<PAGE>
Registration No.333-_________
As filed with the Securities and Exchange Commission on March 9, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________________________
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 7832 43-1304369
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. employer
incorporation or organization) Classification Code Number) identification number)
</TABLE>
106 West 14th Street
Kansas City, Missouri 64105-1977
(816) 221-4000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Peter C. Brown
Co-Chairman of the Board, President and Chief Financial Officer
AMC Entertainment Inc.
106 West 14th Street
Kansas City, Missouri 64105-1977
(816) 221-4000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
WITH COPIES TO:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(816) 460-5834
Approximate date of commencement of proposed sale to the public:
As Soon as Practicable after the Effective Date of this Registration Statement.
If the Securities registered on this Form are to be offered in connection
with the formation of a holding company and there is compliance with General
Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / .
- -------------------------------------------------------------------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / .
---------------------------------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Title Of Each Class Of Amount to Be Proposed Maximum Proposed Maximum Amount of
Securities To Be Registered Registered Offering Price Per Unit Aggregate Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9-1/2% Exchange Senior
Subordinated Notes due 2011 $225,000,000 100% $225,000,000 $62,550
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
(Subject to Completion, dated March 9, 1999)
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
9-1/2% SENIOR SUBORDINATED NOTES DUE FEBRUARY 1, 2011
$225,000,000 PRINCIPAL AMOUNT OUTSTANDING FOR
9-1/2% EXCHANGE SENIOR SUBORDINATED NOTES DUE FEBRUARY 1, 2011 OF
AMC ENTERTAINMENT INC.
We offer to exchange up to $225,000,000 aggregate principal amount of our
9-1/2% Exchange Senior Subordinated Notes due February 1, 2011 (the "Exchange
Notes"), which are registered under the Securities Act of 1933, for an equal
principal amount of our outstanding 9-1/2% Senior Subordinated Notes due
February 1, 2011 which were issued on January 27, 1999 in a private sale (the
"Initial Notes"). We refer to the Exchange Notes and the Initial Notes
together as the "Notes."
TERMS OF THE EXCHANGE OFFER
- - The Exchange Offer expires at ____ p.m., New York City time, on ________,
1999, unless extended.
- - The Exchange Offer is subject to certain customary conditions, which we
may waive.
- - The Exchange Offer is not conditioned upon any minimum principal balance of
the Initial Notes being tendered for exchange.
- - You may withdraw tenders of Initial Notes at any time before the Exchange
Offer expires.
- - All Initial Notes that are validly tendered and not withdrawn will be
exchanged for Exchange Notes.
- - Initial Notes may only be tendered in denominations of $1,000 and integral
multiples thereof.
- - We will not receive any proceeds from, and no underwriter is being used in
connection with, the Exchange Offer.
- - The terms of the Exchange Notes are substantially identical to the terms of
the Initial Notes, except that the Exchange Notes will not have any
transfer restrictions or registration rights.
- - The Exchange Notes will not be listed on any exchange or quoted on NASDAQ.
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Notes as a result of market-making activities or other
trading activities. The Company has agreed that, starting on the Expiration
Date (as defined herein) and ending on the close of business one year after the
Expiration Date, it will make this Prospectus available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution".
BEFORE PARTICIPATING IN THIS EXCHANGE OFFER, PLEASE REFER TO THE SECTION IN
THIS PROSPECTUS ENTITLED "RISK FACTORS" BEGINNING ON PAGE 12.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the Initial Notes or the Exchange Notes
or determined if this Prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this Prospectus is _________, 1999.
<PAGE>
You should rely only on the information contained and incorporated by
reference in this Prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state or other jurisdiction where the offer is not permitted. You should not
assume that the information contained in this Prospectus is accurate as of any
date other than the date on the front of this Prospectus.
TABLE OF CONTENTS
PAGE
----
Additional Information . . . . . . . . . . . . . . . . . . . . . (ii)
Documents Incorporated by Reference. . . . . . . . . . . . . . . (iii)
Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . 9
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . 21
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 21
Management of the Company. . . . . . . . . . . . . . . . . . . . 22
The Exchange Offer . . . . . . . . . . . . . . . . . . . . . . . 25
Description of Exchange Notes . . . . . . . . . . . . . . . . . 35
Certain Federal Income Tax Consequences. . . . . . . . . . . . . 56
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 59
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 60
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
(i)
<PAGE>
ADDITIONAL INFORMATION
This Prospectus incorporates by reference documents containing important
business and financial information that are not presented in or delivered with
this Prospectus. You may obtain copies of such documents without charge, other
than exhibits to such documents that are not specifically incorporated by
reference herein, by making written or oral request to: AMC Entertainment Inc.,
Attention: Ms. Nancy L. Gallagher, Vice President and Secretary, 106 West 14th
Street, Kansas City, Missouri 64105-1977 (telephone: (816) 221-4000). IN ORDER
TO ASSURE TIMELY DELIVERY, YOU SHOULD MAKE SUCH REQUEST NO LATER THAN ________,
1999, WHICH IS FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE
OFFER.
We are subject to the informational requirements of the Exchange Act and,
in accordance therewith, file Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q, Proxy Statement and other reports and information with the Securities
and Exchange Commission. Such reports and other information can be inspected and
copied at prescribed rates at the public reference facilities mentioned below.
You may read and copy any materials we file without charge at, or obtain
copies upon payment of prescribed fees from, the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
information on the operation of the Commission's Public Reference Room by
calling the Commission at 1-800-SEC-0330. The Commission also maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file documents with the Commission,
including the Company, and the address is http://www.sec.gov.
Our Common Stock is listed on the American Stock Exchange and is also
listed on the Pacific Stock Exchange. Our periodic reports and proxy statements
filed under the Exchange Act as well as other information about us can be
requested at the American Stock Exchange, 86 Trinity Place, New York, New York
10086 and at the Pacific Stock Exchange, 301 Pine Street, Suite 1104, San
Francisco, California 94104.
We have filed a registration statement on Form S-4 under the Securities Act
with the Commission with respect to the Exchange Notes offered by this
Prospectus, The Commission's rules and regulations permit us to omit from the
Prospectus certain information contained in the registration statement. For
additional information with respect to us and the Exchange Notes, we refer you
to the registration statement, including its exhibits and the financial
statements, notes and schedules filed as a part of the registration statement or
incorporated by reference to it. You may read and copy the registration
statement at the public reference facilities mentioned above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents and other materials, which we have filed with the
Securities and Exchange Commission, are incorporated herein and specifically
made a part of this Prospectus by this reference:
(1) Annual Report on Form 10-K for the fiscal year ended April 2,
1998, as amended;
(2) Quarterly Reports on Form 10-Q for the quarters ended July 2,
1998, October 1, 1998 and December 31, 1998;
(3) Proxy Statement for the Annual Meeting of Stockholders filed on
October 20, 1998 and
(4) Current Reports on Form 8-K filed on July 17, 1998, August 5,
1998, September 11, 1998, January 15, 1999 and January 25, 1999.
In addition, all documents that we may file with the Securities and
Exchange Commission pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934 after the date hereof and prior to the
termination of any offering of securities made by this Prospectus shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing of such documents with the Securities and
Exchange Commission. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in this Prospectus or in any other
subsequently filed document which also is or is deemed to be
(ii)
<PAGE>
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Statements contained in this Prospectus or in any document incorporated by
reference in this Prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance, reference is made to the copy of such contract or other document filed
as an exhibit to the registration statement of which this Prospectus is a part
or to the documents incorporated by reference, each such statement being
qualified in all respects by such reference.
(iii)
<PAGE>
SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE AND INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. BECAUSE IT IS A SUMMARY, IT DOES NOT CONTAIN ALL
OF THE INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING THE SECTION ENTITLED "RISK FACTORS" AND THE
FINANCIAL STATEMENTS AND THE RELATED NOTES TO THOSE STATEMENTS INCORPORATED BY
REFERENCE IN THIS PROSPECTUS BEFORE TENDERING YOUR INITIAL NOTES FOR EXCHANGE.
EXCEPT AS OTHERWISE REQUIRED BY THE CONTEXT, REFERENCES IN THIS PROSPECTUS
TO "WE," "US," "OUR," THE "ISSUER", THE "COMPANY" OR "AMCE" REFER TO THE
COMBINED BUSINESS OF AMC ENTERTAINMENT INC. AND ALL OF ITS SUBSIDIARIES. THE
TERM "AMC" REFERS TO THE COMPANY'S SUBSIDIARY, AMERICAN MULTI-CINEMA, INC. THE
TERM "YOU" REFERS TO AN OWNER OF THE INITIAL NOTES TO WHOM THE EXCHANGE OFFER IS
BEING MADE.
CERTAIN INFORMATION CONTAINED IN THIS SUMMARY AND ELSEWHERE IN THIS
PROSPECTUS, INCLUDING INFORMATION WITH RESPECT TO OUR EXPECTED OPERATIONS,
EXPECTED FINANCIAL RESULTS, COST SAVINGS, PLANS AND STRATEGY FOR OUR BUSINESS
AND RELATED FINANCING, ARE FORWARD-LOOKING STATEMENTS. YOU SHOULD SEE "RISK
FACTORS" FOR A DISCUSSION OF IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS.
THE COMPANY
We are one of the leading theatrical exhibition companies in North America,
based on revenues. In the fiscal year ended April 2, 1998, we had revenues of
$846,795,000. As of December 31, 1998, we operated 239 theatres with a total of
2,748 screens located in 23 states, the District of Columbia, Portugal, Japan,
Spain, China (Hong Kong) and Canada. Approximately 59% of our screens are
located in California, Florida, Texas, Arizona and Missouri, and approximately
69% of our domestic screens are located in areas among the 20 largest
"Designated Market Areas" (television market areas as defined by Nielsen Media
Research).
We are an industry leader in the development and operation of "megaplex"
and "multiplex" theatres, primarily in large metropolitan markets. Megaplexes
are theatres with predominantly stadium-style seating (seating with an elevation
between rows to provide unobstructed viewing) and other amenities to enhance the
movie-going experience. Multiplexes are theatres generally without stadium-style
seating. All but two of our megaplexes have 14 or more screens. We believe that
our strategy of developing megaplexes has prompted the current theatrical
exhibition industry trend in the United States and Canada toward the development
of larger theatre complexes. This trend has accelerated the obsolescence of many
existing movie theatres, including certain multiplexes, by setting new standards
for moviegoers, who have demonstrated their preference for the more attractive
surroundings, wider variety of films, better customer services and more
comfortable seating typical of megaplexes.
In addition to providing a superior entertainment experience, megaplexes
generally realize economies of scale by serving more patrons from common
support facilities. This spreads costs over a higher revenue base. Our
megaplexes have consistently ranked among our top grossing facilities on a
per screen basis and many are among the top grossing theatres in North
America. During the thirty-nine weeks ended December 31, 1998, attendance per
screen on an annualized basis at our megaplexes was 71,000 compared to 54,300
for our multiplexes. In addition, during this thirty-nine week period,
average revenue per patron at our megaplex theatres was $6.93 compared to
$6.18 for our multiplex theatres, and operating cash flow before rent of our
megaplex theatres was 36.4% of the total revenues of such theatres, whereas
operating cash flow before rent of our multiplex theatres was 33.2% of the
total revenues of such theatres. (Operating cash flow before rent excludes
non-theatre level revenues and expenses, including all corporate overhead. We
use operating cash flow before rent as an internal statistic to measure
theatre level performance.)
Our initial five megaplexes, which were opened during fiscal 1996,
exceeded our expectations for attendance per screen. We believe this resulted
from, among other factors, the newness of the concept and the lack of
competition in the markets where the initial megaplexes were opened.
Subsequent megaplexes have generated, and those planned to be opened in the
future are expected to generate, lower attendance per screen than the initial
five megaplexes.
As of December 31, 1998, 1,314 screens, or 47.8% of our total screens,
were located in megaplexes and our average number of screens per theatre was
11.5. The average number of screens per theatre for the ten largest North
American theatrical exhibition companies (based on number of screens) was 7.2
and the average for all North American theatrical exhibition companies was
6.1, based on the listing of exhibitors in the National Association of
Theatre Owners 1998-99 Encyclopedia of Exhibition, as of May 1, 1998. As of
May 1, 1998, our average number of screens per theatre was 10.7.
1
<PAGE>
We continually upgrade our theatre circuit by opening new theatres
(primarily megaplexes), adding new screens to existing theatres and
selectively closing or disposing of unprofitable multiplexes. From April 1996
through December 31, 1998, we opened 56 new theatres with 1,205 screens,
representing 43.9% of our current number of screens, acquired four
multiplexes with 29 screens, added 44 screens to existing theatres and closed
or disposed of 47 theatres with 249 screens. Of the 1,205 screens opened
during the period, 1,172 screens were located in a total of 52 megaplexes. As
of December 31, 1998, we had 10 megaplexes under construction with a total of
242 screens.
Our revenues are generated primarily from box office admissions and our
theatre concessions sales, which accounted for 65% and 30%, respectively, of our
fiscal 1998 revenues. The balance of our revenues are generated primarily by our
on-screen advertising business, video games located in theatre lobbies and the
rental of theatre auditoriums.
Our principal subsidiaries are American Multi-Cinema, Inc., AMC
Entertainment International, Inc., National Cinema Network, Inc. and AMC
Realty, Inc. All of our domestic theatrical exhibition business is conducted
through American Multi-Cinema, Inc. We are developing theatres in
international markets through AMC Entertainment International, Inc. and its
subsidiaries. We engage in the on-screen advertising business through
National Cinema Network, Inc. Our real estate activities are conducted
through AMC Realty, Inc. and its subsidiaries.
The Company's predecessor was founded in Kansas City, Missouri in 1920 by
the father of Mr. Stanley H. Durwood, the current Co-Chairman of the Board and
Chief Executive Officer of the Company.
The Company is a Delaware corporation with its principal executive offices
located at 106 West 14th Street, Kansas City, Missouri 64105-1977. Its telephone
number at such address is (816) 221-4000.
BUSINESS STRATEGY
Our strategy is to expand our theatre circuit primarily by developing new
megaplexes in major markets in the United States and select international
markets. Most of our new theatres will be megaplexes which we will equip with
SONY Dynamic Digital Sound-TM- (SDDS-TM-) and AMC LoveSeat-Registered Trademark-
style seating (plush, high-backed seats with retractable armrests). Other
amenities may include auditoriums with TORUS-TM- Compound Curved Screens and
High Impact Theatre Systems-TM- (HITS-TM-), which enhance picture and sound
quality, respectively.
Our strategy of establishing megaplexes enhances attendance and concessions
sales by enabling us to exhibit concurrently a variety of motion pictures
attractive to different segments of the movie-going public. Megaplexes also
allow us to match a particular motion picture's attendance patterns to the
appropriate auditorium size (ranging from approximately 90 to 450 seats),
thereby extending the run of a motion picture and providing superior theatre
economics. We believe that megaplexes enhance our ability to license
commercially popular motion pictures and to economically access prime real
estate sites due to our desirability as an anchor tenant.
We believe that the megaplex format has started a new replacement cycle for
the industry. The new format raises moviegoers' expectations by providing
superior viewing lines, comfort, picture and sound quality as well as increased
choices of films and start times. We believe that consumers will increasingly
choose theatres based on the quality of the movie-going experience rather than
simply upon the location of the theatre. As a result, we believe that older,
smaller theatres will ultimately become obsolete when a megaplex opens in their
market area.
We believe that significant market opportunities exist for development of
modern megaplexes in select international markets. The theatrical exhibition
business has become increasingly global, and box office receipts from
international markets exceed those of the U.S. market. In addition, the
production and distribution of feature films and demand for American motion
pictures are increasing in many countries. We believe that our experience in
developing and operating megaplexes provides us with a significant advantage in
developing megaplexes in international markets, and we intend to utilize this
experience, as well as our existing relationships with domestic motion picture
studios, to enter select international markets. Our strategy in these markets is
to operate leased theatres. Presently our activities in international markets
are directed toward Japan, Spain, China (Hong Kong) and Canada.
We fund the costs of constructing new theatres through internally generated
cash flow or borrowed funds. We generally lease our theatres pursuant to
long-term non-cancelable operating leases requiring the developer, who owns the
property, to reimburse us for a portion of the construction costs. However, we
may decide to own the real estate assets of new theatres and, following
construction, sell and leaseback the real estate assets pursuant to long-term
non-cancelable
2
<PAGE>
operating leases. A recent accounting pronouncement, EITF 97-10, will require
us to record future operating lease commitments as lease financing
obligations on our balance sheet unless we change the manner in which we
contract for the construction of theatres. Historically, we have owned and
paid for the equipment necessary to fixture a theatre; however, recently we
entered into a master lease agreement for up to $25 million of equipment
necessary to fixture certain theatres. In the third and fourth quarters of
fiscal 1998, we engaged in transactions with Entertainment Properties Trust,
a real estate investment trust, pursuant to which we sold to and leased back
from Entertainment Properties Trust the real estate assets associated with 13
megaplexes (the "Sale and Leaseback Transaction") and granted an option to
purchase and lease back the real estate assets associated with one additional
megaplex. We also granted Entertainment Properties Trust, for a period of
five years subsequent to November 1997, a right of first refusal and first
offer to purchase and lease back to us any other real estate assets
associated with megaplexes owned or ground leased by us or our subsidiaries,
exercisable upon our intended disposition of such property.
Through our wholly-owned subsidiary, AMC Realty, Inc., and its
subsidiaries, we are involved in the pre-development of complementary
entertainment and retail properties adjacent to some of our megaplexes. We
believe that in doing this, we will create environments that will enhance the
entertainment experience for our movie-going patrons, thus improving the
performance of our theatres. AMC Realty, Inc.'s subsidiaries presently are
involved in the pre-development of several retail/entertainment projects,
including a project in downtown Kansas City, Missouri known as the "Power and
Light District-Registered Trademark-."
THEATRICAL EXHIBITION INDUSTRY OVERVIEW
Motion picture theatres are the primary initial distribution channel for
new motion picture releases, and we believe that the theatrical success of a
motion picture is often the most important factor in establishing its value in
the cable television, videocassette and other ancillary markets. We also believe
that the emergence of new motion picture distribution channels has not adversely
affected attendance at theatres and that these distribution channels do not
provide an experience comparable to that of viewing a movie in a theatre. We
believe that the public will continue to recognize the advantages of viewing a
movie on a large screen with superior audio and visual quality, while enjoying a
variety of concessions and sharing the experience with a larger audience.
Annual domestic theatre attendance has averaged approximately one billion
persons since the early 1960s. Since 1988, the industry has experienced
significant growth, with attendance increasing at a 3.5% compound growth rate
over the period. During 1998, estimated domestic attendance was 1.5 billion.
Variances in year-to-year attendance are primarily related to the overall
popularity and supply of motion pictures.
The theatrical exhibition industry in North America is comprised of over
500 exhibitors, approximately 280 of which operate four or more screens.
According to the Motion Pictures Association of America, the number of indoor
screens in the United States was 30,825 at the end of 1997. Based on the May 1,
1997 listing of exhibitors in the National Association of Theatre Owners 1997-98
Encyclopedia of Exhibition, we believe that the ten largest exhibitors (in terms
of number of screens) operated approximately 50% of such number of screens, with
no one exhibitor operating more than ten percent of the total screens.
Information concerning the ten largest exhibitors does not reflect changes in
screens operated by them between the date of the National Association of Theatre
Owners information and the date of the Motion Pictures Association of America
information.
3
<PAGE>
<TABLE>
<CAPTION>
THE EXCHANGE OFFER
<S> <C>
REGISTRATION RIGHTS We issued the Initial Notes on January 27,
AGREEMENT . . . . . . . 1999 to Salomon Smith Barney and
NationsBank Montgomery Securities LLC (the
"Initial Purchasers"). The Initial
Purchasers placed the Initial Notes with
qualified institutional buyers and non-
U.S. persons in transactions exempt from
the registration requirements of the
Securities Act and applicable state
securities laws. In connection with this
private placement, we entered into a
registration rights agreement with the
Initial Purchasers, which provides, among
other things, for the Exchange Offer. See
"The Exchange Offer."
THE EXCHANGE OFFER . . We are offering Exchange Notes in exchange
for an equal principal amount of Initial
Notes. As of this date, there is
$225,000,000 aggregate principal amount of
Initial Notes outstanding. Initial Notes
may be tendered only in integral multiples
of $1,000.
RESALE OF EXCHANGE NOTES We believe that the Exchange Notes issued
in the Exchange Offer may be offered for
resale, resold or otherwise transferred by
you without compliance with the
registration and prospectus delivery
provisions of the Securities Act, provided
that:
- you are acquiring the Exchange Notes
in the ordinary course of your
business;
- you are not participating, do not
intend to participate, and have no
arrangement or understanding with any
person to participate, in the
distribution of the Exchange Notes;
and
- you are not an "affiliate" of ours.
If any of the foregoing are not true and
you transfer any Exchange Note without
registering such Exchange Note and
delivering a prospectus meeting the
requirements of the Securities Act, or
without an exemption from registration of
your Exchange Notes from such
requirements, you may incur liability
under the Securities Act. We do not
assume or indemnify you against such
liability.
Each broker-dealer that receives Exchange
Notes for its own account in exchange for
Initial Notes that were acquired by such
broker-dealer as a result of market making
or other trading activities must
acknowledge that it will deliver a
prospectus meeting the requirements of the
Securities Act in connection with any
resale of the Exchange Notes. A broker-
dealer may use this Prospectus for an
offer to resell, a resale or any other
retransfer of the Exchange Notes. See
"The Exchange Offer--Effect of the
Exchange Offer" and "Plan of
Distribution."
CONSEQUENCES OF FAILURE If you do not exchange your Initial Notes
TO EXCHANGE INITIAL for Exchange Notes, you will no longer be
NOTES . . . . . . . . . able to compel us to register the Initial
Notes under the Securities Act. In
addition, you will not be able to offer or
sell the Initial Notes unless they are
registered under the Securities Act (and
we will have no obligation to register
them, except for some limited exceptions),
or unless you offer or sell them under an
exemption from the requirements of, or a
transaction not subject to, the Securities
Act. See "Risk Factors-- Failure to
Participate in the Exchange Offer Will
Have Adverse Consequences" and "The
Exchange Offer--Effect of the Exchange
Offer."
4
<PAGE>
EXPIRATION OF THE The Exchange Offer will expire at 5:00
EXCHANGE OFFER . . . . p.m., New York City time, on
____________, 1999 (the "Expiration
Date"), unless we decide to extend the
Expiration Date.
CONDITIONS TO THE The Exchange Offer is not subject to any
EXCHANGE OFFER . . . . condition other than certain customary
conditions, including that:
- the Exchange Offer does not violate
any applicable law or applicable
interpretation of law of the staff of
the SEC;
- no litigation materially impairs our
ability to proceed with the Exchange
Offer;
- no change or prospective change in
our business or financial affairs
materially impairs our ability to
proceed with the Exchange Offer or
materially impairs the contemplated
benefits of the Exchange Offer to us;
and
- we obtain all the governmental
approvals we deem necessary for the
Exchange Offer.
See "The Exchange Offer--Certain
Conditions to the Exchange Offer.
PROCEDURES FOR TENDERING If you wish to accept the Exchange Offer,
INITIAL NOTES . . . . . you must complete, sign and date the
Letter of Transmittal, or a facsimile of
the Letter of Transmittal, and transmit it
together with all other documents required
by the Letter of Transmittal (including
the Initial Notes to be exchanged) to The
Bank of New York, as exchange agent (the
"Exchange Agent") at the address set forth
on the cover page of the Letter of
Transmittal. In the alternative, you can
tender your Initial Notes by following the
procedures for book-entry transfer, as
described in this document. For more
information on accepting the Exchange
Offer and tendering your Initial Notes,
see "The Exchange Offer--Procedures for
Tendering" and"--Book-Entry Transfer."
GUARANTEED DELIVERY If you wish to tender your Initial Notes
PROCEDURES . . . . . . and you cannot get your required documents
to the Exchange Agent by the Expiration
Date, you may tender your Initial Notes
according to the guaranteed delivery
procedure under the heading "The Exchange
Offer--Guaranteed Delivery Procedures."
SPECIAL PROCEDURE FOR If you are a beneficial holder whose
BENEFICIAL HOLDERS . . Initial Notes are registered in the name
of a broker, dealer, commercial bank,
trust company, or other nominee and you
wish to tender your Initial Notes in the
Exchange Offer, you should contact the
registered holder promptly and instruct
the registered holder to tender your
Initial Notes on your behalf. If you are
a beneficial holder and you wish to tender
your Initial Notes on your own behalf, you
must, prior to delivering the Letter of
Transmittal and your Initial Notes to the
Exchange Agent, either make appropriate
arrangements to register ownership of your
Initial Notes in your own name or obtain a
properly completed bond power from the
registered holder. The transfer of
registered ownership may take considerable
time. See "The Exchange Offer--Procedures
for Tendering" and "--Book Entry Transfer.
WITHDRAWAL RIGHTS . . . You may withdraw the tender of your
Initial Notes at any time prior to 5:00
p.m., New York City time, on the
Expiration Date. To withdraw, you must
send a written or facsimile transmission
of your notice of withdrawal to the
Exchange Agent at its address set forth
herein under "The Exchange
Offer--Withdrawal of Tenders" by 5:00
p.m., New York City time, on the
Expiration Date.
5
<PAGE>
ACCEPTANCE OF INITIAL Subject to certain conditions, we will
NOTES AND DELIVERY OF accept all Initial Notes that are properly
EXCHANGE NOTES . . . . tendered in the Exchange Offer and not
withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. We
will deliver the Exchange Notes promptly
after the Expiration Date. See "The
Exchange Offer--Acceptance of Initial
Notes for Exchange; Delivery of Echange
Notes."
TAX CONSIDERATIONS . . We believe that the exchange of Initial
Notes for Exchange Notes will not be a
taxable exchange for federal income tax
purposes, but you should consult your tax
adviser about the tax consequences of this
exchange. See "Certain U.S. Federal
Income Tax Consequences."
EXCHANGE AGENT . . . . The Bank of New York is serving as
exchange agent in connection with the
Exchange Offer. The mailing address of
the Exchange Agent is 101 Barclay Street,
__________________, Attn: _____________,
See "The Exchange Offer--Exchange Agent."
FEES AND EXPENSES . . . We will bear all expenses related to
consummating the Exchange Offer and
complying with the Registration Rights
Agreement. See "The Exchange Offer--Fees
and Expenses."
USE OF PROCEEDS . . . . We will not receive any cash proceeds from
the issuance of the Exchange Notes. We
used the proceeds from the sale of the
Initial Notes to reduce outstanding
borrowings under our Credit Facility. See
"Use of Proceeds."
6
<PAGE>
SUMMARY DESCRIPTION OF EXCHANGE NOTES
NOTES OFFERED . . . . . . . $225,000,000 principal amount of 9-1/2%
Exchange Senior Subordinated Notes due
2011 of AMC Entertainment Inc.
ISSUER . . . . . . . . . . AMC Entertainment Inc.
MATURITY DATE . . . . . . . February 1, 2011.
INTEREST PAYMENT DATES . . February 1 and August 1 of each year,
commencing August 1, 1999.
OPTIONAL REDEMPTION . . . . We may redeem the Exchange Notes at our
option, in whole or in part, at any time
on or after, February 1, 2004 at 104.75%
of the principal amount thereof,
declining ratably to 100.00% of the
principal amount thereof on or after
February 1, 2007, plus in each case
interest accrued to the redemption date.
CHANGE OF CONTROL . . . . . Upon a Change of Control (as defined
herein), you as a holder of the Exchange
Notes will have the right to require us
to repurchase the Exchange Notes at a
price equal to 101% of the principal
amount thereof plus accrued and unpaid
interest to the date of repurchase. See
"Description of Notes--Change of
Control."
SINKING FUND . . . . . . . None.
RANKING . . . . . . . . . . The Exchange Notes will be unsecured
senior subordinated indebtedness ranking
PARI PASSU with all of our other existing
and future senior subordinated
indebtedness. The payment of all
obligations in respect of the Exchange
Notes will be subordinated, as set forth
herein, in right of payment to the prior
payment in full in cash or Cash
Equivalents of all Senior Indebtedness
(as defined herein). As of December 31,
1998, after giving pro forma effect to
the offering of the Initial Notes and the
application of the estimated net proceeds
therefrom as described in "Use of
Proceeds", we would have had
$83.1 million of Senior Indebtedness and
$199.0 million of PARI PASSU indebtedness
outstanding. In addition, the Exchange
Notes will be effectively subordinated to
all liabilities of our Subsidiaries (as
defined herein). As of December 31, 1998,
our Subsidiaries had $259.9 million of
liabilities, including trade payables but
excluding:
- intercompany obligations;
- liabilities under guarantees of
our obligations; and
- obligations under operating
leases and other obligations
not reflected in our
consolidated financial
statements.
7
<PAGE>
CERTAIN COVENANTS . . . . . The Indenture contains certain covenants
that, among other things, restrict our
ability and the ability of our
Subsidiaries to:
- incur additional indebtedness;
- pay dividends or make
distributions in respect of
capital stock;
- purchase or redeem capital
stock;
- enter into transactions with
certain affiliates;
- become liable for any
indebtedness that is
subordinate or junior in right
of payment to any Senior
Indebtedness and senior in
right of payment to the Notes;
or
- consolidate, merge or sell all
or substantially all of our
assets, other than in certain
transactions between one or
more of our wholly-owned
subsidiaries and us.
All of the foregoing restrictive
covenants will apply unless and until the
Fall-away Event (as defined herein)
occurs. In such event, we will be
released from our obligations to comply
with the restrictive covenants described
above, other than certain of the
covenants relating to mergers and a sale
of substantially all of our assets, as
well as certain other obligations. All of
these limitations are subject to a number
of important qualifications. In
particular, there are no restrictions on
our ability or the ability of our
Subsidiaries to prepay subordinated debt
or to make advances to, or invest in,
other entities (including unaffiliated
entities). See "Risk Factors--Limitations
of Covenants" and "Description of
Exchange Notes--Certain Covenants" and
"--Merger and Sale of Substantially All
Assets."
ABSENCE OF PUBLIC MARKET The Exchange Notes will be new securities
FOR THE NOTES . . . . . . . for which there is currently no market.
Although the Initial Purchasers have
informed us that they currently intend to
make a market in the Exchange Notes, they
are not obligated to do so, and any such
market making may be discontinued at any
time without notice. Accordingly, we
cannot assure you as to the development
or liquidity of any market for the
Exchange Notes. We do not intend to
apply for listing of the Exchange Notes
on any securities exchange or for
quotation on the National Association of
Securities Dealers Automated Quotation
System ("NASDAQ"). In connection with
the issuance of the Initial Notes, we
arranged for the Intitial Notes to be
eligible for trading in the Private
Offering, Resale and Trading through
Automated Linkages Market.
</TABLE>
RISK FACTORS
The Notes offered hereby involve a high degree of risk, and prospective
purchasers should carefully consider the factors described under "Risk
Factors."
8
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected data regarding the Company's
five most recent fiscal years and the interim periods ended December 31, 1998
and January 1, 1998. Operating results for the interim period ended December
31, 1998 are not necessarily indicative of the results that may be expected
for the entire fiscal year ending April 1, 1999. The historical financial
information for each of the fiscal years specified below has been derived
from the Company's consolidated financial statements for such periods. The
unaudited pro forma financial information of the Company as of and for the
fiscal year ended April 2, 1998 and for the interim period ended December 31,
1998 has been adjusted to give effect to the offering of the Initial Notes
and the application of the net proceeds thereof to the reduction of
outstanding indebtedness under the Credit Facility as described under "Use of
Proceeds". Such pro forma information does not purport to represent what the
Company's results of operations would have been had the offering of the
Initial Notes occurred on the dates presented or to project the Company's
financial position or results of operations for any future period.
9
<PAGE>
<TABLE>
<CAPTION>
Pro Forma(11) Actual Actual Pro Forma(11)
Thirty-nine Thirty-nine Thirty-nine Fifty-two
Weeks Ended Weeks Ended Weeks Ended Weeks Ended
----------- ----------- ----------- ----------- -------------
December 31, December 31, January 1, April 2, April 2,
1998 1998 1998 1998(1) 1998(1)
----------- ----------- ----------- ----------- -------------
(unaudited) (unaudited) (unaudited) (unaudited)
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
SUMMARY CONSOLIDATED STATEMENT OF
OPERATIONS:
Total revenues $ 785,353 $ 785,353 $ 629,890 $ 846,795 $ 846,795
Total cost of operations 648,376 648,376 502,447 685,540 685,540
General and administrative 44,717 44,717 41,893 54,354 54,354
Depreciation and amortization(2) 64,472 64,472 50,116 70,117 70,117
Impairment of long-lived assets(2) -- -- 46,998 46,998 46,998
---------- --------- --------- --------- ---------
Operating income (loss) 27,788 27,788 (11,564) (10,214) (10,214)
Interest expense 33,622 26,217 27,520 45,303 35,679
Investment income 1,085 1,085 805 1,090 1,090
Minority interest -- -- -- -- --
Gain (loss) on disposition of assets 2,259 2,259 3,360 3,704 3,704
---------- --------- --------- --------- ---------
Earnings (loss) before income taxes
and extraordinary item (2,490) 4,915 (34,919) (50,723) (41,099)
Income tax provision (792) 1,800 (14,150) (19,968) (16,600)
Extraordinary item, net of taxes(3) -- -- -- -- --
---------- --------- --------- --------- ---------
Net earnings (loss) $ (1,698) $ 3,115 $ (20,769) $ (30,755) $ (24,499)
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Preferred dividends -- -- 3,849 4,846 4,846
---------- --------- --------- --------- ---------
Net earnings (loss) for common
shares
$ (1,698) $ 3,115 $ (24,618) $ (35,601) $ (29,345)
---------- --------- --------- --------- ---------
---------- --------- --------- --------- ---------
Earnings (loss) per share before
extraordinary item:
Basic $ (0.07) $ 0.13 $ (1.34) $ (1.93) $ (1.59)
Diluted $ (0.07) $ 0.13 $ (1.34) $ (1.93) $ (1.59)
Earnings (loss) per share:
Basic $ (0.07) $ 0.13 $ (1.34) $ (1.93) $ (1.59)
Diluted $ (0.07) $ 0.13 $ (1.34) $ (1.93) $ (1.59)
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Cash, equivalents and investments $ 34,277 $ 34,277 $ 53,525 -- $ 9,881
Total assets 910,152 904,452 838,159 -- 795,780
Corporate borrowings 457,730 452,030 378,977 -- 348,990
Capital lease obligations 49,426 49,426 55,446 -- 54,622
Stockholders' equity 136,605 136,605 144,269 -- 139,455
OTHER FINANCIAL DATA:
Capital expenditures $ 177,063 $ 177,063 $ 293,507 $ 389,217 $ 389,217
Proceeds from sale/leasebacks -- -- 214,300 283,800 283,800
Rent expense 119,065 119,065 72,742 106,383 106,383
Preopening expense(4) 1,982 1,982 1,592 2,243 2,243
Theatre closure expense(5) 2,801 2,801 -- -- --
EBITDA (as adjusted)(6) 92,260 92,260 85,550 106,901 106,901
EBITDAR(7) 211,325 211,325 158,292 213,284 213,284
EBITDA margin(8) 11.7% 11.7% 13.6% 12.6% 12.6%
EBITDAR margin(9) 26.9% 26.9% 25.1% 25.2% 25.2%
Ratio of earnings to fixed charges(10) -- -- -- -- --
Net interest expense 32,973 25,568 27,211 44,788 35,164
Ratio of EBITDA to net interest
expense 2.80x 3.61x 3.14x 2.39x 3.04x
Ratio of EBITDAR to net interest
expense plus rent 1.39x 1.46x 1.58x 1.41x 1.51x
OPERATING DATA:
Number of Megaplex theatres operated 59 59 37 44 44
Number of Megaplex screens operated 1,314 1,314 795 987 987
Number of Multiplex theatres operated 180 180 192 185 185
Number of Multiplex screens operated 1,434 1,434 1,496 1,455 1,455
Average screens per theatre 11.5 11.5 10.0 10.7 10.7
Attendance 116,734 116,734 96,887 130,021 130,021
Theatre revenues per patron $ 6.56 $ 6.56 $ 6.33 $ 6.35 $ 6.35
Actual Years Ended
------------------------------------------------------------
April 3, March 28, March 30, March 31,
1997(1) 1996(1) 1995(1) 1994(1)
----------- ---------- ----------- ------------
Total revenues $ 749,597 $ 655,972 $ 563,344 $ 586,300
Total cost of operations 580,002 491,358 432,763 446,957
General and administrative 56,647 52,059 41,639 40,559
Depreciation and amortization(2) 52,572 42,087 37,913 38,048
Impairment of long-lived assets(2) 7,231 1,799 -- --
--------- --------- --------- ---------
Operating income (loss) 53,145 68,669 51,029 60,736
Interest expense 22,022 28,828 35,908 36,375
Investment income 856 7,052 10,013 1,156
Minority interest -- -- -- 1,599
Gain (loss) on disposition of assets (84) (222) (156) 296
--------- --------- --------- ---------
Earnings (loss) before income taxes
and extraordinary item 31,895 46,671 24,978 27,412
Income tax provision 12,900 19,300 (9,000) 12,100
Extraordinary item, net of taxes(3) -- (19,350) -- --
--------- --------- --------- ---------
Net earnings (loss) $ 18,995 $ 8,021 $ 33,978 $ 15,312
--------- --------- --------- ---------
--------- --------- --------- ---------
Preferred dividends 5,907 7,000 7,000 538
--------- --------- --------- ---------
Net earnings (loss) for common
shares $ 13,088 $ 1,021 $ 26,978 $ 14,774
--------- --------- --------- ---------
--------- --------- --------- ---------
Earnings (loss) per share before
extraordinary item:
Basic $ 0.75 $ 1.23 $ 1.64 $ 0.90
Diluted $ 0.74 $ 1.15 $ 1.45 $ 0.89
Earnings (loss) per share:
Basic $ 0.75 $ 0.06(3) $ 1.64 $ 0.90
Diluted $ 0.74 $ 0.34 $ 1.45 $ 0.89
CONSOLIDATED BALANCE SHEET DATA
(AT PERIOD END):
Cash, equivalents and investments $ 24,715 $ 10,795 $ 140,377 $ 151,469
Total assets 719,055 483,458 522,154 501,276
Corporate borrowings 315,072 126,150 200,222 200,149
Capital lease obligations 58,652 62,022 67,282 68,039
Stockholders' equity 170,012 158,918 157,388 130,404
OTHER FINANCIAL DATA:
Capital expenditures $ 253,380 $ 120,796 $ 56,403 $ 10,651
Proceeds from sale/leasebacks -- -- -- --
Rent expense 80,061 64,813 60,076 58,443
Preopening expense(4) 2,414 573 -- --
Theatre closure expense(5) -- -- -- --
EBITDA(6) 112,948 112,555 88,942 98,784
EBITDAR(7) 193,009 177,368 149,018 157,227
EBITDA margin(8) 15.1% 17.2% 15.8% 16.8%
EBITDAR margin(9) 25.7% 27.0% 26.5% 26.8%
Ratio of earnings to fixed charges(10) 1.55x 1.81x 1.42x 1.48x
Net interest expense 21,453 22,337 27,904 34,206
Ratio of EBITDA to net interest
expense 5.26x 5.04x 3.19x 2.89x
Ratio of EBITDAR to net interest
expense plus rent 1.90x 2.04x 1.69x 1.70x
OPERATING DATA:
Number of Megaplex theatres operated 19 5 -- --
Number of Megaplex screens operated 379 98 -- --
Number of Multiplex theatres operated 209 221 232 236
Number of Multiplex screens operated 1,578 1,621 1,630 1,603
Average screens per theatre 8.6 7.6 7.0 6.8
Attendance 121,391 112,794 101,536 106,240
Theatre revenues per patron $ 6.04 $ 5.70 $ 5.46 $ 5.46
</TABLE>
10
<PAGE>
___________
(1) Fiscal 1997 consists of 53 weeks. All other fiscal years consist of 52
weeks.
