UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ......... to ...........
Commission File Number 1-8747
AMC ENTERTAINMENT INC.
(Exact name of registrant as specified in its charter)
Delaware 43-1304369
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 West 14th Street
P.O. Box 419615
Kansas City, Missouri 64141-6615
(Address of principal executive offices) (Zip Code)
(816) 221-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No __
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Number of Shares
Title of Each Class of Common Stock Outstanding as of
December 31, 1998
Common Stock, 66 2/3 cents par value 19,427,098
Class B Stock, 66 2/3 cents par value 4,041,993
1
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
INDEX
Page Number
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
Consolidated Statements of Operations 3
Consolidated Balance Sheets 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Item 2.Management's Discussion and Analysis
of Financial Condition and Results of Operations 10
Item 3.Quantitative and Qualitative Disclosures About
Market Risk 23
PART II - OTHER INFORMATION
Item 1.Legal Proceedings 23
Item 4.Submission of Matters to a Vote of Security Holders 26
Item 6.Exhibits and Reports on Form 8-K 27
Signatures 29
2
<PAGE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<CAPTION>
Thirteen Thirty-nine
Weeks Ended Weeks Ended
December 31,January 1, December 31, January 1,
1998 1998 1998 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Admissions $165,812 $140,317 $509,571 $411,034
Concessions 77,436 64,049 239,998 189,476
Other 14,003 11,473 35,784 29,380
-------- -------- -------- --------
Total revenues 257,251 215,839 785,353 629,890
Expenses
Film exhibition costs 88,839 75,583 278,243 227,563
Concession costs 13,356 10,903 38,499 30,810
Other 113,239 85,822 331,634 244,074
-------- -------- -------- --------
Total cost of operations 215,434 172,308 648,376 502,447
General and administrative 14,517 15,041 44,717 41,893
Depreciation and
amortization 23,100 17,227 64,472 50,116
Impairment of long-lived
assets - - - 46,998
-------- -------- -------- --------
Total expenses 253,051 204,576 757,565 641,454
-------- -------- -------- --------
Operating income (loss) 4,200 11,263 27,788 (11,564)
Other expense (income)
Interest expense
Corporate borrowings 7,270 7,552 19,844 20,513
Capital lease obligations 2,079 2,318 6,373 7,007
Investment income (434) (124) (1,085) (805)
Gain on disposition of
assets (901) (864) (2,259) (3,360)
-------- -------- -------- --------
Earnings (loss) before
income taxes (3,814) 2,381 4,915 (34,919)
Income tax provision (2,100) 950 1,800 (14,150)
-------- -------- -------- --------
Net earnings (loss) $ (1,714)$ 1,431 $ 3,115 $(20,769)
======== ======== ======== ========
Preferred dividends - 1,198 - 3,849
-------- -------- -------- --------
Net earnings (loss) for
common shares $ (1,714) $ 233 $ 3,115 $(24,618)
======== ======== ======== ========
Earnings (loss) per share:
Basic $ (.07) $ .01 $.13 $(1.34)
======== ======== ======== ========
Diluted $ (.07) $ .01 $.13 $(1.34)
======== ======== ======== ========
See Notes to Consolidated Financial Statements.
