Durwood children wish to
sell in a transaction exempt from registration, except for shares sold in
brokers' transactions. Pursuant to the Stock Agreement, the Durwood Family
Stockholders have agreed for two years not to sell, exchange or otherwise
dispose of approximately 50% of the shares acquired by them in the Merger. To
this end, each of the Durwood Children has deposited 730,602 shares of Common
Stock and Stanley H. Durwood has deposited 2,590,017 shares of Class B Stock in
escrow. The Stock Agreement obligates Mr. Stanley H. Durwood and Delta to pay
the Company $2 million and to reimburse the Company for all of its Merger
expenses if the Secondary Offering is not consummated within 12 months after the
Merger. The obligation may be offset by certain Credit Amounts resulting from
the realization by the Company of tax benefits from the utilization of certain
tax credits and operating loss carryforwards of DI. See "-- The Indemnification
Agreement."
OTHER MATTERS
Certain corporate departments of AMC performed general and administrative
services for DI and its subsidiaries. AMC charged DI and its subsidiaries
$116,000 for such services for fiscal 1996 and 1995. There was no general and
administrative allocation in fiscal 1997.
Periodically, AMC and DI reconciled any amounts owed by one company to the
other. Charges to the intercompany account have included payments made by AMC on
behalf of DI. The largest balance owed by DI and its subsidiaries to AMC during
fiscal 1997 was $795,000.
Ms. Marjorie D. Grant, a Vice President of AMC and the sister of Mr. Stanley
H. Durwood, has an employment agreement with the Company providing for an annual
base salary of no less than $110,000, an automobile and, at the sole discretion
of the Chief Executive Officer of the Company, a year-end bonus. Ms. Grant's
current annual base salary is $110,000. During fiscal 1997, Ms. Grant received a
bonus of $10,000 and a lump sum payment in lieu of a base salary increase of
$4,400. Ms. Grant's employment agreement, executed July 1, 1996, terminates on
June 30, 1999, or upon her death or disability. The agreement provides that in
the event Mr. Stanley H. Durwood fails to control the management of the Company
by reason of its sale, merger or consolidation, or because of his death or
disability, or for any other reason, then the Company and Ms. Grant would each
have the option to terminate the agreement. In such event, the Company would pay
to Ms. Grant in cash a sum equal to the aggregate cash compensation, exclusive
of bonus, to the end of the term of her employment under the agreement, after
discounting such amount to its then present value using a discount rate equal to
the prime rate of interest published in THE WALL STREET JOURNAL on the date of
termination. The aggregate amount payable under the employment agreement,
assuming termination by reason of a change of control and payment in a lump sum
as of October 2, 1997, was approximately $178,000.
30
<PAGE>
Since July 1992, Mr. Jeffery W. Journagan, a son-in-law of Mr. Stanley H.
Durwood, has been employed by a subsidiary of the Company. Mr. Journagan's
current salary is approximately $82,540; he received bonuses of $21,600 and
$7,500 for fiscal 1996 and 1997, respectively.
During fiscal 1997, the Company retained Polsinelli, White, Vardeman &
Shalton, P.C., to provide certain legal services to a subsidiary of AMC. Mr.
Vardeman, who is a director of the Company, is a director, officer and
shareholder of that law firm.
For a description of certain employment agreements between the Company and
Messrs. Stanley H. Durwood, Peter C. Brown, Philip M. Singleton and Richard M.
Fay, see "Employment Contracts, Termination of Employment and Change in Control
Arrangements."
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors recommends that the stockholders ratify the
appointment of Coopers & Lybrand L.L.P. as independent public accountants to
audit the financial statements of the Company for the fiscal year ending April
2, 1998. Representatives of Coopers & Lybrand L.L.P. are expected to be present
at the Annual Meeting of Stockholders, and if present, will have the opportunity
to make a statement if they wish, and are expected to be available to respond to
appropriate questions from stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF
COOPERS & LYBRAND L.L.P. AS INDEPENDENT PUBLIC ACCOUNTANTS TO AUDIT THE
FINANCIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDING APRIL 2, 1998.
3. PROPOSAL TO AMEND ARTICLE FOURTH OF THE RESTATED AND
AMENDED CERTIFICATE OF INCORPORATION
GENERAL
The Board of Directors recommends to the stockholders for their approval and
adoption the proposed amendments to sections (c) (v) (C) (1) and (2) of Article
FOURTH of the Company's Restated and Amended Certificate of Incorporation set
forth below (the "Proposed Amendments"). As explained below, the effect of the
Proposed Amendments will be to preserve certain voting rights of holders of
Common Stock in the election of Directors if the Company changes the market on
which shares of Common Stock are listed.
