SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 2)*
AMC ENTERTAINMENT INC.
(name of issuer)
COMMON STOCK, 66 2/3 cents PAR VALUE
001669 10 0
(CUSIP number)
Raymond F. Beagle, Jr.
LATHROP & GAGE L.C.
2345 Grand Avenue
Kansas City, Missouri 64108-2684
(816) 292-2129
(name, address and telephone number)
of person authorized to receive
notices and communications)
August 15, 1997
(date of event which requires filing
of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1 (a) for other parties to whom copies are to
be sent.
(Continued on following pages)
(Page 1 of 11 pages)
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 001669 10 0
(1) Names of reporting Persons; S.S. or I.R.S. Identification Nos. of Above
Persons.
Stanley H. Durwood; ###-##-####
(2) Check the appropriate box if a member of a Group (See Instructions)
(a) [ ]
(b) [x]
(3) SEC Use Only
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(4) Source of Funds (See Instructions)
00
(5) Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [_]
(6) Citizenship or Place of Organization
U.S.A.
Number of Shares (7) Sole Voting Power 5,070,807
Beneficially ----------------------------------------------------
Owned by Each (8) Shared Voting Power 0
Reporting ----------------------------------------------------
Person (9) Sole Dispositive Power 5,070,807
With ----------------------------------------------------
(10) Shared Dispositive Power 5,070,807
(11) Aggregate Amount Beneficially Owned by Each Reporting Person
5,070,807
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions) [ x ]
(13) Percent of Class Represented by Amount in Row (11) 27.5 %
(14) Type of Reporting Person (See Instructions) IN
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INTRODUCTORY STATEMENT
This schedule is filed by Mr. Stanley H. Durwood. By this filing, Mr.
Durwood amends Items 2 through 7 of the Schedule 13D filed by Mr. Durwood and
Durwood, Inc., a Missouri corporation ("DI"), dated January 24, 1994, as amended
May 3, 1996, to read as set forth herein.
ITEM 1. SECURITY AND ISSUER.
This statement relates to the Common Stock, par value 66 2/3 cents per
share ("Common Stock") , of AMC Entertainment Inc., a Delaware corporation
("AMCE"). AMCE's principal executive offices are located at 106 West 14th
Street, Kansas City, Missouri 64105.
ITEM 2. IDENTITY AND BACKGROUND.
This statement is filed by Stanley H. Durwood.
Stanley H. Durwood is a United States Citizen whose business address is
106 West 14th Street, Kansas City, Missouri, 64105. As his principal occupation
he serves as Chairman of the Board and Chief Executive Officer of AMCE. AMCE is
a theatrical exhibition company.
During the last five years, Stanley H. Durwood has not been convicted in
any criminal proceeding nor been a party to any civil proceeding of a judicial
or administrative body of competent jurisdiction which resulted in him being
subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activity subject to, federal or state securities laws
or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Not applicable.
ITEM 4. PURPOSE OF TRANSACTION.
On May 3, 1996, Stanley H. Durwood entered into a Durwood Family
Settlement Agreement (as amended on March 25, 1997 and August 15, 1997, the "
Family Agreement") with his six children, Edward D. Durwood, Carol D. Journagan,
Thomas A Durwood, Elissa B. Grodin, Brian H. Durwood and Peter J. Durwood
(collectively, the "Durwood Children") and The Thomas A. and Barbara F. Durwood
Family Investment Partnership (the "TBD Partnership" and together with the
Durwood Children and Stanley H. Durwood, the "Durwood Family Members") setting
forth the Durwood Family Members' intention to pursue certain transactions to
dissolve American Associated Enterprises, Inc., a Missouri limited partnership
("AAE"), and to cause the shares of AMCE held by Durwood, Inc., a Missouri
corporation ("DI"), to be distributed to Durwood Family Members through a merger
of DI with and into AMCE. The Durwood Family Members sought such transactions to
eliminate DI and AAE, thereby enabling the Durwood Family Members to hold their
interests in AMCE directly in the form of a marketable security instead of
indirectly through DI or AAE, and to resolve a dispute among the Durwood Family
Members concerning the value of their interests in AAE and DI.
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On August 15, 1997, 6,141,343 shares of Class B Stock held of record by
DI were converted into shares of Common Stock and AAE was liquidated. In
addition, on August 15, 1997, the stockholders of AMCE approved and adopted an
Agreement and Plan of Merger and Reorganization dated as of March 31, 1997 (the
"Merger Agreement") by and between AMCE and DI, and DI was merged with and into
AMCE (the "Merger"). Pursuant to the Merger, 5,015,657 shares of AMCE Class B
Stock were distributed to Stanley H. Durwood in exchange for his shares of DI
and 8,767,218 shares of AMCE Common Stock were distributed to the Durwood
Children and the TBD Partnership in exchange for their shares of DI. Each of the
Durwood Children other than Thomas Durwood received 1,461,203 shares, Thomas
Durwood received 1,315,083 shares and the TBD Partnership received 146,120
shares.
In connection with the Merger, AMCE and the Durwood Family Members
entered into a Registration Agreement dated August 15, 1997 (the "Registration
Agreement") pursuant to which the Durwood Family Members have agreed that they
or their charitable donees will sell at least 3,000,000 shares of AMCE Common
Stock in a registered secondary offering (the "Secondary Offering") that will be
made only by means of a prospectus, and AMCE 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 Stanley H. Durwood and Delta Properties,
Inc., a Missouri corporation, whose shares were distributed by DI to the Durwood
Family Members and DI's other stockholder prior to the Merger ("Delta").
Of the 3,000,000 shares to be sold in the Secondary Offering, 500,000
will be sold by Stanley H. Durwood or his charitable donees who may agree to
participate in the Secondary Offering. Prior to and for purposes of such
offering, Stanley H. Durwood intends to convert 500,000 shares of Class B stock
into shares of Common Stock. Each of the Durwood Children will sell
approximately 416,667 shares of Common Stock in the Secondary Offering, unless
they agree to a different allocation of the 2,500,000 shares to be sold by them.
The Family Agreement also generally provides that if the price per share to the
public of the 2.5 million shares of AMCE Common Stock proposed to be sold by the
Durwood Children in the Secondary Offering is less than $18, 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 AMCE Common Stock, as an adjustment to the original
allocation of shares received by the Durwood Children in the Merger (the "Share
Adjustment").
The Family Agreement provides that AMCE (which is not a party to the
Family Agreement) and the individual Durwood Family Members are to participate
equally in determining all material terms of the Secondary Offering. Matters to
be determined by individual Durwood Family Members are to be determined by
majority vote, with each family member having one vote.
Also in connection with the Merger, the Durwood Family Members have
entered into a Stock Agreement dated August 15, 1997 (the "Stock Agreement")
which, for three years, limits the ability of the Durwood Children and TBD
Partnership to deposit shares in a voting trust, solicit proxies, participate in
election contests or make a proposal concerning an extraordinary transaction
involving AMCE. Under the Stock Agreement, the Durwood Children and TBD
Partnership have agreed, among other matters, for a period of three years, (i)
to grant an irrevocable proxy to the Secretary and each Assistant Secretary of
AMCE to vote their shares of AMCE Common Stock for each candidate to the AMCE
Board in the same proportion as the aggregate votes cast by all other
stockholders not affiliated with AMCE, its directors or officers and (ii) that
AMCE will have a right of first refusal with respect to any such shares the
Durwood Children or TBD Partnership wish to sell in a transaction exempt from
registration, except for such shares sold in brokers' transactions.
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Pursuant to the terms of an Escrow Agreement dated August 15, 1997, by
and among Stanley H. Durwood, the Durwood Children and Mercantile Bank of Kansas
City (the "Escrow Agreement"), Stanley H. Durwood and the Durwood Children have
agreed to deposit in escrow the 3,000,000 shares 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.
The dissolution of AAE, the Merger and the sale of at least 3,000,000
shares of AMCE Common Stock by the Durwood Family Members are provided for in
the settlement of a derivative action (the "Derivative Suit") that was filed by
certain shareholders in 1993 in the Chancery Court for New Castle County,
Delaware against Messrs. Stanley H. Durwood, Edward D. Durwood, Charles J. Egan,
Paul E. Vardeman and a former AMCE director. On October 10, 1996, the parties to
this litigation entered into a Stipulation and Agreement of Compromise and
Settlement (the "Derivative Action Settlement Agreement") providing for the
release of all claims against the defendants, the Durwood Family Members and the
Company, conditioned upon the dissolution of AAE, the consummation of the Merger
and the sale of shares by the Durwood shareholders in a secondary offering and
certain other transactions, including, among other matters, (i) the payment
following the Secondary Offering of an aggregate of approximately $1.3 million
to persons who were holders of AMCE Common Stock on January 2, 1996 (other than
the defendants, DI or the Durwood Family Members), (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 AMCE
Board whose biographical information has been furnished to plaintiffs' counsel
and 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 Stanley
H. Durwood and Edward D. Durwood will cause the other Durwood Family Members 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 AMCE, its directors and officers, (v) that the New
Independent Directors are to have the ability to approve or disapprove (a) any
proposed transaction between AMCE and any of the Durwood Family Members, except
with respect to compensation issues relating to Stanley H. Durwood or any other
Durwood Family Stockholder who is an officer of AMCE, which are to be governed
by existing AMCE Board procedures, and (b) the hiring and compensation of any
person related to Stanley H. Durwood who is not an officer of AMCE, and (vi)
that the New Independent Directors, together with either Charles J. Egan, Jr. or
Paul E. Vardeman, are to have the ability to approve or disapprove all other
related-party transactions with all officers, directors and ten percent
stockholders of AMCE.
The Derivative Action Settlement Agreement requires court approval.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a)-(b) Under AMCE's charter, holders of the AMCE Class B stock
generally are entitled to elect as a class 75% of the Board of Directors and to
vote as a class with holders of the Common Stock on other matters, with each
share of Class B Stock being entitled to ten (10) votes per share and each share
of Common Stock being entitled to one (1) vote per share. Holders of AMCE Common
Stock generally are entitled to elect 25% of AMCE's Board of Directors. Should
the outstanding shares of Class B Stock be less than 12 1/2% of the total number
of outstanding shares of Class B and Common Stock, the holders of Common Stock
would be entitled to vote with the holders of Class B Stock in the election of
the remaining 75% of the Board; for these purposes, the Class B Stock would have
ten votes per share and the Common Stock would have one vote per share. Each
share of AMCE Class B Stock is convertible into one share of AMCE Common Stock.
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Stanley H. Durwood now beneficially owns 150 shares of AMCE Common
Stock and options that are presently exercisable to acquire 55,000 shares of
AMCE Common Stock, over which he has sole voting and investment power, which
constitute less than 1% of the outstanding shares of such class. Stanley H.
Durwood also beneficially owns 5,015,657 shares of Class B Stock, which
constitute 100% of the outstanding shares of that class. Mr. Durwood has sole
voting power over all of these share and sole investment power over 4,515,657 of
these shares. As noted below, he may be deemed to share investment power over
500,000 of these shares with the Durwood Children. The Class B and Common shares
presently beneficially owned by Stanley H. Durwood represent approximately 78.9%
of the voting power of AMCE stock, other than in the election of directors. Were
all the shares of AMCE Class B Stock converted, there would be approximately
18,387,119 shares of AMCE Common Stock outstanding, of which shares 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 Class B shares beneficially owned by Stanley H. Durwood are 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 Stanley H. Durwood is
the settler and sole acting trustee of both trusts. The name successor trustees
are Charles J. Egan, Jr. , a director of AMCE, and Raymond F. Beagle, Jr. AMCE's
general counsel.
Because of the Escrow Agreement, Stanley H. Durwood may be deemed to
share investment power over the 2,500,000 shares held under the Escrow Agreement
that are owned by the Durwood Children, and each of the Durwood Children may be
deemed to share investment power over the 500,000 shares held under the Escrow
Agreement that are owned of record by Stanley H. Durwood as well as the shares
held thereunder that are owned of record by the other Durwood Children..
However, Stanley H. Durwood disclaims any beneficial ownership of any shares of
AMCE Common Stock owned of record by the Durwood Children.
After giving effect to the Secondary Offering (and disregarding shares
which may be acquired by Stanley H. Durwood upon the exercise of employee stock
options, shares which the Durwood Children might acquire under the Share
Adjustment referred to in Item 4 herein and shares of Common Stock which might
be issued upon conversion of shares of the Company's outstanding $1.75
Cumulative Convertible Preferred Stock) (i) Stanley H. Durwood will beneficially
own approximately 4.5 million shares of Class B Stock, and the Durwood Children
and TBD Partnership will own an aggregate of approximately 6.3 million shares of
AMCE Common Stock, (ii) such shares of Class B Stock to be owned by Stanley H.
Durwood will entitle him to elect a majority of the Board of Directors and will
have approximately 76.5% of the voting power of all outstanding shares of AMCE
capital stock to be then outstanding generally having the right to vote on
matters submitted to stockholders, other than the election of directors, and
(iii) the Common Stock to be owned by the Durwood Children and TBD Partnership
will represent approximately 45.2% of the shares of Common Stock expected to be
then outstanding.
Stanley H. Durwood's holdings will diminish and the other Durwood Family
Member's holdings will increase if the other Durwood Family Members acquire
additional shares under the Share Adjustment. However, based on the number of
Common and Class B shares presently outstanding, the Share Adjustment should not
result in Stanley H. Durwood owning shares with less than 50% of the combined
voting power of the outstanding Common and Class B Stock unless AMCE and the
Durwood Family Members determine to proceed with the Secondary Offering of the
family's shares at a time during which the market value of AMCE's stock is less
than approximately $7.03 per share ($8.38 assuming full conversion of AMCE's
outstanding $1.75 Cumulative Convertible Preferred Stock).
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Set forth below is information known to the undersigned concerning the
business or residence address and primary employment of each of the Durwood
Children.
Name and Address Principal Employment
Edward D. Durwood Self Employed
3001 West 68th Street
Shawnee Mission, Ks. 66208
Carol D. Journagan Homemaker
1323 Granite Creek Drive
Blue Springs, Mo. 64015
Thomas A. Durwood Self Employed
P.O.Box 7208
Rancho Santa Fe, Ca. 92067
Elissa D. Grodin Homemaker
187 Chestnut Hill Road
Wilton, Ct. 06897
Brian H. Durwood Markets computer software
655 N.W. Altishim Place
Beaverton, Or. 97006
Peter J. Durwood The Children's Television Workshop
666 West End Avenue New York, New York
New York, N.Y. 10025
Each of the Durwood Children is a United States Citizen. To Stanley H.
Durwood's knowledge, during the last five years none of the Durwood Children has
been convicted in any criminal proceeding nor been a party to any civil
proceeding of a judicial or administrative body of competent jurisdiction which
resulted in any of them being subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activity subject to,
federal or state securities laws or finding any violation with respect to such
laws.
The TBD Partnership is a California limited partnership. Its general
partner is the Thomas A. and Barbara F. Durwood Family Trust, of which Thomas A.
Durwood and his spouse, Barbara F. Durwood, are trustees.
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(c) Except as described above, during the past 60 days, Mr. Stanley H.
Durwood has not effected a transaction in AMCE Common Stock or Class B Stock.
(d) No other person is known to Stanley H. Durwood to have the right to
receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the securities described in paragraphs 5(a)-(b) above.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS, WITH
RESPECT TO SECURITIES OF THE ISSUER.