3
</TABLE>
<PAGE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<CAPTION>
December 31, April 2,
1998 1998
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 34,277 $9,881
Receivables, net of allowance for doubtful
accounts of $698 as of December 31, 1998
and $706 as of April 2, 1998 22,352 13,018
Reimbursable construction advances 16,180 58,488
Other current assets 28,407 25,736
-------- --------
Total current assets 101,216 107,123
Property, net 675,321 562,158
Intangible assets, net 20,113 22,066
Other long-term assets 107,802 104,433
-------- --------
Total assets $904,452 $795,780
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 82,158 $ 72,633
Construction payables 7,313 24,588
Accrued expenses and other liabilities 96,071 72,598
Current maturities of
capital lease obligations 3,998 4,017
-------- --------
Total current liabilities 189,540 173,836
Corporate borrowings 452,030 348,990
Capital lease obligations 45,428 50,605
Other long-term liabilities 80,849 82,894
-------- --------
Total liabilities 767,847 656,325
Stockholders' equity:
$1.75 Cumulative Convertible Preferred Stock,
66 2/3 cents par value;1,800,331 shares issued and
outstanding as of April 2, 1998(aggregate
liquidation preference of $45,008 as of
April 2, 1998) - 1,200
Common Stock, 66 2/3 cents par value; 19,447,598 and
15,376,811 shares issued as of December 31, 1998
and April 2, 1998, respectively 12,965 10,251
Convertible Class B Stock, 66 2/3 cents par value;
4,041,993 and 5,015,657 shares
issued and outstanding as of December 31, 1998
and April 2, 1998, respectively 2,695 3,344
Additional paid-in capital 106,713 107,676
Foreign currency translation adjustment (801) (3,689)
Retained earnings 24,157 21,042
-------- --------
145,729 139,824
Less:
Employee notes for Common Stock purchases (8,755) -
Common Stock in treasury, at cost,
20,500 shares as of December 31, 1998
and April 2, 1998 (369) (369)
-------- --------
Total stockholders' equity 136,605 139,455
-------- --------
Total liabilities and stockholders' equity $904,452 $795,780
======== ========
See Notes to Consolidated Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except per share data)
<CAPTION>
Thirty-nine
Weeks Ended
December 31,January 1,
1998 1998
---- ----
(Unaudited)
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND EQUIVALENTS
Cash flows from operating activities:
Net earnings (loss) $3,115 $(20,769)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Impairment of long-lived assets - 46,998
Depreciation and amortization 64,472 50,116
Deferred income taxes - (19,270)
Gain on disposition of long-term assets (2,259) (3,360)
Change in assets and liabilities:
Receivables (9,334) (5,620)
Other current assets (2,671) (4,360)
Accounts payable (1,207) 5,519
Accrued expenses and other liabilities 29,780 33,974
Other, net 561 499
-------- --------
Net cash provided by operating activities 82,457 83,727
-------- --------
Cash flows from investing activities:
Capital expenditures (177,063) (293,507)
Proceeds from sale/leasebacks - 214,300
Investments in real estate - (4,347)
Net change in reimbursable construction advances 42,308 (54,083)
Preopening expenditures (6,723) (6,567)
Proceeds from disposition of long-term assets 10,150 7,357
Other, net (9,480) (6,971)
-------- --------
Net cash used in investing activities (140,808) (143,818)
-------- --------
Cash flows from financing activities:
Net borrowings under revolving credit facility 103,000 70,000
Repurchase of 11 7/8% Senior and 12 5/8% Senior
Subordinated Notes - (5,817)
Principal payments under capital lease and other
obligations (5,196) (2,561)
Cash overdrafts 10,732 17,863
Change in construction payables (17,275) 14,985
Funding of employee notes for Common Stock
purchases, net (8,579) -
Proceeds from exercise of stock options - 22
Dividends paid on $1.75 on preferred stock - (3,884)
Deferred financing costs and other (98) (1,663)
-------- --------
Net cash provided by financing activities 82,584 88,945
-------- --------
Effect of exchange rate changes on cash and
equivalents 163 (44)
-------- --------
Net increase in cash and equivalents 24,396 28,810
Cash and equivalents at beginning of period 9,881 24,715
-------- --------
Cash and equivalents at end of period $ 34,277 $ 53,525
======== ========
5
</TABLE>
<PAGE>
<TABLE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
<CAPTION>
Thirty-nine
Weeks Ended
December 31,January 1,
1998 1998
---- ----
(Unaudited)
<S> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized of
$5,585 and $5,879) $ 26,134 $ 27,568
Income taxes paid 2,913 11,720
6
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
AMC ENTERTAINMENT INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
AMC Entertainment Inc. ("AMCE") is a holding company which, through its
direct and indirect subsidiaries, including American Multi-Cinema, Inc.
("AMC") (collectively with AMCE, unless the context otherwise requires, the
"Company"), is principally involved in the theatrical exhibition business
throughout the United States and in Japan, Portugal, Spain, China (Hong
Kong) and Canada. The Company is also involved in the business of providing
on-screen advertising and other services to AMC and other theatre circuits
through a wholly-owned subsidiary, National Cinema Network, Inc. ("NCN").