(2) During fiscal 1998, 1997 and 1996, we recognized non-cash impairment losses
on 59, 18 and 4 of our multiplexes, respectively. The estimated future
cash flows of these theatres, undiscounted and without interest charges,
were less than the carrying value of the theatre assets.
(3) Fiscal 1996 includes a $19.35 million extraordinary loss on early
extinguishment of debt (net of income tax benefit of $13.4 million) equal
to $1.17 per common share.
(4) Preopening expense is comprised of advertising and promotional expense that
is incurred in connection with the opening of a new theatre. Certain other
preopening costs are capitalized and amortized over a two year period.
Effective April 1, 1999, all capitalized preopening costs will be written
off as a cumulative effect adjustment and all future preopening costs will
be expensed as incurred.
(5) Theatre closure expense relates to actual and estimated lease exit costs on
five of our multiplex theatres. We expect to have additional closure
expenses in the future. See "Risk Factors--Declining Multiplex Theatres."
(6) Represents net earnings (loss) plus interest, income taxes, depreciation
and amortization and adjusted for impairment losses, gain (loss) on
disposition of assets, equity in earnings of unconsolidated affiliates and
extraordinary item. We have included EBITDA because we believe that EBITDA
provides lenders and stockholders additional information for estimating our
value and evaluating our ability to service debt. We believe that EBITDA
is a financial measure commonly used in our industry and should not be
construed as an alternative to operating income (as determined in
accordance with GAAP). EBITDA, as we use the term herein, may not be
comparable to EBITDA as reported by other companies. In addition, EBITDA
is not intended to represent cash flow (as determined in accordance with
GAAP) and does not represent the measure of cash available for
discretionary uses. EBITDA as defined in the Indenture will generally be
greater than as presented above. See "Description of Notes--Certain
Definitions--Consolidated EBITDA."
(7) Represents EBITDA plus rent expense.
(8) Defined as EBITDA as a percentage of total revenues.
(9) Defined as EBITDAR as a percentage of total revenues.
(10) We had a deficiency of earnings to fixed charges for the thirty-nine weeks
ended December 31, 1998 and January 1, 1998 and the fiscal year ended April
2, 1998 of $427,000, $40.06 million and $48.48 million, respectively.
Earnings consist of income (loss) before taxes, plus fixed charges
(excluding capitalized interest). Fixed charges consist of interest
expense, amortization of debt issuance cost, and one-third of rent expense
on operating leases treated as representative of the interest factor
attributable to rent expense. On a pro form a basis after giving effect to
the offering of the Initial Notes as though such transaction had occurred
at the beginning of the period, we had a deficiency of earnings to fixed
charges for the thirty-nine weeks ended December 31, 1998 and the fiscal
year ended April 2, 1998 of $7.83 million and $58.10 million,
respectively.
(11) The pro forma Statement of Operations Data for the thirty-nine weeks ended
December 31, 1998 and for the fiscal year ended April 2, 1998 give effect
to the offering of the Initial Notes as though such transaction had
occurred at the beginning of the period. The pro forma balance sheet data
gives effect to such transaction as though it had occurred on December 31,
1998. The pro forma Statement of Operations Data includes the addition to
interest expense for the issuance of the 9-1/2% Senior Subordinated Notes
due 2011, including amortization of debt issuance costs, and the reduction
of interest expense associated with the reduction of outstanding
indebtedness under the Credit Facility from the net proceeds from the
offering of the Initial Notes. If such offering had occurred on April 4,
1997, the excess proceeds would have been available for investment.
Interest income from this use of proceeds would have been approximately
$937,000 for the thirty-nine weeks ended December 31, 1998 (assuming a rate
of 5.0%) and $1.76 million for the year (52 weeks) ended April 2, 1998
(assuming a rate of 5.1%).
11
<PAGE>
RISK FACTORS
AN INVESTMENT IN THE NOTES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS, IN ADDITION TO THE
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, IN DECIDING WHETHER TO INVEST
IN THE NOTES. THIS PROSPECTUS AND DOCUMENTS INCORPORATED BY REFERENCE HEREIN
CONTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE
FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH DIFFERENCES INCLUDE
THOSE DISCUSSED BELOW.
FAILURE TO PARTICIPATE IN THE EXCHANGE OFFER WILL HAVE ADVERSE CONSEQUENCES
If you do not exchange your Initial Notes for Exchange Notes pursuant to
the Exchange Offer, you will continue to be subject to the restrictions on
transfer of your Initial Notes, as set forth in the legend on your Initial
Notes. The restrictions on transfer of your Initial Notes arise because we
sold the Initial Notes in a private offering. In general, the Initial Notes
may not be offered or sold, unless registered under the Securities Act or
pursuant to an exemption from, or in a transaction not subject to, such
requirements. We do not intend to register the Initial Notes under the
Securities Act.
After completion of the Exchange Offer, holders of Initial Notes who do
not tender their Initial Notes in the Exchange Offer will no longer be
entitled to any exchange or registration rights under the Registration Rights
Agreement, except under limited circumstances.
If you exchange your Initial Notes in the Exchange Offer for the purpose
of participating in a distribution of the Exchange Notes, you may be deemed
to have received restricted securities and, if so, will be required to comply
with the registration and prospectus delivery requirements of the Securities
Act in connection with any resale transaction. To the extent Initial Notes
are tendered and accepted in the Exchange Offer, the trading market, if any,
for the Initial Notes would be adversely affected. See "The Exchange Offer."
SUBSTANTIAL OBLIGATIONS; NEED FOR ADDITIONAL CAPITAL
We had approximately $501 million of indebtedness outstanding as of
December 31, 1998, including approximately $199 million of our 9-1/2% Senior
Subordinated Notes due 2009 (the "9-1/2% Notes due 2009"), $253 million under
our Credit Facility and $49.4 million in capitalized leases. We also have
significant rental obligations under operating leases, the incurrence of
which are not restricted under the Indenture. As of April 2, 1998, the
undiscounted base rentals over the lives of such leases (with initial base
terms ranging generally from 13 to 25 years) were over $2.4 billion.
Our business plan requires that we make substantial capital
expenditures. See "--Substantial Capital Expenditures; Uncertainty of Theatre
Development." We intend to finance a substantial portion of these
expenditures by borrowing. The total commitment under the Credit Facility is
$425 million, but the facility contains covenants that limit our ability to
incur debt (whether under the Credit Facility or from other sources). Under
one of these covenants, our compliance with, and the amount of additional
borrowing capacity under, the Credit Facility is determined as of the end of
each quarter, based on "net indebtedness" at the end of the quarter and our
"Consolidated EBITDA" during the previous four quarters, as such terms are
defined in the Credit Facility. As of December 31, 1998, after giving
effect to the use of the net proceeds of the offering of the Initial Notes,
we could have had approximately $650 million in net indebtedness under this
covenant and therefore would have had available approximately $183 million
additional borrowing capacity under the Credit Facility. This amount is
substantially less than we would need to fund our expansion program.
Furthermore, based on our performance to date during the fourth quarter,
unless we amend our Credit Facility we expect that the total amount of net
indebtedness which we could have at April 1, 1999 will be less than it was at
December 31, 1998.
We are in the process of negotiating with our banks to amend the Credit
Facility to increase our ability to incur debt, which will improve our
borrowing capacity under the Credit Facility. Although we expect that we
will be able to amend the Credit Facility before the end of the fiscal year,
we cannot assure you that we will be able to successfully negotiate such
terms or that they will be at favorable rates. Subject to favorable market
conditions, our business plan also contemplates selling and leasing back the
real estate assets associated with newly constructed megaplex theatres, which
could be a more expensive source of financing than additional debt.
Entertainment Properties Trust has notified us of its intent to exercise a
purchase option (subject to due diligence review) on one of our megaplex
theatres; the purchase price would be approximately $23.5 million. We are
not engaged in negotiations for any other sale leaseback transactions, and
12
<PAGE>
we cannot assure you that we will be able to engage in any such
transactions. A failure to amend the Credit Facility as contemplated and/or
enter into sale and leaseback transactions would adversely affect our ability
to continue our expansion program.
In order to satisfy our obligations under the Notes, the 9-1/2% Notes
due 2009, the Credit Facility and our leases, and to incur incremental debt
to fund our expansion program, we will have to generate substantial operating
cash flow. Our ability to meet debt service, rental and other obligations
will depend on our future performance, which will be subject to prevailing
economic conditions and to financial, business and other factors beyond our
control. If our cash flow were to prove inadequate to meet our debt service,
rental and other obligations, we may be required to refinance all or a
portion of our existing debt, to sell assets or to obtain additional
financing. We cannot assure you that any such refinancing or that any such
sale of assets or additional financing would be possible on favorable terms
if at all.
The amount of our indebtedness and lease obligations could have
important consequences to you, as a holder of the Notes, including the
following: (i) our ability to obtain additional financing in the future for
working capital, capital expenditures, acquisitions, general corporate
purposes or other purposes and our ability to refinance the Notes and other
indebtedness upon maturity or a change in control may be impaired and (ii) a
substantial portion of our cash flow from operations will be dedicated to the
payment of lease rentals and principal and interest on our indebtedness,
thereby reducing the funds available to us for operations, payment of
dividends and any future business opportunities. Because the interest rate
under the Notes exceeds that under the Credit Facility, the offering of the
Initial Notes will result in increased interest expense for us.
SUBORDINATION OF THE NOTES
The Notes are our general unsecured obligations. They are subordinated
in right of payment to all of our existing and future Senior Indebtedness,
including obligations under the Credit Facility. Our obligations under the
Notes are PARI PASSU with our obligations under our 9-1/2% Notes due 2009. As
of December 31, 1998, after giving pro forma effect to the offering of the
Initial Notes and the application of the net proceeds therefrom as described
in "Use of Proceeds", we would have had outstanding Senior Indebtedness of
$83.1 million and we would have had available approximately $183 million
additional borrowing capacity under the Credit Facility. Amounts borrowed
under the Credit Facility would be included as Senior Indebtedness. As noted
above, we are in the process of negotiating revised terms that would increase
our borrowing capacity under the Credit Facility. Subject to certain
limitations, we will be able to incur additional indebtedness, including
Senior Indebtedness, under the Indenture. See "Description of Notes--Certain
Covenants--Limitation on Consolidated Indebtedness."
If we liquidate, dissolve, reorganize or engage in any similar
proceeding, our assets will be available to pay obligations on the Notes only
after our Senior Indebtedness has been paid in full, and there may not be
sufficient assets remaining to pay you as a holder of the Notes. In addition,
we may not pay principal of, premium, if any, or interest on the Notes or
purchase, redeem or otherwise retire the Notes, if any principal, premium, if
any, or interest on any Senior Indebtedness is not paid when due (whether at
final maturity, upon scheduled installment, acceleration or otherwise) unless
such payment default has been cured or waived or such Senior Indebtedness has
been repaid in full. In addition, under certain circumstances, if any
non-payment default exists with respect to Designated Senior Indebtedness (as
defined herein), we may not make any payments on the Notes for a specified
period of time, unless such default is cured or waived or such Designated
Senior Indebtedness has been repaid in full. If we fail to make any payment
on the Notes when due or within any applicable grace period, whether or not
on account of the payment blockage provisions referred to above, we would be
in default under the Indenture and the holders of the Notes could accelerate
the maturity thereof on or after the fifth business day following such event
of default. See "Description of Notes--Subordination."
If certain financial ratios exceed specified limits, we must pledge all
the stock of all our operating subsidiaries to secure our indebtedness under
the Credit Facility.
HOLDING COMPANY STRUCTURE
We are a holding company with no operations of our own. Consequently,
our ability to service our debt and pay dividends is dependent upon the
earnings from the businesses conducted by our subsidiaries. The distribution
of those
13
<PAGE>
earnings, or advances or other distributions of funds by these subsidiaries
to us, all of which could be subject to statutory or contractual
restrictions, are contingent upon the subsidiaries' earnings and are subject
to various business considerations.
Our subsidiaries have guaranteed our obligations under the Credit
Facility. However, our subsidiaries are not obligors or guarantors of the
Notes. Therefore, the claims of creditors of such subsidiaries, including
claims of lenders under the Credit Facility, the claims of trade creditors,
and claims of preferred stockholders (if any) of such subsidiaries, generally
will have priority with respect to the assets and earnings of such
subsidiaries over the claims of our creditors. The Notes, therefore, are
effectively subordinated to creditors (including trade creditors) and
preferred stockholders (if any) of such subsidiaries. As of December 31,
1998, our subsidiaries had $259.9 million of liabilities, including trade
payables but excluding (i) intercompany obligations, (ii) liabilities under
guarantees of our obligations and (iii) obligations under operating leases
and other obligations not reflected in our consolidated financial statements.
Accordingly, there can be no assurance that, in the event of our bankruptcy,
after providing for claims of creditors and preferred stockholders (if any)
of our subsidiaries, there would be sufficient assets available to pay
amounts due to you as a holder of the Notes.
LIMITATIONS OF COVENANTS
Although the Indenture limits our ability to incur indebtedness, such
limitation is subject to a number of significant qualifications, as follows.
- The definition of EBITDA used in the Indenture, which is a principal
measure of our debt capacity under the Indenture, is more favorable to
the Company than that shown under "Selected Financial and Operating
Data." See "Description of Exchange Notes--Certain
Definitions--Consolidated EBITDA."
- The Indenture does not impose any limitation on our incurrence of
capital lease obligations or liabilities that are not considered
"Indebtedness" under the Indenture (such as operating leases), nor
does it impose any limitation on the amount of liabilities incurred by
subsidiaries, if any, that might be designated as Unrestricted
Subsidiaries (as defined herein). See "--Substantial Obligations"; and
"Description of Exchange Notes--Certain Covenants--Limitation on
Consolidated Indebtedness."
- The Indenture will treat future operating leases that are recorded on
our balance sheet as lease financing obligations in accordance with
EITF 97-10 as permitted indebtedness.
- There are no restrictions on our ability to prepay subordinated debt
or to make advances to, or invest in, other entities (including
unaffiliated entities) and no restrictions on the ability of our
subsidiaries to enter into agreements restricting their ability to pay
dividends or otherwise transfer funds to us.
- If the Notes attain Investment Grade Status, the covenants in the
Indenture limiting our ability to incur indebtedness, pay dividends,
acquire stock or engage in transactions with affiliates will cease to
apply.
OPERATING RISKS IN THE THEATRICAL EXHIBITION INDUSTRY
We predominantly license "first run" motion pictures. Our ability to
operate successfully depends upon a number of factors, the most important of
which are:
- the availability and popularity of such "first run" motion pictures;
- the allocation of popular motion pictures to us as a result of our
relationship with motion picture distributors;
- the terms upon which motion pictures are licensed to us; and
- the performance of such motion pictures in the markets in which we
operate.
As a result of these factors, historically our operating results have
fluctuated significantly and we expect them to do so in future periods.
14
<PAGE>
DEPENDENCE ON DISTRIBUTORS. We must rely on distributors of motion
pictures, over whom we have no control, for the films which we exhibit. Our
business can be adversely affected if the production of motion pictures is
disrupted or if our access to motion pictures is limited or delayed because
of a deterioration in our relationship with such distributors or for some
other reason. For example, since fiscal 1995, we licensed films of a certain
distributor for a smaller number of theatres than we otherwise would have. To
the extent that we are unable to license a popular film for exhibition in our
theatres, our operating results may be adversely affected.
SIGNIFICANCE OF PRICE TERMS. Price terms of film licenses also affect
our results. Recently, more distributors have been licensing films under firm
term fee arrangements, where final terms are negotiated at the time of
licensing, instead of on a settlement basis, where terms are adjusted
subsequent to the exhibition of a motion picture. Firm term arrangements
generally result in our retaining a lower percentage of admissions,
particularly when a film plays off more quickly than expected when the terms
were negotiated.
IMPACT OF POOR PERFORMING FILMS. Because film distributors have
historically released those films which they anticipate will be the most
successful during the summer and holiday seasons, poor performance of such
films or disruption in the release of films during such periods can adversely
affect our quarterly results for those particular periods.
HIGHER COST OF MEGAPLEXES. The entertainment industry trend towards
megaplexes is relatively recent. Although megaplexes generally produce higher
revenues per patron, they also generally require greater capital expenditures
than the previous generation of multiplexes, special construction and limited
use designs by developers of such properties. In addition, the fixed costs of
operating megaplexes generally are higher than those related to multiplexes,
which can result in greater volatility in operating results based on changes
in operating revenues. Therefore, we cannot assure you that we will be able
to operate such theatres profitably or recoup our investment on such
theatres.
GENERAL ECONOMIC CONDITIONS. Our success depends on general economic
conditions and the willingness of consumers to allocate their expenditures
toward theatrical exhibition. To the extent such activities become less
popular or consumers spend less on theatrical exhibition activities, our
operations could be adversely affected.
SEASONALITY OF OPERATIONS
As with other exhibitors, our business is seasonal in nature, with the
highest attendance and revenues generally occurring during the summer months
and holiday seasons. Accordingly, our results for one quarter are not
necessarily indicative of our results for the next quarter and we sometimes
incur net losses in the first and, less frequently, the fourth fiscal
quarters.
DECLINING MULTIPLEX THEATRES
A majority of our screens presently are in multiplex theatres. As with
other exhibitors, certain of our multiplexes, generally those smaller in
screen count, are subject to deteriorating financial performance and to being
rendered obsolete through the introduction of new, competing megaplexes, some
of which we operate. For example, the summer of 1997 was the first summer
film season, generally the highest grossing period for the film industry,
that we and our competitors were operating a significant number of
megaplexes. During this period, the financial results of certain of our
multiplexes were significantly less than anticipated at the beginning of
fiscal 1998. This was due primarily to competition from the newer megaplexes.
Primarily as a result of the competition from newer megaplexes, attendance
per screen at multiplexes open throughout fiscal 1997 and 1998 declined from
62,800 in fiscal 1997 to 56,800 in fiscal 1998.
As a result of their deteriorating performance, we recognized a non-cash
impairment loss in fiscal 1998 of $46,998,000 ($27,728,000 after tax, or
$1.50 per share) on 59 multiplexes with 412 screens in 14 states. This
followed impairment losses of $7,231,000 ($4,266,000 after tax, or $.24 per
share) on 18 multiplexes with 82 screens in nine states in fiscal 1997 and
$1,799,000 ($1,061,000 after tax, or $.06 per share) on four multiplexes with
21 screens in three states in fiscal 1996. These impairment losses were
recognized because the future cash flows of these theatres, undiscounted and
without interest charges, were less than the carrying value of the theatre
assets. We believe that the amount of the impairment losses which we have
taken are adequate. However, deterioration in the performance of other
multiplexes which may be competitively impacted in the future could require
us to recognize additional impairment losses.
15
<PAGE>
We are evaluating our future plans for the affected multiplexes, which
may include selling theatres, subleasing properties to other exhibitors or
for other uses, retrofitting certain theatres to the standards of a megaplex
or closing theatres and terminating the leases. Any or all of these options
could result in a significant impact to our results of operations and
financial position. Closure or other dispositions of certain multiplexes
could result in expenses related to lease exit costs which are primarily
comprised of expected payments to landlords or conversion costs. Such
expenses could aggregate up to $32 million over the next four years.
INTERNATIONAL OPERATIONS RISK
We are pursuing opportunities for operating megaplexes in Europe, Canada
and Asia. In 1996, we opened a 13-screen theatre in Japan and a 20-screen
theatre in Portugal. During the current fiscal year, we have opened a
24-screen theatre in Spain, a 16-screen theatre in Japan, an 11-screen
theatre in China (Hong Kong) and two theatres with a total of 44 screens in
Canada. As of December 31, 1998, we had commenced construction of three
additional international theatres, two in Canada and one in Japan.
There are significant differences between the theatrical exhibition
industry in the United States and in certain international markets. These
include:
- REGULATORY BARRIERS. International market entry may be affected by
restrictions on the size of theatres, the issuance of licenses and the
ownership of land.
- VERTICAL INTEGRATION OF PRODUCTION AND EXHIBITION COMPANIES. In
certain international markets, vertical integration of production and
exhibition companies can have an adverse effect on our ability to
license motion pictures for international exhibition. The operations
of our first theatre in Japan previously was negatively impacted by
local film distributors who restricted our ability to obtain film
product until after our competitors received it. While this issue has
been resolved in Japan, there can be no assurances that this or
similar problems will not recur in Japan or other international
markets.
- FLUCTUATING CURRENCY VALUES. We do not hedge against the risk of
fluctuating currency values.
- QUOTA SYSTEMS. Quota systems sometimes are used to limit the number of
foreign films that can be exhibited in a domestic market. Some
countries use quota systems to protect their domestic film industry.
Quota systems may adversely affect revenues from theatres that we
develop in such markets.
Such differences in industry structure and regulatory and trade
practices may adversely affect our ability to expand internationally or to
operate at a profit following such expansion. See "--Substantial Capital
Expenditures; Uncertainty of Theatre Development."
COMPETITION
We compete against both local and national exhibitors, some of which may
have substantially greater financial resources. There are over 500 companies
competing in the domestic theatrical exhibition industry, approximately 280
of which operate four or more screens. Industry participants vary
substantially in size, from small independent operators to large
international chains. Recently, four of the industry's largest companies have
merged, and there may be additional mergers in the future. According to the
Motion Pictures Association of America, the number of indoor screens in the
United States was 30,825 at the end of 1997. Based on the May 1, 1997 listing
of exhibitors in the National Association of Theatre Owners 1997-98
Encyclopedia of Exhibition, we believe that the ten largest exhibitors (in
terms of number of screens) operated approximately 50% of such number of
screens, with no one exhibitor operating more than ten percent of the total
screens. Information concerning the ten largest exhibitors does not reflect
changes in screens operated by them between the date of the National
Association of Theatre Owners information and the date of the Motion Pictures
Association of America information.
16
<PAGE>
Our theatres are subject to varying degrees of competition in the
geographic areas in which they operate. Competitors may be national circuits,
regional circuits or smaller independent exhibitors. Competition is often
intense with respect to the following factors.
- ATTRACTING PATRONS. The competition for patrons is dependent upon
factors such as the availability of popular motion pictures, the
location and number of theatres and screens in a market, the comfort
and quality of the theatres and pricing. Many of our competitors have
sought to increase the number of screens that they operate.
Competitors have built or may be planning to build theatres in certain
areas where we operate, which could result in excess capacity and
increased competition for patrons.
- LICENSING MOTION PICTURES. We believe that the principal competitive
factors with respect to film licensing include licensing terms,
seating capacity and the location and condition of an exhibitor's
theatres.
- FINDING NEW THEATRE SITES. We must compete with exhibitors and others
in our efforts to locate and acquire attractive sites for our
theatres. See "--Substantial Capital Expenditures; Uncertainty of
Theatre Development."
We expect that in the long term the addition of new megaplexes will help
us obtain more favorable allocations of film product and other licensing
terms from distributors than our competitors. However, competition from
established theatres that have established relationships with distributors
initially may negatively impact the earnings of new megaplexes.
We also face competition in the international markets in which we
operate. See "--International Operations Risk."
The theatrical exhibition industry also faces competition from other
distribution channels for filmed entertainment, such as cable television, pay
per view and home video systems, as well as from all other forms of
entertainment.
SUBSTANTIAL CAPITAL EXPENDITURES; UNCERTAINTY OF THEATRE DEVELOPMENT
Our growth strategy involves the development of new megaplexes and may
involve acquisitions of existing theatres and theatre circuits. From April
1996 to December 31, 1998, we opened 56 new theatres and 1,249 screens,
acquired four theatres and 29 screens and as of December 31, 1998, had 10
megaplexes with an aggregate of 242 screens under construction. We have plans
to open approximately 1,000 screens, including 300 in international markets,
during fiscal years 2000 and 2001. If we execute our growth strategy as
planned, we estimate that capital expenditures will aggregate approximately
$545 million during such period. There can be no assurance that we will
successfully develop new screens or successfully complete those under
construction, that we will stay within our construction budgets for such
screens or that the financial performance of such screens will be equivalent
to the performance of the Company's existing screens. See "--Substantial
Obligations; Need for Additional Capital."
The development of new theatre locations involves significant risks and
investments and is also likely to have an initial negative impact on earnings
and EBITDA.
- COMPETITION FOR SITES. There is significant competition in the United
States for site locations from both theatre companies and other
businesses and significant competition among theatre companies for
theatre acquisition opportunities. As we and our competitors continue
to build megaplexes, we may find it increasingly difficult to obtain
attractive sites.
- DEVELOPMENT LAG TIME. We typically require 18 to 24 months to open a
domestic theatre on a site from the time we identify the site. We
generally require an additional year or more to open an international
theatre.
- ECONOMIC AND OTHER CONDITIONS. The availability of attractive site
locations can be adversely affected by changes in the national,
regional and local economic climate. Local conditions, such as
scarcity of space or an increase in demand for real estate in the
area, demographic changes, competition from other available
17
<PAGE>
space and changes in real estate, zoning and tax laws can also affect
the availability of attractive site locations.
- FINANCING. Our expansion program will require financing in addition to
the currently available commitment amount under our Credit Facility
and internally generated funds. We cannot assure you that we will be
able to obtain such additional financing at favorable rates. See
"--Substantial Obligations; Need for Additional Capital."
As a result of the foregoing, we cannot assure you that we will be able
to acquire attractive site locations or existing theatres or theatre circuits
on terms we consider acceptable, that we will be able to acquire financing
for such theatres on acceptable terms or that our strategy will result in
improvements to our business, financial condition or profitability. See
"--Competition."
RESTRICTIONS UNDER FINANCING AGREEMENTS; VARIABLE INTEREST RATE
Our Credit Facility contains certain financial and other covenants,
including covenants requiring us to maintain certain financial ratios and
restricting our ability to incur indebtedness or to create or suffer to exist
certain liens. The Credit Facility also requires that certain amounts of
indebtedness thereunder be repaid by specified dates. Our ability to comply
with such provisions may be affected by events beyond our control. See
"--Substantial Obligations; Need for Additional Capital."
If we fail to make any required payment under the Credit Facility or to
comply with any of the financial and operating covenants included in the
Credit Facility, we would be in default. Our lenders could then vote to
accelerate the maturity of the indebtedness under the Credit Facility and
foreclose upon the stock of our subsidiaries, if pledged, securing the Credit
Facility. Other creditors might then accelerate other indebtedness. If the
lenders under the Credit Facility accelerate the maturity of the indebtedness
thereunder, we cannot assure you that we will have sufficient assets to
satisfy our obligations under the Credit Facility or our other indebtedness,
including the Notes. In addition, if we were to default on our obligations to
holders of Senior Indebtedness, such as the Credit Facility, the
subordination provisions of the Indenture likely would restrict payments to
you as a holder of the Notes.
Our indebtedness under the Credit Facility bears interest at rates that
fluctuate with changes in certain prevailing interest rates (although,
subject to certain conditions, such rates may be fixed for certain periods).
If interest rates increase, we may be unable to meet our debt service
obligations under the Credit Facility and other indebtedness.
ADA COMPLIANCE
Our theatres must comply with Title III of the Americans with
Disabilities Act of 1990 (the "ADA"). Compliance with the ADA requires that
public accommodations "reasonably accommodate" individuals with disabilities
and that new construction or alterations made to "commercial facilities"
conform to accessibility guidelines unless "structurally impracticable" for
new construction or technically infeasible for alterations. Non-compliance
with the ADA could result in the imposition of injunctive relief, fines, an
award of damages to private litigants or additional capital expenditures to
remedy such noncompliance.
Although we believe that our theatres are in substantial compliance with
the ADA, in the summer of 1998 the Civil Rights Division of the Department of
Justice (the "DOJ") threatened to sue us based on an alleged pattern or
practice of violations of Title III of the ADA at our newly constructed and
renovated theatres having stadium-style seating. Thereafter, we engaged in
discussions with the DOJ in an effort to ascertain the DOJ's position and
resolve this matter on a reasonable basis. However, on January 29, 1999, we
were notified that the DOJ had filed suit in the United States District Court
for the Central District of California, UNITED STATES OF AMERICA V. AMC
ENTERTAINMENT INC. AND AMERICAN MULTI-CINEMA, INC. The complaint alleges that
we have designed, constructed and operated two of our motion picture
theatres in the Los Angeles area and unidentified theatres elsewhere that
have stadium-style seating in violation of DOJ regulations implementing Title
III of the ADA and related "Standards for Accessible Design" (the
"Standards"). The complaint alleges various types of non-compliance with the
DOJ's Standards, but relates primarily to issues relating to lines of sight.
The DOJ seeks declaratory and injunctive relief regarding existing and future
theatres with stadium-style seating, compensatory damages and civil penalty.
18
<PAGE>
The current DOJ position appears to be that theatres must provide
wheelchair seating locations and transfer seats with viewing angles to the
screen that are at the median or better, counting all seats in the
auditorium. Heretofore, we have attempted to conform to the evolving
standards imposed by the DOJ. However, we believe that the DOJ's current
position has no basis in the ADA or related regulations and is an attempt to
amend the ADA regulations without complying with the Administrative
Procedures Act. We intend to file an answer denying the allegations made in
the DOJ's complaint and asserting that the DOJ is engaging in unlawful
rulemaking. A similar suit recently has been filed by another exhibitor,
CINEMARK USA, INC. V. UNITED STATES DEPARTMENT OF JUSTICE, United States
District Court for the Northern District of Texas, Case No. 399CV0183-L. We
have made a motion to intervene in this litigation. Although no assurances
can be given, based on existing precedent involving stadiums or stadium
seating, we believe that an adverse decision in the matter brought against us
by the DOJ is not likely to have a material adverse effect on our financial
condition, liquidity or results of operations. However, there have been only
a few cases involving stadiums or stadium seating.
In an unrelated action filed on March 5, 1998 in the United States
District Court for the District of Arizona, HOWARD BELL V. AMC 24 THEATRES,
CIV 98 0390, a private plaintiff is alleging we have violated the ADA for not
dispersing accessible seating or providing accessible signage at a megaplex
located in Phoenix, Arizona. On October 16, 1998, another private plaintiff
filed suit in the United States District Court for the District of Southern
Florida, BARBARA HARRIS V. AMERICAN MULTI-CINEMA, INC., CIV 98-2472, alleging
that we have violated the ADA by failing to provide comparable seating for
wheel chair patrons. Both suits seek an injunction against continued
operation of the megaplex in violation of the ADA. On November 30, 1998,
Cyndi Soto filed suit in the United States District Court for the Central
District of California, CYNDI SOTO V. AMERICAN MULTI-CINEMA, INC. AND
JANSS/TYS LONG BEACH ASSOCIATES, CV989547JSLRNBX, alleging that one of our
theatres violated the ADA and California law by failing to remove certain
barriers to access. The suit seeks an unspecified amount of general, special
and punitive damages under California law and an injunction requiring the
Company to remove the alleged barriers.
POTENTIAL CONFLICTS OF INTEREST
We sponsored Entertainment Properties Trust's formation, and
Mr. Peter C. Brown, our Co-Chairman of the Board, President and Chief
Financial Officer, serves as Chairman of the Board of Trustees of
Entertainment Properties Trust. Because of the various agreements between
Entertainment Properties Trust and us, situations may arise where we have
differing interests from Entertainment Properties Trust. These agreements
include (i) leases with respect to 16 theatre properties, (ii) an option to
purchase one additional property and (iii) a five-year right of first refusal
and first offer in favor of Entertainment Properties Trust to purchase any
megaplex and related entertainment properties acquired or developed and owned
(or ground leased) by us. Because of the relationships between us and
Entertainment Properties Trust, there exists the risk that we will not
achieve the same results in our dealings with Entertainment Properties Trust
that we might achieve if such relationships did not exist. Although we
believe that the existing terms of the leases and other agreements between
Entertainment Properties Trust and us reflected market conditions when they
were negotiated, it is possible such terms might have been different had they
been negotiated on an arm's length basis.
ENVIRONMENTAL REGULATION
The Company owns and operates facilities throughout the U.S. and in
several foreign countries, and is subject to the environmental laws and
regulations of those jurisdictions, particularly laws governing the cleanup
of hazardous materials and the management of properties. While the Company is
not currently involved in any environmental matter that could have a material
adverse effect on its financial condition or results of operations, in the
future, the Company might be required to participate in the cleanup of a
property that it owns or leases or at which it is alleged to have disposed of
hazardous materials from one of its facilities. In certain circumstances, the
Company might be solely responsible for any such liability under
environmental laws, and, therefore, any such claims could be material.
POTENTIAL IMPACT OF YEAR 2000 ON COMPANY.
The failure of information technology ("IT") and embedded, or non-IT
systems, because of the Year 2000 issue or otherwise, could adversely affect
our operations. If not corrected, many computer-based systems and theatre
equipment, such as air conditioning systems and fire and sprinkler systems,
could encounter difficulty differentiating between the year 1900 and the year
2000 and interpreting other dates, resulting in system malfunctions,
corruption of data or system failure. Additionally, we rely upon outside
third parties ("business partners") to supply many of the products and
services that we
19
<PAGE>
need in our business. Such products include films which we exhibit and
concession products which we sell. Attendance at our theatres could be
severely impacted if one or more film producers are unable to produce new
films because of Year 2000 issues. We could suffer other business disruptions
and loss of revenues if any other types of material business partners fail to
supply the goods or services necessary for our operations.
CONTROLLING STOCKHOLDERS
Mr. Stanley H. Durwood, our 78-year old Co-Chairman of the Board and
Chief Executive Officer, owns all the Company's outstanding Class B Stock,
which has ten votes per share and presently is entitled to elect 75% of the
members of the Board of Directors. Mr. Durwood therefore generally has voting
control of the Company, subject to the right of holders of Common Stock to
elect 25% of the members of the Board of Directors. Recently, Mr. Durwood
commenced treatment for a recurrence of esophageal cancer. He was diagnosed
with the condition and had surgery in early 1997.
Mr. Stanley H. Durwood has created a revocable voting trust and
revocable INTER VIVOS trust for his benefit that hold all of the Class B
Stock that he beneficially owns. Mr. Durwood is the sole acting trustee of
these trusts; the named successor trustees are Messrs. Charles J. Egan, Jr.,
a Director of the Company, and Raymond F. Beagle, Jr., general counsel to the
Company. Under the terms of the voting trust, Mr. Durwood has all voting
powers with respect to shares held therein during his lifetime. Thereafter,
all voting rights with respect to such shares vest in his successor trustees
and any additional trustees whom they might appoint. The trustees must
exercise such rights by majority vote. Unless revoked by Mr. Durwood or
otherwise terminated or extended in accordance with its terms, the voting
trust will terminate in the year 2030.
Mr. Stanley H. Durwood owns approximately 4.0 million shares of Class B
Stock, representing 67.5% of the voting interest in the Company. His children
own an aggregate of approximately 6.35 million shares of Common Stock,
representing 10.6% of the voting interest in the Company, and 32.7% of the
outstanding shares of Common Stock.
As a result of their ownership of shares of Common Stock and because
attendance at stockholders' meetings generally is less than 100%, any
corporate action requiring the approval of the holders of Common Stock voting
as a class may as a practical matter require the approval of the Durwood
children. Matters requiring approval of holders of the Common Stock voting as
a class include any proposed amendment to the Restated and Amended
Certificate of Incorporation changing the authorized number of shares of
Common Stock or altering the powers, preferences or special rights of the
shares of such class so as to affect them adversely.
Holders of Common Stock are entitled to elect 25% of the Company's
Board. As stated above, the Durwood children hold 32.7% of the shares of
Common Stock. Until August 2000, the Durwood children have given an
irrevocable proxy to the Secretary and any Assistant Secretary of the Company
to vote their shares of Common Stock for each candidate to the Board in the
same proportion as the aggregate votes cast by all other stockholders not
affiliated with the Company, its directors and officers. Also, the Durwood
children have agreed during such period not to become a member of any group,
solicit proxies or enter into any arrangement or agreement with respect to
voting shares.