Under the Company's Restated and Amended Certificate of Incorporation and
the Delaware General Corporation Law, the Proposed Amendments must be approved
by the holders of a majority of the votes of outstanding shares of Common Stock
and Class B Stock entitled to notice of and to vote at the Annual Meeting,
voting as a single class, and by the affirmative vote of the holders of a
majority of outstanding shares of Class B Stock, voting as a separate class.
Under the Delaware General Corporation Law, in determining whether the Proposed
Amendments have received the vote required, abstentions and broker non-votes
will have the effect of a negative vote. The sole holder of the outstanding
Class B Stock has advised the Company of his intention to vote in favor of the
Proposed Amendments.
31
<PAGE>
BACKGROUND
Shares of the Company have been listed on the American Stock Exchange
("AMEX") since 1984. Prior to such listing, the Company's Certificate of
Incorporation provided that holders of Class B Stock would elect 75% of the
Board of Directors and holders of Common Stock would elect 25% of the Board of
Directors; if the number of Directors was not an integral multiple of four, then
any fraction produced that was more than one-half would be rounded up in favor
of the Class B Stock or Common Stock, as the case might be, and any fraction of
less than one-half would be eliminated.
In connection with the original listing of its shares on the AMEX, the
Company amended its Certificate of Incorporation (the "1984 Amendments") to
provide that so long as the Company's Common Stock was listed on the AMEX, any
fraction produced in calculating the number of directors that holders of Class B
Stock are entitled to elect would be eliminated, whereas any fraction produced
in calculating the number of directors that holders of Common Stock are entitled
to elect would be rounded up. Pursuant to the 1984 Amendments, the Certificate
of Incorporation was also amended to provide that, so long as the Company's
Common Stock was listed on the AMEX, holders of Common Stock would vote with
holders of Class B Stock in electing 75% of the Board of Directors if the total
number of shares of Class B Stock ceased to represent at least 12 1/2% of the
combined number of shares of Common Stock and Class B Stock outstanding, with
each share of Common Stock having one vote and each share of Class B Stock
having ten votes. As a result of the 1984 Amendments, voting rights of holders
of Common Stock in the election of directors were enhanced.
If the Company were to change listings from the AMEX to the New York Stock
Exchange ("NYSE") or the Nasdaq National Market System ("NASDAQNMS"), and as a
result the Company's Common Stock was no longer listed on the AMEX, the
allocation of voting rights for directors between Common Stock and Class B Stock
would revert to the arrangement that existed before the Company's AMEX listing.
The Company believes that this was not the intent of the 1984 Amendments and
that the voting rights afforded holders of Common Stock should not be affected
by the market on which such shares are listed.
PROPOSED AMENDMENTS
In order that a change in listing, should such occur, have a neutral effect
on holders of Common Stock under the Company's Restated and Amended Certificate
of Incorporation, the Board of Directors is recommending to stockholders that
sections (c) (v) (C) (1) and (2) of Article FOURTH of the Restated and Amended
Certificate of Incorporation be amended as set forth below. The Proposed
Amendments preserve the existing voting arrangements in the election of
directors, whether the Company's Common Stock is listed on the AMEX, the NYSE,
the NASDAQNMS or any similar system of automated dissemination of quotations of
securities prices in the United States. The revised text is set forth in bold
and deleted text is bracketed.
"(C) ELECTION OF DIRECTORS. The right to vote on the election of directors of
the corporation is subject to the following terms and conditions:
(1) So long as any shares of Class B Stock shall be outstanding (and not
converted into shares of Common Stock pursuant to section (c)(iv) of Article
Fourth hereof), at any time that the holders of any class of securities of
the Corporation generally having the right to vote in the election of
directors shall take any action for the purpose of electing directors,
whether at an
32
<PAGE>
annual or special meeting of stockholders or otherwise, the holders of the
shares of Class B Stock then outstanding, voting separately as a single
class, with each outstanding share of Class B Stock having one vote per
share for such purpose, shall have the exclusive right to elect such number
of directors as shall equal 75% of the members of the board of directors to
be elected by holders of shares generally having the right to vote in the
election of directors; PROVIDED, HOWEVER, that if such number of directors
is not an integral multiple of four, the holders of Class B Stock shall have
the exclusive right to elect such number of directors as shall equal 75% of
the board of directors to be elected by holders of shares generally having
the right to vote in the election of directors with any fraction of one-half
or more rounded up and with any fraction of less than one-half eliminated;
and, PROVIDED FURTHER, HOWEVER, that so long as shares of Common Stock are
listed on either The American Stock Exchange, THE NEW YORK STOCK EXCHANGE OR
THE NATIONAL ASSOCIATION OF SECURITIES DEALERS' AUTOMATED QUOTATION NATIONAL
MARKET SYSTEM OR ANY SIMILAR SYSTEM OF AUTOMATED DISSEMINATION OF QUOTATIONS
OF SECURITIES PRICES IN THE UNITED STATES (EACH A "NATIONAL MARKET") any
such fraction shall be eliminated. Notwithstanding anything herein to the
contrary, in the event that the total number of shares of Class B Stock
outstanding is less than 12 1/2% of the total number of shares of Class B
Stock and Common Stock outstanding, then, so long as shares of Common Stock
are listed on [The American Stock Exchange] A NATIONAL MARKET, the right to
elect the said 75% of the board of directors to be elected by holders of
shares generally having the right to vote in the election of directors shall
be vested in the holders of the outstanding shares of Common Stock and Class
B Stock, voting together as if a single class, with each outstanding share
of Common Stock having one vote per share for such purpose and each
outstanding share of Class B Stock having ten votes per share for such
purpose.