In addition to the agreements described in Item 4, Stanley H. Durwood is a
party to an Indemnification Agreement, dated as of March 31, 1997, as amended
August 15, 1997, with AMCE, Delta Properties, Inc., the Durwood Children and TBD
Partnership, and an Escrow Agreement, dated as of August 15, 1997, with the
Durwood Children and Mercantile Bank of Kansas City, as escrow agent. Pursuant
to the Stock Agreement and the Indemnification Agreement, Stanley H. Durwood and
the Durwood Children have agreed for two years not to sell, exchange or
otherwise dispose of a number of shares: (i) in the case of each of the Durwood
Children, which would reduce his or her ownership to less than 730,602 shares
and (ii) in the case of Stanley H. Durwood, which would reduce his ownership to
less than 2,590,017 shares. 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 under the Escrow Agreement, to be
held for a period of two years after the Merger. Pursuant to the Indemnification
Agreement, Stanley H. Durwood also has agreed not to transfer shares (other than
in the Secondary Offering or to certain charitable assignees) unless the
assignee agrees to be bound by the Indemnification Agreement and the
indemnification provisions of the Stock Agreement and the Registration
Agreement.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EX-99.1 Agreement and Plan of Merger and Reorganization dated as of
March 31, 1997, between AMCE and DI ( Filed as Exhibit 2.1 to AMCE's
registration Statement on Form S-4 (File No. 333- 25755 )
EX-99.2 Registration Agreement, dated as of August 15, 1997, among AMCE,
Stanley H. Durwood, the Durwood Children and Delta Properties, Inc.
EX-99.3 Stock Agreement, dated as of August 15, 1997, among AMCE,
Stanley H. Durwood, the Durwood Children, TBD Partnership and Delta Properties,
Inc.
EX-99.4 Escrow Agreement, dated as of August 15, 1997, among Stanley H.
Durwood, the Durwood Children and Mercantile Bank of Kansas City, as escrow
agent.
EX-99.5 Durwood Family Settlement Agreement dated as of January 22, 1996
among Stanley H. Durwood and the Durwood Children (Filed as Exhibit 99.1 to
Schedule 13D of Mr. Durwood filed May 7, 1996 )
EX-99.6 First Amendment to Durwood Family Settlement Agreement, dated as
of March 18, 1997, among Stanley H. Durwood and the Durwood Children (Filed as
Exhibit 2.4(c) to AMCE's Registration Statement on Form S-4 (File No. 333-25755)
EX-99.7 Second Amendment to Durwood Family Settlement Agreement, dated
as of August 15, 1997, among Stanley H. Durwood, the Durwood Children and the
TBD Partnership.
EX-99.8 Indemnification Agreement, dated as of March 31, 1997, among AMCE,
Stanley H. Durwood and the Durwood Children (Filed as Exhibit 2.4(a) to AMCE's
Registration Statement on Form S-4 (File No. 333-25755)
EX-99.9 First Amendment to Indemnification Agreement, dated as of August
15, 1997, among AMC Entertainment, Inc., Stanley H. Durwood, the Durwood
Children, TBD Partnership and Delta Properties, Inc.
EX-99.10 Escrow Agreement, dated as of August 15, 1997, among AMCE,
Stanley H. Durwood, the Durwood Children and Mercantile Bank of Kansas City, as
escrow agent.
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After reasonable inquiry and to the best of the undersigned's knowledge
and belief, the undersigned certifies that the information set forth in this
statement is true, complete and accurate.
September 30, 1997 /s/Stanley H. Durwood
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Stanley H. Durwood
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Exhibit 99.2
V32
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT (the "Agreement") is made and entered into this
15th day of August, 1997, between (i) AMCE Entertainment Inc., a Delaware
corporation (the "Company"), (ii) Stanley H. Durwood, individually and as
trustee of the 1992 Durwood, Inc. Voting Trust dated December 12, 1992 (the
"1992 Trust"), and the Trust created pursuant to the Stanley H. Durwood Trust
Agreement dated August 14, 1989 (the "1989 Trust"), Carol D. Journagan, Edward
D. Durwood, Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood, Peter J.
Durwood, The Thomas A. and Barbara F. Durwood Family Investment Partnership, a
California limited partnership (the "TBD Partnership") (the "Family
Stockholders") and each Permitted Assignee (as herein defined) of such Family
Stockholder listed on Exhibit A to this Agreement from time to time (each such
Family Stockholder and Permitted Assignee a "Stockholder" and collectively
"Stockholders") and (iii) solely for purposes of Section 4 hereof, Delta
Properties, Inc., a Missouri corporation.
The Company has agreed to provide to the Stockholders the registration rights
("Registration Rights") set forth in this Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms shall have the following
respective meanings:
"Adjusted Basis" shall mean, as of a specified date with respect to a specified
number of shares of Common Stock or Class B Stock, the number of shares of
Common Stock and Class B Stock that a record holder of such specified number of
shares on March
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31, 1997 would hold on such specified date, after giving effect to all stock
dividends and splits and all subdivisions, combinations or reclassifications of
such class of securities the record date of which occurs between March 31, 1997
and such specified date.
"Charitable Assignee" of a Stockholder shall mean any charitable
organization, including charitable remainder and charitable lead trusts, a
transfer of property to which by such Stockholder would qualify, at least in
part, for an income, gift or estate tax charitable deduction under the Internal
Revenue Code of 1986, as amended.
"Class B Stock" shall mean the Class B Stock, par value 66 2/3(cent) per share,
of the Company.
"Commission" shall mean the Securities and Exchange Commission, or any other
federal agency at the time administering the Exchange Act or the Securities Act,
whichever is the relevant statute for the particular purpose.
"Common Stock" shall mean the Common Stock, par value 66 2/3(cent) per share, of
the Company.
"DI" shall mean Durwood, Inc., a Missouri corporation, which is to be merged
into the Company in the Merger.
"Effectiveness Period" shall have the meaning set forth in Section 2(a).
"Effective Date" shall mean the date on which the Commission declares a
Registration effective or on which a Registration otherwise becomes effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any successor
thereto, as the same shall be amended from time to time.
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The term "holder" shall mean a Stockholder and such of its respective Permitted
Assignees who acquire Registrable Securities, directly or indirectly, from such
Stockholder or from any Permitted Assignee of such Stockholder.
"Merger" shall mean the merger of DI with and into the Company pursuant to the
Agreement and Plan of Merger and Reorganization dated as of March 31, 1997
between the Company and DI (the "Merger Agreement").
"Permitted Assignees" of a Stockholder shall mean any of the following
persons and entities to which Registrable Securities are transferred by such
Stockholder by gift prior to the date the Registration Statement is first filed
with the Commission that at the time of such transfer agree by instrument in
form and substance reasonably satisfactory to the Company to be bound by the
provisions of (x) this Agreement and (y) the Stock Agreement, in each case as a
"Stockholder": (i) another Stockholder, (ii) the spouse of a Stockholder, (iii)
a lineal descendant of a Stockholder, including an adopted child, and any spouse
of a lineal descendant (each, a "Family Member"), (iv) a trust established by
one or more Stockholders or Family Members of one or more Stockholders
principally for the benefit of one or more Stockholders or Family Members of
Stockholders and/or one or more Charitable Assignees, (v) the estate of such
Stockholder and (vi) any Charitable Assignee. Upon the transfer of shares of
Registrable Securities by a Stockholder to a Permitted Assignee of such
Stockholder as provided herein prior to the date the Registration Statement is
first filed with the Commission, Exhibit A hereto will be deemed to be amended
without further action of the parties hereto (x) to reduce the number of shares
of Registrable Securities set forth next to such Stockholder's name on Exhibit A
by the number of shares so transferred that will be subject to this Agreement,
(y) if such Permitted Assignee's name is not listed on Exhibit A, to add the
name of such Permitted Assignee to Exhibit A as a Stockholder, and (z) to set
forth the number of shares of Registrable Securities so transferred that will be
subject to this Agreement (or to increase the number of shares so listed by the
number of shares so transferred that will be subject to this Agreement) next to
such Permitted Assignee's name on Exhibit A. Notwithstanding any provision of
this Agreement to the contrary, a Family Stockholder may transfer to or for the
benefit of one or more Charitable Assignees in the aggregate up to five percent
(5%) of the number of shares of Common Stock or Class B Stock received by such
Family Stockholder in the Merger (or shares of Common Stock issued upon
conversion of such Class B Stock), free and clear of all the provisions of this
Agreement, and such Charitable Assignees may elect after the date of
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transfer (but otherwise at a time consistent with the provisions of this
Agreement) to participate in the Registration (in which case such Charitable
Assignee shall be deemed to be a Permitted Assignee (except that such Charitable
Assignee need not agree to be bound by the provisions of the Stock Agreement));
provided that if any such Charitable Assignee elects to participate in the
Registration, (i) such Charitable Assignee must then agree by instrument in form
and substance satisfactory to the Company to be bound by this Agreement and (ii)
the provisions of the preceding sentence shall apply.
The term "person" shall mean a corporation, association, partnership (general,
limited or limited liability), organization, business, limited liability
company, individual, government or political subdivision thereof or governmental
agency.
"Prospectus" shall mean the prospectus included in a Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement, and all other amendments and supplements to the
prospectus, including post-effective amendments, and all documents and materials
incorporated by reference in such prospectus.
"Registrable Securities" shall mean the shares of Common Stock (on an Adjusted
Basis), listed on Exhibit A hereto and acquired by Stockholders pursuant to the
Merger or upon conversion of shares of the Class B Stock acquired by
Stockholders pursuant to the Merger.
"Registration" shall have the meaning set forth in Section 2(a).
"Registration Expenses" shall have the meaning set forth in Section 4 hereof.
"Registration Statement" shall mean a registration statement of the Company that
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement,
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including post-effective amendments, all exhibits, and all material incorporated
by reference in such registration statement.
"Securities Act" shall mean the Securities Act of 1933, or any successor
thereto, as the same shall be amended from time to time.
"Stock Agreement" shall have the meaning set forth in the Merger
Agreement.
The term "underwritten offering" shall mean a distribution of securities
subject to registration under the Securities Act in which securities are sold to
an underwriter for reoffering to the public.
Section 2. Registration.
(a) Registration. Subject to the consummation of the Merger and the
effectiveness of the Registration, each Stockholder agrees to participate in a
registered underwritten secondary offering of at least 3,000,000 shares (on an
Adjusted Basis) in the aggregate of Registrable Securities on the terms and
conditions set forth in this Agreement and to sell such number of shares of
Common Stock in such underwritten offering as is set forth next to each
Stockholder's name on Exhibit A, subject to increase or reduction as set forth
below. The Stockholders agree that the underwriters for the Registration will
use their reasonable efforts in light of market conditions to sell at least 70%
of the shares sold in such secondary offering to institutional (as opposed to
retail) investors. The Company agrees (subject to the performance by the
Stockholders of their obligations hereunder) to use its reasonable efforts to
file a Registration Statement on a form selected by the Company to register
under the Securities Act for sale to the public in an underwritten offering the
number of shares of Registrable Securities owned by each Stockholder set forth
next to such Stockholder's name on Exhibit A hereto (on an Adjusted Basis) from
time to time (the "Registration") or such smaller or greater number of shares of
Registrable Securities as shall be agreed by the Company and such Stockholder in
writing, provided that (x) the number of shares of Registrable Securities of a
Stockholder set forth on Exhibit A may be decreased without the consent of the
Company by written notice to the Company reasonably
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satisfactory to the Company from such Stockholder if (1) the number of shares of
Registrable Securities of another Stockholder set forth on Exhibit A is at the
same time increased by a like number of shares or (2) such shares are
transferred to a Permitted Assignee of such Stockholder and such Permitted
Assignee becomes a party hereto as a Stockholder and such shares so transferred
are set forth next to such Permitted Assignee's name on Exhibit A hereto, (y)
the number of shares of Registrable Securities of a Stockholder set forth on
Exhibit A may be decreased without the consent of the Company by written notice
to the Company reasonably satisfactory to the Company from such Stockholder so
long as after giving effect thereto the Registration covers at least 3,000,000
shares of Common Stock (on an Adjusted Basis) and (z) the number of shares of
Registrable Securities of a Family Stockholder set forth in Exhibit A may be
increased without the consent of the Company by written notice to the Company
from such Family Stockholder so long as after giving effect thereto the
Registration covers no more than 5,000,000 shares of Common Stock (on an
Adjusted Basis). Should more than one Family Stockholder seek to increase the
number of Registrable Securities as permitted above and as a result the number
of shares sought to be included in the Registration exceeds 5,000,000 shares (on
an Adjusted Basis), the number of shares, if any, that Stanley H. Durwood, the
1992 Trust and the 1989 Trust have sought to include in the Registration above
the number listed on Exhibit A (on an Adjusted Basis) shall be reduced to the
extent necessary to reduce the aggregate number of shares sought to be included
in the Registration to 5,000,000 shares (on an Adjusted Basis), and if such
number of shares still exceeds 5,000,000, the Company shall allocate the
increased number of shares to be included in the Registration among such Family
Stockholders (other than Stanley H. Durwood, the 1992 Trust and the 1989 Trust)
seeking an increase on a pro rata basis or in such other manner as such Family
Stockholders may agree. In the event of any increase or decrease in the number
of Registrable Securities of a Stockholder as set forth above, Exhibit A hereto
shall be deemed amended to increase or decrease, accordingly, the number of
shares of Registrable Securities set forth next to such Stockholder's name. The
Company shall (subject to the performance by the Stockholders of their
obligations hereunder) use its reasonable efforts to cause the Registration to
be declared effective under the Securities Act as promptly as practicable on or
after the date that is six months and one day from the date of the Merger and to
keep the Registration effective under the Securities Act for a period ending on
the date that is six months from such date (provided that such six month period
shall be extended by the length of any Postponement Period (as defined below))
or such shorter period ending when all Registrable Securities covered by the
Registration have been sold (the "Effectiveness Period").
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(b) Supplements and Amendments. The Company shall supplement and amend the
Registration Statement, prior to the Effective Date and during the Effectiveness
Period, if (i) required by the rules, regulations or instructions applicable to
the registration form used for such Registration, (ii) otherwise required by the
Securities Act or (iii) reasonably requested by the holders of a majority in
aggregate principal amount of the Registrable Securities covered by such
Registration Statement or by any underwriter of such Registrable Securities.
(c) Selection of Underwriters. The managing underwriters for the
Registration shall be selected jointly by the Company and the Family
Stockholders (other than the 1992 Trust and the 1989 Trust) acting by majority
vote (for which purpose each such Family Stockholder shall have one vote).
(d) Conditions to the Obligations of Company. The Company shall be entitled
to postpone (or if already filed may withdraw such Registration Statement), for
an aggregate of up to 180 days (together with any period described in the last
sentence of Section 3(b) hereof, a "Postponement Period"), the filing of the
Registration Statement otherwise required to be prepared and filed by it
pursuant hereto if, as a result of the Registration the Company would be
required to prepare any financial statements other than those it customarily
prepares or the Company determines in its reasonable business judgment that such
registration and offering would interfere with any material financing,
acquisition, corporate reorganization or other material corporate transaction or
development involving the Company and gives the Stockholders written notice of
such determination.
Section 3. Registration Procedures.