Prior to fiscal 1998, NCN was consolidated with the Company as of a
fiscal period end that was one period earlier than the Company's fiscal
period end. Beginning in fiscal year 1998, this one-period reporting lag
was eliminated and NCN results for 1998 include activity for forty-four
weeks.
The accompanying unaudited consolidated financial statements have been
prepared in response to the requirements of Form 10-Q and should be read in
conjunction with the Company's annual report on Form 10-K for the year (52
weeks) ended April 2, 1998. In the opinion of management, these interim
financial statements reflect all adjustments (consisting primarily of normal
recurring adjustments) necessary for a fair presentation of the Company's
financial position and results of operations. Due to the seasonal nature of
the Company's business, results for the thirteen and thirty-nine weeks ended
December 31, 1998 are not necessarily indicative of the results to be
expected for the fiscal year (52 weeks) ending April 1, 1999.
The year-end consolidated balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles.
Certain amounts have been reclassified from prior period consolidated
financial statements to conform with the current year presentation.
NOTE 2 - STOCKHOLDERS' EQUITY
During the thirty-nine weeks ended December 31, 1998, various holders
of the Company's Convertible Preferred Stock converted 1,796,485 shares into
3,097,113 shares of Common Stock at a conversion rate of 1.724 shares of
Common Stock for each share of Convertible Preferred Stock. On April 14,
1998, the Company redeemed the remaining 3,846 shares of Convertible
Preferred Stock at a redemption price of $25.75 per share plus accrued and
unpaid dividends.
On August 11, 1998, the Company and its Co-Chairman and Chief Executive
Officer, Mr. Stanley H. Durwood, together with his six children (the
"Durwood Family Stockholders") completed a registered secondary offering of
3,300,000 shares of Common Stock (the "Secondary Offering") owned by the
Durwood Family Stockholders. In connection with the Secondary Offering, Mr.
Stanley H. Durwood converted 500,000 shares of Convertible Class B Stock to
500,000 shares of Common Stock. Additionally, pursuant to an agreement with
his children, Mr. Stanley H. Durwood converted 473,664 shares of Convertible
Class B Stock to Common Stock for delivery to his children.
On August 11, 1998, the Company loaned one of its officers $5,625,000
to purchase 375,000 shares of Common Stock of the Company in the Secondary
Offering. On September 14, 1998, the Company loaned $3,765,000 to another
of its officers to purchase 250,000 shares of Common Stock of the Company.
The 250,000 shares were purchased in the open market and unused proceeds of
$811,000 were repaid to the Company leaving a remaining unpaid principal
balance of $2,954,000. The loans are unsecured and are due in August and
September of 2003, respectively, may be prepaid in part or full without
penalty, and are represented by promissory notes which bear interest at a
rate (5.57% per annum) at least equal to the applicable federal rate
prescribed by Section 1274 (d) of the Internal Revenue Code in effect on the
date of such loans, payable at maturity.
The Company's Board of Directors has also approved a loan under terms
similar to those described above to Mr. Stanley H. Durwood not to exceed
$10,000,000 to purchase up to 500,000 shares of the Company's Common Stock.
Mr. Durwood's eligibility to participate in this program expires in March,
1999.
NOTE 3 - EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
December 31,January 1, December 31,January 1,
1998 1998 1998 1998
---- ---- ---- ----
(in thousands, except per share data)
<S> <C> <C> <C> <C>
Numerator:
Net earnings (loss) $ (1,714) $ 1,431 $3,115 $ (20,769)
Less: Preferred dividends - 1,198 - 3,849
-------- -------- -------- --------
Net earnings (loss) for basic
and diluted earnings per
share $ (1,714) $ 233 $3,115 $ (24,618)
======== ======== ======== ========
Denominator:
Shares for basic earnings
per share - average shares
outstanding 23,469 18,543 23,348 18,310
Stock options - 246 174 -
-------- -------- -------- --------
Shares for diluted earnings
per share 23,469 18,789 23,522 18,310
======== ======== ======== ========
Basic earnings per share $(0.07) $ 0.01 $ 0.13 $(1.34)
======== ======== ======== ========
Diluted earnings per share $(0.07) $ 0.01 $ 0.13 $(1.34)
======== ======== ======== ========
</TABLE>
During the thirteen weeks ended July 2, 1998, all outstanding shares of
Convertible Preferred Stock were either converted or redeemed. During the
thirteen weeks ended December 31, 1998 and the thirty-nine weeks ended
January 1, 1998, dividends and shares issuable upon conversion of
Convertible Preferred Stock, shares issuable upon exercise of options to
purchase shares of Common Stock, and contingently issuable shares were
excluded from the earnings per share calculation because they were anti-
dilutive.