(2) At any time that the holders of any class of securities of the Corporation
generally having the right to vote in the election of directors shall take
any action for the purpose of electing directors, the holders of the shares
of Common Stock then outstanding, voting separately as a single class, with
each outstanding share of Common Stock having one vote per share for such
purpose, shall have the exclusive right to elect such number of directors as
shall equal 25% of the members of the board of directors to be elected by
holders of shares generally having the right to vote in the election of
directors; PROVIDED, HOWEVER, that if such number of directors is not an
integral multiple of four, the holders of Common Stock shall have the
exclusive right to elect such number of directors as shall equal 25% of the
board of directors to be elected by holders of shares generally having the
right to vote in the election of directors with any fraction of more than
one-half rounded up and with any fraction of one-half or less eliminated;
and PROVIDED FURTHER, HOWEVER, that so long as shares of Common Stock are
listed on [The American Stock Exchange] A NATIONAL MARKET any such fraction
shall be rounded up."
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE PROPOSAL TO AMEND
ARTICLE FOURTH OF THE RESTATED AND AMENDED CERTIFICATE OF INCORPORATION.
4. OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by the
Company nor does the Company know of any matters to be brought before the
meeting by others. If, however, any other matters properly come before the
meeting, the persons named in the proxy will vote the shares represented thereby
in accordance with the judgment of management on any such matters.
33
<PAGE>
Stockholders who wish to present proposals for action at the Annual Meeting
of Stockholders to be held in 1998 should submit their proposals to the Company
at the address of the Company set forth on the first page of this Proxy
Statement. Proposals must be received by the Company no later than June 28,
1998, for consideration for inclusion in the next year's Proxy Statement and
proxy.
By order of the Board of Directors
[SIGNATURE]
Nancy L. Gallagher
Vice President and Secretary
REQUESTS FOR ANNUAL REPORT
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR FISCAL 1997 WILL BE SENT TO STOCKHOLDERS
UPON REQUEST WITHOUT CHARGE. REQUESTS SHOULD BE MADE TO THE DIRECTOR OF INVESTOR
RELATIONS, AMC ENTERTAINMENT INC., P.O. BOX 419615, KANSAS CITY, MISSOURI
64141-6615.
34
<PAGE>
AMC ENTERTAINMENT INC.
106 WEST 14TH STREET - KANSAS CITY, MISSOURI 64105
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Messrs. Stanley H. Durwood and Peter C.
Brown, jointly and severally, as Proxies, each with the power to appoint his
substitute, and hereby authorizes them to represent and vote, as designated
below, all of the Common Stock of AMC Entertainment Inc. which the undersigned
is entitled to vote at the Annual Meeting of Stockholders to be held on November
13, 1997 and at any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH OF THE FOLLOWING PROPOSALS:
<TABLE>
<S> <C> <C> <C>
1. Election of Directors: FOR all nominees listed WITHHOLD AUTHORITY
(EXCEPT AS MARKED TO THE CONTRARY). / / TO VOTE FOR THE NOMINEES LISTED. / /
</TABLE>
NOMINEES: Messrs. William T. Grant, II and John P. Mascotte
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE
THAT NOMINEE'S NAME ON THE SPACE PROVIDED BELOW.)
________________________________________
<TABLE>
<S> <C> <C> <C>
2. PROPOSAL TO ratify the appointment of Coopers & Lybrand L.L.P. as independent public accountants of the
Company for the fiscal year ending April 2, 1998.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
3. PROPOSAL TO amend Article FOURTH of the Restated and Amended Certificate of Incorporation.
</TABLE>
/ / FOR / / AGAINST / / ABSTAIN
<TABLE>
<S> <C> <C> <C>
4. In their discretion, the Proxies are authorized to vote on such other business as may properly come before
the meeting.
</TABLE>
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF THE NOMINEES NAMED AND "FOR" PROPOSALS 2 AND 3.
Please date and sign exactly as
name appears. When shares are held
by joint tenants, both must sign.
When signing as an attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
Date ________________________,1997
Signature ________________________
Signature (if held jointly) ______
PLEASE MARK, SIGN, DATE AND RETURN
THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