(a) In connection with the Company's obligations with respect to the
Registration, the Company shall (subject to the performance by the Stockholders
of their obligations hereunder):
(i) prepare and file with the Commission a Registration Statement which shall
permit the disposition of the Registrable Securities, in an underwritten
offering, and use
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its reasonable efforts to cause such Registration Statement to become
effective as provided in this Agreement; provided, however, before filing
the Registration Statement or Prospectus or any amendments or supplements
thereto (including documents that would be incorporated therein by
reference after the initial filing of the Registration Statement), the
Company shall afford the Counsel (as defined below) and the managing
underwriters, an opportunity to review copies of all such documents
proposed to be filed; provided, further, that the Company shall not file
any Registration Statement or related Prospectus or any amendments or
supplements thereto (including such documents incorporated by reference) if
such counsel for all such holders, or the managing underwriters shall
reasonably object, in writing, on a timely basis (provided that any such
objecting party and the Company use their best efforts promptly to resolve
such party's objections on a basis reasonably satisfactory to such party
and the Company which will permit such filing);
(ii) prepare and file with the Commission such amendments, post-effective
amendments and supplements to such Registration Statement and the
Prospectus included therein as may be necessary to effect and maintain the
effectiveness of such Registration Statement for the applicable period
specified herein and furnish to the Stockholders copies of any such
supplement or amendment prior to its being used or filed with the
Commission;
(iii)for a reasonable period prior to the filing of such Registration Statement,
and throughout the Effectiveness Period, make available for inspection by
the Counsel and the counsel for the managing underwriters such financial
and other information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public accountants
of the Company to respond to such inquiries, as shall be reasonably
necessary, in the judgment of the respective counsel referred to in such
Section, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that each such party
shall be required to maintain in confidence and not to disclose to any
other person any information or records reasonably designated by the
Company in writing as being confidential, until such time as (A) such
information becomes a matter of public record (whether by virtue of its
inclusion in such Registration Statement or otherwise), or (B) such person
shall be required so to disclose such information pursuant to a subpoena or
order of any court or other governmental agency or body having jurisdiction
over the matter (subject to the requirements of such order, and only after
such person shall have given the Company prompt written notice of such
requirement), or (C) such information is required to be set forth in such
Registration Statement or the
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<PAGE>
Prospectus included therein or in an amendment to such Registration
Statement or an amendment or supplement to such Prospectus in order that
such Registration Statement, Prospectus, amendment or supplement, as the
case may be, does not contain an untrue statement of a material fact or
omit to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing;
(iv) notify the Stockholders and the managing underwriters thereof and, if
requested by any such person, confirm such advice in writing, (A) when such
Registration Statement or the Prospectus included therein or any Prospectus
amendment or supplement or post-effective amendment has been filed, and,
with respect to such Registration Statement or any post-effective
amendment, when the same has become effective, (B) of any comments by the
Commission and by the blue sky or securities commissioner or regulator of
any state with respect thereto or any request by the Commission for
amendments or supplements to such Registration Statement or Prospectus or
for additional information, (C) of the issuance by the Commission of any
stop order suspending the effectiveness of such Registration Statement or
the initiation or threatening of any proceedings for that purpose, (D) if
at any time the representations and warranties of the Company contemplated
by Section 3(a)(xi) hereof cease to be true and correct in all material
respects, (E) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose, or (F) at any time when a Prospectus is
required to be delivered under the Securities Act, that such Registration
Statement, Prospectus, Prospectus amendment or supplement or post-effective
amendment, or any document incorporated by reference in any of the
foregoing, contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances then
existing;
(v) use its reasonable efforts to obtain the withdrawal of any order suspending
the effectiveness of such Registration Statement or any post-effective
amendment thereto at the earliest practicable date;
(vi) if requested by the managing underwriters or the holders of a majority of
the Registrable Securities covered by the Registration, incorporate in a
Prospectus supplement or post-effective amendment such information as is
required by the applicable
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<PAGE>
rules and regulations of the Commission and as such managing underwriters
or such holders specify should be included therein relating to the terms
of the sale of such Registrable Securities, including, without limitation,
information with respect to the principal amount of Registrable Securities
being sold by such holders or to any underwriters, the name and description
of such holders or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable in
respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of the
Registrable Securities to be sold by such holders or to such underwriters;
and make all required filings of such Prospectus supplement or post-
effective amendment after notification of the matters to be incorporated in
such Prospectus supplement or post-effective amendment;
(vii) furnish to each Stockholder, each underwriter of holders of Registrable
Securities participating in the Registration thereof and the Counsel an
executed copy of such Registration Statement, each such amendment or
supplement thereto (in each case, upon request, including all exhibits
thereto and documents incorporated by reference therein) and furnish each
such holder and underwriter such number of copies of the Prospectus
included in such Registration Statement (including each preliminary
Prospectus and any summary Prospectus) as such holder or underwriter may
reasonably request; the Company hereby consents to the use of such
Prospectus (including such preliminary and summary Prospectus) and any
amendment or supplement thereto by each such holder and underwriter, in
each case in the form most recently provided to such party by the Company,
in connection with the offering and sale of the Registrable Securities
covered by the Prospectus (including such preliminary and summary
Prospectus) or any supplement or amendment thereto;
(viii) use its reasonable efforts to (A) register or qualify the Registrable
Securities to be included in such Registration Statement under such state
securities laws or blue sky laws of such jurisdictions as any holder of
such Registrable Securities and underwriter thereof shall reasonably
request, (B) keep such registrations or qualifications in effect and comply
with such laws so as to permit the continuance of offers, sales and
dealings therein in such jurisdictions during the period such Registration
Statement is required to be kept effective and for so long as may be
necessary to enable any such holder or underwriter to complete its
distribution of Securities pursuant to such Registration Statement as
contemplated hereby and (C) take any and all other actions as may be
reasonably necessary or advisable to enable each such holder and
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities; provided, however, that the Company shall
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<PAGE>
not be required for any such purpose to (I) qualify as a foreign
corporation in any jurisdiction where it would not otherwise be required to
qualify but for the requirements of this Section 3(a)(viii), (II) consent
to general service of process in any such jurisdiction, (III) subject
itself to taxation in any such jurisdiction or (IV) make any changes to the
Company's Certificate of Incorporation or By-laws or any agreement between
the Company and its stockholders;
(ix) cooperate with the holders of the Registrable Securities and the managing
underwriters to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold, which
Registrable Securities shall not bear any restrictive legends; and enable
such Registrable Securities to be registered in such names as the managing
underwriters may request at least two business days prior to any sale of
the Registrable Securities to the underwriters;
(x) enter into one or more underwriting agreements, or similar agreements, as
appropriate, with customary provisions applicable to such agreements,
provided that any such underwriting agreements shall contain an agreement
of the underwriters to indemnify and hold harmless the Company against any
and all losses, claims, damages, and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus relating to the Registrable Securities
if a copy of the current Prospectus, as amended or supplemented, was
furnished to the underwriters and/or the holders of such Registrable
Securities by the Company but was not provided to a purchaser and such
current Prospectus would have cured the defect giving rise to such loss,
claim, damage or liability, or shall contain a substantially similar
agreement acceptable to the Company; and
(xi) (A) make such representations and warranties to the holders of such
Registrable Securities and the underwriters thereof in form, substance and
scope as are customarily made in connection with an offering of equity
securities pursuant to a Registration Statement filed on the form
applicable to the Registration; (B) obtain an opinion of counsel to the
Company in customary form and covering such matters, of the type
customarily covered by such an opinion, as the managing underwriters, and
as the holders of at least a majority in aggregate principal amount of the
Registrable Securities covered by the Registration, may reasonably request,
addressed to such holder or holders and the underwriters thereof; (C)
obtain "comfort" letters and updates thereof from the independent
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certified public accountants of the Company addressed to the selling
holders of Registrable Securities and the underwriters thereof, such
letters to be in customary form and covering matters of the type
ustomarily covered in "comfort" letters to underwriters in connection with
underwritten offerings; (D) deliver such documents and certificates,
including officer's certificates, as may be reasonably requested by the
holders of at least a majority in aggregate principal amount of the
Registrable Securities being sold and the managing underwriters thereof to
evidence the accuracy of the representations and warranties made pursuant
to clause (A) above and the compliance with or satisfaction of any
agreements or conditions contained in the underwriting agreement or other
agreement entered into by the Company; and (E) undertake such obligations
relating to expense reimbursement, indemnification and contribution as are
provided in Sections 4 and 5 hereof.
(b) In the event that the Company would be required, pursuant to Section
3(a)(iv)(F) above, to notify the selling holders of Registrable Securities, and
the managing underwriters thereof, the Company shall prepare and furnish to each
such holder and to each underwriter a reasonable number of copies of a
Prospectus supplemented or amended so that, as thereafter delivered to
purchasers of Registrable Securities, such Prospectus shall not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing. Each holder of Registrable Securities
agrees that upon receipt of any notice from the Company pursuant to Section
3(a)(iv)(F) hereof, such holder shall forthwith discontinue the disposition of
Registrable Securities pursuant to the Registration Statement applicable to such
Registrable Securities until such holder shall have received copies of such
amended or supplemented Prospectus, and if so directed by the Company, such
holder shall deliver to the Company (at the Company's expense) all copies, other
than permanent file copies, then in such holder's possession of the Prospectus
covering such Registrable Securities at the time of receipt of such notice. In
the event the Company shall give such notice, the Company shall extend the
period during which such Registration Statement shall be maintained effective as
provided in Section 2(a) hereof by the number of days during the period from and
including the date of the giving of such notice to the date when the Company
shall make available to each holder of Registrable Securities covered by the
Registration Statement such amended or supplemented Prospectus.
(c) The Company may require each holder of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding such holder (and, in the case of Stanley H. Durwood,
regarding DI, its subsidiaries
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(other than the Company), American Associated Enterprises, a Missouri limited
partnership ("AAE"), the 1989 Trust and the 1992 Trust) and the method of
distribution of such Registrable Securities as the Company may from time to time
reasonably request in writing. Each such holder agrees to notify the Company as
promptly as practicable of any inaccuracy or change in information previously
furnished by such holder to the Company or of the occurrence of any event in
either case as a result of which any Prospectus relating to such registration
contains or would contain an untrue statement of a material fact regarding such
holder or the method of distribution of such Registrable Securities or omits to
state any material fact regarding such holder or the intended method of
distribution of such Registrable Securities required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, and promptly to furnish to the Company any
additional information required to correct and update any previously furnished
information or required so that such Prospectus shall not contain, with respect
to such holder or the method of distribution of such Registrable Securities, an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing.
(d) In connection with the Registration, the Family Stockholders (other than
the 1992 Trust and the 1989 Trust) acting by majority vote (for which purpose
each such Family Stockholder shall have one vote) thereby shall designate a
single counsel (the "Counsel"), which shall be reasonably satisfactory to the
Company, to represent the collective interests of all of the holders of the
Registrable Securities covered by the Registration Statement in the Registration
and in their dealings with the Company.
(e) The Company may require each holder of Registrable Securities covered by
a Registration Statement promptly to furnish in writing to the Company such
information regarding such holder (and, in the case of Stanley H. Durwood,
regarding DI, its subsidiaries (other than the Company), AAE, the 1989 Trust and
the 1992 Trust), the plan of distribution of the Registrable Securities and
other information as the Company may from time to time reasonably request or as
may be legally required in connection with such Registration.
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Section 4. Registration Expenses.
Stanley H. Durwood, the 1989 Trust, the 1992 Trust and Delta shall bear and
pay (jointly and severally), promptly upon request being made therefor, all
expenses incident to the Company's performance of or compliance with this
Agreement whether or not the public offering contemplated by the Registration is
consummated, including, without limitation, (a) all Commission and any NASD
registration and filing fees and expenses, (b) all fees and expenses in
connection with the qualification of the Registrable Securities for offering and
sale under the state securities and blue sky laws referred to in Section
3(a)(viii) hereof, including reasonable fees and disbursements of counsel for
the underwriters in connection with such qualifications (in the event that such
counsel performs such functions), (c) all expenses relating to the preparation,
printing, distribution and reproduction of the Registration Statement required
to be filed hereunder, each Prospectus included therein or prepared for
distribution pursuant hereto, each amendment or supplement to the foregoing, the
certificates representing the Registrable Securities and all other documents
relating hereto, (d) messenger and delivery expenses, (e) fees and expenses of
any escrow agent or custodian, (f) fees, disbursements and expenses of counsel
and independent certified public accountants of the Company (including the
expenses of any opinions or "comfort" letters required by or incident to such
performance and compliance), and fees, expenses and disbursements of any other
persons, including special experts, retained by the Company in connection with
such registration (collectively, the "Registration Expenses"). Each holder of
the Registrable Securities being registered severally shall also pay (i) its
respective pro rata portion of all underwriting discounts and commissions
attributable to the sale of such Registrable Securities and the reasonable fees
and disbursements of the Counsel and (ii) the entire amount of the fees and
expenses of any counsel or other advisors or experts retained by such holder.
The Company shall pay all of its internal expenses (including, without
limitation, all salaries and expenses of the Company's officers and employees
performing legal or accounting duties).
Section 5. Indemnification.
(a) Indemnification by the Company. The Company shall, and it hereby agrees
to, indemnify and hold harmless each holder of Registrable Securities to be
included in the Registration (other than Stanley H. Durwood, the 1992 Trust and
the 1989 Trust) from and against any and all losses, claims, damages and
liabilities to which such holder may
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become subject, under the Securities Act or otherwise, insofar as such losses,
claims, damages and liabilities (or actions in respect thereof) and related
expenses (including without limitation reasonable attorneys' fees and expenses)
("Losses") arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in a Registration Statement under which
such Registrable Securities were registered under the Securities Act, or any
preliminary, final or summary Prospectus contained therein or furnished by the
Company to any such holder, or any amendment or supplement thereto, or arise out
of or are based upon any omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading; provided,
however, that (A) the Company shall not be obligated to indemnify any such
person in any such case to the extent that any such Losses are caused by an
untrue statement or alleged untrue statement or omission or alleged omission
made in such Registration Statement, or preliminary, final or summary
Prospectus, or amendment or supplement based upon written information furnished
to the Company by any holder of Registrable Securities expressly for use
therein, (B) the Company shall not be liable to any such holder under the
indemnity agreement in this subsection (a) with respect to any preliminary
Prospectus to the extent that any such Loss of such holder results from the fact
that such person sold Registrable Securities to a person as to whom it shall be
established that there was not sent or given at or prior to the written
confirmation of such sale, a copy of the Prospectus or of the Prospectus as then
amended or supplemented if the Company has previously furnished copies thereof
in sufficient quantity to such holder or underwriter and the loss, claim, damage
or liability of such holder or underwriter results from an untrue statement or
omission of a material fact contained in the preliminary Prospectus which was
corrected in the Prospectus or in the Prospectus as amended or supplemented and
(C) the Company shall not be obligated to indemnify any such holder with respect
to any sales occurring after the Company has given notice under Section
3(a)(iv)(F) to such holder and the managing underwriters and prior to the
delivery by the Company of any amended or supplemented Prospectus.
(b) Indemnification by the Holders. Each Stockholder shall, and hereby
agrees to, severally and not jointly, indemnify and hold harmless the Company,
and all other holders of Registrable Securities, against any Losses to which the
Company or such other holders of Registrable Securities may become subject,
under the Securities Act or otherwise, to the same extent as the foregoing
indemnity by the Company contained in (a), but only with reference to
information relating to such Stockholder furnished to the Company by such
Stockholder expressly for use in such Registration Statement, or any
preliminary, final or summary Prospectus and, where such Stockholder is Stanley
H. Durwood, the 1989 Trust or the 1992 Trust, with reference to information
relating to DI, its subsidiaries (other than
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the Company), AAE, the 1989 Trust, the 1992 Trust and Stanley H. Durwood;
provided, however, that no such holder shall be required to indemnify under this
Section 5(b) for any amounts in excess of the dollar amount of the proceeds to
be received by such holder from the sale of such holder's Registrable Securities
pursuant to such Registration. Such information shall be deemed to have been so
furnished for use therein by a Stockholder if it relates to such Stockholder
(or, in the case of Stanley H. Durwood, the 1989 Trust or the 1992 Trust, where
it relates to Stanley H. Durwood, the 1989 Trust, the 1992 Trust, DI, its
subsidiaries (other than the Company) or AAE) and if such Registration Statement
was available for review by such Stockholder (or the legal counsel for such
Stockholder) a reasonable time before being filed and not objected to in writing
by such Stockholder prior to the filing thereof.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified party
under subsection (a) or (b) above of written notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against an indemnifying party pursuant to the indemnification provisions of
or contemplated by this Section 5, notify such indemnifying party in writing of
the commencement of such action; but the omission so to notify the indemnifying
party shall relieve it from liability which it may have to any indemnified party
only to the extent the indemnifying party is prejudiced thereby. In case any
such action shall be brought against any indemnified party and it shall notify
an indemnifying party of the commencement thereof, such indemnifying party shall
be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall pay the fees and disbursements of such counsel and
shall not be liable to such indemnified party for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party unless (i) the indemnifying party and the indemnified party
shall have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties) include both
the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties. Such firm
shall be designated in writing by the managing underwriter if the named parties
to such proceeding include the managing underwriter and by the Family
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Stockholders (other than the 1992 Trust and the 1989 Trust) acting by majority
vote (in which each such Family Stockholder shall have one vote) in the case of
parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) above. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent not to be unreasonably withheld, but if settled with such
consent or if there be a final judgment for the plaintiff, the indemnifying
party agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party not to be
unreasonably withheld, effect any settlement of any pending or threatened
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such indemnified
party from all liability on claims that are the subject matter of such
proceeding.