NOTE 4 - COMPREHENSIVE INCOME
During the current year, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting
Comprehensive Income. The adoption of this statement had no impact on the
Company's consolidated financial position, results of operations or cash
flows. SFAS 130 requires disclosure of comprehensive income and its
components in a company's financial statements. SFAS 130 requires foreign
currency translation adjustments to be included in other comprehensive
income.
The components of comprehensive income for the thirteen and thirty-nine
weeks ended December 31, 1998 and January 1, 1998 are as follows:
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks
Ended
December 31, January 1, December 31,January 1,
1998 1998 1998 1998
---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C>
Net earnings (loss) $ (1,714) $ 1,431 $ 3,115 $(20,679)
Foreign currency translation
adjustment 1,660 (396) 2,888 (1,112)
-------- -------- -------- --------
Comprehensive income $ (54) $ 1,035 $ 6,003 $(21,791)
======== ======== ======== ========
</TABLE>
NOTE 5 - INTERNAL USE SOFTWARE
During fiscal 1999, the Company early adopted Statement of Position 98-
1 ("SOP 98-1"), Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use. SOP 98-1 requires companies to capitalize
certain internal-use software costs once certain criteria are met. Adoption
of this statement did not have a material impact on the Company's
consolidated financial position, results of operations or cash flows.
NOTE 6 - CORPORATE BORROWINGS
On January 27, 1999, the Company sold $225 million of Senior
Subordinated Notes due 2011 (the "Notes") in a private offering. The Notes
bear interest at the rate of 9 1/2% per annum, payable in February and August.
The Notes are redeemable at the option of the Company, 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% of the principal amount thereof on or
after February 1, 2007, plus in each case interest accrued to the redemption
date. Upon a change of control (as defined in the Note Indenture), the
Company will be required to make an offer to repurchase each holder's notes
at a price equal to 101% of the principal amount thereof plus accrued and
unpaid interest to the date of repurchase. The Notes are subordinated to
all existing and future senior indebtedness (as defined in the Note
Indenture) of the Company. The Notes are unsecured senior subordinated
indebtedness of the Company ranking equally with the Company's 9 1/2% Senior
Subordinated Notes due 2009.
The Note Indenture contains certain covenants that, among other things,
restrict the ability of the Company and its subsidiaries to incur additional
indebtedness, pay dividends or make distributions in respect of their
capital stock, purchase or redeem capital stock, engage in transactions with
affiliates, consolidate, merge or sell substantially all of the Company's
assets.
The Note Indenture also requires the Company to use its best efforts to
consummate a registered offer to exchange the Notes (the "Exchange Offer")
for notes of AMCE with terms identical in all material respects to the Notes
or to cause a shelf registration statement with respect to the Notes to
become effective. In the event that certain deadlines relating to the
foregoing undertakings, as specified in the Notes are not met, the interest
rate borne by the Notes could increase by as much as 1.0% per annum. The
Company anticipates meeting such deadlines. Costs related to the issuance
of the Notes were capitalized and will be charged to interest expense,
following the interest method, over the life of the securities. Issuance
costs are estimated to be $5,700,000.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This section contains certain "forward-looking statements" intended to
qualify for the safe harbor from liability established by the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
generally can be identified by use of statements that include words or
phrases such as the Company or its management "believes," "expects,"
"anticipates," "intends," "plans," "foresees" or other words or phrases of
similar import. Similarly, statements that describe the Company's
objectives, plans or goals also are forward-looking statements. All such
forward-looking statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those contemplated
by the relevant forward-looking statement. Important factors that could
cause actual results to differ materially from the expectations of the
Company include, among others: (i) the Company's ability to enter into
various financing programs; (ii) the performance of films licensed by the
Company; (iii) competition; (iv) construction delays; (v) the ability to
open new theatres and screens as currently planned; (vi) general economic
conditions, including adverse changes in inflation and prevailing interest
rates; (vii) demographic changes; (viii) increases in the demand for real
estate; and (ix) changes in real estate, zoning and tax laws. Readers are
urged to consider these factors carefully in evaluating the forward-looking
statements. The forward-looking statements included herein are made only as
of the date of this Form 10-Q and the Company undertakes no obligation to
publicly update such forward-looking statements to reflect subsequent events
or circumstances.