REPURCHASE OF THE NOTES UPON CHANGE OF CONTROL
Upon the occurrence of a Change of Control (as defined herein), we will
be required to make an offer to repurchase the Notes at a price equal to 101%
of the principal amount thereof, plus accrued and unpaid interest, if any, to
the date of repurchase. Certain events involving a Change of Control will
result in an event of default under the Credit Facility and may result in an
event of default under our other indebtedness that we may incur in the
future. An event of default under the Credit Facility or other future Senior
Indebtedness could result in an acceleration of such indebtedness, in which
case the subordination provisions of the Notes would require payment in full
of such Senior Indebtedness before repurchase of the Notes. See "Description
of Notes--Change of Control," and "--Subordination." We cannot assure you
that we would have sufficient resources to repurchase the Notes or pay our
obligations if the indebtedness under the Credit Facility or other future
Senior Indebtedness were accelerated upon the occurrence of a Change of
Control. The acceleration of Senior Indebtedness and our inability to
repurchase all of the tendered Notes would constitute Events of Default under
the Indenture. These provisions may be deemed to have anti-takeover effects
and may delay, defer or prevent a merger, tender offer or other takeover
attempt. No assurance can be given that the terms of any future
20
<PAGE>
indebtedness will not contain cross default provisions based upon Change of
Control or other defaults under such debt instruments.
LACK OF PUBLIC MARKET
The Notes are a new issue of securities for which there is currently no
trading market. Although the Initial Purchasers have informed us that they
currently intend to make a market in the Notes, they are not obligated to
do so, and any such market making may be discontinued at any time without
notice. We do not intend to apply for listing of the Notes on any securities
exchange or for quotation on NASDAQ.
USE OF PROCEEDS
We will not receive any cash proceeds from the issuance of the Exchange
Notes offered hereby. In consideration for issuing the Exchange Notes as
contemplated in this Prospectus, we will receive in exchange Initial Notes in
like principal amount, the terms of which are the same in all material
respects as the form and terms of the Exchange Notes except that the Exchange
Notes have been registered under the Securities Act and will not contain
terms restricting the transfer thereof or providing for registration rights.
The Initial Notes surrendered in exchange for the Exchange Notes will be
retired and cancelled and cannot be reissued. Accordingly, issuance of the
Exchange Notes will not increase our indebtedness.
We received net proceeds of approximately $219.3 million from the
offering of the Initial Notes. We applied the net proceeds from the offering
of the Initial Notes to reduce indebtedness under our Credit Facility. As of
December 31, 1998, after giving effect to the use of the net proceeds of the
offering of the Initial Notes, we could have had approximately $650 million
in net indebtedness under the Credit Facility and therefore had available
approximately $183 million additional borrowing capacity under the Credit
Facility, based on "net indebtedness" at the end of the quarter and
"Consolidated EBITDA" during the previous four quarters, as such terms are
defined in the Credit Facility. We are in the process of negotiating with
our banks to increase our ability to incur debt, which will improve our
borrowing capacity under the Credit Facility. We cannot assure you that we
will be successful in negotiating such terms or that they will be at
favorable rates. See "Risk Factors--Substantial Obligations; Need for
Additional Capital."
CAPITALIZATION
The following table sets forth our total capitalization (including
short-term debt) as of December 31, 1998 and as adjusted to give pro forma
effect to the offering of the Initial Notes and the application of the $219.3
million in estimated net proceeds thereof to the reduction of outstanding
indebtedness under the Credit Facility as described in "Use of Proceeds."
<TABLE>
<CAPTION>
As of December 31, 1998
-----------------------
Actual As Adjusted
(In Thousands)
<S> <C> <C>
Short-term debt (including current maturities of
capital lease obligations) . . . . . . . . . . . $3,998 $3,998
Long-term debt
Credit Facility (1) . . . . . . . . . . . . . 253,000 33,700
Notes . . . . . . . . . . . . . . . . . . . . -- 225,000
9-1/2% Notes due 2009. . . . . . . . . . . . . 199,030 199,030
Capital lease obligations . . . . . . . . . . 45,428 45,428
--------- --------
Total debt . . . . . . . . . . . . . . . . . . . . 501,456 507,156
Total stockholders' equity . . . . . . . . . . . . 136,605 136,605
--------- --------
Total capitalization . . . . . . . . . . . . . . . $638,061 $643,761
--------- --------
--------- --------
</TABLE>
___________
(1) Our indebtedness under the Credit Facility was $44 million on January 28,
1999. The total commitment under the Credit Facility is $425 million, but
the facility contains covenants that limit our ability to incur debt
(whether under the Credit Facility or from other sources). We are engaged
in negotiations to increase availability under the Credit Facility. See
"Risk Factors--Substantial Obligations; Need for Additional Capital" and
"Use of Proceeds."
21
<PAGE>
MANAGEMENT OF THE COMPANY
DIRECTORS AND OFFICERS
The Directors and Executive Officers of the Company are as follows:
<TABLE>
<CAPTION>
Years
Associated
with the
Name Age(1) Positions Company(1)
<S> <C> <C> <C>
Stanley H. Durwood 78 Co-Chairman of the Board, Chief 53(2)
Executive Officer and Director
(AMCE); Chairman of the Board,
Chief Executive Officer and
Director (AMC)
Peter C. Brown 40 Co-Chairman of the Board and 7
President (AMCE); Executive Vice
President (AMC); Chief Financial
Officer and Director (AMCE and AMC)
Philip M. Singleton 52 President (AMC); Executive Vice 24(2)
President (AMCE); Chief Operating
Officer and Director (AMCE and AMC)
John D. McDonald 41 Executive Vice President--North 23(2)
American Operations (AMC)
Charles J. Egan, Jr. 66 Director (AMCE) 12
William T. Grant, II 48 Director (AMCE) 2
John P. Mascotte 59 Director (AMCE) 2
Paul E. Vardeman 68 Director (AMCE) 15(2)
Richard T. Walsh 45 Senior Vice President (AMC) 23(2)
Richard J. King 49 Senior Vice President (AMC) 26(2)
Rolando B. Rodriguez 39 Senior Vice President (AMC) 23(2)
Craig R. Ramsey 48 Senior Vice President-Finance (AMCE 3
and AMC)
Richard L. Obert 59 Senior Vice President-Chief 9
Accounting and Information Officer
(AMCE and AMC)
Charles P. Stilley 44 President (AMC Realty, Inc.) 17(2)
Richard M. Fay 49 President (AMC Film Marketing, a 3
division of AMC)
</TABLE>
___________
(1) As of December 31, 1998.
(2) Includes years of service with the predecessor of the Company.
All directors are elected annually, and each holds office until his
successor has been duly elected and qualified or his earlier resignation or
removal. There are no family relationships between any Director and any
Executive Officer of the Company.
All current Executive Officers of the Company hold such offices at the
pleasure of the Company's Board of Directors, subject in certain instances,
to their rights under employment agreements.
22
<PAGE>
As part of its succession planning and with the approval of Mr. Stanley
H. Durwood, our Board of Directors has appointed the Company's President and
Chief Financial Officer, Mr. Peter C. Brown, as Co-Chairman. Mr. Brown
oversees all Company matters with Mr. Durwood.
Mr. Stanley H. Durwood has served as a Director of the Company from its
organization on June 14, 1983, and of AMC since August 2, 1968. Mr. Durwood
has served as Co-Chairman of the Board of the Company since May 15, 1998. Mr.
Durwood served as Chairman of the Board of the Company from February 1986
until May 15, 1998, and as Chairman of the Board of AMC since February 1986.
Mr. Durwood has served as Chief Executive Officer of the Company since June
1983, and of AMC since February 20, 1986. Mr. Durwood served as President of
the Company (i) from June 1983 through February 20, 1986, (ii) from May 1988
through June 1989, and (iii) from October 6, 1995 to January 10, 1997. Mr.
Durwood served as President of AMC (i) from August 2, 1968 through
February 20, 1986, (ii) from May 13, 1988 through November 8, 1990, and
(iii) from October 6, 1995 to January 10, 1997. Mr. Durwood is a graduate of
Harvard University.
Mr. Peter C. Brown has served as a Director of the Company and AMC since
November 12, 1992 and has served as Co-Chairman of the Board of the Company
since May 15, 1998. Mr. Brown was elected President of the Company on
January 10, 1997. Mr. Brown served as Executive Vice President of the Company
from August 3, 1994 to January 10, 1997. Mr. Brown served as Executive Vice
President of AMC from August 3, 1994 to January 10, 1997. Mr. Brown has
served as Executive Vice President of AMC since August 3, 1994, and as Chief
Financial Officer of the Company and AMC since November 14, 1991. Mr. Brown
served as Senior Vice President of the Company and AMC from November 14, 1991
until his appointment as Executive Vice President in August 1994. Mr. Brown
served as Treasurer of the Company and AMC from September 28, 1992 through
September 19, 1994. Mr. Brown also serves as Chairman of the Board of
Trustees of Entertainment Properties Trust, a real estate investment trust,
and serves on the board of directors of Protection One, Inc., a security
alarm monitoring company. Mr. Brown also serves as a member of the Board of
Trustees of the Kansas City Art Institute and Rockhurst High School. In
addition, Mr. Brown is a member of the Board of Advisors for the University
of Kansas School of Business. Mr. Brown is a graduate of the University of
Kansas.
Mr. Philip M. Singleton has served as a Director of the Company and AMC
since November 12, 1992. Mr. Singleton was elected President of AMC on
January 10, 1997. Mr. Singleton has served as Executive Vice President of the
Company since August 3, 1994 and as Chief Operating Officer of the Company
and AMC since November 14, 1991. Mr. Singleton served as Executive Vice
President of AMC from August 3, 1994 to January 10, 1997. Mr. Singleton
served as Senior Vice President of the Company and AMC from November 14, 1991
until his appointment as Executive Vice President in August 1994. Prior to
November 14, 1991, Mr. Singleton served as Vice President in charge of
operations for the Southeast Division of AMC from May 10, 1982. Mr. Singleton
holds an undergraduate degree from California State University, Sacramento,
and an M.B.A. degree from the University of South Florida.
Mr. Charles J. Egan, Jr., has served as a Director of the Company since
October 30, 1986. Mr. Egan is Vice President of Hallmark Cards, Incorporated,
and was General Counsel of such company until December 31, 1996. Hallmark
Cards, Incorporated is primarily engaged in the business of greeting cards
and related social expressions products, Crayola crayons and the production
of movies for television. Mr. Egan also serves as a member of the Board of
Trustees, Treasurer and Chairman of the Finance Committee of the Kansas City
Art Institute. Mr. Egan holds an A.B. degree from Harvard University and an
LL.B. degree from Columbia University.
Mr. William T. Grant, II has served as a Director of the Company since
November 14, 1996. Mr. Grant is Chairman of the Board, President, Chief
Executive Officer and a Director of LabONE, Inc. LabONE, Inc. provides risk
appraisal laboratory testing services to the insurance industries in the
United States and Canada. Mr. Grant also serves on the board of directors of
Commerce Bancshares, Inc., Kansas City Power & Light Company, Business Men's
Assurance Company of America, and Response Oncology, Inc. Mr. Grant is a
board member of the Boys and Girls Clubs of Greater Kansas City. Mr. Grant
holds a B.A. degree from the University of Kansas and an M.B.A. degree from
the Wharton School of Finance at the University of Pennsylvania.
Mr. John P. Mascotte has served as a Director of the Company since
November 14, 1996. Mr. Mascotte assumed the duties of President and Chief
Executive Officer of BlueCross BlueShield of Kansas City on July 1, 1997.
Prior thereto, Mr. Mascotte served as Chairman of Johnson & Higgins of
Missouri, Inc., a privately held insurance broker, from January 1996 to
June 30, 1997, and as Chairman of the Board and Chief Executive Officer of
The Continental
23
<PAGE>
Corporation, a property-casualty insurer, from December 1982 through December
1995. Mr. Mascotte is also currently a consultant to the First Episcopal
District, African Methodist Episcopal Church. Mr. Mascotte also serves on the
board of directors of Hallmark Cards, Incorporated, Hallmark Entertainment,
Inc., Business Men's Assurance Company of America and American Home Products
Corporation, in addition to serving on the boards of BlueCross BlueShield of
Kansas City and the BlueCross and Blue Shield Association. Also, Mr. Mascotte
is Vice Chairman of the Aspen Institute, Chairman of LISC (Local Initiatives
Support Corp.) and a member of the Board of Trustees of the New York Public
Library and Midwest Research Institute. Mr. Mascotte is a board member of the
Hall Family Foundation and the Greater Kansas City Community Foundation and
is Co-Chairman of the Jazz District Redevelopment Corporation in Kansas City,
Missouri. Mr. Mascotte holds B.S. degrees from St. Joseph's College,
Rensselaer, Indiana, and an LL.B. degree from the University of Virginia. Mr.
Mascotte is also a certified public accountant and a chartered life
underwriter.
Mr. Paul E. Vardeman has served as a Director of the Company since
June 14, 1983. Mr. Vardeman was a director, officer and shareholder of the
law firm of Polsinelli, White, Vardeman & Shalton, P.C., Kansas City, Missouri
from 1982 until his retirement from such firm in November 1997. Prior
thereto, Mr. Vardeman served as a Judge of the Circuit Court of Jackson
County, Missouri. Mr. Vardeman holds undergraduate and J.D. degrees from the
University of Missouri-Kansas City.
Mr. John D. McDonald has served as Executive Vice President--North
American operations of AMC since October 1, 1998. Prior thereto, Mr. McDonald
served as Senior Vice President, corporate operations from November 9, 1995
until his promotion to Executive Vice President on October 1, 1998. Mr.
McDonald served as Vice President, corporate operations from September 22,
1992 through November 9, 1995.
Mr. Richard T. Walsh has served as Senior Vice President in charge of
operations for the West Division of AMC since July 1, 1994. Previously, Mr.
Walsh served as Vice President in charge of operations for the Central
Division of AMC from June 10, 1992, and as Vice President in charge of
operations for the Midwest Division of AMC from December 1, 1988.
Mr. Richard J. King has served as Senior Vice President in charge of
operations for the East Division of AMC since January 4, 1995. Previously,
Mr. King served as Vice President in charge of operations for the East
Division of AMC from June 10, 1992, and as Vice President in charge of
operations for the Southwest Division of AMC from October 30, 1986.
Mr. Rolando B. Rodriguez has served as Senior Vice President in charge
of operations for the South Division of AMC since April 2, 1996. Previously,
Mr. Rodriguez served as Vice President and South Division Operations Manager
of AMC from July 1, 1994, as Assistant South Division Operations Manager of
AMC from February 12, 1993, as South Division Senior Operations Manager from
March 29, 1992, and as South Division Operations Manager from August 6, 1989.
Mr. Richard L. Obert has served as Senior Vice President--Chief
Accounting and Information Officer of the Company and AMC since November 9,
1995, and prior thereto served as Vice President and Chief Accounting Officer
of the Company and AMC from January 9, 1989.
Mr. Craig R. Ramsey has served as Senior Vice President--Finance of the
Company since August 20, 1998. Prior thereto, Mr. Ramsey served as Vice
President of Finance from January 17, 1997 and as Director of Information
Systems and Director of Financial Reporting since joining the Company on
February 1, 1995. Previously, Mr. Ramsey served as Vice President--Corporate
Accounting and Data Processing for Mid-America Dairymen, Inc.
Mr. Charles P. Stilley has served as President of AMC Realty, Inc., a
wholly owned subsidiary of the Company, since February 9, 1993, and prior
thereto served as Senior Vice President of AMC Realty, Inc. from March 3,
1986.
Mr. Richard M. Fay has served as President--AMC Film Marketing, a
division of AMC, since September 8, 1995. Previously, Mr. Fay served as
Senior Vice President and Assistant General Sales Manager of Sony Pictures
from 1994 until joining AMC. From 1991 to 1994, Mr. Fay served as Vice
President and Head Film Buyer for the eastern division of United Artists
Theatre Circuit, Inc.
24
<PAGE>
RECENT EMPLOYMENT AGREEMENTS
Messrs. Peter C. Brown, Philip M. Singleton, Richard T. Walsh and
Richard M. Fay have entered into new employment agreements with the Company
providing for annual base salaries of no less than the following amounts: Mr.
Brown -$400,000; Mr. Singleton - $375,000; Mr. Walsh - $230,041 and Mr. Fay -
$285,031. The agreements also provide for discretionary bonuses, an
automobile allowance, reimbursement of reasonable travel and entertainment
expenses and other benefits offered from time to time to other executive
officers. The employment agreements of Mr. Brown and Mr. Singleton have terms
of three years and those of Mr. Walsh and Mr. Fay have terms of two years.
On the anniversary date of each agreement, one year shall be added to its
term, so that each employment agreement shall always have a three-year or
two-year term, as the case may be, as of each anniversary date. Each
employment agreement terminates generally without severance if such employee
is terminated for cause, as defined in the employment agreement, or upon such
employee's resignation, death or disability as defined in his employment
agreement. Pro rata bonus payments will be made upon termination by reason of
disability or death. If either Mr. Brown or Mr. Singleton is terminated
without cause or terminates his agreement following a material breach by the
Company or a change in control, as defined in the agreement, he will be
entitled to receive (i) a lump sum cash payment equal to the lesser of 4.5
times current base salary or 2.99 times average annual W-2 earnings for the
prior five years and (ii) the value of all outstanding employee stock options
held by such employee. If either Mr. Walsh or Mr. Fay is terminated without
cause or terminates his agreement subsequent to specified changes in his
responsibilities, base salary or benefits following a change in control, as
defined in the agreement, he will be entitled to receive a lump sum cash
payment equal to two years base salary. In addition, if either Mr. Brown or
Mr. Singleton dies, is terminated without cause or terminates his agreement
following a material breach by the Company or a change in control, the
Company will redeem shares previously purchased by him with the proceeds of
a loan from the Company. (Mr. Brown financed the purchase of 375,000 shares
with such a loan and Mr. Singleton financed the purchase of 250,000 shares
with such a loan). In such event, if the employee's obligations under the
note to the Company exceed the value of the stock which he acquired with the
note proceeds, the Company will forgive a portion of such excess in an amount
based on a formula set forth in the agreement. The amounts payable to the
named executive officers under these employment agreements, assuming
termination by reason of a change of control as of February 1, 1999 were as
follows: Mr. Brown - $1,067,652; Mr. Singleton - $1,000,923; Mr. Walsh
$424,931; and Mr. Fay - $526,509.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
We sold the Initial Notes in a private offering on January 27, 1999, to
the Initial Purchasers pursuant to a purchase agreement dated as of
January 21, 1999 by and among the Company and the Initial Purchasers (the
"Purchase Agreement"). The Initial Purchasers subsequently resold the Initial
Notes to qualified institutional buyers and non-U.S. persons in reliance, and
subject to the restrictions imposed under, Rule 144A and Regulation S under the
Securities Act.
Under the Registration Rights Agreement that we and the Initial
Purchasers entered into in connection with the private offering of the
Initial Notes, we are required to file, no more than 90 days following the
date the Initial Notes were originally issued (the "Issue Date"), the
Registration Statement of which this Prospectus is a part providing for a
registered exchange offer of new notes identical in all material respects to
the Initial Notes, except that such new notes will be freely transferable and
will not have any covenants regarding exchange and registration rights (the
"Exchange Offer"). Under the Registration Rights Agreement, we are required
to:
- use our best efforts to cause the Registration Statement to be
declared effective no later than June 26, 1999 (150 days after the
Issue Date),
- keep the Exchange Offer open for not less than 30 days (or longer if
required by applicable law) after the date that notice of the Exchange
Offer is mailed to holders of the Initial Notes, and
- use our best efforts to consummate the Exchange Offer no later than
July 26, 1999 (180 days after the Issue Date).
25
<PAGE>
In the event that (1) applicable law or interpretations of the staff of
the Commission do not permit us to effect such an Exchange Offer, (2) for any
other reason the Registration Statement is not consummated within 180 days
after the original issuance of the Initial Notes, (3) the Initial Purchasers
so request with respect to Notes not eligible to be exchanged for Exchange
Notes in the Exchange Offer or (4) any holder of Initial Notes (other than an
Initial Purchaser with respect to an unsold allotment) is not eligible to
participate in the Exchange Offer or does not receive freely tradeable
Exchange Notes in the Exchange Offer other than by reason of such holder
being our affiliate (it being understood that the requirement that an
Exchanging Dealer (as defined below) deliver the prospectus contained in the
Exchange Offer Registration Statement in connection with sales of Exchange
Notes shall not result in such Exchange Notes being not "freely tradeable"),
we will, at our cost, (a) as promptly as practicable, file a shelf
registration statement covering resales of the Initial Notes or the Exchange
Notes, as the case may be (the "Shelf Registration Statement"), (b) use our
best efforts to cause the Shelf Registration Statement to be declared
effective under the Securities Act and (c) use our best efforts to keep the
Shelf Registration Statement effective until January 27, 2001. We will, in
the event a Shelf Registration Statement is filed, among other things,
provide to each holder for whom such Shelf Registration Statement was filed
copies of the prospectus which is a part of the Shelf Registration Statement,
notify each such holder when the Shelf Registration Statement has become
effective and take certain other actions as are required to permit
unrestricted resales of the Initial Notes or the Exchange Notes, as the case
may be. A holder selling such Initial Notes or Exchange Notes pursuant to the
Shelf Registration Statement generally would be required to be named as a
selling security holder in the related prospectus and to deliver a prospectus
to purchasers, will be subject to certain of the civil liability provisions
under the Securities Act in connection with such sales and will be bound by
the provisions of the Registration Rights Agreement which are applicable to
such holder (including certain indemnification obligations).
If (1) on or prior to June 26, 1999 neither the Registration Statement
nor the Shelf Registration Statement has been declared effective, (2) on or
prior to July 26, 1999 neither the Exchange Offer has been consummated nor
the Shelf Registration Statement has been declared effective, or (3) after
either the Exchange Offer Registration Statement or the Shelf Registration
Statement has been declared effective, such Registration Statement thereafter
ceases to be effective or usable (subject to certain exceptions) in
connection with resales of Initial Notes or Exchange Notes in accordance with
and during the periods specified in the Registration Rights Agreement (each
such event referred to in clauses (1) through (3), a "Registration Default"),
interest ("Special Interest") will accrue on the principal amount of the
Initial Notes and the Exchange Notes (in addition to the stated interest on
the Initial Notes and the Exchange Notes) from and including the date on
which any such Registration Default shall occur to but excluding the date on
which all Registration Defaults have been cured. Special Interest will accrue
at a rate of 0.50% per annum during the 90-day period immediately following
the occurrence of such Registration Default and shall increase by 0.50% per
annum at the end of each subsequent 30-day period, but in no event shall such
rate exceed 1.0% per annum.
EFFECT OF THE EXCHANGE OFFER
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, we believe that you may offer for
resale, resell, and otherwise transfer the Exchange Notes issued to you
pursuant to the Exchange Offer in exchange for your Initial Notes ( unless
you are an "affiliate of the Company within the meaning of Rule 405 under the
Securities Act and except as noted below with respect to persons who are
"Exchanging Dealers") without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that you can represent
that:
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes;
- you are acquiring the Exchange Notes in the ordinary course of your
business; and
- you did not acquire the Initial Notes directly from us or from one of
our affiliates for resale pursuant to Rule 144A, Regulation S or
other available exemption under the Securities Act.
By tendering the Intitial Notes in exchange for Exchange Notes, you will
be required to make representations to that effect. If you are participating
in or intend to participate in a distribution of the Exchange Notes, or have
any arrangement or understanding with any person to participate in a
distribution of the Exchange Notes to be acquired pursuant to the Exchange
Offer, you may be deemed to have received "restricted securities" and may
not rely on the
26
<PAGE>
applicable interpretations of the staff of the Securities and Exchange
Commmission. You may only sell your Exchange Notes pursuant to a
registration statement containing the selling security holder information
required by Item 507 or 508 of Regulation S-K under the Securities Act, as
applicable, or pursuant to an exemption from the registration requirement of
the Securities Act.
Each broker-dealer that receives Exchange Notes for its own account in
exchange for Initial Notes, where such Initial Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities (but not directly from us or one of our affiliates) (an
"Exchanging Dealer"), must acknowledge in the Letter of Transmittal that it
will deliver a prospectus in connection with any resale of such Exchange
Notes. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. Based upon
interpretations by the staff of the Commission, we believe that Exchange
Notes issued pursuant to the Exchange Offer to Exchanging Dealers may be
offered for resale, resold and otherwise transferred by a Exchanging Dealer
upon compliance with the prospectus delivery requirements, but without
compliance with the registration requirements, of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by an Exchanging Dealer in connection with resales of Exchange Notes
received in exchange for Initial Notes. We have agreed that, starting on the
Expiration Date (as defined herein) and ending on the close of business one
year after the Expiration Date, we will make this Prospectus available to any
broker-dealer for use in connection with any such resale. By acceptance of
this Exchange Offer, each broker-dealer that receives Exchange Notes pursuant
to the Exchange Offer agrees to notify us prior to using this Prospectus in
connection with the sale or transfer of Exchange Notes. See "Plan of
Distribution."
To the extent Initial Notes are tendered and accepted in the Exchange
Offer, the principal amount of outstanding Initial Notes will decrease with a
resulting decrease in the liquidity in the market for the Initial Notes.
Initial Notes that are still outstanding following the consummation of the
Exchange Offer will continue to be subject to certain transfer restrictions.
TERMS OF THE EXCHANGE OFFER
We are sending this Prospectus and the accompanying Letter of
Transmittal to all registered holders as of ______, 1999.
Upon the terms and subject to the conditions set forth in this
Prospectus and in the Letter of Transmittal, we will accept any and all
Initial Notes validly tendered and not withdrawn prior to 5:00 p.m., New York
City time, on the Expiration Date. As of the date of this Prospectus, an
aggregate of $225 million principal amount of the Initial Notes is
outstanding. We will issue $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of outstanding Initial Notes
accepted in the Exchange Offer. You may tender some or all of your Initial
Notes pursuant to the Exchange Offer. However, Initial Notes may be tendered
only in integral multiples of $1,000.
By tendering Initial Notes in exchange for Exchange Notes and by
executing the Letter of Transmittal, you will be required to represent, among
other things, that:
- you are not an "affiliate" (as defined in Rule 405 of the Securities
Act) of Company (or, if you are an affiliate, that you will comply
with the registration and prospectus delivery requirements of the
Securities act to the extent applicable);
- you are not engaged in, and do not intend to engage in, and have no
arrangement or understanding with any person to participate in, a
distribution of the Exchange Notes;
- you are acquiring the Exchange Notes in the ordinary course of your
business;
- you did not acquire the Initial Notes directly from us or from one
of our affiliates for resale pursuant to Rule 144A, Regulation S or
other available exemption under the Securities Act.
27
<PAGE>
Each Exchanging Dealer must acknowledge in the Letter of Transmittal
that it will deliver a prospectus in connection with any resale of such
Exchange Notes. See "Plan of Distribution."
The form and terms of the Exchange Notes will be identical in all
material respects to the form and terms of the Initial Notes, except that:
- the offering of the Exchange Notes has been registered under the
Securities Act;
- the Exchange Notes will not be subject to transfer restrictions; and
- the Exchange Notes will be issued free of any covenants regarding
exchange and registration rights (including that they will not provide
for Additional Interest).
The Exchange Notes will evidence the same debt as the Initial Notes and
will be entitled to the benefits of the Indenture under which the Initial
Notes were, and the Exchange Notes will be, issued.
This Prospectus, together with the accompanying Letter of Transmittal,
is initially being sent to all registered holders of Initial Notes on or
about ____________, 1999. The Exchange Offer is not conditioned upon any
minimum aggregate principal amount of Initial Notes being tendered. However,
the Exchange Offer is subject to certain customary conditions, which we may
waive, and to the terms and provisions of the Registration Rights Agreement.
See "--Certain Conditions to the Exchange Offer."
You do not have any appraisal or dissenters' rights under law or the
Indenture in connection with the Exchange Offer. We intend to conduct the
Exchange Offer in accordance with the applicable requirements of the Exchange
Act and the rules and regulations of the Commission thereunder.
If we do not accept for exchange any tendered Initial Notes because of
an invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Initial Notes will be returned, without
expense to you, as promptly as practicable after the Expiration Date.
If you tender Initial Notes in the Exchange Offer, you will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Initial Notes pursuant to the Exchange Offer. We will pay all charges and
expenses, other than certain applicable taxes, in connection with the
Exchange Offer. See "--Fees and Expenses."
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" means 5:00 p.m., New York City time, on
____________, 1999, unless we, in our sole discretion, extend the Exchange
Offer, in which case the term "Expiration Date" shall mean the latest date
and time to which the Exchange Offer is extended.
We have the right to delay accepting any Initial Notes, to extend the
Exchange Offer or, if any of the conditions set forth below under "Certain
Conditions to the Exchange Offer" shall not have been satisfied, to terminate
the Exchange Offer, by giving oral or written notice of such delay, extension
or termination to the Exchange Agent. We also have the right to amend the
terms of the Exchange Offer in any manner. If we delay acceptance of any
Initial Notes, or terminate or amend the Exchange Offer, we will make a
public announcement thereof as promptly as practicable. If we believe that we
have made a material amendment of the terms of the Exchange Offer, we will
promptly disclose such amendment in a manner reasonably calculated to inform
the holders of such amendment and we will extend the Exchange Offer to the
extent required by law. We will notify the Exchange Agent of any extension of
the Exchange Offer in writing or orally (which we will promptly confirm in
writing). Unless otherwise required by applicable law or regulation, we will
make a public announcement of any extension of the Expiration Date before
9:00 a.m., New York City time, on the first business day after the
previously-scheduled expiration date.
28
<PAGE>
Without limiting the manner in which we may choose to make public
announcements of any delay, extension, termination or amendment of the
Exchange Offer, we shall have no obligation to publish, advise or otherwise
communicate any such public announcement, other than by making a timely press
release thereof.
INTEREST ON THE EXCHANGE NOTES
Interest on the Exchange Notes will accrue from the last interest
payment date on which interest was paid on the Initial Notes surrendered in
exchange therefor or, if no interest has been paid on the Initial Notes, from
January 27, 1999. The Exchange Notes will bear interest at a rate of 9 1/2%
per year. Interest on the Exchange Notes will be payable semiannually on
February 1 and August 1 of each year, beginning August 1, 1999.
PROCEDURES FOR TENDERING
A holder of Initial Notes who wishes to tender Initial Notes for
exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, or a facsimile thereof, together
with any required signature guarantees and with the certificates representing
the Initial Notes being tendered and any other required documents, to the
Exchange Agent prior to 5:00 p.m., New York City time, on the Expiration
Date. Alternatively, you may either (i) cause DTC to send an Agent's Message
(as defined below) to the Exchange Agent in lieu of a Letter of Transmittal
and a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Initial Notes, if such procedure is available, into
the Exchange Agent's account at The Depository Trust Company ("DTC" or the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below or (ii) comply with the guaranteed delivery
procedures described below. To be tendered effectively, the Letter of
Transmittal and the Initial Notes, or a Book-Entry Confirmation, as the case
may be, and other required documents must be received by the Exchange Agent
at the address set forth below under "--Exchange Agent" prior to 5:00 p.m.,
New York City time, on the Expiration Date. DELIVERY OF DOCUMENTS TO DTC IN
ACCORDANCE WITH ITS PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE
AGENT.
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a Book-Entry
Confirmation, which states that DTC has received an express acknowledgment
from the participant in DTC tendering the Initial Notes stating (i) the
aggregate principal amount of Initial Notes which have been tendered by such
participant, (ii) that such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and (iii) that the Company may
enforce such agreement against the participant.
DTC has authorized DTC participants that hold Initial Notes on behalf of
beneficial owners of Initial Notes through DTC to tender their Initial Notes
as if they were holders. To effect a tender of Initial Notes, DTC
participants should transmit their acceptance to DTC through the DTC
Automated Tender Offer Program ("ATOP") and follow the procedure for
book-entry transfer set forth in "--Book-Entry Transfer."
The tender (as set forth above) by a holder of Initial Notes will
constitute an agreement between such holder and us in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal.
Delivery of all documents must be made to the Exchange Agent at its
address set forth herein. Holders may also request that their respective
brokers, dealers, commercial banks, trust companies or nominees effect such
tender for the holders.
The method of delivery of Initial Notes, the Letter of Transmittal and
all other required documents to the Exchange Agent, including through DTC's
ATOP system, is at the election and risk of the holders. Instead of delivery
by mail, we recommend that holders use an overnight or hand delivery service.
In all cases, sufficient time should be allowed to assure timely delivery. NO
LETTER OF TRANSMITTAL OR INITIAL NOTES SHOULD BE SENT TO US.
Only a holder of Initial Notes may tender such Initial Notes in the
Exchange Offer. The term "holder" with respect to the Exchange Offer means
any person in whose name Initial Notes are registered on the register
maintained by the Trustee or any other person who has obtained a properly
completed bond power from the registered holder, or any person whose Initial
Notes are held of record by DTC who desires to deliver such Initial Notes by
book-entry transfer at DTC.
29
<PAGE>
Any beneficial holder whose Initial Notes are registered in the name of
his broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on his behalf. If such beneficial holder
wishes to tender on his own behalf, such beneficial holder must, prior to
completing and executing the Letter of Transmittal and delivering his Initial
Notes, either make appropriate arrangements to register ownership of the
Initial Notes in such holder's name or obtain a properly completed bond power
from the registered holder. The transfer of record ownership may take
considerable time.
Signatures on a Letter of Transmittal or a notice of withdrawal must be
guaranteed by an "Eligible Institution", which means
- a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc.;
- a commercial bank or trust company having an office or correspondent
in the United States; or
- an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Exchange Act,
unless the Initial Notes tendered pursuant thereto are tendered
- by a registered holder who has not completed the box entitled "Special
Issuance Instructions" or "Special Delivery Instructions" on the
Letter of Transmittal; or
- for the account of an Eligible Institution.
If the Letter of Transmittal is signed by the recordholder(s) of the
Initial Notes tendered, the signature must correspond with the name(s)
written on the face of the Initial Notes without alteration, enlargement or
any change whatsoever. If the Letter of Transmittal is signed by a
participant in DTC, the signature must correspond with the name as it appears
on the security position listing as the holder of the Initial Notes.
If the Letter of Transmittal is signed by a person other than the
registered holder of any Initial Notes listed therein, such Initial Notes
must be endorsed or accompanied by appropriate bond powers which authorize
such person to tender the Initial Notes on behalf of the registered holder,
and, in either case, signed as the name of the registered holder or holders
appears on the Initial Notes.
If the Letter of Transmittal or any Initial Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and, unless waived by
us, evidence satisfactory to us of their authority to so act must be
submitted with the Letter of Transmittal.
A tender will be deemed to have been received as of the date when the
tendering holder's duly signed Letter of Transmittal accompanied by the
Initial Notes tendered (or a timely confirmation of a book-entry transfer of
Initial Notes into the Exchange Agent's account at DTC with an Agent's
Message) or a Notice of Guaranteed Delivery from an Eligible Institution is
received by the Exchange Agent. Issuances of Exchange Notes in exchange for
Initial Notes tendered pursuant to a Notice of Guaranteed Delivery by an
Eligible Institution will be made only against delivery of the Letter of
Transmittal (and any other required documents) and the tendered Initial Notes
(or a timely confirmation received of a book-entry transfer of Initial Notes
into the Exchange Agent's account at DTC with an Agent's Message) with the
Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of the tendered Initial Notes will be
determined by us in our sole discretion, which determination will be final
and binding. We reserve the absolute right to reject any and all Initial
Notes not properly tendered or any Initial Notes our acceptance of which
would, in the opinion of our counsel, be unlawful. We also reserve the
absolute right to waive any irregularities or conditions of tender as to
particular Initial Notes. Our interpretation of the terms and conditions of
the Exchange Offer (including the instructions in the Letter of Transmittal)
will be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Initial Notes must be cured
within such time as we shall determine. Neither
30
<PAGE>
we, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Initial
Notes nor shall we, the Exchange Agent or any other person incur any
liability for failure to give such notification. Tenders of Initial Notes
will not be deemed to have been made until such irregularities have been
cured or waived. Any Initial Notes received by the Exchange Agent that are
not properly tendered, and as to which the defects or irregularities have not
been cured or waived, will be returned without cost by the Exchange Agent to
the tendering holder of such Initial Notes unless otherwise provided in the
Letter of Transmittal as soon as practicable following the Expiration Date.
In addition, we reserve the right in our sole discretion to (a) purchase
or make offers for any Initial Notes that remain outstanding subsequent to
the Expiration Date, or, as set forth under "--Certain Conditions to the
Exchange Offer," to terminate the Exchange Offer and (b) to the extent
permitted by applicable law, purchase Initial Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such
purchases or offers may differ from the terms of the Exchange Offer.
By tendering, each holder of Initial Notes will represent to us that,
among other things:
- the Exchange Notes acquired pursuant to the Exchange Offer in exchange
for such holder's Initial Notes are being obtained in the ordinary
course of business of the person receiving such Exchange Notes,
whether or not such person is the holder;
- neither the holder nor any other person receiving such Exchange Notes
has an arrangement or understanding with any person to participate in
the distribution of the Exchange Notes;
- neither the holder nor any such other person receiving such Exchange
Notes is an "affiliate" of ours, within the meaning of Rule 405 under
the Securities Act (or, if such person is an affiliate, that it will
comply with the registration and prospectus delivery requirements of
the Securities act to the extent applicable);
- the holder did not acquire the Initial Notes directly from us or
from one of our affiliates for resale pursuant to Rule 144A,
Regulation S or other available exemption under the Securities Act.
ACCEPTANCE OF INITIAL NOTES FOR EXCHANGE; DELIVERY OF EXCHANGE NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange
Offer, we will accept, promptly after the Expiration Date, all Initial Notes
properly tendered and will issue the Exchange Notes promptly after acceptance
of the Initial Notes. See "--Certain Conditions to the Exchange Offer." For
each Initial Note accepted for exchange, the holder of such Initial Notes
will receive an Exchange Note having a principal amount equal to that of the
surrendered Initial Note.
For purposes of the Exchange Offer, we shall be deemed to have accepted
properly tendered Initial Notes for exchange when, as and if we have given
oral or written notice thereof to the Exchange Agent, with written
confirmation of any oral notice to be given promptly thereafter.