(d) Contribution. Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 5(a) or Section 5(b) are
unavailable to or insufficient to hold harmless an indemnified party in respect
of any Losses referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Losses in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnifying party and the indemnified party,
but also the relative fault of the indemnifying party and the indemnified party
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or by such indemnified party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 5(d), no holder shall be
required to contribute any amount in excess of the amount by which the dollar
amount of the proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise been
required to pay by reason of such untrue or alleged
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untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The holders' obligations in this Section 5(d) to
contribute shall be several in proportion to the principal amount of Registrable
Securities registered or underwritten, as the case may be, by them and not
joint.
(e) The obligations of the Company under this Section 5 shall extend, upon
the same terms and conditions, to each officer, director and partner of each
holder and each person, if any, who controls any holder within the meaning of
either Section 20 of the Exchange Act or Section 15 of the Securities Act; and
the obligations of the Stockholders contemplated by this Section 5 shall be in
addition to any liability which the Stockholders may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company (including any person who, with his consent, is named in any
Registration Statement as about to become a director of the Company) and to each
person, if any, who controls the Company within the meaning of the Securities
Act.
(f) The obligations of the Company and each Stockholder under this Section 5
shall terminate on the Termination Date (as defined below), except that such
obligations shall survive in respect to any claim for indemnification made under
this Section 5 prior to the Termination Date until such claim for
indemnification is finally resolved. As used herein "Termination Date" means the
March 31 that is two years after the March 31 occurring immediately after the
date on which the Effective Time (defined in the Merger Agreement) occurs.
Section 6. Underwriting Requirements.
Each holder of Registrable Securities hereby agrees (i) to sell such
holder's Registrable Securities on a basis consistent with this Agreement and as
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements and (ii) to complete and execute all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements.
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Section 7. Miscellaneous.
(a) Specific Performance. The parties hereto acknowledge that there may be
no adequate remedy at law if any party fails to perform any of its obligations
hereunder and that each party may be irreparably harmed by any such failure, and
accordingly agree that each party, in addition to any other remedy to which it
may be entitled at law or in equity, shall be entitled to compel specific
performance of the obligations of any other party under this Agreement in
accordance with the terms and conditions of this Agreement, in any court of the
United States or any State thereof having jurisdiction.
(b) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered by hand, if delivered personally or by courier, or
three days after being deposited in the mail (registered or certified mail,
postage prepaid, return receipt requested) as follows: if to the Company, to it
at 106 West 14th Street, Kansas City, Missouri 64101, Attention: Corporate
Secretary, if to Delta, to it at 106 West 14th Street, Kansas City, Missouri
64101, and if to a Stockholder, to such Stockholder at the address set forth on
the signature page hereof next to such Stockholder's signature, provided that
such addresses may be changed by written notice as provided in this paragraph.
Information copies of all notices given to a Stockholder (other than Stanley H.
Durwood, the 1992 Trust or the 1989 Trust) or to Delta shall be given to:
Robert C. Kopple, Esq.
Kopple & Klinger
2029 Century Park East
Suite 1040
Los Angeles, CA 90067
Glenn Kurlander, Esq.
Schiff Hardin & Waite
150 East 52nd Street
Suite 2900
New York, New York 10022
19
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Information copies of all notices given
to Stanley H. Durwood, the 1992 Trust,
the 1989 Trust, or Delta should be
given to: Raymond F. Beagle, Jr., Esq.
Lathrop & Gage L.C.
2345 Grand Boulevard, 24th Floor
Kansas City, Missouri 64108-2684
Information copies of all notices given
to the Company should be given to: Charles J. Egan, Jr., Esq.
Hallmark Cards, Incorporated
2501 McGee Trafficway
Kansas City, MO 64141-6126
The Honorable Paul E. Vardeman
Polsinelli, White, Vardeman & Shalton
Suite 1000, Plaza Steppes
700 West 47th Street
Kansas City, MO 64112-1802
(c) Third Party Beneficiaries: Holders Entitled and Bound. This agreement
shall be binding upon and inure to the benefit of the parties, their successors,
heirs, legatees, devisees and personal and legal representatives, and any
transferee that is a Permitted Assignee. No party may assign its rights under
this Agreement (except to a Permitted Assignee as provided herein) without the
consent of the other parties hereto.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(e) Survival. The respective indemnities, agreements, representations and
warranties and each other provision set forth in this Agreement or made pursuant
hereto shall remain in full force and effect regardless of any investigation (or
statement as to the results thereof) made by or on behalf of any holder of
Registrable Securities, any director, officer
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or partner of such holder, any agent or underwriter or any director, officer or
partner thereof, or any controlling person of any of the foregoing, and shall
survive the transfer of Registrable Securities by such holder.
(f) Law Governing; Consent to Jurisdiction.
(I) This Agreement shall be governed by and construed in accordance with
the laws of the State of Missouri without giving effect to the conflicts of laws
principles thereof.
(II) Each party hereto hereby consents to, and confers exclusive
jurisdiction upon, the courts of the State of Missouri and the Federal courts of
the United States of America located in the City of Kansas City, Missouri, and
appropriate appellate courts therefrom, over any action, suit or proceeding
arising out of or relating to this Agreement. Each party covenants that it will
not commence any action, suit or proceeding arising out of or relating to this
Agreement in any other jurisdiction. Nothing in this paragraph shall affect the
rights of a party to enforce a judgment rendered by the courts referred to in
the first sentence of this paragraph in any other jurisdiction. Each party
hereto hereby waives, and agrees not to assert, as a defense in any such action,
suit or proceeding that it is not subject to such jurisdiction or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement may not be enforced in or by said courts or that
its property is exempt or immune from execution, that the suit, action or
proceeding is brought in an inconvenient forum, or that the venue of the suit,
action or proceeding is improper. Service of process in any such action, suit or
proceeding may be served on any party anywhere in the world, whether within or
without the State of Missouri by mailing a copy thereof by registered or
certified mail, postage prepaid, to such party at its address provided in
Section 7(b) of this Agreement, provided that service of process may be
accomplished in any other manner permitted by applicable law.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
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(h) Entire Agreement; Amendments. This Agreement, the Stock Agreement, the
Indemnification Agreement and the Merger Agreement and, with respect to the
Family Stockholders, that certain Durwood Family Settlement Agreement dated as
of January 22, 1996 contain the entire understanding of the parties with respect
to the transactions contemplated hereby. This Agreement supersedes all prior
agreements and understandings between the parties with respect to its subject
matter, except that the Durwood Family Settlement Agreement shall not be deemed
to be amended by this Agreement and shall remain in full force and effect. This
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively) only by a written instrument duly executed by the Company and the
Family Stockholders acting by majority vote (for which purpose each Family
Stockholder (other than the 1992 Trust and the 1989 Trust) shall have one vote).
Each holder of any Registrable Securities at the time or thereafter outstanding
shall be bound by any amendment or waiver effected pursuant to this Section
7(h), whether or not any notice, writing or marking indicating such amendment or
waiver appears on such Registrable Securities or is delivered to such holder.
(i) Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the holders of
Registrable Securities shall be made available for inspection and copying on any
business day by any holder of Registrable Securities at the offices of the
Company at the address thereof set forth in Section 7(b) above.
(j) Severability. In the event that any one or more of the provisions
contained in this Agreement, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) Certain Provisions Regarding the TBD Partnership. The TBD partnership
will not participate in any vote or determination to be made by the Stockholders
hereunder. All agreements and obligations of Thomas A. Durwood and the TBD
Partnership made herein or arising hereunder shall be deemed to be joint and
several agreements and obligations of each of Thomas A. Durwood and the TBD
Partnership, except that the number of Registrable Securities to be sold by
Thomas A. Durwood and the TBD Partnership in the
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secondary offering provided for herein shall in the aggregrate equal the number
of shares of Registrable Securities set forth next to Thomas A. Durwood's name
on Exhibit A hereto (the allocation of such Registrable Securities between
Thomas A. Durwood and the TBD Partnership to be determined by Thomas A.
Durwood).
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
AMC ENTERTAINMENT INC.
By: /s/Peter C. Brown
-----------------
Peter C. Brown
President
DELTA PROPERTIES, INC.
By:/s/Stanley H. Durwood
---------------------
Address: Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615
Kansas City, Missouri 64141-6615
/s/Stanley H. Durwood
- ---------------------
1323 Granite Creek Drive
/s/Carol D. Journagan Blue Springs, Missouri 64015
- ---------------------
3001 West 68th Street
/s/Edward D. Durwood Shawnee Mission, KS 66208
- --------------------
P.O. Box 7208
/s/Thomas A. Durwood Rancho Santa Fe, CA 92067
- --------------------
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187 Chestnut Hill Road
/s/Elissa D. Grodin Wilton, CT 06897
- -------------------
655 N.W. Altishan Place
/s/Brian H. Durwood Beaverton, OR 97006
- -------------------
666 West End Avenue
/s/Peter J. Durwood New York, NY 10025
- -------------------
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615
/s/Stanley H. Durwood, Kansas City, Missouri 64141-6615
- ----------------------
as trustee of the 1992
Trust
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615
/s/Stanley H. Durwood, Kansas City, Missouri 64141-6615
- ----------------------
as trustee of the 1989
Trust
THE THOMAS A. AND BARBARA F. P.O. Box 7208
DURWOOD FAMILY INVESTMENT Rancho Santa Fe, California 92067
PARTNERSHIP
By:/s/ Thomas A. Durwood
- ------------------------
Thomas A. Durwood, as Trustee of the Thomas A. and Barbara F. Durwood
Family Trust, as General Partner
By: /s/Barbara F. Durwood
- --------------------------
Barbara F. Durwood, as Trustee of the Thomas A. and Barbara F. Durwood
Family Trust, as General Partner
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<PAGE>
Exhibit A
Stanley H. Durwood *
1989 Trust *
1992 Trust *
___________
*500,000 shares, collectively
Carol D. Journagan 416,666.67 shares
Edward D. Durwood 416,666.67 shares
Thomas A. Durwood 416,666.67 shares
Elissa D. Grodin 416,666.67 shares
Brian H. Durwood 416,666.67 shares
Peter J. Durwood 416,666.67 shares
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Exhibit 99.3
V55
STOCK AGREEMENT
THIS AGREEMENT, dated as of August 15, 1997, is between (i) AMC
Entertainment Inc., a Delaware corporation ("AMCE"), (ii) Stanley H. Durwood,
individually, and as trustee of the 1992 Durwood, Inc. Voting Trust dated
December 12, 1992 (the "1992 Trust"), and as trustee of the Trust created
pursuant to the Stanley H. Durwood Trust Agreement dated August 14, 1989 (the
"1989 Trust"), Carol D. Journagan, Edward D. Durwood, Thomas A. Durwood, Elissa
D. Grodin, Brian H. Durwood, Peter J. Durwood, The Thomas A. and Barbara F.
Durwood Family Investment Partnership, a California limited partnership (the
"TBD Partnership") (all persons and entities referred to in this clause (ii) are
referred to herein collectively as the "Family Stockholders") and each
Authorized Assignee (as defined below) of such Family Stockholder (each such
Family Stockholder and Authorized Assignee a "Stockholder" and collectively
"Stockholders") and (iii) solely for purposes of Section 5.3 hereof, Delta
Properties, Inc., a Missouri corporation.
WITNESSETH:
WHEREAS, Family Stockholders own (directly or indirectly) stock of Durwood,
Inc., a Missouri corporation ("DI"), which is party to an Agreement and Plan of
Merger and Reorganization among DI and AMCE (the "Merger Agreement"), providing
for the merger ("Merger") of DI into AMCE; and
WHEREAS, pursuant to the Merger, Family Stockholders will acquire shares of
AMCE's common stock, par value 66 2/3(cent) per share (the "Common Stock") and
shares of AMCE's Class B Stock, par value 66 2/3(cent) per share (the "Class B
Stock"); and
WHEREAS, the parties anticipate that a portion of the shares of Common
Stock received in the Merger (or the shares of Common Stock received upon the
conversion of shares of Class B Stock received in the Merger) will be offered in
a secondary offering registered under the Securities Act of 1933, as amended
(the "1933 Act") pursuant to and as contemplated by the Registration Agreement
(the "Secondary Offering"); and
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WHEREAS, AMCE requires that this Agreement be made as a condition precedent
to the Merger and its agreement to file a registration statement in connection
with the Secondary Offering.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein and for other good and valuable
consideration the receipt of which is hereby acknowledged, the parties,
intending to be legally bound hereby, agree as follows:
ARTICLE I
Definitions
As used in this Agreement, the following terms, not otherwise defined
herein, have the meanings set forth below.
"Adjusted Basis" shall have the meaning specified in the Registration
Agreement.
"Affiliate" of a specified person means a person (other than AMCE or a
majority-owned subsidiary of AMCE) that directly, or indirectly through one or
more intermediaries, controls or is controlled by, or is under common control
with, the person specified. For purposes of this definition, control of a person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such person whether by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"Associate" of any person means (i) a corporation or organization (other
than AMCE or a majority-owned subsidiary of AMCE) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of 10% or
more of any class of equity securities; (ii) any trust or other estate in which
such person has a substantial beneficial ownership interest or as to which such
person serves as trustee or in a similar fiduciary capacity; or (iii) any
relative or spouse of such person, or any relative of such
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spouse, who has the same home as such person or who is a director or officer of
AMCE or any of its parents or subsidiaries.
"Authorized Assignee" of a Stockholder means (i) any person or entity
(other than a Charitable Assignee, except as provided in clause (ii) below) to
which Voting Securities are transferred by gift or otherwise without fair
consideration or (ii) if such Stockholder is a Family Stockholder, to the extent
such Stockholder (and its Authorized Assignees) transfers more than 5% in the
aggregate of the shares of Class B Stock or Common Stock received by such Family
Stockholder in the Merger (or Common Stock received upon the conversion of such
Class B Stock) ("Merger Shares") to Charitable Assignees, those Charitable
Assignees receiving shares in excess of such threshold.
"Charitable Assignee" of a Stockholder shall mean any charitable
organization, including charitable remainder and charitable lead trusts, a
transfer of property to which by such Stockholder would qualify, at least in
part, for an income, gift or estate tax charitable deduction under the Internal
Revenue Code of 1986, as amended.
"Durwood Children" means Family Stockholders (other than Stanley H.
Durwood, the 1992 Trust and the 1989 Trust), and any Authorized Assignee of a
Family Stockholder (other than Authorized Assignees of Stanley H. Durwood, the
1992 Trust and the 1989 Trust that are not Family Stockholders).
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Effective Date" shall mean the date on which the Effective Time (as
defined in the Merger Agreement) occurs.
"Group" means two or more persons acting as a partnership, limited
partnership, syndicate, or other group for the purpose of acquiring, holding, or
disposing of securities of AMCE.