Operating Results
Set forth in the table below is a summary of revenues, cost of
operations, general and administrative, and depreciation and amortization
expenses attributable to the Company's domestic and international theatrical
exhibition operations and the Company's on-screen advertising business.
<TABLE>
<CAPTION>
Thirteen Thirty-nine
Weeks Ended Weeks Ended
December 31,January 1, December 31, January 1,
12/31/98 1/1/98 % Change 12/31/98 1/1/98 % Change
---- ---- ---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Revenues
Domestic
Admissions $157,114 $134,924 16.4% $488,516 $394,839 23.7%
Concessions 75,333 62,839 19.9 235,140 185,975 26.4
Other 6,955 5,735 21.3 15,937 12,862 23.9
--------- ------- ---- -------- ------- ----
239,402 203,498 17.6 739,593 593,676 24.6
International
Admissions 8,698 5,393 61.3 21,055 16,195 30.0
Concessions 2,103 1,210 73.8 4,858 3,501 38.8
Other 214 42 * 278 60 *
------- ---- ----___ ------ ------- ----
11,015 6,645 65.8 26,191 19,756 32.6
On-screen advertising
and other 6,834 5,696 20.0 19,569 16,458 18.9
----- ------ ---- -------- -------- ----
Total revenues $257,251 $215,839 19.2% $785,353 $629,890 24.7%
======== ======== ====== ========= ======== =====
Cost of Operations
Domestic
Film exhibition
costs $ 84,074$ 72,713 15.6% $266,865 $218,770 22.0%
Concession costs 12,665 10,411 21.7 36,977 29,476 25.4
Rent 39,280 25,702 52.8 114,056 68,356 66.9
Other 63,089 53,905 17.0 192,728 155,312 24.1
--------- ------- ---- ------- -------- -----
199,108 162,731 22.4 610,626 471,914 29.4
International
Film exhibition
costs 4,765 2,870 66.0 11,378 8,793 29.4
Concession costs 691 492 40.4 1,522 1,334 14.1
Rent 2,383 1,414 68.5 5,009 4,386 14.2
Other 3,835 1,349 * 6,950 4,281 62.3
-------- --------- --- ---- ------ ----
11,674 6,125 90.6 24,859 18,794 32.3
On-screen advertising
and other 4,652 3,452 34.8 12,891 11,739 9.8
-------- -------- ---- -------- -------- ----
Total cost of
operations $215,434 $172,308 25.0 %$648,376 $502,447 29.0%
======== ======== ===== ======== ========= ====
General and Administrative
Corporate and domestic $11,006 $12,280 (10.4)% $34,548 $33,440 3.3%
International 2,171 1,660 30.8 6,602 4,804 37.4
On-screen advertising
and other 1,340 1,101 21.7 3,567 3,649 (2.2)
------- ------ ----- ------ ------ ----
Total general and
administrative $14,517 $15,041 (3.5)% $44,717 $41,893 6.7%
------ ------- ---- -------- ------- -----
Depreciation and Amortization
Corporate and domestic$21,499 $16,023 34.2% $60,724 $46,427 30.8%
International 1,023 601 70.2 2,051 1,888 8.6
On-screen advertising
and other 578 603 (4.1) 1,697 1,801 (5.8)
------ ------ ----- ----- -------- -----
Total depreciation
and amortization $23,100 $17,227 34.1% $64,472 $50,116 28.6%
----- -------- ------ ------- -------- -----
*Percentage change in excess of 100%.