In all cases, issuance of Exchange Notes for Initial Notes that are
accepted for exchange pursuant to the Exchange Offer will be made only after
timely receipt by the Exchange Agent of a properly completed and duly
executed Letter of Transmittal and certificates for such Initial Notes, or a
timely Book-Entry Confirmation (with an Agent's Message) of the book-entry
transfer of such Initial Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, and all other required documents, in each case,
in form satisfactory to us and the Exchange Agent. If any tendered Initial
Notes are not accepted for any reason set forth in the terms and conditions
of the Exchange Offer or if Initial Notes are submitted for a greater
principal amount than the holder desires to exchange, such unaccepted or
non-exchanged Initial Notes will be returned without expense to the tendering
holder thereof (or, in the case of Initial Notes tendered by book-entry
transfer procedures described below, such non-exchanged Initial Notes will be
credited to an account maintained with such Book-Entry Transfer Facility) as
promptly as practicable after withdrawal, rejection of tender, the Expiration
Date or earlier termination of the Exchange Offer.
31
<PAGE>
BOOK-ENTRY TRANSFER
The Exchange Agent will establish a new account or utilize an existing
account with respect to the Initial Notes at DTC within two business days
after the date of this Prospectus, and any financial institution that is a
participant in DTC and whose name appears on a security position listing as
the owner of Initial Notes may make a book-entry tender of Initial Notes by
causing DTC to transfer such Initial Notes into the Exchange Agent's account
in accordance with DTC's procedures for such transfer. However, although
tender of Initial Notes may be effected through book-entry transfer into the
Exchange Agent's account at DTC, an Agent's Message and any other required
documents, must, in any case, be received by the Exchange Agent at its
address set forth below under the caption "Exchange Agent" on or prior to the
Expiration Date, or the guaranteed delivery procedures described below must
be complied with. The confirmation of a book-entry transfer of Initial Notes
into the Exchange Agent's account at DTC as described above is referred to
herein as a "Book Entry Confirmation." Delivery of documents to DTC in
accordance with DTC's procedures does not constitute delivery to the Exchange
Agent.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Initial Notes and who cannot deliver
their Initial Notes, the Letter of Transmittal, or any other required
documents to the Exchange Agent prior to the Expiration Date, or holders who
cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender if:
- The tender is made through an Eligible Institution;
- Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of the Initial Notes,
the certificate number or numbers of such Initial Notes and the
principal amount of Initial Notes tendered, stating that the tender is
being made thereby, and guaranteeing that, within three business days
after the Expiration Date the Letter of Transmittal (or facsimile
thereof), together with certificates for all tendered Initial Notes,
in proper form for transfer, or a Book-Entry Confirmation with an
Agent's Message, as the case may be, and any other required documents
will be deposited by the Eligible Institution with the Exchange Agent.
- The certificates for all tendered Initial Notes, in proper form for
transfer, or a Book-Entry Confirmation as the case may be, and all
other required documents are received by the Exchange Agent within
three business days after the Expiration Date.
Upon request to the Exchange Agent, a Notice of Guaranteed Delivery will
be sent to holders who wish to tender their Initial Notes according to the
guaranteed delivery procedures set forth above.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Initial Notes may be
withdrawn at any time prior to 5:00 p.m., New York City time, on the
Expiration Date.
To withdraw a tender of Initial Notes in the Exchange Offer, a facsimile
transmission or letter notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time,
on the Expiration Date. Any such notice of withdrawal must:
- specify the name of the person having deposited the Initial Notes to
be withdrawn (the "Depositor");
- include a statement that the Depositor is withdrawing its election to
have Initial Notes exchanged and identify the Initial Notes to be
withdrawn (including the certificate number or numbers and principal
amount of such Initial Notes);
- be signed by the Depositor in the same manner as the original
signature on the Letter of Transmittal by which such Initial Notes
were tendered (including any required signature guarantees) or be
accompanied by
32
<PAGE>
documents of transfer sufficient to permit the Trustee with respect
to the Initial Notes to register the transfer of such Initial Notes
into the name of the Depositor withdrawing the tender; and
- specify the name in which any such Initial Notes are to be registered,
if different from that of the Depositor.
If Initial Notes have been tendered pursuant to the procedures for
book-entry transfer set forth in "--Procedures for Tendering" and
"--Book-Entry Transfer," the notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawal of Initial
Notes, in which case a notice of withdrawal will be effective if delivered to
the Exchange Agent by written, telegraphic, telex or facsimile transmission.
All questions as to the validity, form and eligibility (including time
of receipt) for such withdrawal notices will be determined by us, and our
determination shall be final and binding on all parties. Any Initial Notes so
withdrawn will be deemed not to have been validly tendered for purposes of
the Exchange Offer and no Exchange Notes will be issued with respect thereto
unless the Initial Notes so withdrawn are validly re-tendered. Any Initial
Notes which have been tendered for exchange which are not exchanged for any
reason will be returned to the holder thereof without cost to such holder
(or, in the case of Initial Notes tendered by book-entry transfer into the
Exchange Agent's account at DTC pursuant to the book-entry transfer
procedures described above, such Initial Notes will be credited to an account
maintained with DTC for the Initial Notes) as promptly as practicable after
withdrawal, rejection of tender, Expiration Date or earlier termination of
the Exchange Offer. Properly withdrawn Initial Notes may be re-tendered by
following one of the procedures described above under "--Procedures for
Tendering" at any time prior to the Expiration Date.
CERTAIN CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, we will not be
required to accept Initial Notes for exchange, or issue Exchange Notes in
exchange for any Initial Notes, and we may terminate or amend the Exchange
Offer as provided in this Prospectus before the acceptance of such Initial
Notes, if:
- an action or proceeding has been instituted or threatened in any court
or before any governmental agency or body that in our judgment would
reasonably be expected to prohibit, prevent or otherwise impair our
ability to proceed with the Exchange Offer or materially impair the
contemplated benefits of the Exchange Offer to us;
- a change in the current interpretation of the staff of the Commission
has occurred, which current interpretation permits the Exchange Notes
issued pursuant to the Exchange Offer in exchange for the Initial
Notes to be offered for resale, resold or otherwise transferred by
holders thereof (other than in certain circumstances);
- a law, statute, rule or regulation has been adopted or enacted which,
in our judgment, would reasonably be expected to impair our ability to
proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to us;
- a stop order has been issued by the Commission or any state securities
authority suspending the effectiveness of the Registration Statement
of which this Prospectus is a part or the qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), or proceedings shall have been initiated or,
to our knowledge, threatened for that purpose;
- a governmental approval has not been obtained, which approval we deem
in our sole discretion, necessary for the consummation of the Exchange
Offer; or
- a change, or a development involving a prospective change, in our
business or financial affairs has occurred which, in our sole
judgment, might materially impair our ability to proceed with the
Exchange Offer or materially impair the contemplated benefits of the
Exchange Offer to us.
These conditions are for our sole benefit and may be asserted by us
regardless of the circumstances giving rise to any such condition or may be
waived by us, in whole or in part, at any time and from time to time, if we
determine in our reasonable discretion that any of the foregoing events or
conditions has occurred or exists or has not been satisfied, subject
33
<PAGE>
to applicable law. Our failure at any time to exercise any of the foregoing
rights will not be deemed a waiver of any such right and each such right will
be deemed an ongoing right which we may assert at any time and from time to
time.
There can be no assurance that any such condition will not occur.
Holders of Initial Notes will have certain rights against us under the
Registration Rights Agreement should we fail to consummate the Exchange
Offer. If we determine that we may terminate the Exchange Offer, as set forth
above, we may:
- refuse to accept any Initial Notes and return any Initial Notes that
have been tendered to the holders thereof;
- extend the Exchange Offer and retain all Initial Notes tendered prior
to the Expiration Date, subject to the rights of such holders of
tendered Initial Notes to withdraw their tendered Initial Notes; or
- waive such termination event with respect to the Exchange Offer and
accept all properly tendered Initial Notes that have not been
withdrawn.
If such waiver constitutes a material change in the Exchange Offer, we will
disclose such change by means of a supplement to this Prospectus that will be
distributed to each registered holder of Initial Notes, and we will extend
the Exchange Offer for a period of five to ten business days, depending upon
the significance of the waiver and the manner of disclosure to the registered
holders of the Initial Notes, if the Exchange Offer would otherwise expire
during such period.
EXCHANGE AGENT
The Bank of New York, the Trustee under the Indenture, has been
appointed as Exchange Agent for the Exchange Offer. Questions and requests
for assistance and inquiries for additional copies of this Prospectus or of
the Letter of Transmittal should be directed to the Exchange Agent addressed
as follows:
[UPDATE] By Mail, Overnight Courier or Hand Delivery:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attention: Corporate Trust Trustee Administration
By Facsimile Transmission [(for Eligible Institutions only)]:
(212) 815-5915
Attention: Corporate Trust Trustee Administration
Confirm by Telephone:
(212) 815-
DELIVERY OF THE LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
We will pay the expenses of soliciting tenders. We have not retained
any dealer-manager in connection with the Exchange Offer and will not make
any payments to brokers, dealers or others soliciting acceptances of the
Exchange Offer. We will pay the Exchange Agent reasonable and customary fees
for its services and will reimburse it for its reasonable out-of-pocket
expenses in connection therewith.
We will pay the cash expenses incurred in connection with the Exchange
Offer. Such expenses include fees and expenses of the Exchange Agent and
Trustee, accounting and legal fees and printing costs, among others.
34
<PAGE>
TRANSFER TAXES
We will pay all transfer taxes, if any, applicable to the exchange of
Initial Notes pursuant to the Exchange Offer. If, however, certificates
representing Exchange Notes or Initial Notes for principal amounts not
tendered or accepted for exchange are to be delivered to, or are to be issued
in the name of, any person other than the registered holder of the Initial
Notes tendered, or if tendered Initial Notes are registered in the name of
any person other than the person signing the Letter of Transmittal, or if a
transfer tax is imposed for any reason other than the exchange of Initial
Notes pursuant to the Exchange Offer, then the amount of any such transfer
taxes (whether imposed on the registered holder or any other persons) will be
payable by the tendering holder. If satisfactory evidence of payment of such
taxes or exemption therefrom is not submitted with the Letter of Transmittal,
the amount of such transfer taxes will be billed directly to such tendering
holder.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the
Initial Notes on the date of the exchange. Accordingly, we will not
recognize any gain or loss for accounting purposes. The expenses of the
Exchange Offer and the unamortized expenses relating to the issuance of the
Initial Notes will be amortized over the term of the Exchange Notes.
REGULATORY APPROVALS
We do not believe that the receipt of any material federal or state
regulatory approvals will be necessary in connection with the Exchange Offer,
other than the effectiveness of the Exchange Offer Registration Statement
under the Securities Act.
DESCRIPTION OF EXCHANGE NOTES
The Initial Notes were and the Exchange Notes will be issued under an
indenture dated as of January 27, 1999 (the "Indenture"), between AMC
Entertainment Inc., as issuer, and The Bank of New York, as trustee (the
"Trustee"). For purposes of this Description of the Notes, the term
"Company" refers to AMC Entertainment Inc. and does not include its
subsidiaries. The Exchange Notes are subject to all of the terms of the
Indenture, and Holders of Exchange Notes are referred to the Indenture, which
has been filed as an exhibit to the Registration Statement of which this
Prospectus is a part, for a statement thereof. The form of the Exchange Notes
will be identical in all material respects to that of the Initial Notes
except that the Exchange Notes have been registered under the Securities Act
and, therefore, will not bear legends restricting their transfer. The
Exchange Notes will not represent new indebtedness of the Company, and will
rank PARI PASSU with the Initial Notes and with the Company's 9-1/2% Senior
Subordinated Notes due 2009. Any provision of the Indenture which requires
action by or approval of a specified percentage of the Holders of the
outstanding Notes shall require the approval of the Holders of such
percentage of outstanding Initial Notes and Exchange Notes, in the aggregate.
Upon the effectiveness of an Exchange Offer Registration Statement or Shelf
Registration Statement, as the case may be, filed under the Securities Act
with respect to the Notes, the Indenture will be subject to and governed by
the Trust Indenture Act of 1939, as amended. The following summaries of
certain material provisions of the Indenture do not purport to be complete,
and where reference is made to particular provisions of the Indenture, such
provisions, including the definitions of certain terms, are incorporated by
reference as a part of such summaries or terms, which are qualified in their
entirety by such reference. The definitions of certain capitalized terms used
in the following summary are set forth below under "--Certain Definitions".
There are $225 million principal amount of Initial Notes issued under
the Indenture. The Indenture also provides for the original issuance of up to
$100 million of additional Notes (subject to the covenants described under
"--Certain Covenants"). Any additional Notes will be identical to the Notes
in all respects except issue date and issue price.
GENERAL
The Notes will mature on February 1, 2011 and are limited to $325
million aggregate principal amount. The Initial Notes were issued in a
principal amount of $225 million. Each Exchange Note will bear interest at
the rate set forth on the cover page hereof from January 27, 1999 or from the
most recent interest payment date to which interest has been
35
<PAGE>
paid, payable semiannually on February 1 and August 1 of each year,
commencing August 1, 1999, to the person in whose name the Exchange Note (or
any predecessor Initial Note) is registered at the close of business on the
January 15 or July 15 next preceding such interest payment date. Interest
will be computed on the basis of a 360-day year of twelve, 30-day months.
Principal of and premium, if any, and interest on the Notes will be
payable in immediately available funds, and the Notes will be exchangeable
and transferable, at the office or agency of the Company in The City of New
York (which initially will be the corporate trust office of the Trustee, The
Bank of New York, 101 Barclay Street, 21W, New York, NY 10286); PROVIDED,
HOWEVER, that payment of interest may be made at the option of the Company by
check mailed to the person entitled thereto as shown on the Note Register. No
service charge will be made for any registration of transfer or exchange or
redemption of Notes, except for certain taxes or other governmental charges
that may be imposed in connection with any registration of transfer or
exchange.
The Notes are not entitled to the benefit of any sinking fund.
FALL-AWAY EVENT
In the event that the Notes achieve Investment Grade Status and no Event
of Default or Default shall have occurred and be continuing at such time (the
occurrence of the foregoing events, being collectively referred to as the
"Fall-away Event"), upon the request of the Company the covenants described
under "--Certain Covenants" will no longer be applicable to the Company and
its Subsidiaries. See "--Certain Covenants". As a result, upon the occurrence
of the Fall-away Event the Notes will be entitled to substantially no
covenant protection.
SUBORDINATION
The Notes will be unsecured senior subordinated indebtedness of the
Company ranking PARI PASSU with the Company's 9-1/2% Notes due 2009 and all
other existing and future senior subordinated indebtedness of the Company.
The payment of all Obligations in respect of the Notes will be subordinated,
as set forth in the Indenture, in right of payment to the prior payment in
full in cash or Cash Equivalents of all Senior Indebtedness.
In the event of any insolvency or bankruptcy case or proceeding, or any
receivership, liquidation, reorganization or other similar case or proceeding
in connection therewith, relating to the Company or to its assets, or any
liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary, or any assignment for the benefit of creditors or
other marshalling of assets or liabilities of the Company, the holders of
Senior Indebtedness will first be entitled to receive payment in full in cash
or Cash Equivalents of all Senior Indebtedness, or provision shall be made
for such payment in full in cash or Cash Equivalents to the satisfaction of
the holders of Senior Indebtedness, before the Holders will be entitled to
receive any payment or distribution of any kind or character from any source
(other than any payment or distribution in the form of equity securities or
subordinated securities of the Company or any successor obligor provided for
by a plan of reorganization or readjustment that, in the case of any such
subordinated securities, are subordinated in right of payment to all Senior
Indebtedness that may at the time be outstanding to at least the same extent
as the Notes are so subordinated as provided in the Indenture) (such equity
securities or subordinated securities hereinafter being "Permitted Junior
Securities") on account of all Obligations in respect of the Notes or on
account of the purchase, deposit for defeasance or redemption or other
acquisition of Notes.
No payment (other than any payments made pursuant to the provisions
described under "--Defeasance and Covenant Defeasance of the Indenture" from
monies or U.S. Government Obligations previously deposited with the Trustee)
or distribution of any assets of the Company of any kind or character from
any source, whether in cash, property or securities (other than Permitted
Junior Securities), may be made by the Company on account of all Obligations
in respect of the Notes or on account of the purchase, redemption, deposit
for defeasance or other acquisition of Notes upon the occurrence of any
default in payment (whether at stated maturity, upon scheduled installment,
by acceleration or otherwise) of principal of, premium, if any, or interest
in respect of any Senior Indebtedness beyond any applicable grace periods (a
"Payment Default") until such Payment Default shall have been cured or waived
or have ceased to exist or such Senior Indebtedness shall have been
discharged or paid in full in cash or Cash Equivalents.
36
<PAGE>
No payment (other than any payments made pursuant to the provisions
described under "--Defeasance and Covenant Defeasance of the Indenture" from
monies or U.S. Government Obligations previously deposited with the Trustee)
or distribution of any assets of the Company of any kind or character from
any source, whether in cash, property or securities (other than Permitted
Junior Securities), may be made by the Company on account of all Obligations
in respect of the Notes or on account of the purchase, redemption, deposit
for defeasance or other acquisition of Notes for the period specified below
("Payment Blockage Period") upon the occurrence of any default with respect
to any Designated Senior Indebtedness not covered by the immediately
preceding paragraph pursuant to which the maturity thereof may be accelerated
(a "Non-payment Default") and receipt by the Trustee of written notice
thereof from the representatives of the holders of any Designated Senior
Indebtedness.
The Payment Blockage Period will commence upon the date of receipt by
the Trustee of written notice from such representative and shall end on the
earliest of
(1) 179 days thereafter (PROVIDED any Designated Senior
Indebtedness as to which notice was given shall not theretofore have been
accelerated, in which case the provisions of the second preceding paragraph
shall apply),
(2) the date on which such Non-payment Default is cured, waived or
ceases to exist or such Designated Senior Indebtedness is discharged or paid
in full in cash or Cash Equivalents,
(3) such Designated Senior Indebtedness has been discharged or
paid in full in cash or Cash Equivalents or
(4) such Payment Blockage Period shall have been terminated by
written notice to the Trustee from the representative initiating such Payment
Blockage Period,
after which the Company will resume making any and all required payments in
respect of the Notes, including any missed payments. In any event, not more
than one Payment Blockage Period may be commenced during any period of 365
consecutive days. No event of default that existed or was continuing on the
date of the commencement of any Payment Blockage Period will be, or can be,
made the basis for the commencement of a subsequent Payment Blockage Period,
unless such default has been cured or waived for a period of not less than 90
consecutive days.
In the event that, notwithstanding the foregoing, the Trustee or any
holder of the Notes shall have received any payment prohibited by the
foregoing, then such payment shall be paid over to the representatives of
such Designated Senior Indebtedness initiating the Payment Blockage Period,
to be held in trust for distribution to the holders of Senior Indebtedness
or, to the extent amounts are not then due in respect of Senior Indebtedness,
prompt return to the Company, or otherwise as a court of competent
jurisdiction shall direct.
Failure by the Company to make any required payment in respect of the
Notes when due or within any applicable grace period, whether or not
occurring during a Payment Blockage Period, will result in an Event of
Default and, thereafter, Holders will have the right to require repayment of
the Notes in full. See "--Events of Default".
By reason of such subordination, in the event of liquidation,
receivership, reorganization or insolvency of the Company, creditors of the
Company who are holders of Senior Indebtedness may recover more, ratably,
than the Holders, and assets which would otherwise be available to pay
obligations in respect of the Notes will be available only after all Senior
Indebtedness has been paid in full in cash or Cash Equivalents, and there may
not be sufficient assets remaining to pay amounts due on any or all of the
Notes.
"SENIOR INDEBTEDNESS" means:
(1) all obligations of the Company, now or hereafter existing, under
or in respect of the Credit Facility, whether for principal, premium, if
any, interest (including interest accruing after the filing of, or which
would have accrued but for the filing of, a petition by or against the
Company under the Bankruptcy Laws, whether or not such interest is allowed
as a claim after such filing in any proceeding under such law), fees,
expenses, indemnities, gross-ups or other payments thereunder and
37
<PAGE>
(2) the principal of, premium, if any, and interest on all other
Indebtedness of the Company (other than the Notes and the 9 1/2% Notes due
2009), whether outstanding on the date of the Indenture or thereafter
created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness
shall not be senior in right of payment to the Notes.
Notwithstanding the foregoing, "Senior Indebtedness" shall not include:
(1) Indebtedness evidenced by the Notes,
(2) Indebtedness of the Company that is expressly subordinated in
right of payment to any Senior Indebtedness of the Company, the Notes or
the Indebtedness evidenced by the 9 1/2% Notes due 2009,
(3) Indebtedness of the Company that by operation of law is
subordinate to any general unsecured obligations of the Company,
(4) Indebtedness of the Company to the extent incurred in violation
of any covenant of the Indenture,
(5) any liability for Federal, state or local taxes or other taxes,
owed or owing by the Company,
(6) trade account payables owed or owing by the Company,
(7) amounts owed by the Company for compensation to employees or for
services rendered to the Company,
(8) Indebtedness of the Company to any Subsidiary or any other
Affiliate of the Company, and
(9) Indebtedness which when incurred and without respect to any
election under Section 1111(b) of Title 11 of the United States Code is
without recourse to the Company or any Subsidiary.
"DESIGNATED SENIOR INDEBTEDNESS" means:
(1) all Senior Indebtedness under the Credit Facility and
(2) any other Senior Indebtedness
(a) which at the time of determination exceeds $30 million in
aggregate principal amount,
(b) which is specifically designated in the instrument
evidencing such Senior Indebtedness as "Designated Senior
Indebtedness" by the Company and
(c) as to which the Trustee has been given written notice of
such designation.
OPTIONAL REDEMPTION
The Notes are redeemable, at the option of the Company, as a whole or in
part, at any time on or after February 1, 2004, at the Redemption Prices
(expressed as percentages of the principal amount thereof) set forth below
together with accrued and unpaid interest to the Redemption Date, if redeemed
during the 12-month period beginning on February 1 of the years indicated:
<TABLE>
<CAPTION>
Year Redemption Price
- ---- ----------------
<S> <C>
2004...................................................... 104.750%
2005...................................................... 103.167%
2006...................................................... 101.583%
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
YEAR Redemption Price
- ---- ----------------
<S> <C>
2007...................................................... 100.000%
</TABLE>
If less than all of the Notes are to be redeemed at any time, selection
of Notes for redemption will be made by the Trustee not more than 60 days
prior to the Redemption Date by such method as the Trustee shall deem fair
and appropriate; PROVIDED, HOWEVER, that Notes will not be redeemed in amount
less than the minimum authorized denomination of $1,000. Notice of redemption
shall be mailed by first class mail not less than 30 nor more than 60 days
prior to the Redemption Date to each Holder of Notes to be redeemed at its
registered address. If any Note is to be redeemed in part only, the notice of
redemption that relates to such Note shall state the portion of the principal
amount thereof to be redeemed. A new Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof
upon cancellation of the original Note. On and after the Redemption Date,
interest will cease to accrue on Notes or portions thereof called for
redemption.
CERTAIN COVENANTS
The Indenture will provide that all of the following restrictive
covenants will be applicable to the Company unless and until the Fall-away
Event occurs. In such event, the Company will be released from its
obligations to comply with the restrictive covenants described below as well
as certain other obligations. The covenants that will be released upon the
Fall-away Event are "Limitation on Consolidated Indebtedness", "Limitation on
Restricted Payments", "Limitation on Transactions with Affiliates",
"Limitation on Senior Subordinated Indebtedness" and clause (3) under the
"Merger and Sale of Assets" covenant.
LIMITATION ON CONSOLIDATED INDEBTEDNESS. The Company shall not, and
shall not permit any of its Subsidiaries to, create, incur, assume or
guarantee, or in any other manner become directly or indirectly liable for
the payment of, any Indebtedness (excluding Permitted Indebtedness) unless,
at the time of such event and after giving effect thereto on a pro forma
basis, the Company's Consolidated EBITDA Ratio for the four full fiscal
quarters immediately preceding such event, taken as one period calculated on
the assumption that such Indebtedness had been incurred on the first day of
such four quarter period, is greater than or equal to 1.75:1. The definition
of EBITDA used for this purpose differs in significant respects from that
presented under "Summary Financial Data." See "--Certain Definitions."
LIMITATION ON RESTRICTED PAYMENTS. The Company shall not directly or
indirectly:
(1) declare or pay any dividend on, or make any distribution in
respect of, any shares of the Company's or any Subsidiary's Capital Stock
(excluding dividends or distributions payable in shares of its Capital
Stock or in options, warrants or other rights to purchase such Capital
Stock, but including dividends or distributions payable in Redeemable
Capital Stock or in options, warrants or other rights to purchase
Redeemable Capital Stock (other than dividends on such Redeemable Capital
Stock payable in shares of such Redeemable Capital Stock)) held by any
Person other than the Company or any of its Wholly Owned Subsidiaries; or
(2) purchase, redeem or acquire or retire for value any Capital Stock
of the Company or any Affiliate thereof (other than any Wholly Owned
Subsidiary of the Company) or any options, warrants or other rights to
acquire such Capital Stock;
(such payments or any other actions described in (1) and (2) above are
collectively referred to as "Restricted Payments") unless at the time of and
after giving effect to the proposed Restricted Payment (the amount of any
such Restricted Payment, if other than cash, as determined by the Board of
Directors, whose determination shall be conclusive and evidenced by a Board
Resolution):
(a) no Default or Event of Default shall have occurred and be
continuing,
(b) the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) under the provisions of "Limitation on
Consolidated Indebtedness" and
(c) the aggregate amount of all Restricted Payments declared or made
after the Closing Date (including the proposed Restricted Payment) does not
exceed the sum of:
39
<PAGE>
(i) (x) Consolidated EBITDA for the Restricted Payments
Computation Period minus (y) 1.75 times Consolidated Interest Expense
for the Restricted Payments Computation Period;
(ii) the aggregate net proceeds, including the Fair Market
Value of property other than cash (as determined by the Board of
Directors, whose determination shall be conclusive, except that for
any property whose Fair Market Value exceeds $10 million such Fair
Market Value shall be confirmed by an independent appraisal obtained
by the Company), received after the Closing Date by the Company from
the issuance or sale (other than to any of its Subsidiaries) of shares
of Capital Stock of the Company (other than Redeemable Capital Stock)
or warrants, options or rights to purchase such shares of Capital
Stock;
(iii) the aggregate net proceeds, including the Fair Market
Value of property other than cash (as determined by the Board of
Directors, whose determination shall be conclusive, except that for
any property whose Fair Market Value exceeds $10 million such Fair
Market Value shall be confirmed by an independent appraisal obtained
by the Company), received after the Closing Date by the Company from
debt securities that have been converted into or exchanged for Capital
Stock of the Company (other than Redeemable Capital Stock) to the
extent such debt securities were originally sold for such net proceeds
plus the aggregate cash received by the Company at the time of such
conversion; and
(iv) $100 million.
Notwithstanding the foregoing limitation, the Company may
(1) pay dividends on its Capital Stock within sixty days of the
declaration thereof if, on the declaration date, such dividends could have
been paid in compliance with the foregoing limitation or
(2) acquire, redeem or retire Capital Stock in exchange for, or in
connection with a substantially concurrent issuance of, Capital Stock of
the Company (other than Redeemable Capital Stock).
LIMITATION ON TRANSACTIONS WITH AFFILIATES. The Company shall not, and
shall not permit any of its Subsidiaries to, directly or indirectly enter
into or suffer to exist any transaction or series of related transactions
(including, without limitation, the sale, purchase, exchange or lease of
assets, property or services) with any Affiliate of the Company (other than a
Wholly Owned Subsidiary of the Company) involving aggregate consideration in
excess of $5 million unless
(1) such transaction or series of transactions is on terms that are
no less favorable to the Company or such Subsidiary, as the case may be,
than would be available at the time of such transaction or series of
transactions in a comparable transaction in an arm's-length dealing with an
unaffiliated third party,
(2) such transaction or series of transactions is in the best
interests of the Company and
(3) with respect to a transaction or series of transactions involving
aggregate payments equal to or greater than $50 million, a majority of
disinterested members of the Board of Directors determines that such
transaction or series of transactions complies with clauses (1) and
(2) above, as evidenced by a Board Resolution.
Notwithstanding the foregoing limitation, the Company and its
Subsidiaries may enter into or suffer to exist the following:
(1) any transaction pursuant to any contract in existence on the
Closing Date;
(2) any Restricted Payment permitted to be made pursuant to the
provisions of "Limitation on Restricted Payments" above;
(3) any transaction or series of transactions between the Company and
one or more of its Subsidiaries or between two or more of its Subsidiaries
(PROVIDED that no more than 5% of the equity interest in
40
<PAGE>
any such Subsidiary is owned, directly or indirectly (other than by direct
or indirect ownership of an equity interest in the Company), by any
Affiliate of the Company other than a Subsidiary) and
(4) the payment of compensation (including amounts paid pursuant to
employee benefit plans) for the personal services of officers, directors
and employees of the Company or any of its Subsidiaries.
LIMITATION ON SENIOR SUBORDINATED INDEBTEDNESS. The Company will not
incur, create, issue, assume, guarantee or otherwise become liable for any
Indebtedness that is subordinate or junior in right of payment to any Senior
Indebtedness and senior in right of payment to the Notes.
MERGER AND SALE OF SUBSTANTIALLY ALL ASSETS
The Company shall not, in a single transaction or through a series of
related transactions, consolidate with or merge with or into any other Person
(other than any Wholly Owned Subsidiary) or sell, assign, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets to
any Person (other than any Wholly Owned Subsidiary) or group of affiliated
Persons unless at the time and after giving effect thereto
(1) either
(a) the Company shall be the continuing corporation or
(b) the Person (if other than the Company) formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance, transfer, lease or disposition the properties
and assets of the Company substantially as an entirety (the "Surviving
Entity") shall be a corporation duly organized and validly existing
under the laws of the United States of America, any state thereof or
the District of Columbia and shall, in either case, expressly assume
all the obligations of the Company under the Notes and the Indenture,
(2) immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred and be continuing, and
(3) immediately before and immediately after giving effect to such
transaction on a pro forma basis, except in the case of the consolidation
or merger of any Subsidiary with or into the Company, the Company (or the
Surviving Entity if the Company is not the continuing corporation) could
incur $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under the provisions of "Limitation on Consolidated Indebtedness".
In connection with any consolidation, merger, transfer or lease
contemplated hereby, the Company shall deliver, or cause to be delivered, to
the Trustee, in the form and substance reasonably satisfactory to the
Trustee, an Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger, transfer or lease and the supplemental
indenture in respect thereto comply with the provisions described herein and
that all conditions precedent herein provided for or relating to such
transaction have been complied with.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the
successor corporation formed by such a consolidation or into which the
Company is merged or to which such transfer is made shall succeed to, shall
be substituted for and may exercise every right and power of the Company
under the Notes and the Indenture, with the same effect as if such successor
corporation had been named as the Company therein. In the event of any
transaction (other than a lease) described and listed in the immediately
preceding paragraphs in which the Company is not the continuing corporation,
the successor Person formed or remaining shall succeed to, be substituted for
and may exercise every right and power of the Company, and the Company shall
be discharged from all obligations and covenants under the Notes and the
Indenture.
41
<PAGE>
CHANGE OF CONTROL
Upon the occurrence of a Change of Control, the Company will be required
to make an offer (a "Change of Control Offer") to purchase all Outstanding
Notes at a purchase price (the "Change of Control Purchase Price") equal to
101% of their principal amount plus accrued and unpaid interest, if any, to
the date of purchase.
Within 30 days following the date upon which the Change of Control
occurred, the Company must send, by first class mail, a notice to each
Holder, with a copy to the Trustee, which notice shall govern the terms of
the Change of Control Offer. Such notice will state, among other things, the
purchase date, which must be no earlier than 30 days nor later than 60 days
from the date such notice is mailed, other than as may be required by law
(the "Change of Control Payment Date"). The Change of Control Offer is
required to remain open for at least 20 Business Days and until the close of
business on the Change of Control Payment Date.
The Change of Control provision of the Notes may in certain
circumstances make it more difficult or discourage a takeover of the Company
and, as a result, may make removal of incumbent management more difficult.
The Change of Control provision, however, is not the result of the Company's
knowledge of any specific effort to accumulate the Company's stock or to
obtain control of the Company by means of a merger, tender offer,
solicitation or otherwise, or part of a plan by management to adopt a series
of anti-takeover provisions. Instead, the Change of Control provision is a
result of negotiations between the Company and the Initial Purchasers. The
Company is not presently in discussions or negotiations with respect to any
pending offers which, if accepted, would result in a transaction involving a
Change of Control, although it is possible that the Company would decide to
do so in the future.
The Credit Facility provides that certain change of control events with
respect to the Company would constitute a default thereunder. In such
circumstances, the subordination provisions in the Indenture could restrict
payments to the Holders of the Notes. Finally, the Company's ability to pay
cash to the Holders of the Notes in connection with a Change of Control may
be limited to the Company's then existing financial resources. There can be
no assurance that sufficient funds will be available when necessary to make
any required purchases.
The provisions of the Indenture would not necessarily afford Holders of
the Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, merger or similar transaction involving the
Company that may adversely affect the Holders.
If an offer is made to repurchase the Notes pursuant to a Change of
Control Offer, the Company will comply with all tender offer rules under
state and Federal securities laws, including, but not limited to, Section
14(e) under the Exchange Act and Rule 14(e) thereunder, to the extent
applicable to such offer.
ADDITIONAL INFORMATION
Anyone who receives this Prospectus may obtain a copy of the Indenture
and the Registration Rights Agreement without charge by writing to AMC
Entertainment Inc., Attention: Ms. Nancy L. Gallagher, Vice President and
Secretary, 106 West 14th Street, Kansas City, Missouri 64105-1977 (telephone:
(816) 221-4000).
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the Indenture.
Reference is made to the Indenture for the definition of any other
capitalized term used herein for which no definition is provided.
"ACQUIRED INDEBTEDNESS" of any particular Person shall mean Indebtedness
of any other Person existing at the time such other Person merged with or
into or became a Subsidiary of such particular Person or assumed by such
particular Person in connection with the acquisition of assets from any other
Person, and not incurred by such other Person in connection with, or in
contemplation of, such other Person merging with or into such particular
Person or becoming a Subsidiary of such particular Person or such
acquisition.
"AFFILIATE" shall mean, with respect to any specified Person:
42
<PAGE>
(1) any other Person directly or indirectly controlling or controlled
by or under direct or indirect common control with such specified
Person or
(2) any other Person that owns, directly or indirectly, 10% or more
of such Person's Capital Stock or any officer or director of any such
Person or other Person or with respect to any natural Person, any person
having a relationship with such Person by blood, marriage or adoption not
more remote than first cousin.
For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
controlled" have meanings correlative to the foregoing.
"BOARD OF DIRECTORS" shall mean the Board of Directors of the Company or
any committee of such Board of Directors duly authorized to act under the
Indenture.
"BOARD RESOLUTION" shall mean a copy of a resolution, certified by the
Secretary of the Company to have been duly adopted by the Board of Directors
and to be in full force and effect on the date of such certification, and
delivered to the Trustee.
"BUSINESS DAY" shall mean any day other than a Saturday or Sunday or
other day on which banks in New York, New York, Kansas City, Missouri, or the
city in which the Trustee's Office is located are authorized or required to
be closed, or, if no Note is outstanding, the city in which the principal
corporate trust office of the Trustee is located.
"CAPITAL LEASE OBLIGATION" of any Person shall mean any obligations of
such Person and its Subsidiaries on a consolidated basis under any capital
lease of a real or personal property which, in accordance with GAAP, has been
recorded as a capitalized lease obligation (together with Indebtedness in the
form of operating leases entered into by the Company or its Subsidiaries
after May 21, 1998 and required to be reflected on a consolidated balance
sheet pursuant to EITF 97-10).
"CAPITAL STOCK" of any Person shall mean any and all shares, interests,
participations or other equivalents (however designated) of such Person's
capital stock, any rights (other than debt securities convertible into
capital stock), warrants or options to acquire such capital stock, whether
now outstanding or issued after the date of the Indenture.
"CASH EQUIVALENTS" means:
(1) United States dollars,
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality,
(3) certificates of deposit and eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any United States domestic commercial bank
having capital and surplus in excess of $500 million and a Keefe Bank Watch
Rating of "B" or better,
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (2) and
(3) entered into with any financial institution meeting the qualifications
specified in clause (3) above,
(5) commercial paper having one of the two highest rating categories
obtainable from Moody's or S&P in each case maturing within six months
after the date of acquisition and
43
<PAGE>
(6) readily marketable direct obligations issued by any State of the
United States of America or any political subdivision thereof having one of
the two highest rating categories obtainable from Moody's or S&P.
"CHANGE OF CONTROL" shall mean the occurrence of, after the date of the
Indenture, either of the following events:
(1) any Person (other than a Permitted Holder) or any Persons (other
than any Permitted Holders) acting together that would constitute a group
(for purposes of Section 13(d) of the Exchange Act, or any successor
provision thereto) (a "Group"), together with any Affiliates thereof (other
than any Permitted Holders) shall beneficially own (as defined in
Rule 13d-3 under the Exchange Act, or any successor provision thereto) at
least 50% of the aggregate voting power of all classes of Capital Stock of
the Company entitled to vote generally in the election of directors (the
determination of aggregate voting power to recognize that the Company's
Class B Stock, par value 66 2/3 CENTS per share, currently has ten votes
per share and the Company's Common Stock, par value 66 2/3 CENTS per
share, currently has one vote per share) or
(2) any Person (other than a Permitted Holder) or Group (other than
any Permitted Holders) together with any Affiliates thereof (other than any
Permitted Holders) shall succeed in having a sufficient number of its
nominees who are not management nominees elected to the Board of Directors
of the Company such that such nominees when added to any existing director
remaining on the Board of Directors of the Company after such election who
is an Affiliate (other than any Permitted Holder) of such Group, will
constitute a majority of the Board of Directors of the Company.
"CLOSING DATE" shall mean the date on which the Offered Notes are
originally issued under the Indenture.