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<PAGE>
"Indemnification Agreement" has the meaning specified in the Merger
Agreement.
"Merger Expenses" shall mean those Expenses (as defined in the Merger
Agreement) not paid by Stanley H. Durwood, the 1989 Trust and the 1992 Trust
pursuant to Section 2(c) of the Indemnification Agreement.
"Permitted Assignee" shall have the meaning specified in the Registration
Agreement.
"Registration Agreement" means the Registration Agreement dated the date
hereof among AMCE and the Family Stockholders.
"Restricted Period" shall mean a period commencing the date hereof and
ending three years after the Effective Date.
"Voting Securities" means Common Stock, Class B Stock and any other
securities of AMCE that may be issued from time to time having general voting
power under ordinary circumstances in the election of directors and any other
security of AMCE convertible into, or exercisable for, any such security.
ARTICLE II
Representations and Warranties
Section 2.1 Representations and Warranties of Stockholders: Each
Stockholder, severally, as to himself, herself or itself, and not jointly,
hereby represents and warrants to AMCE as follows:
(a) Such Stockholder has full legal right, power and authority to enter
into and perform this Agreement and the Registration Agreement. This Agreement
and the Registration Agreement are valid and binding obligations of such
Stockholder enforceable against such Stockholder in accordance with their terms,
except that such enforcement may
4
<PAGE>
be subject to (i) bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
(b) Neither the execution and delivery of this Agreement or the
Registration Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby or thereby conflicts with or
constitutes a violation of or default under any statute, law, regulation, order
or decree applicable to such Stockholder, or any material contract, commitment,
agreement, arrangement or restriction of any kind to which such Stockholder is a
party or by which such Stockholder is bound.
Section 2.2 Representations and Warranties of AMCE. AMCE hereby represents
and warrants to Stockholders as follows:
(a) AMCE has full legal right, power and authority to enter into and
perform this Agreement and the Registration Agreement. The execution and
delivery of this Agreement and the Registration Agreement by AMCE and the
consummation by AMCE of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on behalf of AMCE. This
Agreement and the Registration Agreement are valid and binding obligations of
AMCE enforceable against AMCE in accordance with their terms, except that such
enforcement may be subject to (i) bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforcement is considered in a proceeding in equity
or at law).
(b) Neither the execution and delivery of this Agreement or the
Registration Agreement by AMCE nor the consummation by AMCE of the transactions
contemplated hereby or thereby conflicts with or constitutes a violation of or
default under the charter or bylaws of AMCE, any statute, law, regulation, order
or decree applicable to AMCE, or any material contract, commitment, agreement,
arrangement or restriction of any kind to which AMCE is a party or by which AMCE
is bound.
5
<PAGE>
ARTICLE III
Limitations and Restrictions
Section 3.1 Restrictions on Certain Actions by Stockholders. Each of the
Durwood Children severally agrees that during the Restricted Period, such
Stockholder will not, nor will it permit any of its Affiliates or Associates
(other than Stanley H. Durwood, the 1992 Trust and the 1989 Trust) from and
after the date that such person becomes an Affiliate or Associate to, unless in
any such case specifically invited to do so by the Board of Directors of AMCE,
directly or indirectly, alone or in concert with others:
(a) become a member of a Group (other than a Group composed solely of
Stockholders) or make any public or private proposal with respect to an
extraordinary transaction involving AMCE or any of its subsidiaries;
(b) solicit, or participate in any "solicitation" of, "proxies" or become a
"participant" in any "election contest" (as such terms are defined or used in
Regulation 14A under the Exchange Act) with respect to AMCE; or
(c) deposit any shares of Common Stock in a voting trust (where the
trustees thereof are not such Stockholder or Permitted Assignees of such
Stockholder) or, except as specifically contemplated by this Agreement, subject
them to a voting agreement or other agreement or arrangement with respect to the
voting of such shares of Common Stock.
The foregoing limitations shall not restrict directors of AMCE who are also
Stockholders from taking such action as directors as they deem necessary,
advisable or proper to fulfill their fiduciary duties to AMCE and its
stockholders.
Section 3.2 Voting. (a) During the Restricted Period, each of the Durwood
children, severally, shall grant the proxy set forth in paragraph (b) below, and
shall take no action to revoke or interfere with the exercise of such proxy or
to vote shares subject to the proxy in a manner inconsistent with the proxy.
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<PAGE>
(b) Each of the Durwood Children hereby appoints the Secretary and each
Assistant Secretary of AMCE, and each of them, as such Durwood Child's proxy and
attorney, with full power of substitution, to vote all shares of Common Stock
owned by such Durwood Child from time to time for each candidate for the Board
of Directors of AMCE in the same proportion as the aggregate votes cast in such
elections by all other holders of Common Stock not affiliated with AMCE, its
directors and officers. This proxy will remain in effect during the Restricted
Period and is coupled with an interest and irrevocable during the Restricted
Period. This proxy will automatically terminate upon the conclusion of the
Restricted Period.
Section 3.3 Restrictions on Transfer. Each Stockholder severally agrees not
to sell, assign, pledge, hypothecate, transfer, grant an option with respect to
or otherwise dispose of any interest in Voting Securities, or enter into an
agreement, arrangement or understanding with respect to the foregoing
(individually and collectively, "Transfer"), except in compliance with the 1933
Act. Each Stockholder severally acknowledges that shares of Common Stock and
Class B Stock received in the Merger will be subject to limitations on Transfer
imposed by Rule 145 under the 1933 Act and may not be sold except in a
registered offering, pursuant to Rule 145 under the 1933 Act or in a transaction
otherwise exempt from registration under the 1933 Act and that certificates
evidencing Voting Securities of AMCE which it will receive as a result of the
Merger (and any shares subsequently acquired by such Stockholder) may bear an
appropriate legend to such effect (and to the effect that Authorized Assignees
are required to become parties to this Agreement and to the effect that the
Company has a right of first refusal in connection with certain sales thereof)
and that AMCE will give stop transfer instructions to its transfer agent
regarding Voting Securities held by such Stockholder.
Section 3.4 Transfers by Gift. Subject to the next sentence, each
Stockholder severally agrees that during the Restricted Period such Stockholder
will not transfer Voting Securities to any Authorized Assignee unless such
person or entity agrees by instrument in form and substance reasonably
satisfactory to AMCE to be bound by the provisions of this Agreement as a
"Stockholder". It is understood and agreed that (subject to the requirements set
forth in the definition of Permitted Assignees in the Registration Agreement)
other transferees of Voting Securities shall not be required to agree to be
bound by the provisions of this Agreement and that each Family Stockholder may
transfer up to 5%
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<PAGE>
in the aggregate of its Merger Shares to Charitable Assignees free and clear of
the provisions of this Agreement.
ARTICLE IV
Right of First Refusal
Section 4.1 Right of First Refusal.
(a) In the event that during the Restricted Period one of the Durwood
Children desires to sell all or part of its holding of Voting Securities (the
"Shares") in a transaction that is exempt from the registration requirements of
the 1933 Act other than in brokers' transactions within the meaning of Section
4(4) thereof, AMCE shall first be given the opportunity, in the following
manner, to purchase (or cause a corporation, entity, person or group designated
by AMCE to purchase) all, but not less than all, of such Shares sought to be
sold.
(b) Such Durwood Child shall deliver a written notice (the "Notice") to
AMCE of such intention, describing the proposed terms for sale of the Shares,
identifying the offeror, identifying the proposed price of the Shares, and
setting forth the other terms and conditions of such offer or proposed sale.
(c) AMCE shall have the right for 5 business days (which period shall be
extended by the amount of time taken to determine the value of non-cash
consideration pursuant to the next sentence) from the receipt of the Notice (the
"Decision Period"), exercisable by written notice in accordance with Section 7.8
hereof, to elect to purchase (or to designate a corporation, entity, person or
group to purchase) all, but not less than all, of the Shares specified in the
Notice for cash at the price set forth therein and upon the terms and conditions
in the Notice.
If the purchase price specified in the Notice includes any property other
than cash, the purchase price shall be deemed to be the amount of any cash
included in the purchase price plus the value (as may be mutually agreed by the
Durwood Child and AMCE, or, if they are unable to agree, as determined by an
independent, nationally recognized investment banking firm mutually selected by
the Durwood Child and AMCE and the fees and expenses of such firm shall be borne
equally by the Durwood Child and AMCE) of the
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other property included in the price; and in such event AMCE's notice of
exercise of the right to elect to purchase provided for herein shall set forth
the purchase price so determined.
(d) If AMCE does not exercise its right to elect to purchase by the end of
the Decision Period, the Durwood Child shall be free to sell or agree to sell
the Shares specified in the Notice to the third party making the offer described
in the Notice, at the price specified therein or at any price in excess thereof
and on the other terms and conditions specified in the Notice. If the Durwood
Child shall not so sell all of the Shares within 90 days after the expiration of
the Decision Period, the provisions of this Agreement including, without
limitation, this Article IV, shall thereafter apply to the Shares not so sold.
(e) If AMCE exercises its right to purchase specified in paragraph (c) of
this Article IV, the closing of the purchase of the Shares shall take place
within 30 days after receipt by the Durwood Child of the notice of exercise at a
place, time, and date specified by AMCE. At the closing, AMCE shall deliver to
the Durwood Child cash or immediately available funds in an amount equal to the
purchase price set forth in the Notice, and the Durwood Child shall deliver to
AMCE certificates representing the Shares, which Shares shall be free and clear
of all liens, security interests and other encumbrances, duly endorsed in blank
or accompanied by stock powers duly executed and otherwise in form acceptable
for transfer of the Shares on the books of AMCE, together with all necessary
stock transfer stamps.
ARTICLE V
Secondary Offering
Section 5.1 Consummation of Secondary Offering. The Stockholders agree to
use their best efforts to cause the Secondary Offering to be consummated during
the period beginning the date that is six months and one day from the Effective
Date and ending the date (the "Deadline Date") that is six months from such date
(provided that such six-month period ending on the Deadline Date shall be
extended by the length of any Postponement Period (as defined in the
Registration Agreement)).
Section 5.2 Number of Shares. Subject to the terms and conditions of the
Registration Agreement, each Stockholder severally agrees that it will sell a
number of
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<PAGE>
shares of Common Stock in the Secondary Offering equal to the number of shares
of Common Stock set forth next to such Stockholder's name in Exhibit A to the
Registration Agreement, subject to reduction or increase pursuant to the
Registration Agreement, provided that Thomas A. Durwood and the TBD Partnership
need only in the aggregate sell the number of shares of Common Stock set forth
next to Thomas A. Durwood's name on such Exhibit A.
Section 5.3 Failure to Consummate. In the event that the Merger is
consummated and the Secondary Offering is not consummated pursuant to the
Registration Agreement on or prior to the Deadline Date, other than as a result
of the breach by AMCE of the Registration Agreement, Stanley H. Durwood, the
1992 Trust, the 1989 Trust and Delta shall jointly and severally (i) pay to AMCE
a fee equal to an aggregate of $2,000,000 to compensate AMCE for the diversion
of its officers and other employees in connection with the Secondary Offering
and (ii) reimburse AMCE for all of its Merger Expenses.
ARTICLE VI
Tax Matters
Section 6.1 Representations. Each Stockholder (other than the TBD
Partnership) hereby severally represents and warrants to AMCE that such
Stockholder has no plan or intention, and as of the Effective Date will have no
plan or intention to sell, exchange, or otherwise dispose of a number of shares
of Common Stock or Class B Stock received in the Merger that would reduce (i)
the ownership by such Stockholder of Common Stock received in the Merger to a
number of shares equal to less than 50% of the number of shares of Common Stock
received by such Stockholder (plus, in the case of Thomas A. Durwood, the TBD
Partnership) in the Merger or (ii) the ownership by such Stockholder of Class B
Stock received by such Stockholder in the Merger to a number of shares equal to
less than 50% of the number of shares of Class B Stock received by such
Stockholder in the Merger (plus, in the case of Stanley H. Durwood, the 1989
Trust and the 1992 Trust, collectively, a number of shares of Class B Stock
equal to the sum of (x) 65% of the number of shares of Common Stock received by
Harvard College in the Merger, plus (y) a number of shares of Class B Stock
equal to the Specified Percentage of the total number of shares of Class B Stock
and Common Stock issued in the Merger).
Section 6.2 Covenants. Each Stockholder (other than the TBD Partnership)
hereby severally covenants that for a period of two years from the Effective
Date, he, she or
10
<PAGE>
it will not sell, exchange, or otherwise dispose of a number of shares of Common
Stock or Class B Stock received by such Stockholder in the Merger that would
reduce (i) the ownership by such Stockholder of Common Stock received in the
Merger to a number of shares equal to less than 50% of the number of shares of
Common Stock received by such Stockholder (plus, in the case of Thomas A.
Durwood, the TBD Partnership) in the Merger (provided that such Stockholder may
sell, exchange or otherwise dispose of a number of shares of Common Stock in
excess of the number otherwise permitted by this clause (i) if another
Stockholder agrees by written instrument reasonably satisfactory to AMCE to
reduce the number of shares of Common Stock such other Stockholder is permitted
to sell pursuant to this clause (i) by a like number of shares and all other
Stockholders consent in writing thereto) or (ii) the ownership by such
Stockholder of Class B Stock received by such Stockholder in the Merger to a
number of shares equal to less than 50% of the number of shares of Class B Stock
received by such Stockholder in the Merger (plus, in the case of Stanley H.
Durwood, the 1989 Trust and the 1992 Trust, collectively, a number of shares of
Class B Stock equal to the sum of (x) 65% of the number of shares of Common
Stock received by Harvard College in the Merger, plus (y) a number of shares of
Class B Stock equal to the Specified Percentage of the total number of shares of
Class B Stock and Common Stock issued in the Merger).
Section 6.3 Definitions. As used herein, a "Specified Percentage" of a
number of shares of Common Stock and Class B Stock shall mean a percentage of
such shares equal to the product (expressed as a percentage) of (A) a fraction
having a numerator of $1,125,000 and a denominator equal to the sum of the value
of all shares of Common Stock and Class B Stock issued in the Merger (as
determined by AMCE in good faith, such determination to be conclusive and
binding on the parties in the absence of manifest error), plus $1,125,000,
multiplied by (B) 1.25. Immediately prior to the execution and delivery of this
Agreement, AMCE shall have delivered to the 1989 Trust, the 1992 Trust and
Stanley H. Durwood written notice of its determination of the Specified
Percentage.
ARTICLE VII
Miscellaneous
Section 7.1 Holdback Agreement. The Stockholders agree in connection with
any registration of an underwritten offering of securities of AMCE during the
Restricted Period, including the Secondary Offering, upon the request of AMCE or
the underwriters
11
<PAGE>
managing such offering, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Voting Securities
without the prior written consent of AMCE or such underwriters, as the case may
be, for such period of time as AMCE or the underwriters may specify (a "Holdback
Period"), provided that the aggregate of Holdback Periods for any 365-day period
shall not exceed 180 days.
Section 7.2 Interpretation. For all purposes of this Agreement, the terms
AMCE "Common Stock" and "Class B Stock" shall include any securities of any
issuer entitled to vote generally for the election of directors of such issuer
which securities the holders of AMCE Common Stock or Class B Stock shall have
received or as a matter of right are entitled to receive as a result of (i) any
capital reorganization or reclassification of the capital stock of AMCE, (ii)
any consolidation, merger or share exchange of AMCE with or into another
corporation, or (iii) any sale of all or substantially all the assets of AMCE.
Section 7.3 Enforcement. (a) Stockholders, on the one hand, and AMCE, on
the other, acknowledge and agree that irreparable damage would occur if any of
the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. Accordingly, the parties will be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically its provisions in any court of the United States or
any state having jurisdiction, this being in addition to any other remedy to
which they may be entitled at law or in equity.