</TABLE>
Thirteen weeks ended December 31, 1998 and January 1, 1998.
Revenues. Total revenues increased 19.2%, or $41,412,000, during the
thirteen weeks ended December 31, 1998 compared to the thirteen weeks ended
January 1, 1998.
Total domestic revenues increased 17.6%, or $35,904,000, from the prior
year. Admissions revenues increased 16.4%, or $22,190,000, due to a 13.7%
increase in attendance, which contributed $18,471,000 of the increase, and a
2.4% increase in average ticket prices, which contributed $3,719,000 of the
increase. Attendance at megaplexes (theatres with predominantly stadium-
style seating) increased as a result of the addition of 22 new megaplexes
with 519 screens since January 1, 1998 offset by a 1.6% decrease in
attendance at comparable megaplexes (theatres opened before the third
quarter of fiscal year 1998). Attendance at multiplexes (theatres generally
without stadium-style seating) decreased due to a 13.3% decrease in
attendance at comparable multiplexes and the closure or sale of 15
multiplexes with 90 screens since January 1, 1998. The decline in
attendance at comparable multiplexes was related primarily to certain
multiplexes experiencing competition from new megaplexes operated by the
Company and other competing theatre circuits, a trend the Company generally
anticipates will continue. The increase in average ticket prices was due to
price increases and the growing number of megaplexes in the Company's
theatre circuit, which yield higher average ticket prices than multiplexes.
Concessions revenues increased 19.9%, or $12,494,000, due to the increase in
total attendance, which contributed $8,602,000 of the increase, and a 5.4%
increase in average concessions per patron, which contributed $3,892,000 of
the increase. The increase in average concessions per patron was
attributable to the increasing number of megaplexes in the Company's theatre
circuit, where concession spending per patron is higher than in multiplexes.
Total international revenues increased 65.8%, or $4,370,000, from the
prior year. Admissions revenues increased 61.3%, or $3,305,000, due
primarily to increases in attendance from the addition of a 24-screen
megaplex in Spain, a 16-screen megaplex in Japan, an 11-screen megaplex in
China (Hong Kong) and two new megaplexes with a total of 44 screens in
Canada during the thirteen weeks ended December 31, 1998. Attendance at
comparable international megaplexes increased 2.7% for the thirteen weeks
ended December 31, 1998 compared to the thirteen weeks ended January 1,
1998. Concessions revenues increased 73.8%, or $893,000, due primarily to
the increase in total attendance. International revenues were positively
impacted by the weakening of the U.S. dollar, although this did not have a
material impact on consolidated net earnings.
On-screen advertising and other revenues increased 20.0%, or
$1,138,000, from the prior year due primarily to an increase in the number
of screens served.
Cost of Operations. Total cost of operations increased 25.0%, or
$43,126,000, during the thirteen weeks ended December 31, 1998 compared to
the thirteen weeks ended January 1, 1998.
Total domestic cost of operations increased 22.4%, or $36,377,000, from
the prior year. Film exhibition costs increased 15.6%, or $11,361,000, due
to higher attendance, which contributed $11,959,000 of the increase, offset
by a decrease in the percentage of admissions paid to film distributors,
which reduced film exhibition costs by $598,000. As a percentage of
admissions revenues, film exhibition costs were 53.5% in the current year
compared with 53.9% in the prior year. Concession costs increased 21.7%, or
$2,254,000, due to the increase in concessions revenues, which contributed
$2,070,000 of the increase, and an increase in concession costs as a
percentage of concessions revenues, which produced an increase in concession
costs of $184,000. As a percentage of concessions revenues, concession
costs were 16.8% in the current year compared with 16.6% in the prior year.
Rent expense increased 52.8%, or $13,578,000, due to the higher number of
screens in operation, the growing number of megaplexes in the Company's
theatre circuit, which generally have higher rent per screen than
multiplexes, and the sale and lease back during November and December of the
prior year of the real estate assets associated with 13 megaplexes,
including seven theatres opened during fiscal 1998, to Entertainment
Properties Trust ("EPT"), a real estate investment trust (the "Sale and
Lease Back Transaction"). Other cost of operations increased 17.0%, or
$9,184,000, from the prior year due to the higher number of screens in
operation. As a percentage of revenues, other cost of operations was 26.3%
during the current year as compared with 26.5% in the prior year.