"CONSOLIDATED EBITDA" shall mean, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period increased
(to the extent deducted in determining Consolidated Net Income) by the sum
of:
(1) all income taxes of such Person and its Subsidiaries paid or
accrued in accordance with GAAP for such period (other than income taxes
attributable to extraordinary, unusual or non-recurring gains or losses);
(2) Consolidated Interest Expense of such Person and its Subsidiaries
for such period;
(3) depreciation expense of such Person and its Subsidiaries for such
period;
(4) amortization expense of such Person and its Subsidiaries for such
period including amortization of capitalized debt issuance costs; and
(5) any other non-cash charges of such Person and its Subsidiaries
for such period (including non-cash expenses recognized in accordance with
Financial Accounting Standard Number 106), all determined on a consolidated
basis in accordance with GAAP;
PROVIDED, HOWEVER, that, for purposes of this definition, all transactions
involving the acquisition of any Person or motion picture theatre by another
Person shall be accounted for on a "pooling of interests" basis and not as a
purchase; PROVIDED, FURTHER, that, solely with respect to calculations of the
Consolidated EBITDA Ratio:
(1) Consolidated EBITDA shall include the effects of incremental
contributions the Company reasonably believes in good faith could have been
achieved during the relevant period as a result of a Theatre Completion had
such Theatre Completion occurred as of the beginning of the relevant
period; PROVIDED, HOWEVER, that such incremental contributions were
identified and quantified in good faith in an Officers' Certificate
delivered to the Trustee at the time of any calculation of the Consolidated
EBITDA Ratio,
(2) Consolidated EBITDA shall be calculated on a pro forma basis
after giving effect to any motion picture theatre or screen that was
permanently or indefinitely closed for business at any time on or
subsequent to the first day of such period as if such theatre or screen was
closed for the entire period, and
44
<PAGE>
(3) All preopening expense and theatre closure expense which reduced
Consolidated Net Income during any applicable period shall be added to
Consolidated EBITDA.
"CONSOLIDATED EBITDA RATIO" of any Person shall mean, for any period,
the ratio of Consolidated EBITDA to Consolidated Interest Expense for such
period (other than any non-cash Consolidated Interest Expense attributable to
any amortization or write-off of deferred financing costs); PROVIDED that, in
making such computation,
(1) the Consolidated Interest Expense attributable to interest on any
Indebtedness computed on a pro forma basis and bearing a floating interest
rate shall be computed as if the rate in effect on the date of computation
had been the applicable rate for the entire period, and
(2) with respect to any Indebtedness which bears, at the option of
such Person, a fixed or floating rate of interest, such Person shall apply,
at its option, either the fixed or floating rate.
"CONSOLIDATED INTEREST EXPENSE" of any Person shall mean, without
duplication, for any period, as applied to any Person:
(1) the sum of
(a) the aggregate of the interest expense on Indebtedness of
such Person and its consolidated Subsidiaries for such period, on a
consolidated basis, including, without limitation:
(i) amortization of debt discount,
(ii) the net cost under Interest Rate Protection
Agreements (including amortization of discounts),
(iii) the interest portion of any deferred payment
obligation and
(iv) accrued interest, plus
(b) the interest component of the Capital Lease Obligations
paid, accrued and/or scheduled to be paid or accrued by such Person
and its consolidated Subsidiaries during such period, minus
(2) the cash interest income (exclusive of deferred financing fees)
of such Person and its consolidated subsidiaries during such period, in
each case as determined in accordance with GAAP consistently applied.
"CONSOLIDATED NET INCOME (LOSS)" of any Person shall mean, for any
period, the consolidated net income (or loss) of such Person and its
consolidated Subsidiaries for such period as determined in accordance with
GAAP, adjusted, to the extent included in calculating such net income (loss),
by excluding all extraordinary gains or losses (net of reasonable fees and
expenses relating to the transaction giving rise thereto) of such Person and
its Subsidiaries.
"CONSTRUCTION INDEBTEDNESS" shall mean Indebtedness incurred by the
Company or its Subsidiaries in connection with the construction of motion
picture theatres or screens.
"CREDIT FACILITY" shall mean that certain Amended and Restated Credit
Agreement, dated as of April 10, 1997, among the Company, The Bank of Nova
Scotia, as administrative agent, Bank of America National Trust and Savings
Association, as document agent, and the various other financial institutions
thereto, as the same may be amended from time to time, together with any
extensions, revisions, refinancings or replacements thereof by a lender or
syndicate of lenders.
"CURRENCY HEDGING OBLIGATIONS" shall mean the obligations of any Person
pursuant to an arrangement designed to protect such Person against
fluctuations in currency exchange rates.
"DEBT RATING" shall mean the rating assigned to the Notes by Moody's or
S&P, as the case may be.
45
<PAGE>
"DEFAULT" means any event which is, or after notice or the passage of
time or both, would be, an Event of Default.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" shall mean, with respect to any asset or property,
the sale value that would be obtained in an arm's-length transaction between
an informed and willing seller under no compulsion to sell and an informed
and willing buyer under no compulsion to buy.
"GENERALLY ACCEPTED ACCOUNTING PRINCIPLES" or "GAAP" shall mean
generally accepted accounting principles in the United States, consistently
applied.
"GUARANTEE" shall mean, with respect to any Person, any obligation,
contingent or otherwise, of such Person directly or indirectly guaranteeing
any Indebtedness or other obligation of any other Person and, without
limiting the generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness or other obligation of such other Person
(whether arising by virtue of partnership arrangements, or by agreements
to keep-well, to purchase assets, goods, securities or services, to take-
or-pay, or to maintain financial statement conditions or otherwise) or
(2) entered into for purposes of assuring in any other manner the
obligee of such Indebtedness or other obligation of the payment thereof or
to protect such obligee against loss in respect thereof (in whole or in
part);
PROVIDED that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning.
"GUARANTEED INDEBTEDNESS" of any Person shall mean, without duplication,
all Indebtedness of any other Person referred to in the definition of
Indebtedness and all dividends of other Persons for the payment of which, in
either case, such Person is directly or indirectly responsible or liable as
obligor, guarantor or otherwise.
"INDEBTEDNESS" shall mean, with respect to any Person, without duplication:
(1) all indebtedness of such Person for borrowed money or for the
deferred purchase price of property or services, excluding any trade
payables and other accrued current liabilities incurred in the ordinary
course of business, but including, without limitation, all obligations of
such Person in connection with any letters of credit and acceptances issued
under letter of credit facilities, acceptance facilities or other similar
facilities, now or hereafter outstanding,
(2) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments,
(3) all indebtedness created or arising under any conditional sale or
other title retention agreement with respect to property acquired by such
Person (even if the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of
such property), but excluding trade accounts payable arising in the
ordinary course of business,
(4) every obligation of such Person issued or contracted for as
payment in consideration of the purchase by such Person or a Subsidiary of
such Person of the Capital Stock or substantially all of the assets of
another Person or in consideration for the merger or consolidation with
respect to which such Person or a Subsidiary of such Person was a party,
(5) all Indebtedness referred to in clauses (1) through (4) above of
other Persons and all dividends of other Persons, the payment of which is
secured by (or for which the holder of such Indebtedness has an existing
46
<PAGE>
right, contingent or otherwise, to be secured by) any Lien upon or in
property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness,
(6) all Guaranteed Indebtedness of such Person,
(7) all obligations under Interest Rate Protection Agreements of such
Person,
(8) all Currency Hedging Obligations of such Person,
(9) all Capital Lease Obligations of such Person, and
(10) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of the types referred to in clauses
(1) through (9) above.
"INTEREST RATE PROTECTION AGREEMENT" shall mean any interest rate
protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedge agreement, option or
future contract or other similar agreement or arrangement designed to protect
the Company or any of its Subsidiaries against fluctuations in interest
rates.
"INVESTMENT GRADE STATUS" exists as of a date and thereafter if at such
date either:
(1) the Debt Rating of Moody's is at least Baa3 (or the equivalent)
or higher or
(2) the Debt Rating of S&P is at least BBB- (or the equivalent) or
higher.
"LIEN" shall mean any mortgage, lien (statutory or other), pledge,
security interest, encumbrance, claim, hypothecation, assignment for
security, deposit arrangement or preference or other security agreement of
any kind or nature whatsoever. A Person shall be deemed to own subject to a
Lien any property which it has acquired or holds subject to the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement relating to Indebtedness of such Person. The right
of a distributor to the return of its film held by a Person under a film
licensing agreement is not a Lien as used herein. Reservation of title under
an operating lease by the lessor and the interest of the lessee therein are
not Liens as used herein.
"MATURITY" means, with respect to any Note, the date on which the
principal of such Note becomes due and payable as provided in such Note or
the Indenture, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"MOODY'S" shall mean Moody's Investor Service, Inc. or any successor to
the rating agency business thereof.
"NON-RECOURSE INDEBTEDNESS" shall mean Indebtedness as to which:
(1) none of the Company or any of its Subsidiaries
(a) provides credit support (including any undertaking,
agreement or instrument which would constitute Indebtedness) or
(b) is directly or indirectly liable and
(2) no default with respect to such Indebtedness (including any
rights which the holders thereof may have to take enforcement action
against the relevant Unrestricted Subsidiary or its assets) would permit
(upon notice, lapse of time or both) any holder of any other Indebtedness
of the Company or its Subsidiaries (other than Non-recourse Indebtedness)
to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity.
47
<PAGE>
"OBLIGATIONS" means any principal (including reimbursement obligations
and guarantees), premium, if any, interest (including interest accruing on or
after the filing of, or which would have accrued but for the filing of, any
petition in bankruptcy or for reorganization relating to the Company whether
or not a claim for post-filing interest is allowed in such proceedings),
penalties, fees, expenses, indemnifications, reimbursements, claims for
rescission, damages, gross-up payments and other liabilities payable under
the documentation governing any Indebtedness or otherwise.
"OFFICER" shall mean the Chairman of the Board, any Co-Chairman of the
Board, President, the Chief Executive Officer, any Executive Vice President
and the Chief Financial Officer of the Company.
"OFFICERS' CERTIFICATE" shall mean a certificate signed by two Officers.
"OPINION OF COUNSEL" shall mean a written opinion of counsel to the
Company or any other Person reasonably satisfactory to the Trustee.
"PERMITTED HOLDER" means:
(1) Mr. Stanley H. Durwood, his spouse and any of his lineal
descendants and their respective spouses (collectively, the "Durwood
Family") and any Affiliate of any member of the Durwood Family,
(2) Mr. Stanley H. Durwood's estate, or any trust established by
Mr. Stanley H. Durwood, during any period of administration prior to the
distribution of assets to beneficiaries who are Persons described in clause
(3) below,
(3) any trust which is established solely for the benefit of one or
more members of the Durwood Family (whether or not any member of the
Durwood Family is a trustee of such trust) or solely for the benefit of one
or more charitable organizations or solely for the benefit of a combination
of members of the Durwood Family and one or more charitable organizations
and
(4) any Subsidiary, any employee stock purchase plan, stock option
plan or other stock incentive plan or program, retirement plan or automatic
reinvestment plan or any substantially similar plan of the Company or any
Subsidiary or any Person holding securities of the Company for or pursuant
to the terms of any such employee benefit plan; PROVIDED that if any lender
or other Person shall foreclose on or otherwise realize upon or exercise
any remedy with respect to any security interest in or Lien on any
securities of the Company held by any Person listed in this clause (4),
then such securities shall no longer be deemed to be held by a Permitted
Holder.
"PERMITTED INDEBTEDNESS" shall mean the following:
(1) Indebtedness of the Company under the Offered Notes;
(2) Indebtedness of the Company under the Credit Facility in an
aggregate principal amount at any one time outstanding not to exceed
$425 million;
(3) Indebtedness of the Company or any of its Subsidiaries
outstanding on the Closing Date;
(4) Indebtedness of the Company or any of its Subsidiaries consisting
of Permitted Interest Rate Protection Agreements;
(5) Indebtedness of the Company or any of its Subsidiaries to any one
or the other of them;
(6) Indebtedness incurred to renew, extend, refinance or refund
(each, a "refinancing") any Indebtedness outstanding on the Closing Date in
an aggregate principal amount not to exceed the principal amount of the
Indebtedness so refinanced plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of the
Indebtedness so refinanced or the amount of any premium reasonably
determined by the Company as necessary to accomplish such refinancing by
means of a tender offer or privately negotiated repurchase, plus the
expenses of the Company incurred in connection with such refinancing;
48
<PAGE>
(7) Indebtedness of any Subsidiary incurred in connection with the
Guarantee of any Indebtedness of the Company;
(8) Indebtedness relating to Currency Hedging Obligations entered
into solely to protect the Company or any of its Subsidiaries from
fluctuations in currency exchange rates and not to speculate on such
fluctuations;
(9) Capital Lease Obligations of the Company or any of its
Subsidiaries;
(10) Indebtedness of the Company or any of its Subsidiaries in
connection with one or more standby letters of credit or performance bonds
issued in the ordinary course of business or pursuant to self-insurance
obligations;
(11) Indebtedness represented by property, liability and workers'
compensation insurance (which may be in the form of letters of credit);
(12) Acquired Indebtedness; PROVIDED that such Indebtedness, if
incurred by the Company, would be in compliance with "Limitation on
Consolidated Indebtedness";
(13) Indebtedness of the Company or any of its Subsidiaries to an
Unrestricted Subsidiary for money borrowed; PROVIDED that such Indebtedness
is subordinated in right of payment to the Notes and the Weighted Average
Life of such Indebtedness is greater than the Weighted Average Life of the
Notes;
(14) Construction Indebtedness in an aggregate principal amount that
does not exceed $100 million; and
(15) Indebtedness not otherwise permitted to be incurred pursuant to
clauses (1) through (14) above which, together with any other Indebtedness
pursuant to this clause (14), has an aggregate principal amount that does
not exceed $100 million at any time outstanding.
"PERMITTED INTEREST RATE PROTECTION AGREEMENTS" shall mean, with respect
to any Person, Interest Rate Protection Agreements entered into in the
ordinary course of business by such Person that are designed to protect such
Person against fluctuations in interest rates with respect to Permitted
Indebtedness and that have a notional amount no greater than the payment due
with respect to Permitted Indebtedness hedged thereby.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
estate, unincorporated organization or government or any agency or political
subdivision thereof.
"REDEEMABLE CAPITAL STOCK" shall mean any Capital Stock that, either by
its terms, by the terms of any security into which it is convertible or
exchangeable or otherwise, is or upon the happening of an event or passage of
time would be required to be redeemed prior to the final Stated Maturity of
the Notes or is redeemable at the option of the holder thereof at any time
prior to such final Stated Maturity, or is convertible into or exchangeable
for debt securities at any time prior to such final Stated Maturity at the
option of the holder thereof.
"RESTRICTED PAYMENTS" shall have the meaning set forth in the
"Limitation on Restricted Payments" covenant.
"RESTRICTED PAYMENTS COMPUTATION PERIOD" shall mean the period (taken as
one accounting period) from the beginning of the first fiscal quarter
commencing after the Closing Date to the last day of the Company's fiscal
quarter preceding the date of the applicable proposed Restricted Payment.
"S&P" shall mean Standard & Poor's Ratings Service or any successor to
the rating agency business thereof.
49
<PAGE>
"STATED MATURITY", when used with respect to any Note or any installment
of interest thereof, means the date specified in such Note as the fixed date
on which the principal of such Note or such installment of interest is due
and payable.
"SUBSIDIARY" of any person shall mean:
(1) any corporation of which more than 50% of the outstanding shares
of Capital Stock having ordinary voting power for the election of directors
is owned directly or indirectly by such Person and
(2) any partnership, limited liability company, association, joint
venture or other entity in which such Person, directly or indirectly, has
more than a 50% equity interest, and, except as otherwise indicated herein,
references to Subsidiaries shall refer to Subsidiaries of the Company.
Notwithstanding the foregoing, for purposes hereof, an Unrestricted
Subsidiary shall not be deemed a Subsidiary of the Company other than for
purposes of the definition of "Unrestricted Subsidiary" unless the Company
shall have designated in writing to the Trustee an Unrestricted Subsidiary as
a Subsidiary. A designation of an Unrestricted Subsidiary as a Subsidiary may
not thereafter be rescinded.
"SURVIVING ENTITY" shall have the meaning set forth under "Merger and
Sale of Substantially All Assets".
"THEATRE COMPLETION" shall mean any motion picture theatre or screen
which was first opened for business during any applicable period.
"UNRESTRICTED SUBSIDIARY" shall mean a Subsidiary of the Company
designated in writing to the Trustee
(1) whose properties and assets, to the extent they secure
Indebtedness, secure only Non-Recourse Indebtedness,
(2) that has no Indebtedness other than Non-Recourse Indebtedness
and
(3) that has no Subsidiaries.
"VOTING STOCK" shall mean stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors,
managers or trustees of a corporation (irrespective of whether or not at the
time, stock of any other class or classes shall have or might have voting
power by reason of the happening of any contingency).
"WEIGHTED AVERAGE LIFE" shall mean, as of any date, with respect to any
debt security, the quotient obtained by dividing (1) the sum of the products
of the number of years from such date to the dates of each successive
scheduled principal payment (including any sinking fund payment requirements)
of such debt security multiplied by the amount of such principal payment, by
(2) the sum of all such principal payments.
"WHOLLY OWNED SUBSIDIARY" of any Person shall mean a Subsidiary of such
Person, all of the Capital Stock (other than directors' qualifying shares) or
other ownership interests of which shall at the time be owned by such Person
or by one or more Wholly Owned Subsidiaries of such Person or by such Person
and one or more Wholly Owned Subsidiaries of such Person.
EVENTS OF DEFAULT
The following will be "Events of Default" under the Indenture:
(1) default in the payment of any interest on any Note when it
becomes due and payable and continuance of such default for a period of 30
days;
50
<PAGE>
(2) default in the payment of the principal of or premium, if any, on
any Note at its Maturity (upon acceleration, optional redemption, required
purchase or otherwise);
(3) default in the performance, or breach, of any covenant or
warranty of the Company contained in the Indenture (other than a default in
the performance, or breach, of a covenant or warranty which is specifically
dealt with in clause (1) or (2) above) and continuance of such default or
breach for a period of 60 days after written notice shall have been given
to the Company by the Trustee or to the Company and the Trustee by the
holders of at least 25% in aggregate principal amount of the Notes then
outstanding;
(4) (a) one or more defaults in the payment of principal of or
premium, if any, on Indebtedness of the Company or AMC aggregating
$5 million or more, when the same becomes due and payable at the stated
maturity thereof, and such default or defaults shall have continued after
any applicable grace period and shall not have been cured or waived or
(b) Indebtedness of the Company or AMC aggregating $5 million or more
shall have been accelerated or otherwise declared due and payable, or
required to be prepaid or repurchased (other than by regularly scheduled
prepayment) prior to the stated maturity thereof;
(5) any holder of any Indebtedness in excess of $5 million in the
aggregate of the Company or AMC shall notify the Trustee of the intended
sale or disposition of any assets of the Company or AMC that have been
pledged to or for the benefit of such Person to secure such Indebtedness or
shall commence proceedings, or take action (including by way of set-off) to
retain in satisfaction of any such Indebtedness, or to collect on, seize,
dispose of or apply, any such asset of the Company or AMC pursuant to the
terms of any agreement or instrument evidencing any such Indebtedness of
the Company or AMC or in accordance with applicable law;
(6) one or more final judgments or orders shall be rendered against
the Company or AMC for the payment of money, either individually or in an
aggregate amount, in excess of $5 million and shall not be discharged and
either (a) an enforcement proceeding shall have been commenced by any
creditor upon such judgment or order or (b) there shall have been a period
of 60 consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, was not in effect;
and
(7) the occurrence of certain events of bankruptcy, insolvency or
reorganization with respect to the Company or AMC.
If an Event of Default (other than an Event of Default specified in
clause (7) above) shall occur and be continuing, the Trustee or the Holders
of not less than 25% in principal amount of the Notes then outstanding may
declare the principal of all Notes due and payable; PROVIDED, HOWEVER, that
so long as the Credit Facility shall be in full force and effect, if an Event
of Default shall occur and be continuing (other than an Event of Default
specified in clause (7)), any such acceleration shall not become effective
until the earlier of
(a) five Business Days following a delivery of a notice of such
acceleration to the agent under the Credit Facility and
(b) the acceleration of any amounts under the Credit Facility.
If an Event of Default specified in clause (7) above occurs and is
continuing, then the principal of all the Notes shall become due and payable
without any declaration or other act on the part of the Trustee or any
Holder. After a declaration of acceleration, but before a judgment or decree
for payment of the money due has been obtained by the Trustee, the Holders of
a majority in principal amount of the Outstanding Notes, by written notice to
the Company and the Trustee, may rescind and annul such declaration and its
consequences if
(1) the Company has paid or deposited, or caused to be paid or
deposited, with the Trustee a sum sufficient to pay
(A) all sums paid or advanced by the Trustee under the
Indenture and the reasonable compensation, expenses, disbursements and
advances to the Trustee, its agents and counsel,
51
<PAGE>
(B) all overdue interest on all Notes,
(C) the principal of and premium, if any, on any Notes that
has become due otherwise than by such declaration of acceleration and
interest thereon at the rate borne by the Notes and
(D) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes, and
(2) all Events of Default, other than the non-payment of principal of
the Notes which have become due solely by such declaration of acceleration,
have been cured or waived.
The Indenture contains a provision entitling the Trustee, subject to the
duty of the Trustee during the existence of an Event of Default to act with
the required standard of care, to be indemnified by the Holders of Notes
before proceeding to exercise any right or power under the Indenture at the
request of such Holders. The Indenture provides that the Holders of a
majority in aggregate principal amount of the Notes then Outstanding may
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise as a prudent person would
exercise under the circumstances in the conduct of such person's own affairs.
The Trust Indenture Act of 1939 contains limitations on the rights of
the Trustee, should it be a creditor of the Company, to obtain payment of
claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is
permitted to engage in other transactions; PROVIDED that if it acquires any
conflicting interest it must eliminate such conflict upon the occurrence of
an Event of Default or else resign.
The Company will be required to furnish to the Trustee annually a
statement as to any default by the Company in the performance and observance
of its obligations under the Indenture.
DEFEASANCE AND COVENANT DEFEASANCE OF THE INDENTURE
The Company may, at its option, and at any time, elect to have the
obligations of the Company discharged with respect to all Outstanding Notes
("defeasance"). Such defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented by the
Outstanding Notes and to have satisfied its other obligations under the
Indenture, except for the following which shall survive until otherwise
terminated or discharged:
(1) the rights of Holders of Outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest on such Notes
when such payments are due,
(2) the Company's obligations with respect to the Notes relating to
the issuance of temporary Notes, the registration, transfer and exchange of
Notes, the replacement of mutilated, destroyed, lost or stolen Notes, the
maintenance of an office or agency in The City of New York, the holding of
money for security payments in trust and statements as to compliance with
the Indenture,
(3) its obligations in connection with the rights, powers, trusts,
duties and immunities of the Trustee and
(4) the defeasance provisions of the Indenture.
In addition the Company may, at its option and at any time, elect to be
released from its obligations with respect to certain of its restrictive
covenants under the Indenture ("covenant defeasance") and any omission to
comply with such obligations shall not constitute a Default or an Event of
Default with respect to the Notes. In the event covenant defeasance occurs,
certain events (not including non-payment, bankruptcy and insolvency events)
described under "Events of Default" will no longer constitute Events of
Default with respect to the Notes.
52
<PAGE>
In order to exercise either defeasance or covenant defeasance:
(1) the Company must irrevocably deposit with the Trustee, in trust,
for the benefit of the Holders, cash in U.S. dollars, certain U.S.
government obligations, or a combination thereof, in such amounts as will
be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of (and premium, if
any, on) and interest on the Outstanding Notes on the Stated Maturity (or
Redemption Date, if applicable) of such principal (and premium, if any) or
installment of interest,
(2) in the case of defeasance, the Company shall have delivered to
the Trustee an Opinion of Counsel stating that
(a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or
(b) since the date of this Prospectus, there has been a
change in the applicable United States Federal income tax law, in
either case to the effect that, and based thereon such Opinion of
Counsel shall confirm that, the Holders of the Outstanding Notes will
not recognize income, gain or loss for United States Federal income
tax purposes as a result of such defeasance and will be subject to
United States Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such
defeasance had not occurred,
(3) in the case of covenant defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding Notes will not recognize income, gain or loss
for United States Federal income tax purposes as a result of such covenant
defeasance and will be subject to United States Federal income tax on the
same amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred,
(4) the Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit shall not cause the Trustee or the
trust so created to be subject to the Investment Company Act of 1940 and
(5) the Company must comply with certain other conditions, including
that such defeasance or covenant defeasance will not result in a breach or
violation of, or constitute a default under, the Indenture or any material
agreement or instrument to which the Company is a party or by which it is
bound.
MODIFICATION AND WAIVER
Modifications and amendments of the Indenture may be entered into by the
Company and the Trustee with the consent of the Holders of not less than a
majority in aggregate principal amount of the Outstanding Notes; PROVIDED,
HOWEVER, that no such modification or amendment may, without the consent of the
Holder of each Outstanding Note affected thereby:
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable upon the
redemption thereof, or change the coin or currency in which any Note or any
premium or the interest thereon is payable, or impair the right to
institute suit for the enforcement of any such payment after the Stated
Maturity thereof (or, in the case of redemption, on or after the Redemption
Date),
(2) reduce the amount of, or change the coin or currency of, or
impair the right to institute suit for the enforcement of, the Change of
Control Purchase Price,
(3) reduce the percentage in principal amount of Outstanding Notes,
the consent of whose Holders is necessary to amend or waive compliance with
certain provisions of the Indenture or to waive certain defaults,
53
<PAGE>
(4) modify any of the provisions relating to supplemental indentures
requiring the consent of Holders or relating to the waiver of past defaults
or relating to the waiver of certain covenants, except to increase the
percentage of Outstanding Notes the consent of whose Holders is required
for such actions or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the Holder of
each Note affected thereby or
(5) modify any of the provisions of the Indenture relating to the
subordination of the Notes in a manner adverse to any Holder.
The Holders of a majority in aggregate principal amount of the Outstanding
Notes may waive compliance with certain restrictive covenants and provisions of
the Indenture.
Without the consent of any holder of the Notes, the Company and the Trustee
may amend the Indenture to cure any ambiguity, omission, defect or
inconsistency, to provide for the assumption by a successor corporation of the
obligations of the Company under the Indenture, to provide for uncertificated
Notes in addition to or in place of certificated Notes (provided that the
uncertificated Notes are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated Notes
are described in Section 163(f)(2)(B) of the Code), to add Guarantees with
respect to the Notes, to secure the Notes, to add to the covenants of the
Company for the benefit of the holders of the Notes or to surrender any right or
power conferred upon the Company, to make any change that does not adversely
affect the rights of any holder of the Notes, to make any change to the
subordination provisions of the Indenture that would limit or terminate the
benefits available to any holder of Senior Indebtedness under such provisions or
to comply with any requirement of the Securities and Exchange Commission in
connection with the qualification of the Indenture under the Trust Indenture
Act.
BOOK-ENTRY SYSTEM
Except as set forth in the following paragraph, the Exchange Notes will
be initially represented by one or more global Notes (each a "Global Exchange
Note"). The Global Exchange Note will be deposited with or on behalf of, The
Depository Trust Company ("DTC") and registered in the name of a nominee of
DTC. Investors may hold their beneficial interests in the Global Exchange
Note directly through DTC if they have an account with DTC or indirectly
through organizations which have accounts with DTC.
Exchange Notes that are issued as described below under "-Certificated
Notes" will be issued in definitive form. Upon the transfer of an Exchange Note
in definitive form, such Exchange Note will, unless the Global Exchange Note has
previously been exchanged for Exchange Notes in definitive form, be exchanged
for an interest in the Global Exchange Note representing the principal amount of
Exchange Notes being transferred.
The Company expects that pursuant to procedures established by DTC (a) upon
issuance of the Global Exchange Note in exchange for the Initial Notes pursuant
to the Exchange Offer, DTC or its custodian will credit on its internal system
portions of the Global Exchange Note to the respective accounts of persons who
have accounts with DTC and (b) ownership of the Exchange Notes will be shown on,
and the transfer of ownership thereof will be effected only through records
maintained by DTC or its nominee (with respect to interests of participants (as
defined below) and the records of participants (with respect to interests of
persons other than participants). Ownership of beneficial interests in a Global
Exchange Note will be limited to persons that have accounts with DTC
("participants") or persons that may hold interests through participants.
Ownership of beneficial interests in such Global Exchange Note by persons that
hold through participants will be shown on, and the transfer of that ownership
interest within such participant will be effected only through, records
maintained by such participant. The laws of some jurisdictions require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such limits and such laws may impair the ability to transfer
beneficial interests in a Global Exchange Note.
Payment of principal, premium, if any, and interest on Notes represented by
any such Global Exchange Note will be made to DTC or its nominee, as the case
may be, as the sole registered owner and the sole holder of the Notes
represented thereby for all purposes under the Indenture. None of the Company,
the Trustee or any agent of the Company will have any responsibility or
liability for any aspect of the Depository's reports relating to or payments
made on account
54
<PAGE>
of beneficial ownership interests in a Global Exchange Note representing any
Exchange Notes or for maintaining, supervising or reviewing any of the
Depository's records relating to such beneficial ownership interests.
The Company expects that upon receipt of any payment of principal of,
premium, if any, or interest on any Global Exchange Note, DTC will immediately
credit, on its book-entry registration and transfer system, the accounts of
participants with payments in amounts proportionate to their respective
beneficial interests in the principal or face amount of such Global Exchange
Note, as shown on the records of DTC. The Company expects that payments by
participants to owners of beneficial interests in a Global Exchange Note held
through such participants will be governed by standing instructions and
customary practices as is now the case with securities held for customer
accounts registered in "street name" and will be the sole responsibility of such
participants.
So long as DTC or its nominee is the registered owner or holder of such
Global Exchange Note, DTC or such nominee, as the case may be, will be
considered the sole owner or holder of the Exchange Notes represented by such
Global Exchange Note for the purposes of receiving payment on the Exchange
Notes, receiving notices and for all other purposes under the Indenture and the
Exchange Notes. Beneficial interests in the Exchange Notes will be evidenced
only by, and transfers thereof will be effected only through, records maintained
by DTC and its participants. Except as provided below, owners of beneficial
interests in a Global Exchange Note will not be entitled to receive physical
delivery of certificated Exchange Notes in definitive form and will not be
considered the holders of such Global Exchange Note for any purposes under the
Indenture. Accordingly, each person owning a beneficial interest in a Global
Exchange Note must rely on the procedures of DTC and, if such person is not a
participant, on the procedures of the participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any action of holders or that an owner of a beneficial
interest in a Global Exchange Note desires to give or take any action that a
holder is entitled to give or take under the Indenture, DTC would authorize the
participants holding the relevant beneficial interest to give or take such
action, and such participants would authorize beneficial owners owning through
such participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
The Company understands that DTC will take any action permitted to be taken
by a holder of Exchange Notes only at the direction of one or more participants
to whose account with DTC interests in the Global Exchange Note are credited and
only in respect of such portion of the aggregate principal amount of the
Exchange Notes as to which such participant or participants has or have given
such direction.
Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Exchange Note among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discontinued at any time. None of the Company, the
Trustee or any agent of the Company will have any responsibility for the
performance by DTC or its participants or indirect participants of their
respective obligations under the rules and procedures governing their
operations.
DTC has advised the Company that DTC is a limited-purpose trust company
organized under the Banking Law of the State of New York, a "banking
organization" within the meaning of New York Banking Law, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency" registered under the
Exchange Act. DTC was created to hold the securities of its participants and to
facilitate the clearance and settlement of securities transactions among its
participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. The Depository's participants include securities
brokers and dealers, banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own DTC. Access
to the Depository's book-entry system is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
CERTIFICATED NOTES
Exchange Notes represented by a Global Exchange Note are exchangeable for
certificated Exchange Notes only if (i) DTC notifies the Company that it is
unwilling or unable to continue as a depository for such Global Exchange Note or
if at any time DTC ceases to be a clearing agency registered under the Exchange
Act, and a successor depository is not appointed by the Company within 90 days,
(ii) the Company executes and delivers to the Trustee a notice that such Global
55
<PAGE>
Exchange Note shall be so transferable, registrable and exchangeable, and
such transfer shall be registrable or (iii) there shall have occurred and be
continuing an Event of Default or an event which, with the giving of notice
or lapse of time, or both, would constitute an Event of Default with respect
to the Exchange Notes represented by such Global Exchange Note. Any Global
Exchange Note that is exchangeable for certificated Exchange Notes pursuant
to the preceding sentence will be transferred to, and registered and
exchanged for, certificated Exchange Notes in authorized denominations and
registered in such names as DTC or its nominee holding such Global Exchange
Note may direct. Subject to the foregoing, a Global Exchange Note is not
exchangeable, except for a Global Exchange Note of like denomination to be
registered in the name of DTC or its nominee. In the event that a Global
Exchange Note becomes exchangeable for certificated Exchange Notes, (i)
certificated Exchange Notes will be issued only in fully registered form in
denominations of $1,000 or integral multiples thereof, (ii) payment of
principal, premium, if any, and interest on the certificated Exchange Notes
will be payable, and the transfer of the certificated Exchange Notes will be
registrable, at the office or agency of the Company maintained for such
purposes and (iii) no service charge will be made for any issuance of the
certificated Exchange Notes, although the Company may require payment of a
sum sufficient to cover any tax or governmental charge imposed in connection
therewith.
CONCERNING THE TRUSTEE
The Bank of New York is the Trustee under the Indenture.
The Bank of New York is also the indenture trustee under the indenture
respecting the 9-1/2% Notes due 2009.
GOVERNING LAW
The Indenture and the Notes will be governed by and construed in accordance
with the laws of the State of New York.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
GENERAL
The following is a summary of certain material United States federal
income tax consequences of the exchange of Initial Notes for Exchange Notes
pursuant to the Exchange Offer and of the purchase, ownership, and
disposition of the Exchange Notes. The discussion is based on the Internal
Revenue Code of 1986 (the "Code"), its legislative history, applicable
Treasury Regulations, judicial authority, and administrative rulings and
practice, all as currently existing and in effect. There can be no assurance
that the Internal Revenue Service (the "IRS") and the courts will not take a
contrary view with respect to these tax consequences, and no ruling from the
IRS respecting these tax consequences has been or will be sought.
Legislative, judicial, or administrative changes or interpretations may be
forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may be retroactive and
could affect (possibly adversely) the tax consequences of purchasing, owning,
and disposing of the Notes.
Except as otherwise described herein, this discussion applies only to a
person who is an initial beneficial owner who purchased Initial Notes for cash
for their issue price from the Initial Purchasers pursuant to the initial
offering thereof (a "Holder"), and except as otherwise described herein, who is:
(1) a citizen or resident of the United States for United States federal income
tax purposes; (2) a corporation, partnership, or other entity created or
organized in or under the laws of the United States or any political subdivision
thereof; (3) an estate the income of which is subject to United States federal
income taxation regardless of its source; or (4) a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have the authority to control
all substantial decisions of the trust (each a "U.S. Holder"). As used herein
the term "non-U.S. Holder" means a Holder who is not a U.S. Holder.
This discussion deals only with Notes that are held as capital assets by
Holders. This discussion does not deal with purchasers of subsequent offerings
of notes under the Indenture. This discussion also does not address all of the
United States federal income tax consequences that may be relevant to a Holder
in light of such Holder's particular circumstances or to Holders that are
subject to special rules such as, for example, banks and other financial
institutions, dealers in securities, insurance companies, tax-exempt
organizations, persons holding Notes as part of a straddle, hedge,
56
<PAGE>
conversion transaction, or other integrated investment, or persons whose
functional currency is not the United States dollar. Moreover, the effect of
any applicable state, local, or foreign tax laws, or any estate or gift tax
laws, is not discussed.
Holders who contemplate exchanging Initial Notes for Exchange Notes should
consult their own tax advisors concerning the particular consequences to them of
the ownership and disposition of the Exchange Notes under the Code and the law
of any other taxing jurisdiction.
EXCHANGE OFFER
The exchange of Exchange Notes for Initial Notes pursuant to the Exchange
Offer will be disregarded (I.E., will not be treated as a taxable event) and
each Exchange Note will be treated as a continuation of the corresponding
Initial Note. Accordingly, Holders will not recognize gain or loss upon the
exchange, and a Holder will have the same holding period and tax basis in an
Exchange Note immediately after the exchange as it had in the corresponding
Initial Note immediately before the exchange.
U.S. HOLDERS
STATED INTEREST. A U.S. Holder of a Note will be required to include in
gross income for United States federal income tax purposes (as ordinary interest
income) the stated interest payable on the Note at the time such interest is
accrued or received, in accordance with the Holder's method of federal income
tax accounting.
MARKET DISCOUNT. If a U.S. Holder purchases a Note for an amount that is
less than its stated principal amount, the amount of the difference will be
treated as market discount for federal income tax purposes, unless such
difference is less than a specified DE MINIMIS amount (0.25 percent of its
stated redemption price at maturity multiplied by the number of complete years
to maturity). Under the market discount rules, a U.S. Holder will be required
to treat any principal payment on, or any gain on the sale, exchange,
retirement, or other disposition of, a Note as ordinary income to the extent of
the market discount which has not previously been included in income and is
treated as having accrued on such Note at the time of such payment or
disposition. In addition, the U.S. Holder may be required to defer, until the
maturity of the Note or its earlier disposition in a taxable transaction, the
deduction of all or a portion of the interest expense on any indebtedness
incurred or continued to purchase or carry such Note.
Any market discount will be considered to accrue ratably (I.E., on a
straight line basis) during the period from the date of acquisition to the
maturity date of the Note, unless the U.S. Holder elects to accrue on a constant
yield method. A U.S. Holder of a Note may elect to include market discount in
income currently as it accrues (on either a ratable or constant interest
method), in which case the rule described above regarding deferral of interest
deductions will not apply. This election to include market discount income
currently, once made, applies to all market discount obligations acquired on or
after the first day of the first taxable year to which the election applies and
may not be revoked without the consent of the IRS.