(b) No failure or delay on the part of either party in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
Section 7.4 Entire Agreement. This Agreement, the Merger Agreement, the
Registration Agreement and the Indemnification Agreement (as defined in the
Merger Agreement) and, with respect to the Family Stockholders only, that
certain Durwood Family Settlement Agreement dated as of January 22, 1996,
constitute the entire understanding of the parties with respect to the
transactions contemplated herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to the transactions
contemplated hereby except that the Durwood Family Settlement Agreement shall
not be deemed to be amended by this Agreement and shall remain in full force and
effect. This Agreement may be amended only by an agreement in writing executed
by all the parties.
12
<PAGE>
Section 7.5 Severability. If any provision of this Agreement is held by a
court of competent jurisdiction to be unenforceable, the remaining provisions
shall remain in full force and effect. It is declared to be the intention of the
parties that they would have executed the remaining provisions without including
any that may be declared unenforceable.
Section 7.6 Heading. Descriptive headings are for convenience only and will
not control or affect the meaning or construction of any provision of this
Agreement.
Section 7.7 Counterparts. This Agreement may be executed in two or more
counterparts, and each such executed counterpart will be an original instrument.
Section 7.8 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for in this Agreement and all legal
process in regard to this Agreement will be validly given, made or served, if in
writing and delivered personally, by telecopy (except for legal process) or sent
by registered mail postage paid:
If to AMCE: AMC Entertainment Inc.
106 W. 14th Street
Kansas City, Missouri 64101
Attention: Corporate Secretary
Fax:
with copies to: Charles J. Egan, Jr., Esq.
Hallmark Cards, Incorporated
2501 McGee Trafficway
Kansas City, MO 64141-6126
The Honorable Paul E. Vardeman
Polsinelli, White, Vardeman & Shalton
13
<PAGE>
Suite 1000, Plaza Steppes
700 West 47th Street
Kansas City, MO 64112-1802
If a Stockholder or Delta: to the address set forth next to such Stockholder's
or Delta's name on the signature pages hereto
With information copies of notices
to a Stockholder (other than Stanley
H. Durwood, the 1992 Trust or the
1989 Trust) or Delta to: Robert C. Kopple, Esq.
Kopple & Klinger
2029 Century Park East
Suite 1040
Los Angles, CA 90067
Glenn Kurlander, Esq.
Schiff Hardin & Waite
150 East 52nd Street
Suite 2900
New York, New York 10022
With information copies of notices
to Stanley H. Durwood, the 1992
Trust, the 1989 Trust or Delta to: Raymond F. Beagle, Jr., Esq.
Lathrop & Gage L.C.
2345 Grand Boulevard, 24th Floor
Kansas City, Missouri 64108-2684
or to such other address or telecopy number as any party may, from time to time,
designate in a written notice given in a like manner. Notice shall be deemed
given upon receipt thereof.
Section 7.9 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors, heirs, legatees, devisees and
personal and legal representatives of the parties and Authorized Assignees of
Stockholders; provided, however, that no party may assign this Agreement (other
than an assignment by a Stockholder to an Authorized Assignee as provided
herein) without the prior written consent of all other parties.
14
<PAGE>
Section 7.10 Governing Law.
(a) This Agreement will be governed by and construed and enforced in
accordance with the internal laws of the State of Missouri without giving effect
to the conflict of laws principles thereof.
(b) Each party hereto hereby consents to, and confers exclusive
jurisdiction upon, the courts of the State of Missouri and the Federal courts of
the United States of America located in the City of Kansas City, Missouri, and
appropriate appellate courts therefrom, over any action, suit or proceeding
arising out of or relating to this Agreement. Each party covenants that it will
not commence any action, suit or proceeding arising out of or relating to this
Agreement in any other jurisdiction. Nothing in this paragraph shall affect the
rights of a party to enforce a judgment rendered by the courts referred to in
the first sentence of this paragraph in any other jurisdiction. Each party
hereto hereby waives, and agrees not to assert, as a defense in any such action,
suit or proceeding that it is not subject to such jurisdiction or that such
action, suit or proceeding may not be brought or is not maintainable in said
courts or that this Agreement may not be enforced in or by said courts or that
its property is exempt or immune from execution, that the suit, action or
proceeding is brought in an inconvenient forum, or that the venue of the suit,
action or proceeding is improper. Service of process in any such action, suit or
proceeding may be served on any party anywhere in the world, whether within or
without the State of Missouri by mailing a copy thereof by registered or
certified mail, postage prepaid, to such party at its address provided in
Section 7.8 of this Agreement, provided that service of process may be
accomplished in any other manner permitted by applicable law.
Section 7.11 Certain Provisions Regarding the TBD Partnership. The TBD
Partnership will not participate in any vote or determination to be made by the
Stockholders hereunder. All agreements and obligations of Thomas A. Durwood and
the TBD Partnership made herein or arising hereunder (other than in or under
Article VI hereof) shall be deemed to be joint and several agreements and
obligations of each of Thomas A. Durwood and the TBD Partnership.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
AMC ENTERTAINMENT INC.
By /s/Peter C. Brown
--------------------
Peter C. Brown
President
Address: STOCKHOLDERS
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/Stanley H. Durwood
Kansas City, Missouri 64141-6615 ---------------------
Stanley H. Durwood
1323 Granite Creek Drive /s/Carol D. Journagan
---------------------
Blue Springs, MO 64015 Carol D. Journagan
3001 West 68th Street /s/Edward D. Durwood
--------------------
Shawnee Mission, KS 66208 Edward D. Durwood
P.O. Box 7208 /s/Thomas A. Durwood
--------------------
Rancho Santa Fe, CA 92067 Thomas A. Durwood
187 Chestnut Hill Road /s/Elissa D. Grodin
-------------------
Wilton, CT 06897 Elissa D. Grodin
655 N.W. Altishan Place /s/Brian H. Durwood
-------------------
Beaverton, OR 97006 Brian H. Durwood
666 West End Avenue /s/Peter J. Durwood
-------------------
New York, NY 10025 Peter J. Durwood
16
<PAGE>
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/Stanley H. Durwood
----------------------
Kansas City, Missouri 64141-6615 Stanley H. Durwood, as trustee
of the 1992 Trust
1700 Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/ Stanley H. Durwood
----------------------
Kansas City, Missouri 64141-6615 Stanley H. Durwood, as trustee
of the 1989 Trust
Suite 1700 DELTA PROPERTIES, INC.
Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/Stanley H. Durwood,
----------------------
Kansas City, Missouri 64141-6615 President
P.O. Box 7208 THE THOMAS A. AND BARBARA F.
Rancho Santa Fe, California 92067 DURWOOD FAMILY INVESTMENT
PARTNERSHIP
By:/s/Thomas A. Durwood
---------------------
Thomas A. Durwood, as Trustee
of the Thomas A. and Barbara
F. Durwood Family
Trust, as General Partner
By: /s/Barbara F. Durwood
---------------------
Barbara F. Durwood, as Trustee
of the Thomas A. and Barbara
F. Durwood Family
Trust, as General Partnership
17
<PAGE>
Exhibit 99.4
Family Settlement Agreement Escrow
ESCROW AGREEMENT
This Escrow Agreement is entered into on August 15, 1997, by and among (i)
Stanley H. Durwood, individually, and as trustee of the 1992 Durwood, Inc.
Voting Trust dated December 12, 1992 (the "1992 Trust") and as trustee of the
Trust created pursuant to the Stanley H. Durwood Trust Agreement dated August
14, 1989 (the "1989 Trust"), Carol D. Journagan, Edward D. Durwood, Thomas A.
Durwood, Elissa D. Grodin, Brian H. Durwood and Peter J. Durwood (all persons
and entities listed in this clause (ii) are referred to herein as the "Durwood
Parties") and (ii) Mercantile Bank of Kansas City, a state banking corporation
chartered in Missouri (the "Escrow Agent").
WHEREAS, the Durwood Parties are parties to a Durwood Family Settlement
Agreement dated as of January 22, 1996 as amended (the "Settlement Agreement")
and, together with AMC Entertainment Inc. ("AMCE"), are parties to a
Registration Agreement dated as of August 15, 1995 (the "Registration
Agreement"); and
WHEREAS, pursuant to the Registration Agreement the Durwood Parties have
agreed to sell at least 3,000,000 shares of Registerable Securities (as therein
defined) in a registered secondary offering to occur after six months from the
date hereof but prior to the expiration of twelve months after the date hereof,
and pursuant to Section 7(a) of the Settlement Agreement, the Durwood Parties
have agreed to deposit in escrow the shares to be offered by them in a secondary
offering; and
WHEREAS, the Escrow Agent is willing to establish an escrow account on the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. The Escrow Agent hereby acknowledges receipt of one or more certificates
representing the shares of AMCE Common Stock and Class B Stock listed on Exhibit
A hereto (the "Shares") and one or more related stock powers executed in blank
with signatures guaranteed ("Stock Power") from the Durwood Party whose name is
set forth next to such Shares on Exhibit A, in escrow, pursuant to this Escrow
Agreement. The Durwood Party placing Shares and Stock Powers in escrow is
referred to herein as the "Owner" of such Shares and of all Additional Shares
(as defined below) issued or paid as dividends or other distributions thereon or
with respect thereto. The Escrow Agent agrees to hold and dispose of the Shares
and Stock Powers and any Additional Shares and Stock Powers in accordance with
the terms and conditions of this Escrow Agreement.
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<PAGE>
2. The Escrow Agent shall hold the Shares and all shares of capital stock
of AMCE or other securities issued or paid as dividends or other distributions
on the Shares, any shares issued upon conversion of the Shares ("Additional
Shares") and all Stock Powers delivered hereunder and release them only as set
forth in Section 3 below.
All dividends and other distributions (other than Additional Shares) on
Shares received by the Escrow Agent will be immediately distributed to the Owner
of such Shares by mailing the same to his or her respective address specified in
or in the manner provided in Section 9. Each Durwood Party severally agrees to
immediately forward to the Escrow Agent for deposit in escrow all Additional
Shares received by such Durwood Party and related Stock Powers with respect to
Shares remaining in escrow hereunder.
The Escrow Agent shall maintain a ledger setting forth the number of Shares
placed in escrow by each Durwood Party and all Additional Shares issued in
respect of such Shares and deposited in escrow.
3. The Escrow Agent shall distribute the Shares, Additional Shares and
related Stock Powers as follows:
(a) Shares of Class B Stock and the related Stock Powers may be surrendered
to AMCE in exchange for shares of Common Stock issued to the Owner thereof upon
conversion of the Class B Stock by such Owner and a related Stock Power.
(b) Subject to paragraphs (c) and (d) below, all Shares, Additional Shares
and related Stock Powers shall be released from escrow and distributed to the
Durwood Party that is the Owner thereof by mailing the same to his or her
respective address specified in or in the manner provided in Section 9 promptly
following the first anniversary of the date hereof.
(c) Shares, Additional Shares and related Stock Powers shall be released
from escrow, in whole or in part, (i) to the managing underwriters selected
under the Registration Agreement upon the Escrow Agent's receipt of a joint
written notice from a majority of the Durwood Parties, in accordance with such
notice, and (ii) from time to time upon the Escrow Agent's receipt of a joint
written notice from all the Durwood Parties, in accordance with such notice. For
purpose of clause (i), each Durwood Party shall have one vote, Stanley H.
Durwood, the 1992 Trust and the 1989 Trust shall be considered a single Durwood
Party, Thomas A. Durwood and the Investment Partnership, as defined in Section
3(d), if it becomes subject to this Agreement as provided in Section 3(d),
together with any and all of their Permitted Assignees who become subject to
this Agreement as provided in Section 3(d), shall be considered a single Durwood
Party, and each other Durwood Party and any and all of its Permitted Assignees
who become subject to this Agreement as provided in Section 3 (d) shall be
considered a single Durwood Party.
2
<PAGE>
(d) Shares, Additional Shares and related Stock Powers may be released to
one or more Durwood Parties if a like number of Shares and related Stock Powers
are deposited by one or more other Durwood Parties or by a Permitted Assignee,
as defined in the Registration Agreement, or, in the case of Thomas A. Durwood,
by The Thomas A. and Barbara F. Durwood Family Investment Partnership, a
California Limited Partnership (the "Investment Partnership") and such Durwood
Party, Permitted Assignee or Investment Partnership executes an addendum in the
form set forth as Exhibit B hereto acknowledging that they and such Shares are
subject to this Agreement. Upon the execution of such addendum and the deposit
of Shares and related Stock Powers by a Permitted Assignee or the Investment
Partnership, the Permitted Assignee or the Investment Partnership, as the case
may be, will be deemed a Durwood Party for purposes of this Agreement, subject
to Section 3 (c). The Escrow Agent may rely on a joint letter from Lathrop &
Gage L.C. and either of Schiff, Hardin & Waite, of Chicago, Illinois, or New
York, New York, or Kopple & Klinger, LLP, of Los Angeles, California, as to the
status of a person as a Permitted Assignee.
(e) If the Escrow Agent is notified of a claim against or in respect of
Shares, Additional Shares or Stock Powers or if a claim is made against the
Escrow Agent in respect of Shares, Additional Shares, or Stock Powers, such
Shares, Additional Shares and Stock Powers shall continue to be held, and not
released from escrow, except pursuant to the final unappealable order (or an
order for which the time to appeal has expired without an appeal having been
made) of a court of competent jurisdiction.
4. It is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature. It is further agreed that:
(a) the Escrow Agent may conclusively rely and shall be protected in acting
or refraining from acting upon any document, instrument, certificate,
instruction or signature believed by it to be genuine and may assume and shall
be protected in assuming that any person purporting to give any notice or
instructions in accordance with this Escrow Agreement or in connection with any
transaction to which this Escrow Agreement relates has been duly authorized to
do so. The Escrow Agent shall not be obligated to make any inquiry as to the
authority, capacity, existence or identity of any person purporting to have
executed any such document or instrument or have made any such signature or
purporting to give any such notice or instructions;
(b) in the event that the Escrow Agent shall be uncertain as to its duties
or rights hereunder or shall receive instructions with respect to the Shares,
Additional Shares or Stock Powers which, in its sole opinion, are in conflict
with either other instructions received by it or any provision of the Escrow
Agreement, it shall, without liability of any kind, be entitled to hold the
Shares, Additional Shares and Stock Powers pending the resolution of such
uncertainty to the Escrow Agent's sole satisfaction, by final judgment
3
<PAGE>
of a court or courts of competent jurisdiction or otherwise, or the Escrow
Agent, at its option, may, in final satisfaction of its duties hereunder,
deposit the relevant Shares, Additional Shares and Stock Powers with the clerk
of any other court of competent jurisdiction;
(c) the Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and shall not be bound in any way by any agreement
among the Durwood Parties (whether or not the Escrow Agent has knowledge
thereof);
(d) the Escrow Agent shall not be liable for any action taken by it in good
faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Escrow Agreement (provided that the Escrow Agent shall
be liable for its gross negligence and willful misconduct), and may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel; and
(e) the Escrow Agent shall not assume any responsibility or liability for
any transactions among the Durwood Parties.
5. The Durwood Parties, jointly and severally, agree to indemnify the
Escrow Agent, its directors, officers, agents and employees and any person who
"controls" the Escrow Agent within the meaning of Section 15 of the Securities
Act of 1933, as amended (collectively the "Indemnified Parties") against, and
hold them harmless from, any and all loss, liability, cost, damage and expense,
including, without limitation, costs of investigation and reasonable counsel
fees and expenses, which any of the Indemnified Parties may suffer or incur by
reason of any action, claim or proceeding brought against any of the Indemnified
Parties, arising out of or relating in any way to this Escrow Agreement or any
transaction to which this Escrow Agreement relates, other than any action, claim
or proceeding to the extent resulting from the gross negligence or willful
misconduct of such Indemnified Party. The provisions of this paragraph shall
survive the termination of this Escrow Agreement.
6. This Escrow Agreement may be altered, amended or terminated only with
the written consent of the Durwood Parties and the Escrow Agent. Should the
Durwood Parties attempt to change this Escrow Agreement in a manner which, in
the Escrow Agent's sole opinion, is undesirable, the Escrow Agent may resign as
Escrow Agent upon two weeks' written notice to the Durwood Parties; otherwise,
notwithstanding any provision hereof to the contrary, it may resign as Escrow
Agent at any time upon 60 days' written notice to the Durwood Parties. In the
case of the Escrow Agent's resignation, its only duty shall be to hold and
dispose of the Shares, Additional Shares and Stock Powers in accordance with the
original provisions of this Escrow Agreement until a successor escrow agent
shall be appointed by the Durwood Parties acting by majority vote determined as
set forth in Section 3(c) and a written notice of the name and address of
4
<PAGE>
such successor escrow agent shall be given to the Escrow Agent by the Durwood
Parties, whereupon the Escrow Agent's only duty shall be to turn over, in
accordance with the written instructions of the Durwood Parties, to the
successor escrow agent the Shares, Additional Shares and Stock Powers and any
documentation related thereto. In the event that a successor escrow agent shall
not have been appointed and the Escrow Agent shall not have turned over to the
successor escrow agent the Shares, Additional Shares and Stock Powers within the
time periods specified above, or the Escrow Agent's written notice of
resignation, as the case may be, the Escrow Agent may deposit the Shares,
Additional Shares and Stock Powers with the clerk of any other court of
competent jurisdiction, at which time the Escrow Agent's duties hereunder shall
terminate.
7. The Escrow Agent shall be entitled to a $125 initiation fee and a $750
annual escrow fee. The fees will be payable ratably by the Durwood Parties.
8. THIS ESCROW AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF MISSOURI WITHOUT APPLICATION TO THE PRINCIPLES OF
CONFLICTS OF LAWS. This Escrow Agreement shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that any
assignment or transfer by any party of its rights under this Escrow Agreement
shall be void (as against the Escrow Agent or otherwise) unless:
(a) written notice thereof shall be given to the Escrow Agent and the
Durwood Parties; and
(b) the Escrow Agent and the Durwood Parties shall have consented, in
writing, to such assignment or transfer.
9. All notices, requests, demands and other communications to be given in
connection with this Escrow Agreement shall be in writing, shall be delivered by
hand, overnight delivery service or by facsimile transmission, shall be deemed
given when received and shall be addressed to the Escrow Agent at the address
listed below or to the Durwood Parties at the respective addresses listed on the
signature pages or to such other addresses as they shall designate from time to
time in writing, forwarded in like manner; provided, however, that if any notice
given by telecopy is received other than during the regular business hours of
the recipient, it shall be deemed to have been given on the opening of business
on the next business day of the recipient:
If to the Escrow Agent:
Mercantile Bank of Kansas City
1101 Walnut, 2nd Floor
Kansas City, Missouri 64106
5
<PAGE>
Attention: Carolyn Hargis
Telecopier No.: 816-871-2279
Information copies of all notices given a Durwood Party (other than Stanley
H. Durwood, the 1992 Trust or the 1989 Trust) shall be given to:
Robert C. Kopple, Esq.
Kopple & Klinger
2029 Century Park East
Suite 1040
Los Angeles, A 90067
Glenn Kurlander, Esq.
Schiff Hardin & Waite
150 East 52nd Street
Suite 2900
New York, New York 10022
Information copies of all notices given to Stanley H. Durwood, the 1992
Trust or the 1989 Trust should be given to:
Raymond F. Beagle, Jr., Esq.
Lathrop & Gage L.C.
2345 Grand Boulevard, 24th Floor
Kansas City, Missouri 64108-2684
10. If any provision of this Escrow Agreement or the application thereof to
any person or circumstance shall be determined to be invalid or unenforceable,
the remaining provisions of this Escrow Agreement or the application of such
provision to persons or circumstances other than those to which it is held
invalid or unenforceable shard not be affected thereby and shall be valid and
enforceable to the fullest extent permitted by law.
11. This Escrow Agreement may be executed in several counterparts or by
separate instruments, and all of such counterparts or instruments shall
constitute one agreement, binding on all the parties hereto.
12. All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the context may require.
IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement as
of the day and year first above written.
6
<PAGE>
Mercantile Bank of Kansas City
By: /s/Ted L. Randall
-------------------
Name: Ted L. Randall
Title: Vice President
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/Stanley H. Durwood
---------------------
Kansas City, Missouri 64141-6615 Stanley H. Durwood
1323 Granite Creek Drive /s/Carol D. Journagan
-------------------
Blue Springs, MO 64015 Carol D. Journagan
3001 West 68th Street /s/Edward D. Durwood
----------------------
Shawnee Mission, KS 66208 Edward D. Durwood
P.O. Box 7208 /s/Thomas A. Durwood
--------------------
Rancho Santa Fe. CA 92067 Thomas A. Durwood
187 Chestnut Hill Road /s/Elissa D. Grodin
-------------------
Wilton, CT 06897 Elissa D.Grodin
655 N.W. Altishan Place /s/Brian H. Durwood
------------------
Beaverton, OR 97006 Brian H. Durwood
666 West End Avenue /s/Peter J. Durwood
------------------
New York, NY 10025 Peter J. Durwood
Suite 1700
Power & Light Building
106 West 14th Street /s/ Stanley H. Durwood
----------------------
P.O. Box 419615 Stanley H. Durwood, as trustee of
Kansas City, Missouri 64141-6615 the 1992 Trust
7
<PAGE>
Suite 1700
Power & Light Building
106 West 14th Street /s/Stanley H. Durwood
---------------------
P.O. Box 419615 Stanley H. Durwood, as trustee of
Kansas City, Missouri 64141-6615 the 1989 Trust
8
<PAGE>
Exhibit A
Family Settlement Agreement Escrow
1992 Durwood, Inc. Voting Trust 500,000 Shares of AMCE
Class B Stock
Carol D. Journagan 416,667 Shares of AMCE Common
Stock
Edward D. Durwood 416,667 Shares of AMCE Common
Stock
Thomas A. Durwood 416,667 Shares of AMCE Common
Stock
Elissa D. Grodin 416,667 Shares of AMCE Common
Stock
Brian H. Durwood 416,667 Shares of AMCE Common
Stock
Peter J. Durwood 416,667 Shares of AMCE Common
Stock
9
<PAGE>
Exhibit B
ADDENDUM TO ESCROW AGREEMENT
The undersigned hereby deposits ________ shares of Common Stock of AMC
Entertainment Inc. and related stock powers executed in blank with Mercantile
Bank of Kansas City, as Escrow Agent, to be held in escrow by Escrow Agent in
accordance with that certain Escrow Agreement dated as of August 15, 1997, by
and among Escrow Agent, Stanley H. Durwood, individually, and as trustee of the
1992 Durwood, Inc. Voting Trust dated December 12, 1992 and as trustee of the
Trust created pursuant to the Stanley H. Durwood Trust Agreement dated August
14, 1989, Carol D. Journagan, Edward D. Durwood, Thomas A. Durwood, Elissa D.
Grodin, Brian H. Durwood and Peter J. Durwood. If the undersigned is not one of
the above named original parties to the Escrow Agreement, the undersigned agrees
that it shall be bound by said Escrow Agreement as though it were an original
party thereto and that such shares and stock powers shall be disposed of in
accordance with such Escrow Agreement. For purposes of Section 9 of the Escrow
Agreement, the undersigned's notice address is
- ------------------------------------------------------------------------.
-------------------------------
Date:_________________________
Accepted
Mercantile Bank of Kansas City
By_____________________________ Date:______________________
10
<PAGE>
Exhibit 99.7
SECOND AMENDMENT
TO
DURWOOD FAMILY SETTLEMENT AGREEMENT
THIS AMENDMENT is made as of August 15, 1997 by and among (i) STANLEY H.
DURWOOD, individually, as Trustee of the 1992 Durwood, Inc. Voting Trust dated
December 12, 1992, as amended, and as Trustee of the Stanley H. Durwood Trust
Agreement dated August 14, 1989, as amended, and (ii) CAROL D. JOURNAGAN, EDWARD
D. DURWOOD, ELISSA D. GRODIN, BRIAN H. DURWOOD, PETER J. DURWOOD, THOMAS A.
DURWOOD, ("TAD"), and THE THOMAS A. AND BARBARA F. DURWOOD FAMILY INVESTMENT
PARTNERSHIP, a California limited partnership ("TBD Partnership") (all persons
and entities listed in this clause (ii) are referred to herein as the "Durwood
Children").
WHEREAS, the parties hereto (other than TBD Partnership) heretofore entered
into a certain agreement entitled the "Durwood Family Settlement Agreement"
dated as of January 22, 1996, as amended by first amendment thereto dated as of
March 18, 1997 ("Settlement Agreement"), regarding, among other things, the
liquidation of American Associated Enterprises, a Missouri limited partnership
("AAE"), and the merger of Durwood, Inc., a Missouri corporation ("DI), with and
into AMC Entertainment, Inc., a Delaware corporation ("AMCE");
WHEREAS, the parties hereto and others heretofore entered into a certain
Partnership Interest Assignment and Assumption Agreement dated as of August ___,
1997 (the "Assignment and Assumption"), pursuant to which TAD assigned to TBD
Partnership, inter alia, an undivided portion of TAD's rights, title and
interests in, to and under the Settlement Agreement, and TBD Partnership assumed
and agreed perform and observe, to the extent applicable to the interests
transferred, all of the terms, covenants and conditions on the part of TAD to be
performed or observed under the Settlement Agreement, upon the terms and
conditions contained therein; and
WHEREAS, the parties desire to amend the Settlement Agreement in the manner
hereinafter provided in order to implement the terms of the Assignment and
Assumption;
NOW, THEREFORE, in consideration of the foregoing, and of the mutual
agreements, promises, covenants and representations hereinafter set forth, the
parties, intending to be bound legally, hereby agree as follows:
1. Capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Settlement Agreement.
2. The parties hereto agree that TBD Partnership shall be, and hereby is,
added as a party to the Settlement Agreement as one of the Partners and as one
of the Durwood Children, respectively.
- 1 -
<PAGE>
3. TBD Partnership shall, and hereby does, assume and agree to be bound by
and perform and observe, to the extent applicable directly or indirectly to the
interest transferred pursuant to the Assignment and Assumption, all of the
terms, covenants, conditions and obligations on the part of TAD to be performed
or observed under the Settlement Agreement.
4. Notwithstanding anything contained or implied herein or in the
Assignment and Assumption to the contrary, TBD Partnership will not participate
in any vote or determination to be made by the parties under the Settlement
Agreement. All agreements and obligations of TAD and TBD Partnership made or
arising under the Settlement Agreement shall be deemed to be joint and several
agreements and obligations of each of TAD and TBD Partnership.
5. Except as expressly modified by this Amendment, each party hereby
expressly reserves all of its rights, remedies and defenses under, arising out
of or related to the Settlement Agreement, the transactions contemplated thereby
and all applicable laws, whether at law or in equity.
6. Except as expressly modified by this Amendment, the Settlement Agreement
shall remain in full force and effect in accordance with its terms and is hereby
ratified and confirmed in all respects by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first above written.
- 2 -
<PAGE>
/s/Stanley H. Durwood /s/Thomas A. Durwood
- --------------------- --------------------
STANLEY H. DURWOOD, individually and THOMAS A. DURWOOD
as trustee of the aforesaid trusts
/s/Carol D. Journagan THE THOMAS A. AND BARBARA F.
- ---------------------
CAROL D. JOURNAGAN DURWOOD FAMILY INVESTMENT
PARTNERSHIP
/s/Edward D. Durwood By: /s/Thomas A, Durwood
- -------------------- ----------------------
EDWARD D. DURWOOD Thomas A. Durwood, as Trustee
of the Thomas A. and Barbara F.
Durwood Family Trust, as
General Partner
/s/Elissa D. Grodin
- -------------------
ELISSA D. GRODIN
By: /s/Barbara F. Durwood
----------------------
Barbara F. Durwood, as Trustee
of the Thomas A. and Barbara
F. Durwood Family Trust.
as General Partner
/s/Brian D. Durwood
- -------------------
BRIAN H. DURWOOD
/s/Peter J. Durwood
- -------------------
PETER J. DURWOOD
- 3 -
<PAGE>
THE UNDERSIGNED, AMC ENTERTAINMENT INC., hereby consents to the provisions
of the foregoing Second Amendment to Durwood Family Settlement Agreement among
Stanley H. Durwood, individually, as Trustee of the 1992 Durwood, Inc. Voting
Trust dated December 12, 1992, as amended, and as Trustee of the Stanley H.
Durwood Trust Agreement dated August 14, 1989, Carol D. Journagan, Edward D.
Durwood, Elissa D. Grodin, Brian H. Durwood, Peter J. Durwood, Thomas A. Durwood
and The Thomas A. and Barbara F. Durwood Family Investment Partnership, pursuant
to the provisions of Section 4(a) of the Indemnification Agreement dated as of
March 31, 1997 among the undersigned, Stanley H. Durwood, individually, as
Trustee of the 1992 Durwood, Inc. Voting Trust dated December 12, 1992, as
amended, and as Trustee of the Stanley H. Durwood Trust Agreement dated August
14, 1989, Carol D. Journagan, Edward D. Durwood, Thomas A. Durwood, Elissa D.
Grodin, Brian H. Durwood and Peter J. Durwood, as amended.
Date: August 15, 1997 AMC ENTERTAINMENT INC.
By:/s/ Stanley H. Durwood
----------------------
Title: Chairman and CEO
- 4 -
<PAGE>
Exhibit 99.9
FIRST AMENDMENT TO INDEMNIFICATION AGREEMENT
THIS AMENDMENT is made as of August 15, 1997 by and among (i) AMC
ENTERTAINMENT, INC., a Delaware corporation ("AMCE"), (ii) STANLEY H. DURWOOD,
individually ("SHD"), as Trustee of the 1992 Durwood, Inc. Voting Trust dated
December 12, 1992, as amended (the "1992 Trust"), and as Trustee of the trust
created pursuant to the Stanley H. Durwood Trust Agreement dated August 14,
1989, as amended (the "1989 Trust"), CAROL D. JOURNAGAN, EDWARD D. DURWOOD,
ELISSA D. GRODIN, BRIAN H. DURWOOD, PETER J. DURWOOD, THOMAS A. DURWOOD,
("TAD"), and THE THOMAS A. AND BARBARA F. DURWOOD FAMILY INVESTMENT PARTNERSHIP,
a California limited partnership ("TBD Partnership") (all persons and entities
listed in this clause (ii) are referred to herein as the "Durwood Parties"), and
(iii) DELTA PROPERTIES, INC., a Missouri corporation ("Delta").
WHEREAS, the parties hereto (other than TBD Partnership) heretofore entered
into a certain Indemnification Agreement dated as of March 31, 1997
("Indemnification Agreement"), in connection with a certain Agreement and Plan
of Merger and Reorganization dated as of March 31, 1997 (the "Merger Agreement")
between AMCE and Durwood Inc., a Missouri corporation ("DI"), pursuant to which
DI will be mergered with and into AMCE;
WHEREAS, the parties hereto and DI heretofore entered into a certain
Partnership Interest Assignment and Assumption Agreement dated as of August 14,
1997 (the "Assignment and Assumption"), pursuant to which TAD assigned to TBD
Partnership, inter alia, an undivided portion of TAD's rights, title and
interests in, to and under the Indemnification Agreement, and TBD Partnership
assumed and agreed perform and observe, to the extent applicable to the
interests transferred, all of the terms, covenants and conditions on the part of
TAD to be performed or observed under the Indemnification Agreement (other than
the provisions of Section 4(c) thereof), upon the terms and conditions contained
therein;
WHEREAS, the parties desire to amend the Indemnification Agreement in the
manner hereinafter provided in order to implement the terms of the Assignment
and Assumption;
NOW, THEREFORE, in consideration of the mutual agreements and covenants set
forth herein, the parties hereto do hereby agree and covenant as follows:
1
<PAGE>
1. Capitalized terms not defined herein shall have the meanings assigned to
such terms in the Indemnification Agreement.