MARKET PREMIUM. A U.S. Holder that purchases a Note for an amount in
excess of its stated redemption price at its earliest call date will be
considered to have purchased the Note at a premium. A U.S. Holder generally may
elect to amortize the excess amount (I.E., the premium) on a constant yield
method. The amount amortized in any year will be treated as a reduction of the
U.S. Holder's interest income from the Note. The premium on a Note held by a
U.S. Holder that does not make such an election will decrease the gain or
increase the loss otherwise recognized on disposition of the Note. The election
to amortize premium on a constant yield method once made applies to all debt
obligations held or subsequently acquired by the electing U.S. Holder on or
after the first day of the first taxable year to which the election applies,
other than debt instruments the interest on which is excludable from gross
income, and may not be revoked without the consent of the IRS.
TAX BASIS. A Holder's tax basis for a Note generally will be the Holder's
purchase price for the Note INCREASED by: (1) the amount of any original issue
discount included in such Holder's gross income; and (2) the amount included in
gross income by the Holder as market discount; and DECREASED by (1) any
amortized premium; and (2) any payment on the Notes other than stated interest.
57
<PAGE>
SALE OR OTHER DISPOSITION. Upon the sale, exchange, redemption,
retirement, or other disposition of an Exchange Note, a Holder will recognize
gain or loss equal to the difference (if any) between the amount realized (not
including amounts attributable to accrued but unpaid stated interest) and the
Holder's tax basis in the Exchange Note. Except to the extent that amounts are
required to be treated as ordinary income under the market discount rules
described above, such gain or loss will be capital gain or loss and will be
long-term capital gain or loss if the Exchange Note has been held for more than
one year. The deductibility of capital losses is subject to limitations.
NON-U.S. HOLDERS
Subject to the discussion of backup withholding below, payments of
principal, if any, and interest by the Company or its paying agent to any
non-U.S. Holder with respect to a Note will not be subject to United States
federal income or withholding tax provided, in the case of interest, that: (1)
such non-U.S. Holder does not actually or constructively own 10 percent or more
of the total combined voting power of all classes of stock of the Company
entitled to vote; (2) such non-U.S. Holder is not a controlled foreign
corporation for United States federal income tax purposes that is related to the
Company through stock ownership; and (3) either: (A) the non-U.S. Holder
certifies to the Company or its agent, under penalties of perjury, that it is
not a United States person (or, in the case of an individual, that he is neither
a citizen nor a resident of the United States) and provides the Company with its
name and address; or (B) a securities clearing organization, bank, or other
financial institution that holds customers' securities in the ordinary course of
its trade or business (a "financial institution") certifies to the Company or
its agent, under penalties of perjury, that the certification described in
clause (A) hereof has been received from the non-U.S. Holder by it or by another
financial institution acting for the beneficial owner and furnishes the payor
with a copy thereof. The certification may be made on an IRS Form W-8 or
substantially similar substitute form, and a non-U.S. Holder must inform the
Company or its agent or the financial institution to which the Non-U.S. Holder
provided the certification of any change in the information on the certification
within 30 days of the change. A non-U.S. Holder of one or more Notes who does
not meet the requirements of the second preceding sentence would generally be
subject to United States federal withholding tax at a flat rate of 30 percent
(or a lower applicable treaty rate) on payments of interest on the Notes.
Treasury regulations generally effective for payments made after December 31,
1999 provide alternative methods for satisfying the certification requirements
described above.
Subject to the discussion of backup withholding below, any gain realized
upon the sale, exchange, redemption, or retirement of a Note by a non-U.S.
Holder will not be subject to United States federal income or withholding taxes
unless: (1) such gain is effectively connected with a United States trade or
business of the Holder; or (2) in the case of an individual, such non-U.S.
Holder is present in the United States for 183 days or more in the taxable year
of the disposition and certain other conditions are met.
If a non-U.S. Holder of a Note is engaged in a trade or business in the
United States (or has a permanent establishment therein, if a tax treaty
applies) and interest on the Note or gain realized on the sale, exchange, or
other disposition of the Note is effectively connected with the conduct of such
trade or business (or permanent establishment, if a tax treaty applies), then
the rules set forth in the two preceding paragraphs will not apply (provided, in
the case of withholding, that such non-U.S. Holder furnishes a properly executed
IRS Form 4224 on or before any payment date to claim such an exemption). Such
non-U.S. Holder will be exempt from United States federal withholding tax, but
will be subject to United States federal income tax on such interest and on any
gain realized on the sale, exchange, or other disposition of a Note in the same
manner as if it were a U.S. Holder. In addition, if such non-U.S. Holder is a
foreign corporation, it may be subject to a United States foreign branch profits
tax equal to 30 percent of its effectively connected earnings and profits
(subject to adjustment), unless it qualifies for a lower rate under an
applicable income tax treaty.
NON- U.S. HOLDERS SHOULD CONSULT WITH THEIR TAX ADVISORS REGARDING UNITED
STATES AND FOREIGN TAX CONSEQUENCES OF PURCHASING OWNING, AND DISPOSING OF THE
NOTES.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Backup withholding and information reporting requirements may apply to
certain payments of principal and interest on a Note and to certain payments of
proceeds of the sale or retirement of a Note. The Company, its agent, a broker,
the Trustee, or any paying agent, as the case may be, will be required to
withhold tax from any payment that is subject to backup withholding at a rate of
31 percent of such payment if a U.S. Holder fails to furnish his taxpayer
identification number (social security number or employer identification
number), to certify that such U.S. Holder is not
58
<PAGE>
subject to backup withholding, or to otherwise comply with the applicable
requirements of the backup withholding rules. Certain U.S. Holders
(including, among others, all corporations) are generally not subject to the
backup withholding and information reporting requirements.
Under current Treasury Regulations, backup withholding and information
reporting generally will not apply to payments made by the Company or any paying
agent with respect to the Notes to a Holder of a Note who has provided the
required certification under penalties of perjury that it is not a U.S. Holder
as set forth in clause (3) of the first sentence in the first paragraph under
"Non-U.S. Holders" or has otherwise established an exemption (provided that
neither the Company nor such agent has actual knowledge that the Holder is a
U.S. Holder or that the conditions of any other exemption are, in fact, not
satisfied).
Payments of the proceeds from the sale by a non-U.S. Holder of a Note made
to or through a foreign office of a broker will not be subject to United States
information reporting, except that if the broker is a United States person, a
controlled foreign corporation for United States federal income tax purposes, a
foreign person 50 percent or more of whose gross income is effectively connected
with a United States trade or business, or, for taxable years beginning after
December 31, 1999, a foreign partnership more than 50 percent of the income or
capital interest in which is owned by U.S. Holders or which has certain
connections with the United States, then United States information reporting may
apply to such payments. Before January 1, 2000 backup withholding will not
apply to any payment of the proceeds from the sale of a Note made to or through
a foreign office of a broker. However, after 1999 backup withholding might
apply if the broker has actual knowledge that the payee is a U.S. Holder.
Payments of the proceeds from the sale of a Note to or through the United States
office of a broker are subject to United States information reporting and backup
withholding unless the Holder certifies under penalties of perjury as to its
non-United States status or otherwise establishes an exemption, provided that
the broker does not have actual knowledge that the Holder is a U.S. Holder or
that the conditions of any other exemption are not, in fact, satisfied.
Any amounts withheld under the backup withholding rules from a payment to a
Holder may be claimed as a credit against such Holder's United States federal
income tax liability, provided that the required information is provided to the
IRS.
THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX
ADVICE. ACCORDINGLY, EACH PROSPECTIVE HOLDER OF AN EXCHANGE NOTE SHOULD CONSULT
WITH SUCH PERSON'S TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH
PERSON OF PURCHASING, OWNING, AND DISPOSING OF THE EXCHANGE NOTE, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL, OR NON-UNITED STATES LAWS AND ANY
PROSPECTIVE CHANGES IN APPLICABLE TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Notes for its own account
pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of Exchange Notes received in
exchange for Initial Notes where such Initial Notes were acquired as a result of
market making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of Exchange Notes
by brokers-dealers. Exchange Notes received by broker-dealers for their own
account pursuant to the Exchange Offer may be sold from time to time in one or
more transactions in the over-the-counter market, in negotiated transactions,
through the writing of options on the Exchange Notes or a combination of such
methods of resale, at market prices prevailing at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
may be made directly to purchasers or to or through brokers or dealers who may
receive compensation in the form of commissions or concessions from any such
broker-dealers and/or the purchasers of any such Exchange Notes. Any
broker-dealers that resells Exchange Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Exchange Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and
59
<PAGE>
any profit of any such resale of Exchange Notes and any commissions or
concessions received by any such Persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that
by acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
For a period of one year after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such
documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one
counsel for the holder of the Securities) other than commissions or
concessions of any brokers or dealers and will indemnify the holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Exchange Notes offered hereby will be passed upon
for the Company by Lathrop & Gage L.C., Kansas City, Missouri. Lathrop & Gage
L.C. will rely on the opinion of Cravath, Swaine & Moore as to matters of New
York law. Raymond F. Beagle, Jr., a member of Lathrop & Gage L.C., is general
counsel of the Company and a successor voting trustee under Mr. Stanley H.
Durwood's revocable voting trust. See "Security Ownership of Beneficial
Owners."
EXPERTS
The consolidated balance sheets as of April 2, 1998 and April 3, 1997 and
the consolidated statements of operations, stockholders' equity and cash flows
for the year (52 weeks) ended April 2, 1998, the year (53 weeks) ended April 3,
1997 and the year (52 weeks) ended March 28, 1996 incorporated by reference in
this Registration Statement have been included herein in reliance on the report
of PricewaterhouseCoopers LLP, independent accountants, given on the authority
of that firm as experts in accounting and auditing.
60
<PAGE>
$225,000,000
OFFER TO EXCHANGE 9-1/2% SENIOR EXCHANGE SUBORDINATED NOTES
DUE FEBRUARY 1, 2011
THAT HAVE BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933
FOR OUTSTANDING 9-1/2% SENIOR SUBORDINATED NOTES
DUE FEBRUARY 1, 2011 OF
AMC ENTERTAINMENT INC.
[LOGO]
Prospectus
DATED ____________, 1999
61
<PAGE>
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
AMC Entertainment Inc. is incorporated in Delaware. Under Section 145 of
the Delaware General Corporation Law, a corporation has the power, under
specified circumstances, to indemnify its directors, officers, employees and
agents in connection with actions, suits or proceedings brought against them by
a third party or in the right of the corporation, by reason of the fact that
they were or are such directors, officers, employees or agents, against expenses
incurred in any such action, suit or proceeding. The Company's certificate of
incorporation requires indemnification of directors and officers to the full
extent permitted by the Delaware General Corporation Law and provides that, in
any action by a claimant, the Company shall bear the burden of proof that the
claimant is not entitled to indemnification.
Section 102(b)(7) of the Delaware General Corporation Law provides that a
certificate of incorporation may contain a provision eliminating or limiting the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director provided that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 (relating to
liability for unauthorized acquisitions or redemptions of, or dividends on,
capital stock) of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived an improper personal benefit. The
Certificate of Incorporation of the Company contains the provisions permitted by
Section 102(b)(7) of the Delaware General Corporation Law.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that, in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Company of expenses incurred or paid by a director, officer or
controlling person of the Company in the successful defense of any action, suit
or proceeding) is asserted by a director, officer or controlling person thereof
in connection with the securities being registered pursuant to this Registration
Statement, the Company will, unless in the opinion of counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of March 31, 1997 between
AMC Entertainment Inc. and Durwood, Inc. (together with Exhibit
A, "Pre-Merger Action Plan") (Incorporated by reference from
Exhibit 2.1 to the Company's Registration Statement on Form S-4
(File No. 333-25755) filed April 24, 1997).
2.2 Stock Agreement among AMC Entertainment Inc. and Stanley H.
Durwood, his children: Carol D. Journagan, Edward D. Durwood,
Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood and Peter
J. Durwood (the "Durwood Children"), The Thomas A. and Barbara F.
Durwood Family Investment Partnership (the "TBD Partnership") and
Delta Properties, Inc. (Incorporated by reference from Exhibit
99.3 to Amendment No. 2 to Schedule 13D of Stanley H. Durwood
filed September 30, 1997).
II-1
<PAGE>
2.3 Registration Agreement among AMC Entertainment Inc. and the
Durwood Children and Delta Properties, Inc. (Incorporated by
reference from Exhibit 99.2 to Amendment No. 2 to Schedule 13D of
Stanley H. Durwood filed September 30, 1997).
2.4(a) Indemnification Agreement dated as of March 31, 1997 among AMC
Entertainment Inc., the Durwood Family Stockholders and Delta
Properties, Inc., together with Exhibit B thereto (Escrow
Agreement) (Incorporated by reference from Exhibit 2.4(a) to the
Company's Registration Statement on Form S-4 (File No. 333-25755)
filed April 24, 1997).
2.4(b) Durwood Family Settlement Agreement (Incorporated by reference
from Exhibit 99.1 to Schedule 13D of Durwood, Inc. and Stanley H.
Durwood filed May 7, 1996).
2.4(c) First Amendment to Durwood Family Settlement Agreement
(Incorporated by reference from Exhibit 2.4(c) to the Company's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
2.4(d) Second Amendment to Durwood Family Settlement Agreement dated as
of August 15, 1997, among Stanley H. Durwood, the Durwood
Children and the TBD Partnership (Incorporated by reference from
Exhibit 99.7 to Amendment No. 2 to Schedule 13D of Stanley H.
Durwood filed September 30, 1997).
3.1 Amended and Restated Certificate of Incorporation of AMC
Entertainment Inc. (as amended on December 2, 1997) (Incorporated
by reference from Exhibit 3.1 to the Company's Form 10-Q (File
No. 1-8747) dated January 1, 1998).
3.2 Bylaws of AMC Entertainment Inc. (Incorporated by reference from
Exhibit 3.3 to the Company's Form 10-Q (File No. 0-12429) for the
quarter ended December 26, 1996).
4.1(a) Amended and Restated Credit Agreement dated as of April 10, 1997,
among AMC Entertainment Inc., as the Borrower, The Bank of Nova
Scotia, as Administrative Agent, and Bank of America National
Trust and Savings Association, as Documentation Agent, and
Various Financial Institutions, as Lenders, together with the
following exhibits thereto: significant subsidiary guarantee,
form of notes, form of pledge agreement and form of subsidiary
pledge agreement (Incorporated by reference from Exhibit 4.3 to
the Company's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
4.1(b) Second Amendment, dated January 16, 1998, to Amended and Restated
Credit Agreement dated as of April 10, 1997 (Incorporated by
Reference from Exhibit 4.2 to the Company's Form 10-Q (File No.
1-8747) for the quarter ended January 1, 1998).
4.2(a) Indenture dated March 19, 1997, respecting AMC Entertainment
Inc.'s 9-1/2% Senior Subordinated Notes due 2009 (Incorporated by
reference from Exhibit 4.1 to the Company's Form 8-K (File No.
1-8747) dated March 19, 1997).
4.2(b) First Supplemental Indenture respecting AMC Entertainment Inc.'s
9-1/2% Senior Subordinated Notes due 2009 (Incorporated by
reference from Exhibit 4.4(b) to Amendment No. 2. to the
Company's Registration Statement on Form S-4 (File No.333-29155)
filed August 4, 1997).
4.3 Indenture dated January 27, 1999, respecting AMC Entertainment
Inc.'s 9-1/2% Senior Subordinated Notes due 2011 (Incorporated by
reference from Exhibit 4.3 to the Company's 10-Q (File No.
1-8747) for the quarter ended December 31, 1998).
II-2
<PAGE>
4.4 Registration Rights Agreement, dated January 27, 1999, respecting
AMC Entertainment Inc.'s 9-1/2% Senior Subordinated Notes due 2011
(Incorporated by reference from Exhibit 4.4 to the Company's 10-Q
(File No. 1-8747) for the quarter ended December 31, 1998).
4.5 In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K,
certain instruments respecting long term debt of the Registrant
have been omitted but will be furnished to the Commission upon
request.
*5.1 Form of Opinion of Lathrop & Gage L.C.
*5.2 Form of Opinion of Cravath, Swaine & Moore
10.1. AMC Entertainment Inc. 1983 Stock Option Plan (Incorporated by
reference from Exhibit 10.1 to the Company's Form S-1 (File No.
2-84675) filed June 22, 1983).
10.2. AMC Entertainment Inc. 1984 Employee Stock Purchase Plan
(Incorporated by reference from Exhibit 28.1 to the Company's
Form S-8 (File No. 2-97523) filed July 3, 1984).
10.3. AMC Entertainment Inc. 1984 Employee Stock Option Plan
(Incorporated by reference from Exhibit 28.1 to the Company's S-8
and S-3 (File No. 2-97522) filed July 3, 1984).
10.3.(a) AMC Entertainment Inc. 1994 Stock Option and Incentive Plan, as
amended (Incorporated by reference from Exhibit 10.1 to the
Company's Form 10-Q (File No. 0-12429) for the quarter ended
December 26, 1996).
10.3.(b) Form of Non-Qualified (NON-ISO) Stock Option Agreement
(Incorporated by reference from Exhibit 10.2 to the Company's
Form 10-Q (File No. 0-12429) for the quarter ended
December 26, 1996).
10.4. American Multi-Cinema, Inc. Savings Plan, a defined contribution
401(k) plan, restated January 1, 1989, as amended (Incorporated
by reference from Exhibit 10.6 to the Company's Form S-1 (File
No. 33-48586) filed June 12, 1992, as amended).
10.5(a) Defined Benefit Retirement Income Plan for Certain Employees of
American Multi-Cinema, Inc. dated January 1, 1989, as amended
(Incorporated by reference from Exhibit 10.7 to the Company's
Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).
10.5(b) AMC Supplemental Executive Retirement Plan dated January 1, 1994
(Incorporated by reference from Exhibit 10.7(b) to the Company's
Form 10-K (File No. 0-12429) for the fiscal year ended March 30,
1995).
10.6 Employment Agreement between American Multi-Cinema, Inc. and
Philip M. Singleton (Incorporated by reference from Exhibit
10.2 to the Company's Form 10-Q (File No. 1-8747) for the quarter
ended December 31, 1998).
10.7 Employment Agreement between American Multi-Cinema, Inc. and
Peter C. Brown (Incorporated by reference from Exhibit 10.1 to
the Company's Form 10-Q (File No.1-8747) for the quarter ended
December 31, 1998).
10.8 Disability Compensation Provisions respecting Stanley H. Durwood
(Incorporated by reference from Exhibit 10.12 to the Company's
Form S-1 (File No. 33-48586) filed June 12, 1992, as amended).
10.9 Executive Medical Expense Reimbursement and Supplemental
Accidental Death or Dismemberment Insurance Plan, as restated
effective as of February 1, 1991 (Incorporated by
II-3
<PAGE>
reference from Exhibit 10.13 to the Company's Form S-1 (File No.
33-48586) filed June 12, 1992, as amended).
10.10 Division Operations Incentive Program (incorporated by reference
from Exhibit 10.15 to the Company's Form S-1 (File No. 33-48586)
filed June 12, 1992, as amended).
10.11 Partnership Interest Purchase Agreement dated May 28, 1993, among
Exhibition Enterprises Partnership, Cinema Enterprises, Inc.,
Cinema Enterprises II, Inc., American Multi-Cinema, Inc., TPI
Entertainment, Inc. and TPI Enterprises, Inc. (Incorporated by
reference from Exhibit 10.29 to the Company's Form 10-K (File No.
1-8747) for the fiscal year ended April 1, 1993).
10.12 Mutual Release and Indemnification Agreement dated May 28, 1993,
among Exhibition Enterprises Partnership, Cinema
Enterprises, Inc., American Multi-Cinema, Inc., TPI
Entertainment, Inc. and TPI Enterprises, Inc. (Incorporated by
reference from Exhibit 10.30 to the Company's Form 10-K (File No.
1-8747) for the fiscal year ended April 1, 1993).
10.13 Assignment and Assumption Agreement between Cinema Enterprises
II, Inc. and TPI Entertainment, Inc. (Incorporated by reference
from Exhibit 10.31 to the Company's Form 10-K (File No. 1-8747)
for the fiscal year ended April 1, 1993).
10.14 Confidentiality Agreement dated May 28, 1993, among TPI
Entertainment, Inc., TPI Enterprises, Inc., Exhibition
Enterprises Partnership, Cinema Enterprises, Inc., Cinema
Enterprises II, Inc. and American Multi-Cinema, Inc.
(Incorporated by reference from Exhibit 10.32 to the Company's
Form 10-K (File No. 1-8747) for the fiscal year ended April 1,
1993).
10.15 Termination Agreement dated May 28, 1993, among TPI
Entertainment, Inc., TPI Enterprises, Inc. Exhibition Enterprises
Partnership, American Multi-Cinema, Inc., Cinema
Enterprises, Inc., AMC Entertainment Inc., Durwood, Inc., Stanley
H. Durwood and Edward D. Durwood (Incorporated by reference from
Exhibit 10.33 to the Company's Form 10-K (File No. 1-8747) for
the fiscal year ended April 1, 1993).
10.16 Promissory Note dated June 16, 1993, made by Thomas L. Velde and
Katherine G. Terwilliger, husband and wife, payable to American
Multi-Cinema, Inc. (Incorporated by reference from Exhibit 10.34
to the Company's Form 10-K (File No. 1-8747) for the fiscal year
ended April 1, 1993).
10.17 Second Mortgage dated June 16, 1993, among Thomas L. Velde,
Katherine G. Terwilliger and American Multi-Cinema, Inc.
(Incorporated by reference from Exhibit 10.35 to the Company's
Form 10-K (File No. 1-8747) for the fiscal year ended April 1,
1993).
10.18 Summary of American Multi-Cinema, Inc. Executive Incentive
Program (Incorporated by reference from Exhibit 10.36 to the
Company's Registration Statement on Form S-2 (File No. 33-51693)
filed December 23, 1993).
10.19 AMC Non-Qualified Deferred Compensation Plans (Incorporated by
reference from Exhibit 10.37 to Amendment No. 2 to the Company's
Registration Statement on Form S-2 (File No. 33-51693) filed
February 18, 1994).
10.20 Employment Agreement between AMC Entertainment Inc., American
Multi-Cinema, Inc. and Stanley H. Durwood (Incorporated by
reference from Exhibit 10.32 to the Company's Form 10-K (File No.
0-12429) for the fiscal year ended March 28, 1996).
10.21 Real Estate Contract dated November 1, 1995 among Richard M. Fay,
Mary B. Fay and American Multi-Cinema, Inc. (Incorporated by
reference from Exhibit 10.33 to the Company's Form 10-K (File No.
0-12429) for the fiscal year ended March 28, 1996).
II-4
<PAGE>
10.22 American Multi-Cinema, Inc. Retirement Enhancement Plan
(Incorporated by reference from Exhibit 10.26 to the Company's
Registration Statement on Form S-4 (File No. 333-25755) filed
April 24, 1997).
10.23 Employment Agreement between American Multi-Cinema, Inc. and
Richard M. Fay (Incorporated by reference from Exhibit 10.3 to
the Company's Form 10-Q (File No. 1-8747) for the quarter ended
December 31, 1998).
10.24 American Multi-Cinema, Inc. Executive Savings Plan (Incorporated
by reference from Exhibit 10.28 to the Company's Registration
Statement on Form S-4 (File No. 333-25755) filed April 24, 1997).
10.25 Limited Partnership Agreement of Planet Movies Company, L.P.
dated October 17, 1997 (Incorporated by reference from Exhibit
10.25 to the Company's Form 10-K (File No. 1-8747) for the fiscal
year ended April 2, 1998).
10.26 Agreement of Sale and Purchase dated November 21, 1997 among
American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and
Entertainment Properties Trust, as Purchaser (Incorporated by
reference from Exhibit 10.1 of the Company's Current Report on
Form 8-K (File No. 1-8747) filed December 9, 1997).
10.27 Option Agreement dated November 21, 1997 among American
Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and
Entertainment Properties Trust, as Purchaser (Incorporated by
reference from Exhibit 10.2 of the Company's Current Report on
Form 8-K (File No. 1-8747) filed December 9, 1997).
10.28 Right to Purchase Agreement dated November 21, 1997, between AMC
Entertainment, Inc., as Grantor, and Entertainment Properties
Trust as Offeree (Incorporated by reference from Exhibit 10.3 of
the Company's Current Report on Form 8-K (File No. 1-8747) filed
December 9, 1997.)
10.29 Lease dated November 21, 1997 between Entertainment Properties
Trust, as Landlord, and American Multi-Cinema, Inc., as Tenant
(Incorporated by reference from Exhibit 10.4 of the Company's
Current Report on Form 8-K (File No. 1-8747) filed December 9,
1997). (Similar leases have been entered into with respect to
the following theatres: Mission Valley 20, Promenade 16, Ontario
Mills 30, Lennox 24, West Olive 16, Studio 30, Huebner Oaks 24,
First Colony 24, Oak View 24, Leawood Town Center 20, South
Burrington 30, Gulf Pointe 30, Cantera 30, Mesquite 30 and
Hampton Town Center 24.
10.30 Guaranty of Lease dated November 21, 1997 between AMC
Entertainment, Inc., as Guarantor, and Entertainment Properties
Trust, as Owner (Incorporated by reference from Exhibit 10.5 of
the Company's Current Report on Form 8-K (File No. 1-8747) filed
December 9, 1997, (Similar guaranties have been entered into with
respect to the following theatres: Mission Valley 20, Promenade
16, Ontario Mills 30, Lennox 24, West Olive 16, Studio 30,
Huebner Oaks 24, First Colony 24, Oak View 24, Leawood Town
Center 20, South Burrigton 30, Gulf Pointe 30, Cantera 30,
Mesquete 30 and Hampton Town Center 24.
10.31 Promissory Note dated August 11, 1998, made by Peter C. Brown,
payable to AMC Entertainment Inc. (Incorporated by reference from
Exhibit 10.1 to the Company's Form 10-Q (File No. 1-8747) for the
quarter ended October 1, 1998).
10.32 Promissory Note dated September 14, 1998, made by Phillip M.
Singleton, payable to AMC Entertainment Inc. (incorporated by
reference from Exhibit 10.2 to the Company's Form 10-Q
(File No. 1-8747) for the quarter ended October 1, 1998).
II-5
<PAGE>
10.33 Employment agreement between AMC Entertainment Inc., American
Multi-Cinema, Inc. and Richard T. Walsh dated February 1, 1999
(Incorporated by reference from Exhibit 10.4 to the Company's
Form 10-Q (File No. 1-8747) for the quarter ended December 31,
1998).
10.34 AMC Entertainment Inc. 1994 Stock Option and Incentive Plan, as
amended (Incorporated by reference from Exhibit 10.5 to the
Company's Form 10-Q (File No. 1-8747) for the quarter ended
December 31, 1998).
10.35 Form of Non-Qualified (Non-ISO) Stock Option Agreement used in
November 13, 1998 option grants to Mr. Stanley H. Durwood, Mr.
Peter C. Brown and Mr. Philip M. Singleton (Incorporated by
reference from Exhibit 10.6 to the Company's Form 10-Q (File No.
1-8747) for the quarter ended December 31, 1998).
*12.1 Computation of ratio of earnings to fixed charges
*12.2 Computation of ratio of EBITDA to net interest expense.
16 Letter regarding change in certifying accountant (Incorporated by
reference from Exhibit 19.6 to the Company's Form 10-Q (File No.
0-12429) for the quarter ended July 2, 1992).
*21 Subsidiaries of AMC Entertainment Inc.
*23.1 Consent of PricewaterhouseCoopers LLP to the use of their report
of independent accountants.
*23.2 Form of Consent of Lathrop & Gage L.C. to the use of their
opinion filed as Exhibit 5.1 (Incorporated in Exhibit 5.1)
(executed opinion to be filed by amendment).
*23.3 Form of Consent of Cravath, Swaine & Moore to the use of their
opinion filed as Exhibit 5.2 (Incorporated in Exhibit 5.2)
(executed opinion to be filed by amendment).
*24 Power of Attorney (included on signature page).
**25 Statement of Eligibility and Authorization of The Bank of New
York, Trustee.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Notice of Guaranteed Delivery.
*99.3 Form of Letter to Clients.
*99.4 Form of Letter to Nominees.
___________________
</TABLE>
* Filed herewith
** To be filed by amendment
II-6
<PAGE>
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes:
(a) To file, during period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
PROVIDED, HOWEVER, that paragraphs (a)(i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11, or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information
II-7
<PAGE>
contained in documents filed subsequent to the effective date of the
registration statement through the date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a post-
effective amendment all information concerning a transaction, and the company
being acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, AMC
Entertainment Inc. has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Kansas City and the State of Missouri, on the 5th day of March, 1999.
AMC ENTERTAINMENT INC.
By: /s/ Peter C. Brown
Peter C. Brown, Co-Chairman of the Board,
President and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of Peter C. Brown, Philip M.
Singleton and Richard L. Obert, and each of them, with full power to act without
the other, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments or post-effective
amendments to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto each such attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that each such
attorney-in-fact and agent, or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
TITLE DATE
<S> <C> <C>
/s/ Stanley H. Durwood
- -------------------------- Co-Chairman of the Board, Chief Executive 3/5/99
Stanley H. Durwood Officer and Director
/s/ Peter C. Brown
- -------------------------- Co-Chairman of the Board, President, 3/5/99
Peter C. Brown Chief Financial Officer and Director
/s/ Philip M. Singleton
- -------------------------- Executive Vice President, Chief Operating 3/5/99
Philip M. Singleton Officer and Director
/s/ Paul E. Vardeman
- -------------------------- Director 3/5/99
Paul E. Vardeman
/s/ Charles J. Egan, Jr.
- -------------------------- Director 3/5/99
Charles J. Egan, Jr.
/s/ William T. Grant II
- -------------------------- Director 3/5/99
William T. Grant II
/s/ John P. Mascotte
- -------------------------- Director 3/5/99
John P. Mascotte
/s/ Richard L. Obert
- -------------------------- Senior Vice President, Chief Accounting 3/5/99
Richard L. Obert and Information officer
</TABLE>
II-9
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- -------------- --------------
<S> <C>
2.1 Agreement and Plan of Merger dated as of March 31, 1997
between AMC Entertainment Inc. and Durwood, Inc. (together
with Exhibit A, "Pre-Merger Action Plan") (Incorporated by
reference from Exhibit 2.1 to the Company's Registration
Statement on Form S-4 (File No. 333-25755) filed April 24,
1997).
2.2 Stock Agreement among AMC Entertainment Inc. and Stanley H.
Durwood, his children: Carol D. Journagan, Edward D. Durwood,
Thomas A. Durwood, Elissa D. Grodin, Brian H. Durwood and
Peter J. Durwood (the "Durwood Children"), The Thomas A. and
Barbara F. Durwood Family Investment Partnership (the "TBD
Partnership") and Delta Properties, Inc. (Incorporated by
reference from Exhibit 99.3 to Amendment No. 2 to Schedule
13D of Stanley H. Durwood filed September 30, 1997).
2.3 Registration Agreement among AMC Entertainment Inc. and the
Durwood Children and Delta Properties, Inc. (Incorporated by
reference from Exhibit 99.2 to Amendment No. 2 to Schedule
13D of Stanley H. Durwood filed September 30, 1997).
2.4(a) Indemnification Agreement dated as of March 31, 1997 among
AMC Entertainment Inc., the Durwood Family Stockholders and
Delta Properties, Inc., together with Exhibit B thereto
(Escrow Agreement) (Incorporated by reference from Exhibit
2.4(a) to the Company's Registration Statement on Form S-4
(File No. 333-25755) filed April 24, 1997).
2.4(b) Durwood Family Settlement Agreement (Incorporated by
reference from Exhibit 99.1 to Schedule 13D of Durwood, Inc.
and Stanley H. Durwood filed May 7, 1996).
2.4(c) First Amendment to Durwood Family Settlement Agreement
(Incorporated by reference from Exhibit 2.4(c) to the
Company's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
2.4(d) Second Amendment to Durwood Family Settlement Agreement dated as
of August 15, 1997, among Stanley H. Durwood, the Durwood
Children and the TBD Partnership (Incorporated by reference from
Exhibit 99.7 to Amendment No. 2 to Schedule 13D of Stanley H.
Durwood filed September 30, 1997).
3.1 Amended and Restated Certificate of Incorporation of AMC
Entertainment Inc. (as amended on December 2, 1997)
(Incorporated by reference from Exhibit 3.1 to the Company's
Form 10-Q (File No. 1-8747) dated January 1, 1998).
3.2 Bylaws of AMC Entertainment Inc. (Incorporated by reference
from Exhibit 3.3 to the Company's Form 10-Q (File No.
0-12429) for the quarter ended December 26, 1996).
4.1(a) Amended and Restated Credit Agreement dated as of April 10,
1997, among AMC Entertainment Inc., as the Borrower, The Bank
of Nova Scotia, as Administrative Agent, and Bank of America
National Trust and Savings Association, as Documentation
Agent, and Various Financial Institutions, as Lenders,
together with the following exhibits thereto: significant
subsidiary guarantee, form of notes, form of pledge agreement
and form of subsidiary pledge agreement (Incorporated by
reference from Exhibit 4.3 to the Company's Registration
Statement on Form S-4 (File No. 333-25755) filed April 24,
1997).
4.1(b) Second Amendment, dated January 16, 1998, to Amended and
Restated Credit Agreement dated as of April 10, 1997
(Incorporated by Reference from Exhibit 4.2 to the Company's
Form 10-Q (File No. 1-8747) for the quarter ended January 1,
1998).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.2(a) Indenture dated March 19, 1997, respecting AMC Entertainment
Inc.'s 9-1/2% Senior Subordinated Notes due 2009 (Incorporated by
reference from Exhibit 4.1 to the Company's Form 8-K (File No.
1-8747) dated March 19, 1997).
4.2(b) First Supplemental Indenture respecting AMC Entertainment Inc.'s
9-1/2% Senior Subordinated Notes due 2009 (Incorporated by
reference from Exhibit 4.4(b) to Amendment No. 2. to the
Company's Registration Statement on Form S-4 (File No.333-29155)
filed August 4, 1997).
4.3 Indenture dated January 27, 1999, respecting AMC Entertainment
Inc.'s 9-1/2% Senior Subordinated Notes due 2011 (Incorporated by
reference from Exhibit 4.3 to the Company's 10-Q (File No.
1-8747) for the quarter ended December 31, 1998).
4.4 Registration Rights Agreement, dated January 27, 1999, respecting
AMC Entertainment Inc.'s 9-1/2% Senior Subordinated Notes due 2011
(Incorporated by reference from Exhibit 4.4 to the Company's 10-Q
(File No. 1-8747) for the quarter ended December 31, 1998).
4.5 In accordance with Item 601(b)(4)(iii)(A) of Regulation S-K,
certain instruments respecting long term debt of the Registrant
have been omitted but will be furnished to the Commission upon
request.
*5.1 Form of Opinion of Lathrop & Gage L.C.
*5.2 Form of Opinion of Cravath, Swaine & Moore
10.1 AMC Entertainment Inc. 1983 Stock Option Plan (Incorporated by
reference from Exhibit 10.1 to the Company's Form S-1 (File No.
2-84675) filed June 22, 1983).
10.2 AMC Entertainment Inc. 1984 Employee Stock Purchase Plan
(Incorporated by reference from Exhibit 28.1 to the Company's
Form S-8 (File No. 2-97523) filed July 3, 1984).
10.3 AMC Entertainment Inc. 1984 Employee Stock Option Plan
(Incorporated by reference from Exhibit 28.1 to the Company's
S-8 and S-3 (File No. 2-97522) filed July 3, 1984).
10.3(a) AMC Entertainment Inc. 1994 Stock Option and Incentive Plan,
as amended (Incorporated by reference from Exhibit 10.1 to
the Company's Form 10-Q (File No. 0-12429) for the quarter
ended December 26, 1996).
10.3(b) Form of Non-Qualified (NON-ISO) Stock Option Agreement
(Incorporated by reference from Exhibit 10.2 to the Company's
Form 10-Q (File No. 0-12429) for the quarter ended December
26, 1996).
10.4 American Multi-Cinema, Inc. Savings Plan, a defined
contribution 401(k) plan, restated January 1, 1989, as
amended (Incorporated by reference from Exhibit 10.6 to the
Company's Form S-1 (File No. 33-48586) filed June 12, 1992,
as amended).
10.5(a) Defined Benefit Retirement Income Plan for Certain Employees
of American Multi-Cinema, Inc. dated January 1, 1989, as
amended (Incorporated by reference from Exhibit 10.7 to the
Company's Form S-1 (File No. 33-48586) filed June 12, 1992,
as amended).
10.5(b) AMC Supplemental Executive Retirement Plan dated January 1,
1994 (Incorporated by reference from Exhibit 10.7(b) to the
Company's Form 10-K (File No. 0-12429) for the fiscal year
ended March 30, 1995).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.6 Employment Agreement between American Multi-Cinema, Inc. and
Philip M. Singleton (Incorporated by reference from Exhibit
10.2 to the Company's Form 10-Q (File No. 1-8747) for the
quarter ended December 31, 1998).
10.7 Employment Agreement between American Multi-Cinema, Inc. and
Peter C. Brown (Incorporated by reference from Exhibit 10.1
to the Company's Form 10-Q (File No.1-8747) for the quarter
ended December 31, 1998).
10.8 Disability Compensation Provisions respecting Stanley H.
Durwood (Incorporated by reference from Exhibit 10.12 to the
Company's Form S-1 (File No. 33-48586) filed June 12, 1992,
as amended).
10.9 Executive Medical Expense Reimbursement and Supplemental
Accidental Death or Dismemberment Insurance Plan, as restated
effective as of February 1, 1991 (Incorporated by reference
from Exhibit 10.13 to the Company's Form S-1 (File No.
33-48586) filed June 12, 1992, as amended).
10.10 Division Operations Incentive Program (incorporated by
reference from Exhibit 10.15 to the Company's Form S-1 (File
No. 33-48586) filed June 12, 1992, as amended).
10.11 Partnership Interest Purchase Agreement dated May 28, 1993,
among Exhibition Enterprises Partnership, Cinema Enterprises,
Inc., Cinema Enterprises II, Inc., American Multi-Cinema,
Inc., TPI Entertainment, Inc. and TPI Enterprises, Inc.
(Incorporated by reference from Exhibit 10.29 to the
Company's Form 10-K (File No. 1-8747) for the fiscal year
ended April 1, 1993).
10.12 Mutual Release and Indemnification Agreement dated May 28,
1993, among Exhibition Enterprises Partnership, Cinema
Enterprises, Inc., American Multi-Cinema, Inc., TPI
Entertainment, Inc. and TPI Enterprises, Inc. (Incorporated
by reference from Exhibit 10.30 to the Company's Form 10-K
(File No. 1-8747) for the fiscal year ended April 1, 1993).
10.13 Assignment and Assumption Agreement between Cinema
Enterprises II, Inc. and TPI Entertainment, Inc.
(Incorporated by reference from Exhibit 10.31 to the
Company's Form 10-K (File No. 1-8747) for the fiscal year
ended April 1, 1993).
10.14 Confidentiality Agreement dated May 28,1993, among TPI
Entertainment, Inc., TPI Enterprises, Inc., Exhibition
Enterprises Partnership, Cinema Enterprises, Inc., Cinema
Enterprises II, Inc. and American Multi-Cinema, Inc.
(Incorporated by reference from Exhibit 10.32 to the
Company's Form 10-K (File No. 1-8747) for the fiscal year
ended April 1, 1993).
10.15 Termination Agreement dated May 28, 1993, among TPI
Entertainment, Inc., TPI Enterprises, Inc. Exhibition
Enterprises Partnership, American Multi-Cinema, Inc., Cinema
Enterprises, Inc., AMC Entertainment Inc., Durwood, Inc.,
Stanley H. Durwood and Edward D. Durwood (Incorporated by
reference from Exhibit 10.33 to the Company's Form 10-K (File
No. 1-8747) for the fiscal year ended April 1, 1993).
10.16 Promissory Note dated June 16, 1993, made by Thomas L. Velde
and Katherine G. Terwilliger, husband and wife, payable to
American Multi-Cinema, Inc. (Incorporated by reference from
Exhibit 10.34 to the Company's Form 10-K (File No. 1-8747)
for the fiscal year ended April 1, 1993).
10.17 Second Mortgage dated June 16, 1993, among Thomas L. Velde,
Katherine G. Terwilliger and American Multi-Cinema, Inc.
(Incorporated by reference from Exhibit 10.35 to the
Company's Form 10-K (File No. 1-8747) for the fiscal year
ended April 1, 1993).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.18 Summary of American Multi-Cinema, Inc. Executive Incentive
Program (Incorporated by reference from Exhibit 10.36 to the
Company's Registration Statement on Form S-2 (File No.
33-51693) filed December 23, 1993).
10.19 AMC Non-Qualified Deferred Compensation Plans (Incorporated
by reference from Exhibit 10.37 to Amendment No. 2 to the
Company's Registration Statement on Form S-2 (File No.
33-51693) filed February 18, 1994).
10.20 Employment Agreement between AMC Entertainment Inc., American
Multi-Cinema, Inc. and Stanley H. Durwood (Incorporated by
reference from Exhibit 10.32 to the Company's Form 10-K (File
No. 0-12429) for the fiscal year ended March 28, 1996).
10.21 Real Estate Contract dated November 1, 1995 among Richard M.
Fay, Mary B. Fay and American Multi-Cinema, Inc.
(Incorporated by reference from Exhibit 10.33 to the
Company's Form 10-K (File No. 0-12429) for the fiscal year
ended March 28, 1996).
10.22 American Multi-Cinema, Inc. Retirement Enhancement Plan
(Incorporated by reference from Exhibit 10.26 to the
Company's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
10.23 Employment Agreement between American Multi-Cinema, Inc. and
Richard M. Fay (Incorporated by reference from Exhibit 10.3
to the Company's Form 10-Q (File No. 1-8747) for the quarter
ended December 31, 1998).
10.24 American Multi-Cinema, Inc. Executive Savings Plan
(Incorporated by reference from Exhibit 10.28 to the
Company's Registration Statement on Form S-4 (File No.
333-25755) filed April 24, 1997).
10.25 Limited Partnership Agreement of Planet Movies Company, L.P.
dated October 17, 1997 (Incorporated by reference from
Exhibit 10.25 to the Company's Form 10-K (File No. 1-8747)
for the fiscal year ended April 2, 1998).
10.26 Agreement of Sale and Purchase dated November 21, 1997 among
American Multi-Cinema, Inc. and AMC Realty, Inc., as Seller,
and Entertainment Properties Trust, as Purchaser
(Incorporated by reference from Exhibit 10.1 of the Company's
Current Report on Form 8-K (File No. 1-8747) filed December
9, 1997).
10.27 Option Agreement dated November 21, 1997 among American
Multi-Cinema, Inc. and AMC Realty, Inc., as Seller, and
Entertainment Properties Trust, as Purchaser (Incorporated by
reference from Exhibit 10.2 of the Company's Current Report
on Form 8-K (File No. 1-8747) filed December 9, 1997).
10.28 Right to Purchase Agreement dated November 21, 1997, between
AMC Entertainment, Inc., as Grantor, and Entertainment
Properties Trust as Offeree (Incorporated by reference from
Exhibit 10.3 of the Company's Current Report on Form 8-K
(File No. 1-8747) filed December 9, 1997.)
10.29 Lease dated November 21, 1997 between Entertainment
Properties Trust, as Landlord, and American Multi-Cinema,
Inc., as Tenant (Incorporated by reference from Exhibit 10.4
of the Company's Current Report on Form 8-K (File No. 1-8747)
filed December 9, 1997). (Similar leases have been entered
into with respect to the following theatres: Mission Valley
20, Promenade 16, Ontario Mills 30, Lennox 24, West Olive 16,
Studio 30, Huebner Oaks 24, First Colony 24, Oak View 24,
Leawood Town Center 20, South Burrington 30, Gulf Pointe 30,
Cantera 30, Mesquite 30 and Hampton Town Center 24.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.30 Guaranty of Lease dated November 21, 1997 between AMC
Entertainment, Inc., as Guarantor, and Entertainment
Properties Trust, as Owner (Incorporated by reference from
Exhibit 10.5 of the Company's Current Report on Form 8-K
(File No. 1-8747) filed December 9, 1997, (Similar guaranties
have been entered into with respect to the following
theatres: Mission Valley 20, Promenade 16, Ontario Mills 30,
Lennox 24, West Olive 16, Studio 30, Huebner Oaks 24, First
Colony 24, Oak View 24, Leawood Town Center 20, South
Burrigton 30, Gulf Pointe 30, Cantera 30, Mesquete 30 and
Hampton Town Center 24.
10.31 Promissory Note dated August 11, 1998, made by Peter C.
Brown, payable to AMC Entertainment Inc. (Incorporated by
reference from Exhibit 10.1 to the Company's Form 10-Q (File
No. 1-8747) for the quarter ended October 1, 1998).
10.32 Promissory Note dated September 14, 1998, made by Phillip M.
Singleton, payable to AMC Entertainment Inc. (Incorporated by
reference from Exhibit 10.2 to the Company's Form 10-Q (File
No. 1-8747) for the quarter ended October 1, 1998).
10.33 Employment agreement between AMC Entertainment Inc., American
Multi-Cinema, Inc. and Richard T. Walsh dated February 1,
1999 (Incorporated by reference from Exhibit 10.4 to the
Company's Form 10-Q (File No. 1-8747) for the quarter ended
December 31, 1998).
10.34 AMC Entertainment Inc. 1994 Stock Option and Incentive Plan,
as amended (Incorporated by reference from Exhibit 10.5 to
the Company's Form 10-Q (File No. 1-8747) for the quarter
ended December 31, 1998).
10.35 Form of Non-Qualified (Non-ISO) Stock Option Agreement used
in November 13, 1998 option grants to Mr. Stanley H. Durwood,
Mr. Peter C. Brown and Mr. Philip M. Singleton (Incorporated
by reference from Exhibit 10.6 to the Company's Form 10-Q
(File No. 1-8747) for the quarter ended December 31, 1998).
*12.1 Computation of ratio of earnings to fixed charges
*12.2 Computation of ratio of EBITDA to net interest expense.
16 Letter regarding change in certifying accountant
(Incorporated by reference from Exhibit 19.6 to the Company's
Form 10-Q (File No. 0-12429) for the quarter ended July 2,
1992).
*21 Subsidiaries of AMC Entertainment Inc.
*23.1 Consent of PricewaterhouseCoopers LLP to the use of their report
of independent accountants.
*23.2 Form of Consent of Lathrop & Gage L.C. to the use of their
opinion filed as Exhibit 5.1 (Incorporated in Exhibit 5.1)
(executed opinion to be filed by amendment).
*23.3 Form of Consent of Cravath, Swaine & Moore to the use of their
opinion filed as Exhibit 5.2 (Incorporated in Exhibit 5.2)
(executed opinion to be filed by amendment).
*24 Power of Attorney (included on signature page).
**25 Statement of Eligibility and Authorization of The Bank of New
York, Trustee.
*99.1 Form of Letter of Transmittal.
*99.2 Form of Notice of Guaranteed Delivery.
*99.3 Form of Letter to Clients.
*99.4 Form of Letter to Nominees.
</TABLE>
_____________
* Filed herewith
** To be filed by amendment
<PAGE>
EXHIBIT 5.1
March __, 1999
AMC Entertainment Inc.
106 West 14th Street
Kansas City, Missouri 64105
Re: AMC Entertainment Inc. 9-1/2% Exchange Senior Subordinated Notes due
February 1, 2001
Ladies and Gentlemen:
We have acted as counsel to AMC Entertainment Inc., a corporation
organized under the laws of the State of Delaware (the "Company"), in
connection with the registration of $225,000,000 principal amount of 9-1/2%
Exchange Senior Subordinated Notes due 2011 of the Company (the "Exchange
Notes"), pursuant to the Registration Statement on Form S-4 (Registration No.
333_____, as amended to date, the "Registration Statement") filed with the
Securities and Exchange Commission by the Company under the Securities Act of
1933 (the "Act").
As such counsel, we have examined the Registration Statement, the
Indenture dated as of January 27, 1997 between The Bank of New York, as
Trustee, and the Company, and have made such other factual and legal
investigations as we considered necessary or appropriate for purposes of this
opinion. We are familiar with the proceedings undertaken by the Company in
connection with the authorization and issuance of the Exchange Notes.
As to matters of fact, we have relied, to the extent we deem proper,
upon the representations and certificates of officers of the Company and upon
certain certificates of and telephone conversations with public officials.
As to matters of law, our opinion is limited to matters relating to the laws
of the State of Missouri and the United States and to the General Corporation
Law of the State of Delaware.
We have assumed due authorization execution and delivery of the
Indenture by The Bank of New York and the enforceability of the Indenture
against The Bank of New York. We have also assumed, to the extent we deem
proper, the correctness of all statements of fact contained in all
agreements, certificates and other documents examined by us; the correctness
of all statements of fact made in response to our inquiries by officers and
other representatives of the Company and by public officials; the legal
capacity of all natural persons; the genuineness of all signatures on all
agreements and other documents examined by us; the authenticity of all
documents submitted to us as originals and the conformity to original
documents of all documents submitted to us as copies.
Based upon such examinations and investigations it is our opinion that:
(i) the Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware; and
<PAGE>
(ii) the Exchange notes have been duly authorized for issuance
by the Company and, when the Registration Statement has become
effective under the Act and the Exchange Notes have been duly executed
and authenticated in accordance with the Indenture and issued as
contemplated in the Registration Statement, will constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and
remedies and to general principles of equity, whether such
enforceability is considered in a proceeding at law or in equity, and
by the discretion of the courts before which any proceeding therefor
may be brought.
The foregoing is subject to the following comments and qualifications:
We note that the Indenture and the Exchange Notes provide that they are
governed by the laws of the State of New York. In giving our opinion in
numbered paragraph (ii) above, we have relied as to all matters of New York
law solely on the opinion, dated _________________, of Cravath, Swain &
Moore, and we believe such reliance to be reasonable.
We express no opinions other than as herein expressly set forth, and no
expansion of our opinions may be made by implication or otherwise. This
letter is solely for your use in the transaction indicated above and may not
be furnished to any other person or entity without the express written
consent of this firm.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references made to this firm in such
Registration Statement. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7
of the Act.
Very truly yours,
2
<PAGE>
EXHIBIT 5.2
[Letterhead of]
CRAVATH, SWAINE & MOORE
[New York Office]
March ___,1999
AMC Entertainment Inc.
106 West 14th Street
Kansas City, Missouri 64105
Dear Sirs:
In connection with the registration under the Securities Act of
1933 (the "Act") of $225,000,000 principal amount of 9-1/2% Exchange Senior
Subordinated Notes Due 2011 (the "Securities") of AMC Entertainment Inc., a
Delaware corporation (the "Company"), we have examined such corporate
records, certificates and other documents, and such questions of law, as we
have considered necessary or appropriate for the purposes of this opinion.
We acted as counsel for the initial purchasers in connection with the
offering by the Company of its 9-1/2% Senior Subordinated Notes Due 2011, in
exchange for which the Securities are to be issued, and it is in that
capacity that we are delivering this opinion.
Upon the basis of the aforementioned examination, we advise you
that, in our opinion, when the Registration Statement has become effective
under the Act and the
<PAGE>
AMC Entertainment Inc. -2-
Securities have been duly executed and authenticated in accordance with the
Indenture relating to the Securities and issued as contemplated in the
Registration Statement, the Securities will constitute valid and legally
binding obligations of the Company, subject to applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer, and other
similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether considered in a proceeding in equity or at law.
The foregoing opinion is limited to the laws of the State of New
York, and we are expressing no opinion as to the effect of the laws of any
other jurisdiction. We have assumed that the Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Delaware, that the Securities have been duly authorized for issuance by
the Company under the laws of the State of Delaware, that the Securities,
when issued, will constitute valid and legally binding obligations of the
Company under the laws of the State of Delaware, that the Indenture relating
to the Securities has been duly authorized, executed and delivered by the
Company under the laws of the State of Delaware, and that the indenture
constitutes a valid and legally binding obligation of the Company under the
laws of the State of Delaware. We understand that Lathrop & Gage L.C.
<PAGE>
AMC Entertainment Inc. -3-
is giving you their opinion, dated March ___, 1999, as to such matters.
Also, we have assumed that the Indenture has been duly authorized,
executed and delivered by the Trustee thereunder, an assumption which we have
not independently verified.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the references to us under the heading
"Validity of Notes" in the Prospectus. In giving such consent, we do not
thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Act.
Very truly yours,
404A
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES EXHIBIT 12.1
RATIO OF EARNINGS TO FIXED CHARGES
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ACTUAL ACTUAL PRO FORMA YEAR
39 WEEKS ENDED 39 WEEKS ENDED 39 WEEKS ENDED (52 WEEKS) ENDED
DECEMBER 31, DECEMBER 31, JANUARY 1, APRIL 2,
1998 1998 1998 1998
------ ------ ------ ------
<S> <C> <C> <C> <C>
EARNINGS
Earnings (loss) before income taxes and extraordinary item $ (2,490) $ 4,915 $ (34,919) $ (50,723)
Add: Fixed charges (below) 78,895 71,490 57,659 89,041
Depreciation on capitalized interest 243 243 894 1,016
Less: Interest capitalized (below) (5,585) (5,585) (5,879) (8,264)
Undistributed (income) loss-Joint Ventures - - (161) (133)
------------- ------------- ------------ ------------
Earnings for ratio 71,063 71,063 17,594 30,937
------------- ------------- ------------ ------------
FIXED CHARGES:
Interest on borrowings 27,249 19,844 20,513 35,977
Interest on capital leases 6,373 6,373 7,007 9,326
Interest capitalized 5,585 5,585 5,879 8,264
Amortization of debt issuance costs - - 13 13
Estimated interest portion of rental expense(1) 39,688 39,688 24,247 35,461
50% share of EEP:
Interest on borrowings(2) - - - -
Interest on capital leases - - - -
Interest capitalized - - - -
Estimated interest portion of rent(1) - - - -
------------- ------------- ------------- ------------
Fixed charges 78,895 71,490 57,659 89,041
------------- ------------- ------------- ------------
FIXED CHARGES IN EXCESS OF EARNINGS $ 7,832 $ 427 $ 40,065 $ 58,104
------------- ------------- ------------- ------------
------------- ------------- ------------- ------------
- - - -
------------- ------------- ------------- ------------
------------- ------------- ------------- ------------
RATIO OF EARNINGS TO FIXED CHARGES
ACTUAL YEAR ACTUAL YEAR ACTUAL YEAR ACTUAL YEAR
(52 WEEKS) (53 WEEKS) (52 WEEKS) ENDED (52 WEEKS) ENDED
ENDED APRIL 2, ENDED APRIL 3, MARCH 28, MARCH 30,
1998 1997 1996 1995
------ ------ ------ ------
EARNINGS
Earnings (loss) before income taxes and extraordinary item $ (41,099) $ 31,895 $ 46,671 $ 24,978
Add: Fixed charges (below) 79,417 52,231 54,090 57,599
Depreciation on capitalized interest 1,016 410 298 289
Less: Interest capitalized (below) (8,264) (3,344) (3,003) (870)
Undistributed (income) loss-Joint Ventures (133) (191) (8) (335)
------------- ------------- ------------ -------------
Earnings for ratio 30,937 81,001 98,048 81,661
------------- ------------- ------------ -------------
FIXED CHARGES:
Interest on borrowings 26,353 12,016 18,099 24,502
Interest on capital leases 9,326 10,006 10,729 11,406
Interest capitalized 8,264 3,344 3,003 870
Amortization of debt issuance costs 13 178 655 796
Estimated interest portion of rental expense(1) 35,461 26,687 21,604 20,025
50% share of EEP:
Interest on borrowings(2) - - - -
Interest on capital leases - - - -
Interest capitalized - - - -
Estimated interest portion of rent(1) - - - -
------------- ------------- ------------ -------------
Fixed charges 79,417 52,231 54,090 57,599
------------- ------------- ------------ -------------
FIXED CHARGES IN EXCESS OF EARNINGS $ 48,480 $ - $ - $ -
------------- ------------- ------------ -------------
RATIO OF EARNINGS TO FIXED CHARGES - 1.55 1.81 1.42
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
ACTUAL YEAR
(52 WEEKS) ENDED
MARCH 31,
1994
-----
<S> <C>
EARNINGS
Earnings (loss) before income taxes and extraordinary item $ 27,412
Add: Fixed charges (below) 57,963
Depreciation on capitalized interest 319
Less: Interest capitalized (below) (52)
Undistributed (income) loss-Joint Ventures 202
--------------
Earnings for ratio 85,844
--------------
FIXED CHARGES:
Interest on borrowings 25,699
Interest on capital leases 10,676
Interest capitalized 49
Amortization of debt issuance costs 724
Estimated interest portion of rental expense(1) 19,481
50% share of EEP:
Interest on borrowings(2) 565
Interest on capital leases 180
Interest capitalized 3
Estimated interest portion of rent(1) 586
--------------
Fixed charges 57,963
--------------
FIXED CHARGES IN EXCESS OF EARNINGS $ -
--------------
RATIO OF EARNINGS TO FIXED CHARGES 1.48
--------------
--------------
</TABLE>
- ---------------------------
The ratio of earnings to fixed charges represents the number of times fixed
charges are covered by earnings. For purposes of computing this ratio, earnings
consist of income (loss) before income taxes and extraordinary item, plus fixed
charges except capitalized interest. Fixed charges consist of interest expense,
amortization of debt issuance costs, and one-third of rent expense on operating
leases, estimated by the Company to be representative of the interest factor
attributable to such rent expense. For fiscal 1994, fixed charges includes the
Company's share (50%) of the fixed charges of EEP prior to the May 28, 1993
acquisition of the remaining 50% partnership interest.
(1) Used one-third of rent expense on operating leases.
(2) Interest expense including interest on promissory note payable to AMC, net
of interest capitalized.
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES EXHIBIT 12.2
RATIO OF EBITDA TO NET INTEREST EXPENSE
RATIO OF EBITDAR TO NET INTEREST EXPENSE AND RENT
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA ACTUAL ACTUAL PRO FORMA YEAR ACTUAL YEAR
39 WEEKS ENDED 39 WEEKS ENDED 39 WEEKS ENDED (52 WEEKS) ENDED (52 WEEKS)
DECEMBER 31, DECEMBER 31, JANUARY 1, APRIL 2, ENDED APRIL 2,
1998 1998 1998 1998 1998
-------------- -------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
EBITDA $ 92,260 $ 92,260 $ 85,550 $ 106,901 $ 106,901
Rent 119,065 119,065 72,742 106,383 106,383
------------ ------------ ----------- ------------ ------------
EBITDAR $ 211,325 $ 211,325 $ 158,292 $ 213,284 $ 213,284
Interest on borrowings 27,249 19,844 20,513 35,977 26,353
Interest on capital leases 6,373 6,373 7,007 9,326 9,326
Interest Income (649) (649) (309) (515) (515)
------------ ------------ ----------- ------------ ------------
Net Interest Expense $ 32,973 $ 25,568 $ 27,211 $ 44,788 $ 35,164
Rent 119,065 119,065 72,742 106,383 106,383
------------ ------------ ----------- ------------ ------------
Net Interest Expense Plus Rent 152,038 144,633 99,953 151,171 141,547
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
RATIO OF EBITDA TO NET INTEREST EXPENSE 2.80 3.61 3.14 2.39 3.04
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
RATIO OF EBITDAR TO NET INTEREST EXPENSE 1.39 1.46 1.58 1.41 1.51
AND RENT
------------ ------------ ----------- ------------ ------------
------------ ------------ ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
ACTUAL YEAR ACTUAL YEAR ACTUAL YEAR ACTUAL YEAR
(53 WEEKS) (52 WEEKS) ENDED (52 WEEKS) ENDED (52 WEEKS) ENDED
ENDED APRIL 3, MARCH 28, MARCH 30, MARCH 31,
1997 1996 1995 1994
-------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
EBITDA $ 112,948 $ 112,555 $ 88,942 $ 98,784
Rent 80,061 64,813 60,076 58,443
----------- ----------- ----------- -----------
EBITDAR $ 193,009 $ 177,368 $ 149,018 $ 157,227
Interest on borrowings 12,016 18,099 24,502 25,699
Interest on capital leases 10,006 10,729 11,406 10,676
Interest Income (569) (6,491) (8,004) (2,169)
----------- ----------- ----------- -----------
Net Interest Expense $ 21,453 $ 22,337 $ 27,904 $ 34,206
Rent 80,061 64,813 60,076 58,443
----------- ----------- ----------- -----------
Net Interest Expense Plus Rent 101,514 87,150 87,980 92,649
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIO OF EBITDA TO NET INTEREST EXPENSE 5.26 5.04 3.19 2.89
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
RATIO OF EBITDAR TO NET INTEREST EXPENSE 1.90 2.04 1.69 1.70
AND RENT
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
<PAGE>
EXHIBIT 21
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
AMC ENTERTAINMENT INC.
American Multi-Cinema, Inc.
AMC Entertainment International, Inc.
AMC Entertainment International Limited
AMC Entertainment Espana S.A.
Actividades Multi-Cinemas E Espectaculos, LDA
AMC Theatres of U.K., Limited
AMC De Mexico, S.A., De C.V.
AMC Europe S.A.
National Cinema Network, Inc.
AMC Realty, Inc.
Centertainment, Inc.
Centertainment Development, Inc.
Power & Light District, LLC
Pavilion Holdings LLC
AMC License Corp.
AMCPH Holdings, Inc.
All subsidiaries are wholly-owned.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration
statement on Form S-4 of our report dated May 1, 1998, on our audits of the
financial statements of AMC Entertainment Inc. and subsidiaries as of
April 2, 1998 and April 3, 1997, and the year (52 weeks) ended April 2, 1998,
the year (53 weeks) ended April 3, 1997 and the year (52 weeks) ended
March 28, 1996 which report is incorporated by reference in this Form S-4 and
is included in AMC Entertainment Inc.'s Annual Report on Form 10-K for the year
ended April 2, 1998. We also consent to the references to our firm under the
caption "Experts".
/s/ PRICEWATERHOUSECOOPERS LLP
Kansas City, Missouri
March 9, 1999
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FOR
9-1/2% SENIOR SUBORDINATED NOTES
OF
AMC ENTERTAINMENT INC.
PURSUANT TO THE
EXCHANGE OFFER
IN RESPECT OF
ALL OF ITS OUTSTANDING 9-1/2% SENIOR SUBORDINATED
NOTES DUE FEBRUARY 1, 2011
FOR
9-1/2% EXCHANGE SENIOR SUBORDINATED
NOTES DUE FEBRUARY 1, 2011
---------------
Pursuant to the Prospectus Dated , 1999
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON _________,
1999 UNLESS THE EXCHANGE OFFER IS EXTENDED (THE "EXPIRATION DATE").
TENDERS OF INITIAL NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M. ON
THE EXPIRATION DATE.
TO: THE BANK OF NEW YORK AS EXCHANGE AGENT
<TABLE>
<CAPTION>
By Mail: By Facsimile: By Hand or Overnight Courier:
<S> <C> <C>
The Bank of New York (212) The Bank of New York
101 Barclay Street, 7 East 101 Barclay Street, 7 East
New York, New York 10268 Confirm by Telephone: New York, New York 10268
Attention: Attention:
Reorganization Section (212) Reorganization Section
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET
FORTH ABOVE WILL NOT CONSTITUTE A VALID TENDER OF 9-1/2% SENIOR SUBORDINATED
NOTES DUE 2011 (THE "INITIAL NOTES"). THE INSTRUCTIONS CONTAINED HEREIN
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE EXCHANGE NOTES FOR THEIR
INITIAL NOTES PURSUANT TO THE EXCHANGE OFFER MUST VALIDLY TENDER (AND NOT
WITHDRAW) THEIR INITIAL NOTES TO THE EXCHANGE AGENT PRIOR TO THE EXPIRATION
DATE.
<PAGE>
By execution hereof, the undersigned acknowledges receipt of the
Prospectus dated , 1998, of AMC Entertainment Inc., a Delaware
corporation (the "Company"), as the same may be amended from time to time
(the "Prospectus"), which, together with this Letter of Transmittal and the
instructions hereto (the "Letter of Transmittal"), constitute the Company's
offer (the "Exchange Offer") to exchange $1,000 principal amount of its
9-1/2% Exchange Senior Subordinated Notes due February 1, 2011 (the "Exchange
Notes") that have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus constitutes a part, for each $1,000 principal amount of its
outstanding Initial Notes, upon the terms and subject to the conditions set
forth in the Prospectus.
Unless the context otherwise requires, the term "Holder" means any
person in whose name Initial Notes are registered on the register maintained
by the Trustee or any other person who has obtained a properly completed bond
power from the registered holder, or any person whose Initial Notes are held
of record by The Depository Trust Company ("DTC" or the "Book-Entry Transfer
Facility") who desires to deliver such Initial Notes by book-entry transfer
at DTC.
This Letter of Transmittal is to be used by Holders of Initial Notes if:
(i) certificates representing Initial Notes are to be physically delivered to
the Exchange Agent herewith by Holders; (ii) tender of Initial Notes is to be
made by book-entry transfer to the Exchange Agent's account at DTC pursuant
to the procedures set forth in the Prospectus under the caption "The Exchange
Offer -- Book-Entry Transfer" by any financial institution that is a
participant in DTC and whose name appears on a security position listing as
the owner of Initial Notes or (iii) delivery of Initial Notes is to be made
according to the guaranteed delivery procedures set forth in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures,"
and, in each case, instructions are not being transmitted through the DTC
Automated Tender Program ("ATOP"). DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT.
In order to properly complete this Letter of Transmittal, a Holder must
(i) complete the box entitled "Method of Delivery" by checking one of the
three boxes therein and supplying the appropriate information, (ii) complete
the box entitled "Description of Initial Notes," (iii) if such Holder is an
Exchanging Dealer (as defined below) and wishes to receive additional copies
of the Prospectus for delivery in connection with resales of Exchange Notes,
check the applicable box, (iv) sign this Letter of Transmittal by completing
the box entitled "Please Sign Here", (v) if appropriate, check and complete
the boxes relating to the "Special Issuance Instructions" and "Special
Delivery Instructions," and (vi) complete the Substitute Form W-9. Each
Holder should carefully read the detailed Instructions below prior to
completing this Letter of Transmittal. See "The Exchange Offer -- Procedures
For Tendering" in the Prospectus.
DTC participants that are accepting the Exchange Offer should transmit
their acceptance to DTC, which will edit and verify the acceptance and
execute a book-entry transfer to the Exchange Agent's account at DTC. DTC
will then send an Agent's Message to the Exchange Agent for its acceptance.
Delivery of the Agent's Message by DTC will satisfy the terms of the Exchange
Offer as to execution and delivery of a Letter of Transmittal by the
participant identified in the Agent's Message.
2
<PAGE>
Holders who wish to tender their Initial Notes and who cannot deliver
their Initial Notes, the Letter of Transmittal, or any other required
documents to the Exchange Agent prior to the Expiration Date, or holders who
cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender of such Initial Notes in accordance with the guaranteed
delivery procedures set forth in the Prospectus under the caption "The
Exchange Offer--Guaranteed Delivery Procedures." See Instruction 2 below.
A Holder having Initial Notes registered in the name of a broker,
dealer, commercial bank, trust company or other nominee should contact such
broker, dealer, commercial bank, trust company or other nominee if they
desire to accept the Exchange Offer with respect to the Initial Notes so
registered.
THE EXCHANGE OFFER IS NOT BEING MADE TO (NOR WILL TENDERS OF INITIAL
NOTES BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS IN ANY JURISDICTION IN WHICH
THE MAKING OR ACCEPTANCE OF THE EXCHANGE OFFER WOULD NOT BE IN COMPLIANCE
WITH THE LAWS OF SUCH JURISDICTION.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Prospectus.
Your bank or broker can assist you in completing this form. The
instructions included with this Letter of Transmittal must be followed.
Questions and requests for assistance or for additional copies of the
Prospectus, this Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Exchange Agent, whose address and telephone number
appear on the front cover of this Letter of Transmittal. See Instruction 11
below.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with
respect to the Exchange Offer. HOLDERS WHO WISH TO ACCEPT THE EXCHANGE OFFER
AND TENDER THEIR INITIAL NOTES MUST COMPLETE THIS LETTER OF TRANSMITTAL IN
ITS ENTIRETY.
3
<PAGE>
METHOD OF DELIVERY
/ / CHECK HERE IF CERTIFICATES FOR TENDERED INITIAL NOTES ARE BEING DELIVERED
HEREWITH.
/ / CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH A BOOK-
ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Account Number: _________________ Transaction Code Number:
/ / CHECK HERE IF TENDERED INITIAL NOTES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT
PURSUANT TO INSTRUCTION 2 BELOW AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Eligible Institution that Guaranteed Delivery:
Delivered by Book-Entry Transfer (yes or no):
Account Number:_____________________ Transaction Code Number:
4
<PAGE>
List below the Initial Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, list the certificate numbers and
principal amounts on a separately executed schedule and affix the schedule to
this Letter of Transmittal. Tenders of Initial Notes will be accepted only in
principal amounts equal to $1,000 or integral multiples thereof.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
DESCRIPTION OF INITIAL NOTES
- -------------------------------------------------------------------------------
PRINCIPAL AMOUNT
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE TENDERED (IF LESS
(PLEASE FILL IN, IF BLANK) NUMBERS* THAN ALL)**
<S> <C> <C>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF INITIAL NOTES TENDERED
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered" and subject to the terms and conditions of the Prospectus, a
Holder will be deemed to have tendered the aggregate principal amount
represented by the Initial Notes listed. See Instruction 3.
5
<PAGE>
FOR EXCHANGING DEALERS ONLY:
/ / CHECK HERE AND PROVIDE THE INFORMATION REQUESTED BELOW IF YOU ARE
AN EXCHANGING DEALER (AS DEFINED BELOW) AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO, AS WELL AS ANY NOTICES FROM THE COMPANY TO SUSPEND AND RESUME USE OF
THE PROSPECTUS. BY TENDERING ITS INITIAL NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, EACH EXCHANGING DEALER AGREES TO USE ITS REASONABLE BEST EFFORTS
TO NOTIFY THE COMPANY OR THE EXCHANGE AGENT WHEN IT HAS SOLD ALL OF ITS
EXCHANGE NOTES. (IF NO EXCHANGING DEALERS CHECK THIS BOX, OR IF ALL
EXCHANGING DEALERS WHO HAVE CHECKED THIS BOX SUBSEQUENTLY NOTIFY THE COMPANY
OR THE EXCHANGE AGENT THAT ALL THEIR EXCHANGE NOTES HAVE BEEN SOLD, THE
COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE EFFECTIVENESS OF THE EXCHANGE
OFFER REGISTRATION STATEMENT OR TO UPDATE THE PROSPECTUS AND WILL NOT PROVIDE
ANY NOTICES TO ANY HOLDERS TO SUSPEND OR RESUME USE OF THE PROSPECTUS.)
Provide the name of the individual who should receive, on behalf of the
Holder, additional copies of the Prospectus, and amendments and supplements
thereto, and any notices to suspend and resume use of the Prospectus:
Name: ______________________________________________________________________
Address: ___________________________________________________________________
____________________________________________________________________________
Telephone No.: _____________________________________________________________
Facsimile No.: _____________________________________________________________
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
6
<PAGE>
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the principal amount of Initial
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Initial Notes tendered herewith, the undersigned hereby
exchanges, assigns and transfers to, or upon the order of, the Company all
right, title and interest in and to such Initial Notes. The undersigned
hereby irrevocably constitutes and appoints the Exchange Agent as the true
and lawful agent and attorney-in-fact of the undersigned (with full knowledge
that the Exchange Agent also acts as the agent of the Company and as the
Trustee under the Indenture for the Initial Notes and the Exchange Notes)
with respect to such Initial Notes with full power of substitution (such
power-of-attorney being deemed to be an irrevocable power coupled with an
interest) to (i) present such Initial Notes and all evidences of transfer and
authenticity to, or transfer ownership of, such Initial Notes on the account
books maintained by the Book-Entry Transfer Facility to, or upon the order
of, the Company, (ii) present such Initial Notes for transfer of ownership on
the books of the Company or the trustee under the Indenture (the "Trustee"),
and (iii) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Initial Notes, all in accordance with the terms
of and conditions of the Exchange Offer as described in the Prospectus.
The undersigned represents and warrants that he or she has full power
and authority to tender, exchange, assign and transfer the Initial Notes
tendered hereby and to acquire Exchange Notes issuable upon the exchange of
such tendered Initial Notes, and that, when the same are accepted for
exchange, the Company will acquire good and unencumbered title to the
tendered Initial Notes, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim or right. The
undersigned also warrants that it will, upon request, execute and deliver any
additional documents deemed by the Exchange Agent or the Company to be
necessary or desirable to complete the exchange, assignment and transfer of
the Initial Notes tendered hereby or transfer ownership of such Initial Notes
on the account books maintained by the Book-Entry Transfer Facility.
The Exchange Offer is subject to certain conditions as set forth in the
Prospectus under the caption "The Exchange Offer -- Conditions." The
undersigned recognizes that as a result of these conditions (which may be
waived by the Company, in whole or in part), as more particularly set forth
in the Prospectus, the Company may not be required to exchange any of the
Initial Notes tendered hereby and, in such event, the Initial Notes not
exchanged will be returned to the undersigned at the address shown below.
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE
RIGHT NOT TO ACCEPT TENDERED INITIAL NOTES FROM ANY TENDERING HOLDER IF THE
COMPANY DETERMINES, IN ITS REASONABLE DISCRETION, THAT SUCH ACCEPTANCE COULD
RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents,
or, if the undersigned is a broker, dealer, commercial bank, trust company or
other nominee, represents that it has received representations from the
beneficial owners of the Initial Notes (the "Beneficial Owner") stating that:
7
<PAGE>
(i) neither the Holder nor any such Beneficial Owner is an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Company, or, if such
person is an affiliate, that it will comply with the registration and
prospectus delivery requirements of the Securities Act, to the extent
applicable;
(ii) the Exchange Notes to be acquired in connection with the Exchange
Offer by the Holder and each Beneficial Owner of the Initial Notes are being
acquired by the Holder and each such Beneficial Owner in the ordinary course
of business of the Holder and each such Beneficial Owner;
(iii) the Holder and each such Beneficial Owner are not engaged in, do
not intend to engage in, and have no arrangement or understanding with any
person to participate in, a distribution of the Exchange Notes;
(iv) the Holder nor such Beneficial Owner did not purchase the Initial
Notes directly from us or one of our affiliates for resale pursuant to Rule
144A, Regulation S or other exemption under the Securities Act; and
(v) if the Holder is an Exchanging Dealer (as defined below) that
acquired the Initial Notes as a result of market-making activities or other
trading activities, it will deliver the Prospectus in connection with any
resale of Exchange Notes acquired in the Exchange Offer (but by so
acknowledging and by delivering the Prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the
Securities Act).
The Holder and each Beneficial Owner acknowledge and agree that any
person participating in the Exchange Offer for the purpose of distributing
the Exchange Notes must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction of the Exchange Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in the no-action
letters that are discussed in the Prospectus under the caption "The Exchange
Offer--Effect of the Exchange Offer" and may only sell the Exchange Notes
acquired by such person pursuant to a registration statement containing the
selling security holder information required by Item 507 and 508 of
Regulation S-K under the Securities Act, as applicable, or pursuant to an
exemption from the registration requirements of the Securities Act.