2. The parties hereto agree that TBD Partnership shall be, and hereby is,
added as a party to the Indemnification Agreement as one of the Durwood Parties.
3. TBD Partnership shall, and hereby does, assume and agree to be bound by
and perform and observe, to the extent applicable directly or indirectly to the
interest transferred pursuant to the Assignment and Assumption, all of the
terms, covenants, conditions and obligations on the part of TAD to be performed
or observed under the Indemnification Agreement (other than Section 4(c)
thereof).
4. Notwithstanding anything contained or implied herein or in the
Assignment and Assumption to the contrary, TBD Partnership will not participate
in any vote or determination to be made by the Durwood Parties under the
Indemnification Agreement. All agreements and obligations of TAD and TBD
Partnership made or arising under the Indemnification Agreement (other than
Section 4(c) thereof) shall be deemed to be joint and several agreements and
obligations of each TAD and TBD Partnership.
5. Except as expressly modified by this Amendment, the Indemnification
Agreement shall remain in full force and effect in accordance with its terms and
is hereby ratified and confirmed in all respects by the parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
2
<PAGE>
AMC ENTERTAINMENT, INC.
By /s/Peter C. Brown
-------------------
Peter C. Brown
President
/s/Stanley H. Durwood
----------------------
Stanley H. Durwood
/s/Carol D. Journagan
-------------------------
Carol D. Journagan
/s/Edward D. Durwood
-------------------------
Edward D. Durwood
/s/Thomas A. Durwood
------------------------
Thomas A. Durwood
/s/Elissa D. Grodin
------------------------
Elissa D. Grodin
/s/Brian H. Durwood
------------------------
Brian H. Durwood
/s/Peter J. Durwood
-----------------------
Peter J. Durwood
3
<PAGE>
Exhibit 99.10
Stock Agreement Escrow
ESCROW AGREEMENT
This Escrow Agreement is entered into on August 15, 1997, by and among
(i) AMC Entertainment Inc., a Delaware corporation ("AMCE"), (ii) Stanley H.
Durwood, individually, and as trustee of the 1992 Durwood, Inc. Voting Trust
dated December 12, 1992 (the "1992 Trust") and as trustee of the Trust created
pursuant to the Stanley H. Durwood Trust Agreement dated August 14, 1989
(the"1989 Trust"), Carol D. Journagan, Edward D. Durwood, Thomas A. Durwood,
Elissa D. Grodin, Brian H. Durwood and Peter J. Durwood (all persons and
entities listed in this clause (ii) are referred to herein as the "Durwood
Parties") and (iii) Mercantile Bank of Kansas City, a state banking corporation
chartered in Missouri (the "Escrow Agent").
WHEREAS, AMCE, the Durwood Parties and Delta Properties, Inc., a
Missouri corporation, are parties to an Indemnification Agreement dated as of
March 31, 1997 (the "Indemnification Agreement"); and
WHEREAS, Section 4(c) of the Indemnification Agreement provides that
certain shares of AMCE Common Stock and AMCE Class B Stock be deposited in
escrow for two years; and
WHEREAS, the Escrow Agent is willing to establish an escrow account on
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
1. The Escrow Agent hereby acknowledges receipt of certificates
representing the shares of AMCE Common Stock and Class B Stock listed on Exhibit
A hereto (the "Shares") from the Durwood Party whose name is set forth next to
such Shares on Exhibit A, in escrow, pursuant to this Escrow Agreement. The
Durwood Party placing Shares in escrow is referred to herein as the "Owner" of
such Shares and of all Additional Shares (as defined below) issued or paid as
dividends or other distributions thereon. The Escrow Agent agrees to hold and
dispose of the Shares and any Additional Shares in accordance with the terms and
conditions of this Escrow Agreement.
2. The Escrow Agent shall hold the Shares and all shares of capital
stock of AMCE or other securities issued or paid as dividends or other
distributions on the Shares ("Additional Shares") and release them only as set
forth in Section 3 below.
1
<PAGE>
All dividends and other distributions (other than Additional Shares) on
Shares received by the Escrow Agent will be immediately distributed to the Owner
of such Shares by mailing the same to his or her respective address specified in
or in the manner provided in Section 9. Each Durwood Party severally agrees to
immediately forward to the Escrow Agent for deposit in escrow all Additional
Shares received by such Durwood Party while the relevant Shares remain in escrow
hereunder.
The Escrow Agent shall maintain a ledger setting forth the number of
Shares placed in escrow by each Durwood Party and all Additional Shares issued
in respect of such Shares and deposited in escrow.
3. The Escrow Agent shall distribute the Shares and Additional Shares as
follows:
(a) Subject to paragraphs (b) and (c) below, all Shares and Additional
Shares shall be released from escrow and distributed to the Durwood Party that
is the Owner thereof by mailing the same to his or her respective address
specified in or in the manner provided in Section 9 promptly following the
second anniversary of the date hereof.
(b) Shares and Additional Shares shall be released from escrow, in
whole or in part, from time to time upon the Escrow Agent's receipt of a joint
written notice of AMCE and the Durwood Party that is the Owner of such Shares
and Additional Shares in accordance with such notice.
(c) If the Escrow Agent is notified of a claim against or in respect of
Shares or Additional Shares or if a claim is made against the Escrow Agent in
respect of Shares or Additional Shares, such Shares and Additional Shares shall
continue to be held, and not released from escrow, except pursuant to the final
unappealable order (or an order for which the time to appeal has expired without
an appeal having been made) of a court of competent jurisdiction.
4. It is understood and agreed that the duties of the Escrow Agent are
purely ministerial in nature. It is further agreed that:
(a) the Escrow Agent may conclusively rely and shall be protected in
acting or refraining from acting upon any document, instrument, certificate,
instruction or signature believed by it to be genuine and may assume and shall
be protected in assuming that any person purporting to give any notice or
instructions in accordance with this Escrow Agreement or in connection with any
transaction to which this Escrow Agreement relates has been duly authorized to
do so. The Escrow Agent shall not be obligated to make any inquiry as to the
authority, capacity, existence or identity of any person purporting to have
executed any such document or instrument or have made any such signature or
purporting to give any such notice or instructions;
2
<PAGE>
(b) in the event that the Escrow Agent shall be uncertain as to its
duties or rights hereunder or shall receive instructions with respect to the
Shares and Additional Shares which, in its sole opinion, are in conflict with
either other instructions received by it or any provision of the Escrow
Agreement, it shall, without liability of any kind, be entitled to hold the
Shares and Additional Shares pending the resolution of such uncertainty to the
Escrow Agent's sole satisfaction, by final judgment of a court or courts of
competent jurisdiction or otherwise, or the Escrow Agent, at its option, may, in
final satisfaction of its duties hereunder, deposit the relevant Shares and
Additional Shares with the clerk of any other court of competent jurisdiction;
(c) the Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and shall not be bound in any way by any agreement
between AMCE and the Durwood Parties (whether or not the Escrow Agent has
knowledge thereof);
(d) the Escrow Agent shall not be liable for any action taken by it in
good faith and believed by it to be authorized or within the rights or powers
conferred upon it by this Escrow Agreement (provided that the Escrow Agent shall
be liable for its gross negligence and willful misconduct), and may consult with
counsel of its own choice and shall have full and complete authorization and
protection for any action taken or suffered by it hereunder in good faith and in
accordance with the opinion of such counsel; and
(e) the Escrow Agent shall not assume any responsibility or liability for
any transactions between AMCE and the Durwood Parties.
5. AMCE agrees to indemnify the Escrow Agent, its directors, officers,
agents and employees and any person who "controls" the Escrow Agent within the
meaning of Section 15 of the Securities Act of 1933, as amended (collectively
the "Indemnified Parties") against, and hold them harmless from, any and all
loss, liability, cost, damage and expense, including, without limitation, costs
of investigation and reasonable counsel fees and expenses, which any of the
Indemnified Parties may suffer or incur by reason of any action, claim or
proceeding brought against any of the Indemnified Parties, arising out of or
relating in any way to this Escrow Agreement or any transaction to which this
Escrow Agreement relates, other than any action, claim or proceeding to the
extent resulting from the gross negligence or willful misconduct of such
Indemnified Party. The provisions of this paragraph shall survive the
termination of this Escrow Agreement.
6. This Escrow Agreement may be altered, amended or terminated only
with the written consent of AMCE, the Durwood Parties and the Escrow Agent.
Should AMCE and the Durwood Parties attempt to change this Escrow Agreement in a
manner which, in the Escrow Agent's sole opinion, is undesirable, the Escrow
Agent may resign as Escrow Agent upon two weeks' written notice to AMCE and the
Durwood Parties; otherwise, notwithstanding any provision hereof to the
contrary, it may resign as Escrow
3
<PAGE>
Agent at any time upon 60 days' written notice to AMCE and the Durwood Parties.
In the case of the Escrow Agent's resignation, its only duty shall be to hold
and dispose of the Shares and Additional Shares in accordance with the original
provisions of this Escrow Agreement until a successor escrow agent shall be
appointed by AMCE and the Durwood Parties acting by majority vote (in which each
such party shall have one vote, with Stanley H. Durwood, the 1989 Trust and the
1992 Trust being deemed a single party) and a written notice of the name and
address of such successor escrow agent shall be given to the Escrow Agent by
AMCE and the Durwood Parties, whereupon the Escrow Agent's only duty shall be to
turn over, in accordance with the written instructions of AMCE and the Durwood
Parties, to the successor escrow agent the Shares and Additional Shares and any
documentation related thereto. In the event that a successor escrow agent shall
not have been appointed and the Escrow Agent shall not have turned over to the
successor escrow agent the Shares and Additional Shares within the time periods
specified above, or the Escrow Agent's written notice of resignation, as the
case may be, the Escrow Agent may deposit the Shares and Additional Shares with
the clerk of any other court of competent jurisdiction, at which time the Escrow
Agent's duties hereunder shall terminate.
7. The Escrow Agent shall be entitled to a $125 initiation fee and a $750
annual escrow fee. The fees will be payable by AMCE.
8. THIS ESCROW AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE LAWS OF THE STATE OF MISSOURI WITHOUT APPLICATION TO THE PRINCIPLES OF
CONFLICTS OF LAWS. This Escrow Agreement shall be binding upon the parties
hereto and their respective successors and assigns; provided, however, that any
assignment or transfer by any party of its rights under this Escrow Agreement
shall be void (as against the Escrow Agent or otherwise) unless:
(a) written notice thereof shall be given to the Escrow Agent, AMCE and the
Durwood Parties; and
(b) the Escrow Agent, AMCE and the Durwood Parties shall have consented, in
writing, to such assignment or transfer.
9. All notices, requests, demands and other communications to be given
in connection with this Escrow Agreement shall be in writing, shall be delivered
by hand, overnight delivery service or by facsimile transmission, shall be
deemed given when received and shall be addressed to the Escrow Agent at the
address listed below or to AMCE and the Durwood Parties at the respective
addresses listed on the signature pages or to such other addresses as they shall
designate from time to time in writing, forwarded in like manner; provided,
however, that if any notice given by telecopy is received other than during the
regular business hours of the recipient, it shall be deemed to have been given
on the opening of business on the next business day of the recipient:
4
<PAGE>
If to the Escrow Agent:
Mercantile Bank of Kansas City
1101 Walnut, 2nd Floor
Kansas City, Missouri 64106
Attention: Carolyn Hargis
Telecopier No.: 816-871-2279
Information copies of all notices given a Durwood Party (other than
Stanley H. Durwood, the 1992 Trust or the 1989 Trust) shall be given to:
Robert C. Kopple, Esq.
Kopple & Klinger
2029 Century Park East
Suite 1040
Los Angeles, A 90067
Glenn Kurlander, Esq.
Schiff Hardin & Waite
150 East 52nd Street
Suite 2900
New York, New York 10022
Information copies of all notices given to Stanley H. Durwood, the 1992
Trust or the 1989 Trust should be given to:
Raymond F. Beagle, Jr., Esq.
Lathrop & Gage L.C.
2345 Grand Boulevard, 24th Floor
Kansas City, Missouri 64108-2684
Information copies of all notices given to AMCE shall be given to:
Charles J. Egan, Jr., Esq.
Hallmark Cards, Incorporated
2501 McGee Trafficway
Kansas City, MO 64141-6126
The Honorable Paul E. Vardeman
Polsinelli, White, Vardeman & Shalton
Suite 1000, Plaza Steppes
700 West 47th Street
5
<PAGE>
Kansas City, MO 64112-1802
10. If any provision of this Escrow Agreement or the application
thereof to any person or circumstance shall be determined to be invalid or
unenforceable, the remaining provisions of this Escrow Agreement or the
application of such provision to persons or circumstances other than those to
which it is held invalid or unenforceable shard not be affected thereby and
shall be valid and enforceable to the fullest extent permitted by law.
11. This Escrow Agreement may be executed in several counterparts or by
separate instruments, and all of such counterparts or instruments shall
constitute one agreement, binding on all the parties hereto.
12. All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, neuter, singular or plural as the context may require.
IN WITNESS WHEREOF, the undersigned have executed this Escrow Agreement
as of the day and year first above written.
MERCANTILE BANK OF KANSAS CITY
By:/s/Ted L. Randall
----------------------
Name: Ted L. Randall
Title: Vice President
Suite 1700
Power & Light Building AMC ENTERTAINMENT INC.
106 West 14th Street
P.O. Box 419615 By:/s/Stanley H. Durwood
-----------------------
Kansas City, Missouri 64141-6615 Chairman and CEO
Suite 1700
Power & Light Building
106 West 14th Street
P.O. Box 419615 /s/Stanley H. Durwood
--------------------------
Kansas City, Missouri 64141-6615 Stanley H. Durwood
1323 Granite Creek Drive /s/Carol D. Journagan
--------------------------
Blue Springs, MO 64015 Carol D. Journagan
3001 West 68th Street /s/Edward D. Durwood
--------------------------
Shawnee Mission, KS 66208 Edward D. Durwood
6
<PAGE>
P.O. Box 7208 /s/Thomas A. Durwood
--------------------------
Rancho Santa Fe. CA 92067 Thomas A. Durwood
187 Chestnut Hill Road /s/Elissa D. Grodin
-------------------------
Wilton, CT 06897 Elissa D. Grodin
655 N.W. Altishan Place /s/Brian H. Durwood
-------------------------
Beaverton, OR 97006 Brian H. Durwood
666 West End Avenue /s/Peter J. Durwood
-------------------------
New York, NY 10025 Peter J. Durwood
Suite 1700
Power & Light Building
106 West 14th Street /s/Stanley H. Durwood
---------------------
P.O. Box 419615 Stanley H. Durwood, as trustee of
Kansas City, Missouri 64141-6615 the 1992 Trust
Suite 1700
Power & Light Building
106 West 14th Street /s/Stanley H. Durwood
---------------------------
P.O. Box 419615 Stanley H. Durwood, as trustee of
Kansas City, Missouri 64141-6615 the 1989 Trust
7
<PAGE>
EXHIBIT A TO
STOCK AGREEMENT ESCROW
1992 Durwood, Inc. Voting Trust 2,590,017 shares of AMCE Class B
Stock
Carol D. Journagan 730,602 shares of AMCE Common
Edward D. Durwood Stock each
Thomas A. Durwood
Elissa D. Grodin
Brian H. Durwood
Peter J. Durwood
8
<PAGE>