EACH BROKER-DEALER WHO ACQUIRED INITIAL NOTES FOR ITS OWN ACCOUNT AS A
RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES (BUT NOT
DIRECTLY FROM THE COMPANY OR ANY AFFILIATE OF THE COMPANY) (AN "EXCHANGING
DEALER"), BY TENDERING SUCH INITIAL NOTES AND EXECUTING THIS LETTER OF
TRANSMITTAL, AGREES TO NOTIFY THE COMPANY PRIOR TO USING THE PROSPECTUS IN
CONNECTION WITH THE SALE OR TRANSFER OF EXCHANGE NOTES AND THAT, UPON RECEIPT
OF NOTICE FROM THE COMPANY OF (i) THE OCCURRENCE OF ANY EVENT OR THE
DISCOVERY OF ANY FACT WHICH MAKES ANY STATEMENT CONTAINED OR INCORPORATED BY
REFERENCE IN THE PROSPECTUS UNTRUE IN ANY MATERIAL RESPECT OR WHICH CAUSES
THE PROSPECTUS TO OMIT TO A STATE A MATERIAL FACT NECESSARY IN ORDER TO MAKE
THE STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE THEREIN, IN LIGHT OF
THE CIRCUMSTANCES UNDER WHICH THEY WERE MADE, NOT MISLEADING OR (ii) THE
OCCURRENCE OF CERTAIN OTHER EVENTS SPECIFIED IN THE REGISTRATION RIGHTS
AGREEMENT, SUCH EXCHANGING DEALER WILL SUSPEND THE SALE OF EXCHANGE NOTES
PURSUANT TO THE PROSPECTUS UNTIL
8
<PAGE>
THE COMPANY HAS AMENDED OR SUPPLEMENTED THE PROSPECTUS TO CORRECT SUCH
MISSTATEMENT OR OMISSION AND HAS FURNISHED COPIES OF THE AMENDED OR
SUPPLEMENTED PROSPECTUS TO THE EXCHANGING DEALER OR THE COMPANY HAS GIVEN
NOTICE THAT THE SALE OF THE EXCHANGE NOTES MAY BE RESUMED, AS THE CASE MAY BE.
EACH EXCHANGING DEALER SHOULD CHECK THE BOX HEREIN UNDER THE CAPTION
"FOR EXCHANGING DEALERS ONLY" IN ORDER TO RECEIVE ADDITIONAL COPIES OF THE
PROSPECTUS, AND ANY AMENDMENTS AND SUPPLEMENTS THERETO, FOR USE IN CONNECTION
WITH RESALES OF THE EXCHANGE NOTES, AS WELL AS ANY NOTICES FROM THE COMPANY
TO SUSPEND AND RESUME USE OF THE PROSPECTUS. BY TENDERING ITS INITIAL NOTES
AND EXECUTING THIS LETTER OF TRANSMITTAL, EACH EXCHANGING DEALER AGREES TO
USE ITS REASONABLE BEST EFFORTS TO NOTIFY THE COMPANY OR THE EXCHANGE AGENT
WHEN IT HAS SOLD ALL OF ITS EXCHANGE NOTES. IF NO EXCHANGING DEALERS CHECK
SUCH BOX, OR IF ALL EXCHANGING DEALERS WHO HAVE CHECKED SUCH BOX SUBSEQUENTLY
NOTIFY THE COMPANY OR THE EXCHANGE AGENT THAT ALL THEIR EXCHANGE NOTES HAVE
BEEN SOLD, THE COMPANY WILL NOT BE REQUIRED TO MAINTAIN THE EFFECTIVENESS OF
THE EXCHANGE OFFER REGISTRATION STATEMENT OR TO UPDATE THE PROSPECTUS AND
WILL NOT PROVIDE ANY HOLDERS WITH ANY NOTICES TO SUSPEND OR RESUME USE OF THE
PROSPECTUS.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted properly tendered Initial Notes for exchange when, as and if the
Company has given oral or written notice thereof to the Exchange Agent, with
written confirmation of any oral notice to be given promptly thereafter. If
any tendered Initial Notes are not accepted for exchange pursuant to the
Exchange Offer for any reason, certificates for any such unaccepted Initial
Notes will be returned (except with respect to tenders through DTC), without
expense, to the undersigned at the address shown below or at a different
address as may be indicated under "Special Issuance Instructions" as promptly
as practicable after the Expiration Date.
The undersigned understands that the Company reserves the right, at any
time and from time to time, in its sole discretion (subject to its obligation
under the Registration Rights Agreement) (i) to delay accepting any Initial
Notes, to extend the Exchange Offer or, if any of the conditions set forth in
the Prospectus under the caption "The Exchange Offer--Certain Conditions to
the Exchange Offer" shall not have been satisfied, to terminate the Exchange
Offer, by giving oral or written notice of such delay, extension or
termination to the Exchange Agent or (ii) to amend the terms of the Exchange
Offer in any manner.
The undersigned understands that tenders of the Initial Notes pursuant
to any one of the procedures described under "The Exchange Offer--Procedures
for Tendering" in the Prospectus and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Exchange
Offer. All authority herein conferred or agreed to be conferred by this
Letter of Transmittal and every obligation of the undersigned hereunder shall
be binding upon the heirs, legal representatives, successors and assigns,
executors, administrators and trustees in bankruptcy of the undersigned and
shall survive the death or incapacity of the undersigned. Tendered Initial
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date in accordance with the terms of the Exchange Offer.
9
<PAGE>
The undersigned also understands and acknowledges that the Company
reserves the right in its sole discretion to (a) purchase or make offers for
any Initial Notes that remain outstanding subsequent to the Expiration Date,
or, as set forth under "The Exchange Offer--Certain Conditions to the
Exchange Offer," to terminate the Exchange Offer and (b) to the extent
permitted by applicable law, purchase Initial Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such
purchases or offers may differ from the terms of the Exchange Offer.
The undersigned understands that the delivery and surrender of the
Initial Notes is not effective, and the risk of loss of the Initial Notes
does not pass to the Exchange Agent, until receipt by the Exchange Agent of
this Letter of Transmittal, or a manually signed facsimile hereof, properly
completed and duly executed, with any required signature guarantees, together
with all accompanying evidences of authority and any other required documents
in form satisfactory to the Company. All questions as to form of all
documents and the validity (including time of receipt) and acceptance of
tenders and withdrawals of Initial Notes will be determined by the Company,
in its sole discretion, which determination shall be final and binding.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions," the undersigned hereby requests that any Initial Notes
representing principal amounts not tendered or not accepted for exchange be
issued in the name(s) of the undersigned and that Exchange Notes be issued in
the name(s) of the undersigned (or, in the case of Initial Notes delivered by
book-entry transfer, by credit to the account at the Book-Entry Transfer
Facility designated herein). Similarly, unless otherwise indicated herein in
the box entitled "Special Delivery Instructions," the undersigned hereby
requests that any Initial Notes representing principal amounts not tendered
or not accepted for exchange and certificates for Exchange Notes be delivered
to the undersigned at the address(es) shown below. In the event that the
"Special Issuance Instructions" box or the "Special Delivery Instructions"
box is, or both are, completed, the undersigned hereby requests that any
Initial Notes representing principal amounts not tendered or not accepted for
exchange be issued in the name(s) of, certificates for such Initial Notes be
delivered to, and certificates for Exchange Notes be issued in the name(s)
of, and be delivered to, the person(s) at the address(es) so indicated, as
applicable. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance Instructions" box or "Special Delivery
Instructions" box to transfer any Initial Notes from the name of the
registered Holder(s) thereof if the Company does not accept for exchange any
of the principal amount of such Initial Notes so tendered.
10
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL HOLDERS OF INITIAL NOTES REGARDLESS OF
WHETHER INITIAL NOTES ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the Holder(s) of Initial
Notes exactly as their name(s) appear(s) on certificate(s) for Initial Notes
or, if delivered by a participant in the Book-Entry Transfer Facility, exactly
as such participant's name appears on a security position listing as the owner
of Initial Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative
capacity, such person must set forth his or her full title below under
"Capacity" and submit evidence satisfactory to the Company of such person's
authority to so act. See Instruction 4 below.
If the signature appearing below is not of the record holder(s) of the
Initial Notes, then the record holder(s) must sign a valid bond power.
x _______________________________ Date: _____________________________
x _______________________________ Date: _____________________________
Signature(s) of Registered Holder(s) or Authorized Signatory
Date: _____________________________, 1999
Name(s): __________________________________________________________________
(Please Print)
Capacity: _________________________________________________________________
Address: __________________________________________________________________
(Including Zip Code)
Area Code and Telephone No.: _________________________________
Social Security No.: _________________________________________
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
/ / CHECK HERE IF YOU ARE A BROKER DEALER WHO ACQUIRED THE INITIAL NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING ACTIVITIES
AND WISH TO RECEIVE ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name: _________________________________________________________________
Address: ______________________________________________________________
SIGNATURE GUARANTEE (SEE INSTRUCTION 4 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION
- -------------------------------------------------------------------------------
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
- -------------------------------------------------------------------------------
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER
(INCLUDING AREA CODE) OF FIRM)
- -------------------------------------------------------------------------------
(AUTHORIZED SIGNATURE)
- -------------------------------------------------------------------------------
(PRINTED NAME)
- -------------------------------------------------------------------------------
(TITLE)
Dated: ______________________, 1999
11
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 3, 4, 5 AND 7) (SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if To be completed ONLY if
certificates for Initial Notes in a certificates for Initial Notes in a
principal amount not tendered or not principal amount not accepted for
accepted for exchange are to be exchange or certificates for
issued in the name of, or Exchange Notes are to be sent to
certificates for Exchange Notes are someone other than the person or
to be issued to the order of, someone persons whose signature(s) appear(s)
other than the person or persons within this Letter of Transmittal or
whose signature(s) appear(s) within to an address different from that
this Letter of Transmittal or issued shown in the box entitled
to an address different from that "Description of Initial Notes"
shown in the box entitled within the Letter of Transmittal.
"Description of Initial Notes" within
this Letter of Transmittal. Deliver: / / Initial Notes
/ / Exchange Notes
Issue: / / Initial Notes (CHECK AS APPLICABLE)
/ / Exchange Notes Name: _____________________________
(CHECK AS APPLICABLE) (Please Print)
Name: _____________________________ Address: __________________________
(Please Print)
Address: __________________________ ___________________________________
(Zip Code) (Zip Code)
___________________________________ ___________________________________
(Tax Identification or Social (Tax Identification or Social
Security Number) Security Number)
(See Substitute Form W-9 herein) (See Substitute Form W-9 Herein)
Credit Initial Notes not exchanged
and delivered by book entry transfer
to the Book Entry Transfer Facility
account set below:
_____________________________________
(Book Entry Transfer Facility Account
Number)
Credit Exchange Notes to the Book
Entry Transfer Facility account set
below:
_____________________________________
(Book Entry Transfer Facility Account
Number)
12
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Exchange Offer
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR INITIAL NOTES
OR BOOK-ENTRY CONFIRMATIONS; WITHDRAWAL OF TENDERS.
To tender Initial Notes in the Exchange Offer, physical delivery of
certificates for Initial Notes or confirmation of a book-entry transfer into
the Exchange Agent's account with a Book-Entry Transfer Facility of Initial
Notes tendered electronically, as well as a properly completed and duly
executed copy or manually signed facsimile of this Letter of Transmittal, or
in the case of a book-entry transfer, an Agent's Message, and any other
documents required by this Letter of Transmittal, must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York
City time, on the Expiration Date. Tenders of Initial Notes in the Exchange
Offer may be made prior to 5:00 p.m., New York City time, on the Expiration
Date in the manner described in the preceding sentence and otherwise in
compliance with this Letter of Transmittal. THE METHOD OF DELIVERY OF THIS
LETTER OF TRANSMITTAL, CERTIFICATES FOR INITIAL NOTES AND ALL OTHER REQUIRED
DOCUMENTS TO THE EXCHANGE AGENT, INCLUDING DELIVERY THROUGH DTC AND ANY
ACCEPTANCE OF AN AGENT'S MESSAGE, IS AT THE ELECTION AND RISK OF THE HOLDER
TENDERING INITIAL NOTES. IF SUCH DELIVERY IS MADE BY MAIL, IT IS SUGGESTED
THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED AND THAT SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY
DELIVERY. NO ALTERNATIVE, CONDITIONAL OR CONTINGENT TENDERS OF INITIAL NOTES
WILL BE ACCEPTED. Except as otherwise provided below, the delivery will be
made when actually received by the Exchange Agent. THIS LETTER OF
TRANSMITTAL, CERTIFICATES FOR THE INITIAL NOTES AND ANY OTHER REQUIRED
DOCUMENTS SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE COMPANY, THE
TRUSTEE OR DTC.
Initial Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
In order to be valid, notice of withdrawal of tendered Initial Notes must
comply with the requirements set forth in the Prospectus under the caption
"The Exchange Offer--Withdrawal of Tenders."
2. GUARANTEED DELIVERY PROCEDURES.
Holders who wish to tender their Initial Notes and who cannot deliver
their Initial Notes, the Letter of Transmittal, or any other required
documents to the Exchange Agent prior to the Expiration Date, or holders who
cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender of Initial Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange
Offer--Guaranteed Delivery Procedures."
Pursuant to the guaranteed delivery procedures:
(i) such tender must be made through an Eligible Institution;
13
<PAGE>
(ii) prior to the Expiration Date, the Exchange Agent must have
received from such Eligible Institution, at one of the addresses set forth on
the cover of this Letter of Transmittal, a properly completed and duly
executed Notice of Guaranteed Delivery (by facsimile transmission, mail or
hand delivery) setting forth the name(s) and address(es) of the registered
Holder(s), the certificate number or numbers of such Initial Notes and the
principal amount of Initial Notes being tendered, and stating that the tender
is being made thereby and guaranteeing that, within three business days after
the Expiration Date, the Letter of Transmittal (or a facsimile thereof),
together with certificates for all tendered Initial Notes in proper form for
transfer, or a Book-Entry confirmation with an Agent Message's, as the case
may be, and any other documents required by this Letter of Transmittal and
the instructions hereto, will be deposited by such Eligible Institution with
the Exchange Agent; and
(iii) the Exchange Agent must have received this Letter of
Transmittal and certificates for all tendered Initial Notes, in proper form
for transfer, or a Book-Entry Confirmation, as the case may be, and all other
documents required by this Letter of Transmittal within three business days
after the Expiration Date.
3. PARTIAL TENDERS.
Tenders of Initial Notes will be accepted in all denominations of $1,000
and integral multiples in excess thereof. If less than the entire principal
amount of any Initial Notes evidenced by a submitted certificate is tendered,
the tendering Holder must fill in the principal amount tendered in the last
column of the box entitled "Description of Initial Notes" herein. The entire
principal amount represented by the certificates for all Initial Notes
delivered to the Exchange Agent will be deemed to have been tendered, unless
otherwise indicated. The entire principal amount of all Initial Notes not
tendered or not accepted for exchange will be sent (or, if tendered by
book-entry transfer, returned by credit to the account at the Book-Entry
Transfer Facility designated herein) to the Holder unless otherwise provided
in the "Special Issuance Instructions" or "Special Delivery Instructions"
boxes of this Letter of Transmittal.
4. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal (or facsimile hereof) is signed by the
Holder(s) of the Initial Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the Initial Notes
without alteration, enlargement or any change whatsoever. If this Letter of
Transmittal (or facsimile hereof) is signed by a participant in DTC, the
signature must correspond with the name as it appears on the security
position listing as the owner of the Initial Notes.
If any of the Initial Notes tendered hereby are registered in the name
of two or more Holders, all such Holders must sign this Letter of
Transmittal. If any tendered Initial Notes are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate copies of this Letter of Transmittal and any necessary
accompanying documents as there are different names in which certificates are
held.
If this Letter of Transmittal or any Initial Notes or bond powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in
14
<PAGE>
a fiduciary or representative capacity, such persons should so indicate when
signing, and proper evidence satisfactory to the Company of their authority
to so act must be submitted with this Letter of Transmittal.
If this Letter of Transmittal (or facsimile hereof) is signed by the
registered Holder(s) of Initial Notes tendered and the certificate(s) for
Exchange Notes issued in exchange therefor is to be issued (or any untendered
principal amount of Initial Notes is to be reissued) to the registered
Holder, such Holder need not and should not endorse any tendered Old Note,
nor provide a separate bond power. In any other case, such holder must either
properly endorse the Initial Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal, with the signatures on
the endorsement or bond power guaranteed by an Eligible Institution.
If this Letter of Transmittal (or facsimile hereof) is signed by a
person other than the registered Holder(s) of any Initial Notes listed, such
Initial Notes must be endorsed or accompanied by appropriate bond powers
signed as the name of the registered Holder(s) appears on the Initial Notes
and guaranteed by an Eligible Institution.
Endorsements on Initial Notes or signatures on bond powers required by
this Instruction 4 must be guaranteed by an Eligible Institution.
Signatures on this Letter of Transmittal (or facsimile hereof) must be
guaranteed by an Eligible Institution unless the Initial Notes tendered
pursuant thereto are tendered (i) by a registered Holder who has not
completed the box set forth herein entitled "Special Issuance Instructions"
or the box entitled "Special Delivery Instructions" or (ii) for the account
of an Eligible Institution.
5. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS.
Tendering Holders should indicate in the applicable box or boxes the
name and address to which Initial Notes for principal amounts not tendered or
not accepted for exchange or certificates for Exchange Notes, if applicable,
are to be sent or issued, if different from the name and address of the
Holder signing this Letter of Transmittal. In the case of payment to a
different name, the taxpayer identification or social security number of the
person named must also be indicated. If no instructions are given, Initial
Notes not tendered or not accepted for exchange will be returned, and
certificates for Exchange Notes will be sent, to the Holder of the Initial
Notes tendered.
6. TAXPAYER IDENTIFICATION NUMBER.
Each tendering Holder is required to provide the Exchange Agent with the
Holder's social security or Federal employer identification number, on
Substitute Form W-9, which is provided under "Important Tax Information"
below, or alternatively, to establish another basis for exemption from backup
withholding. A Holder must cross out item (2) in the Certification box in
Part 2 on Substitute Form W-9 if such Holder is subject to backup
withholding. Failure to provide the information on the form may subject such
Holder to 31% Federal backup withholding tax on any payment made to the
Holder with respect to the Exchange Offer. The box in Part 3 of the form
should be checked if the tendering Holder has not been issued a Taxpayer
Identification Number ("TIN") and has either applied for a TIN or intends to
apply for a TIN in the near future. If the
15
<PAGE>
box in Part 3 is checked the Holder should also sign the attached
Certification of Awaiting Taxpayer Identification Number. If the Exchange
Agent is not provided with a TIN within 60 days thereafter, the Exchange
Agent will withholding 31% on all such payments of the Exchange Notes until a
TIN is provided to the Exchange Agent.
7. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the
exchange of Initial Notes pursuant to the Exchange Offer. If, however,
certificates representing Exchange Notes or Initial Notes for principal
amounts not tendered or accepted for exchange are to be delivered to, or are
to be issued in the name of, any person other than the registered Holder of
the Initial Notes tendered, or if tendered Initial Notes are registered in
the name of any person other than the person signing the Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
exchange of Initial Notes pursuant to the Exchange Offer, then the amount of
any such transfer taxes (whether imposed on the registered Holder or any
other persons) will be payable by the tendering Holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted
with the Letter of Transmittal, the amount of such transfer taxes will be
billed directly to such tendering Holder.
8. IRREGULARITIES.
All questions as to the form of all documents and the validity
(including time of receipt) and acceptance of all tenders and withdrawals of
Initial Notes will be determined by the Company, in its sole discretion,
which determination shall be final and binding. ALTERNATIVE, CONDITIONAL OR
CONTINGENT TENDERS OF INITIAL NOTES WILL NOT BE CONSIDERED VALID. The Company
reserves the absolute right to reject any and all tenders of Initial Notes
that are not in proper form or the acceptance of which, in the Company's
opinion, would be unlawful. The Company also reserves the right to waive any
defects, irregularities or conditions of tender as to particular Initial
Notes. The Company's interpretations of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal)
will be final and binding. Any defect or irregularity in connection with
tenders of Initial Notes must be cured within such time as the Company
determines, unless waived by the Company. Tenders of Initial Notes shall not
be deemed to have been made until all defects or irregularities have been
waived by the Company or cured. A defective tender (which defect is not
waived by the Company or cured by the Holder) will not constitute a valid
tender of Initial Notes and will not entitle the Holder to Exchange Notes.
None of the Company, the Trustee, the Exchange Agent or any other person will
be under any duty to give notice of any defect or irregularity in any tender
or withdrawal of any Initial Notes, or incur any liability to Holders for
failure to give any such notice.
9. WAIVER OF CONDITIONS.
The Company reserves the right, in its reasonable discretion, to amend
or waive any of the conditions to the Exchange Offer.
16
<PAGE>
10. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR INITIAL NOTES.
Any Holder whose certificates for Initial Notes have been mutilated,
lost, stolen or destroyed should write to or telephone the Trustee at the
address or telephone number set forth on the cover of this Letter of
Transmittal for the Exchange Agent.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions relating to the procedure for tendering Initial Notes and
requests for assistance or additional copies of the Prospectus, this Letter
of Transmittal, the Notice of Guaranteed Delivery or other documents may be
directed to the Exchange Agent, whose address and telephone number appear
above.
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder who tenders Initial Notes prior
to receipt of the Exchange Notes is required to provide the Exchange Agent
with such Holder's correct TIN on the attached Substitute Form W-9 or
otherwise establish a basis for exemption from backup withholding. If such
Holder is an individual, the TIN is his or her social security number. If the
Exchange Agent is not provided with the correct TIN, a $500 penalty may be
imposed by the Internal Revenue Service ("IRS") and payments, including any
Exchange Notes, made to such Holder with respect to Initial Notes exchanged
pursuant to the Exchange Offer may be subject to backup withholding. A
willful failure to provide a correct TIN may subject a Holder to criminal
penalties, including imprisonment.
Certain Holders (including, among others, corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should indicate their exempt status on the
Substitute Form W-9. A foreign person may qualify as an exempt recipient by
submitting to the Exchange Agent a properly completed IRS Form W-8, signed
under penalties of perjury, attesting to that Holder's exempt status. A Form
W-8 can be obtained from the Exchange Agent. See the enclosed "Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9" for
additional instructions. Holders are urged to consult their own tax advisors
to determine whether they are exempt.
If backup withholding applies, the Exchange Agent is required to
withholding 31% of any payments made to the Holder or other payee. Backup
withholding is not an additional Federal income tax. Rather, any amounts
withheld under the backup withholding rules will be allowed as a refund or a
credit against such Holder's federal income tax liability, provided that the
required information is furnished to the IRS.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments, including any Exchange Notes,
made with respect to Initial Notes exchanged pursuant to the Exchange Offer,
the Holder is required to provide the Exchange Agent with (i) the Holder's
correct TIN by completing the attached form, certifying that the TIN provided
on the Substitute Form W-9 is correct (or that such Holder is awaiting a TIN)
and that (A) such Holder is exempt from backup withholding, (B) the Holder
has
17
<PAGE>
not been notified by the IRS that the Holder is subject to backup withholding
as a result of failure to report all interest or dividends or (C) the IRS has
notified the Holder that the Holder is no longer subject to backup
withholding and (ii) if applicable, an adequate basis for exemption from
backup withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Holder is required to give the Exchange Agent the TIN (e.g., social
security number or employer identification number) of the registered Holder. If
the Initial Notes are held in more than one name or are held not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
18
<PAGE>
PAYER'S NAME: _______________________
<TABLE>
<S> <C> <C>
SUBSTITUTE ______________________________
PART 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number
FORM W-9 BOX AT RIGHT AND CERTIFY BY SIGNING AND OR
DATING BELOW ______________________________
Department of the Treasury Employer Identification Number
Internal Revenue Service
PART 2--Certification--Under Penalties of Internal PART 3--
Revenue Service perjury, I certify that:
Payer's Request for Taxpayer
Awaiting TIN / /
Identification Number (TIN)
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting for
a number to be Identification Number (TIN) issued
to me) and
(2) I am not subject to backup withholding because: (a)
I am exempt from backup withholding or I have not
been notified by the Internal Revenue Service (IRS)
that I am subject to backup withholding as a result
of a failure to report all interest or dividends or
(c) the IRS has notified me that I am no longer
subject to backup withholding.
Certificate instructions--You must cross out item (2) in Part 2 above if
you have been notified by the IRS that you are subject to backup
withholding because of under reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS
stating that you are no longer subject to backup withholding, do not
cross out item (2).
Signature ____________________________ Date ________________________
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO HOLDERS OF EXCHANGE NOTES PURSUANT
TO THE EXCHANGE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR
CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered
an application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number within
60 days, 31 percent of all reportable payments made to me thereafter will be
withheld until I provide a number.
- ------------------------------------------ ------------------------------
Signature Date
19
<PAGE>
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile: By Hand or Overnight Courier
The Bank of New York (212) _________ The Bank of New York
101 Barclay Street, 7 East 101 Barclay Street, 7 East
New York, New York 10268 New York, New York 10268
Attention: _______________ Attention: _______________
Reorganization Section (212) _________ Reorganization Section
20
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FOR
9-1/2% SENIOR SUBORDINATED NOTES DUE 2011
OF
AMC ENTERTAINMENT, INC.
As set forth in the Prospectus dated , 1999 (as
the same may be amended from time to time, the "Prospectus") of AMC
Entertainment, Inc. (the "Company") under the caption "The Exchange
Offer--Guaranteed Delivery Procedures," and in the accompanying Letter of
Transmittal (the "Letter of Transmittal") and Instruction 2 thereto, this
form or one substantially equivalent, must be used to tender any of the
Company's outstanding 9-1/2% Senior Subordinated Notes due 2011 (the "Initial
Notes") pursuant to the Exchange Offer, if (i) the Initial Notes to be
tendered, a Holder's Letter of Transmittal or other required documents cannot
be delivered to the Exchange Agent prior to the Expiration Date with respect
to the Exchange Offer or (ii) the procedures for book-entry transfer cannot
be completed prior to the Expiration Date. This form may be delivered by an
Eligible Institution by mail or hand delivery or transmitted, via facsimile,
to the Exchange Agent as set forth below.
Terms not otherwise defined herein shall have their respective meanings
as set forth in the Prospectus.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1999, UNLESS EXTENDED
OR TERMINATED (THE "EXPIRATION DATE"). TENDERS OF INITIAL
NOTES MAY BE WITHDRAWN AT ANY TIME PRIOR TO 5:00 P.M., NEW
YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent:
THE BANK OF NEW YORK
By Mail: By Facsimile: By Hand or Overnight Courier:
The Bank of New York (212) ________ The Bank of New York
101 Barclay Street, 7 East 101 Barclay Street, 7 East
New York, NY 10286 Confirm by Telephone: New York, NY 10286
Attention: ___________ Attention: _________________
Reorganization Section (212) ________ Reorganization Section
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
<PAGE>
This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.
LADIES AND GENTLEMEN:
The undersigned hereby tender(s) to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Initial Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures."
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender the Initial Notes. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be necessary or desirable for the perfection
of the undersigned's tender.
The undersigned understands that tenders of Initial Notes will be
accepted only in principal amounts equal to $1,000 or integral multiples
thereof. Tenders may be withdrawn in accordance with the procedures set forth
in the Prospectus. The undersigned authorizes the Exchange Agent to deliver
this Notice of Guaranteed Delivery to the Company and the Trustee as evidence
of the undersigned's tender of Initial Notes.
All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the
undersigned and every obligation of the undersigned under this Notice of
Guaranteed Delivery shall be binding upon the heirs, personal
representatives, executors, administrators, successors, assigns, trustees in
bankruptcy and other legal representatives of the undersigned.
2
<PAGE>
PLEASE SIGN AND COMPLETE
Signatures of Registered Holder(s) or Date: ___________________________
Authorized Signatory: ________________
______________________________________ Address: ________________________
______________________________________ _________________________________
Name(s) of Registered Holder(s): Area Code and Telephone No.:
______________________________________ _________________________________
______________________________________
Principal Amount of Notes Tendered: If Notes will be delivered by book-
______________________________________ entry transfer, complete the
______________________________________ following:
______________________________________
Depository Account No. ___________
Certificate No.(s) of Notes
(if available):
______________________________________
______________________________________
Date: ________________________________
This Notice of Guaranteed Delivery must be signed by the Holder(s) exactly as
their names appear on certificates for Initial Notes or on a security
position listing as the owner of Initial Notes, or by person(s) authorized to
become Holder(s) by endorsements and documents transmitted with this Notice
of Guaranteed Delivery. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer or other person acting in
a fiduciary or representative capacity, such person must set forth his or her
full title below under "Capacity" and submit evidence satisfactory to the
Company of such person's authority to so act.
Please print name(s) and address(es)
Name(s): ____________________________________________________________________
_____________________________________________________________________________
Capacity: ___________________________________________________________________
_____________________________________________________________________________
Address(es): ________________________________________________________________
_____________________________________________________________________________
Do not send Initial Notes with this form. Initial notes should be sent to
the Exchange Agent, together with a properly completed and validly executed
Letter of Transmittal and any other related documents.
3
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a member firm of a registered national securities exchange
or of the National Association of Securities Dealers, Inc. or a commercial
bank or trust company having an office or correspondent in the United
States, hereby (a) represents that each holder of Initial Notes on whose
behalf this tender is being made "own(s)" the Initial Notes covered hereby
within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934,
as amended, (b) represents that such tender of Initial Notes complies with
such Rule 14e- 4, and (c) guarantees that, within three business days from
the date of this Notice of Guaranteed Delivery, a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof), together with
certificates representing the Initial Notes tendered hereby in proper form
for transfer (or confirmation of the book-entry transfer of such Initial
Notes into the Exchange Agent's account at a Book-Entry Transfer Facility,
pursuant to the procedure for book-entry transfer set forth in the
Prospectus under the caption "The Exchange Offer--Book-Entry Transfer"), and
any other required documents will be deposited by the undersigned with the
Exchange Agent at its address set forth above.
Name of Firm: __________________________ _______________________________
Authorized Signature
Address: _______________________________ Name: _________________________
________________________________________ Title: ________________________
Area Code and Telephone No.: ___________ Date: _________________________
4
<PAGE>
EXHIBIT 99.3
AMC ENTERTAINMENT INC.
OFFER FOR ALL OUTSTANDING
9-1/2% SENIOR SUBORDINATED NOTES DUE 2011
IN EXCHANGE FOR
9-1/2% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2011
To Our Clients:
Enclosed for your consideration is a Prospectus dated _______________,
1999 (as the same may be amended or supplemented from time to time, the
"Prospectus") and a form of Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") by AMC
Entertainment Inc. (the "Company") to exchange $1,000 principal amount of its
9 1/2% Exchange Senior Subordinated Notes due February 1, 2011 (the "Exchange
Notes") that have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus constitutes a part, for each $1,000 principal amount of its
outstanding 9-1/2% Senior Subordinated Notes due 2011 (the "Initial Notes"),
upon the terms and subject to the conditions set forth in the Prospectus and
the Letter of Transmittal. The Exchange Offer is being made to satisfy
certain obligations of the Company contained in the Registration Rights
Agreement dated January 27, 1999, by and among the Company and the other
signatories thereto.
The material is being forwarded to you as the beneficial owner of
Initial Notes held by us for your account or benefit but not registered in
your name. A TENDER OF THE INITIAL NOTES PURSUANT TO THE EXCHANGE OFFER MAY
BE MADE ONLY BY US AS THE REGISTERED HOLDER OF THE INITIAL NOTES, AND
PURSUANT TO YOUR INSTRUCTIONS. Therefore, the Company urges beneficial owners
of Initial Notes registered in the name of a broker, dealer, commercial bank,
trust company or other nominee to contact such holder promptly if they wish
to tender Initial Notes in the Exchange Offer.
Accordingly, we request instructions as to whether you wish us to tender
any or all Initial Notes held by us for your account or benefit, pursuant to
the terms and conditions set forth in the Prospectus and Letter of
Transmittal. We urge you to read carefully the Prospectus and Letter of
Transmittal before instructing us to tender your Initial Notes pursuant to
the Exchange Offer.
Your instructions to us should be forwarded as promptly as practicable
in order to permit us to tender Initial Notes on your behalf in accordance
with the provisions of the Exchange Offer. The Exchange Offer will expire at
5:00 p.m., New York City Time, on __________, 1999, unless extended (the
"Expiration Date"). Initial Notes tendered pursuant to the Exchange Offer may
be withdrawn, subject to the procedures described in the Prospectus, at any
time prior to the Expiration Date.
Your attention is directed to the following:
<PAGE>
1. The Exchange Offer is for any and all Initial Notes.
2. The Exchange Offer is subject to certain conditions set forth in the
Prospectus in the section captioned "The Exchange Offer--Certain
Conditions to the Exchange Offer".
3. Any transfer taxes incident to the transfer of Initial Notes from the
holder to the Company will be paid by the Company, except as otherwise
provided in the Prospectus and the Instructions in the Letter of
Transmittal.
4. The Exchange Offer expires at 5:00 p.m., New York City time, on
_________, 1999, unless extended by the Company.
If you wish to have us tender any or all of your Initial Notes held by
us for your account or benefit, please so instruct us by completing,
executing and returning to us the instruction form that appears below. THE
ACCOMPANYING LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL
PURPOSES ONLY AND MAY NOT BE USED BY YOU TO TENDER INITIAL NOTES HELD BY US
AND REGISTERED IN OUR NAME FOR YOUR ACCOUNT OR BENEFIT.
INSTRUCTIONS WITH RESPECT TO THE EXCHANGE OFFER
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Exchange Offer made by AMC
Entertainment Inc. with respect to their Initial Notes.
This will instruct you to tender the Initial Notes held by you for the
account of the undersigned, upon and subject to the terms and conditions set
forth in the Prospectus and the related Letter of Transmittal.
Please tender the Initial Notes held by you for my account as
indicated below:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL AMOUNT OF INITIAL NOTES
<S> <C>
9-1/2% Senior Subordinated Notes due 2011.............
-------------------------------------------
/ / Please do not tender any Initial Notes held by
you for my account.
Dated: , 1999
-------------- -------------------------------------------
-------------------------------------------
Signature(s)
-------------------------------------------
</TABLE>
2
<PAGE>
----------------------------
----------------------------
Please print name(s) here
----------------------------
----------------------------
Address(es)
----------------------------
Area Code and Telephone Number
----------------------------
Tax Identification or Social Security No(s).
None of the Initial Notes held by us for your account will be tendered
unless we receive written instructions from you to do so. Unless a specific
contrary instruction is given in the space provided, your signature(s) hereon
shall constitute an instruction to us to tender all the Initial Notes hold by
us for your account.
3
<PAGE>
EXHIBIT 99.4
AMC ENTERTAINMENT INC.
OFFER FOR ALL OUTSTANDING
9-1/2% SENIOR SUBORDINATED NOTES DUE 2011
IN EXCHANGE FOR
9-1/2% EXCHANGE SENIOR SUBORDINATED NOTES DUE 2011
To Brokers, Dealers, Commercial Banks
Trust Companies and Other Nominees:
Enclosed for your consideration is a Prospectus dated _______________,
1999 (as the same may be amended or supplemented from time to time, the
"Prospectus") and a form of Letter of Transmittal (the "Letter of
Transmittal") relating to the offer (the "Exchange Offer") by AMC
Entertainment Inc. (the "Company") to exchange $1,000 principal amount of its
9-1/2% Exchange Senior Subordinated Notes due February 1, 2011 (the "Exchange
Notes") that have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to a Registration Statement of which
the Prospectus constitutes a part, for each $1,000 principal amount of its
outstanding 9-1/2% Senior Subordinated Notes due 2011 (the "Initial Notes"),
upon the terms and subject to the conditions set forth in the Prospectus and
the Letter of Transmittal. The Exchange Offer is being made in order to
satisfy certain obligations of the Company contained in the Registration
Rights Agreement dated January 27, 1999, by and among the Company and the
other signatories thereto.
We are asking you to contact your clients for whom you hold Initial
Notes registered in your name or in the name of your nominee. In addition, we
ask you to contact your clients who, to your knowledge, hold Initial Notes
registered in their own name. The Company will not pay any fees or
commissions to any broker, dealer or other person in connection with the
solicitation of tenders pursuant to the Exchange Offer. You will, however, be
reimbursed by the Company for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
The Company will pay all transfer taxes, if any, applicable to the tender of
Initial Notes to it or its order, except as otherwise provided in the
Prospectus and the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus;
2. A Letter of Transmittal for your use in connection with the
tender of Initial Notes and for the information of your clients;
<PAGE>
3. A form of letter that may be sent to your clients for whose
accounts you hold Initial Notes registered in your name or the name of your
nominee; with space provided for obtaining the clients' instructions with
regard to the Exchange Offer;
4. A form of Notice of Guaranteed Delivery; and
5. Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9.
Your prompt action is requested. The Exchange Offer will expire at 5:00
p.m., New York City Time, on ____________, 1999, unless extended (the
"Expiration Date"). Initial Notes tendered pursuant to the Exchange Offer may
be withdrawn, subject to the procedures described in the Prospectus, at any
time prior to the Expiration Date.
In all cases, exchanges of Initial Notes for Exchange Notes accepted for
exchange pursuant to the Exchange Offer will be made only after timely
receipt by the Exchange Agent of (a) a properly completed and duly executed
Letter of Transmittal, or a facsimile thereof, together with any required
signature guarantees and with the certificates representing the Initial Notes
being tendered and any other required documents or (b) an Agent's Message (as
defined in the Prospectus) in lieu of a Letter of Transmittal and a timely
confirmation of a book-entry transfer of such Initial Notes, if such
procedure is available, into the Exchange Agent's account at The Depository
Trust Company pursuant to the procedure for book-entry transfer set forth in
the Prospectus under the caption "The Exchange Offer--Book-Entry Transfer."
Holders who wish to tender their Initial Notes and who cannot deliver
their Initial Notes, the Letter of Transmittal, or any other required
documents to the Exchange Agent prior to the Expiration Date, or holders who
cannot complete the procedure for book-entry transfer on a timely basis, may
effect a tender of such Initial Notes in accordance with the guaranteed
delivery procedures set forth in the Prospectus under the caption "The
Exchange Offer--Guaranteed Delivery Procedures."
Additional copies of the enclosed material may be obtained form the
Exchange Agent, The Bank of New York, by calling (___) ___-____.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH
RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS AND THE LETTER OF TRANSMITTAL.
2