Total international cost of operations increased 90.6%, or $5,549,000,
from the prior year. Film exhibition costs increased 66.0%, or $1,895,000,
due to higher attendance and an increase in the percentage of admissions
paid to film distributors. Rent expense increased 68.5%, or $969,000, and
other cost of operations increased $2,486,000, from the prior year,
primarily due to the increased number of international screens in operation.
International cost of operations were negatively impacted by the weakening
of the U.S. dollar, although this did not have a material impact on
consolidated net earnings.
On-screen advertising and other cost of operations increased 34.8%, or
$1,200,000, due to an increase in the number of screens served.
General and Administrative. General and administrative expenses
decreased 3.5%, or$524,000, during the thirteen weeks ended December 31,
1998.
Corporate and domestic general and administrative expenses decreased
10.4%, or $1,274,000, primarily due to a decrease in bonus expense which
resulted from a decline in the Company's profitability.
International general and administrative expenses increased 30.8%, or
$511,000, primarily due to the Company's international expansion program.
On-screen advertising and other general and administrative expenses
increased 21.7%, or $239,000, due to an increase in the number of screens
served.
Depreciation and Amortization. Depreciation and amortization increased
34.1%, or $5,873,000, during the thirteen weeks ended December 31, 1998.
This increase was caused by an increase in employed theatre assets resulting
from the Company's expansion plan, which was partially offset by lower
depreciation and amortization as a result of reduced carrying amounts of
impaired multiplex assets.
Interest Expense. Interest expense decreased 5.3%, or $521,000, during
the thirteen weeks ended December 31, 1998 compared to the prior year,
primarily due to a decrease in capital lease obligations.
Gain on Disposition of Assets. Gain on disposition of assets
increased $37,000 from a gain of $864,000 in the prior year to a gain of
$901,000 during the thirteen weeks ended December 31, 1998. The prior and
current year results both include the sales of one of the Company's
multiplexes.
Income Tax Provision. The provision for income taxes decreased
$3,050,000 to a benefit of $2,100,000 during the thirteen weeks ended
December 31, 1998 from an expense of $950,000 in the prior year. The
effective tax rate was 55.1% for the thirteen weeks ended December 31, 1998
compared to 39.9% for the thirteen weeks ended January 1, 1998. The change
in the effective tax rate is primarily due to a change in the expected
annual effective tax rate for the current fiscal year from the prior year.
The Company adjusts its expected annual effective tax rate on a quarterly
basis based on current projections of non-deductible expenses and pre-tax
earnings or losses.
Net Earnings. Net earnings decreased $3,145,000 during the
thirteen weeks ended December 31, 1998 to a loss of $1,714,000 from earnings
of $1,431,000 in the prior year. Net loss per common share, after deducting
preferred dividends, was $.07 compared to earnings of $.01 in the prior year.
Thirty-nine Weeks Ended December 31, 1998 and January 1, 1998
Revenues. Total revenues increased 24.7%, or $155,463,000, during the
thirty-nine weeks ended December 31, 1998 compared to the thirty-nine weeks
ended January 1, 1998.
Total domestic revenues increased 24.6%, or $145,917,000, from the
prior year. Admissions revenues increased 23.7%, or $93,677,000, due to a
20.0% increase in attendance, which contributed $78,920,000 of the increase,
and a 3.1% increase in average ticket prices, which contributed $14,757,000
of the increase. Attendance at megaplexes increased as a result of the
addition of 22 new megaplexes with 519 screens since January 1, 1998.
Attendance at comparable megaplexes (theatres opened before the first
quarter of fiscal year 1998) was essentially unchanged from the prior year.
Attendance at multiplexes decreased due to a 8.0% decrease in attendance at
comparable multiplexes and the closure or sale of 15 multiplexes with 90
screens since January 1, 1998. The decline in attendance at comparable
multiplexes was related primarily to certain multiplexes experiencing
competition from new megaplexes operated by the Company and other competing
theatre circuits, a trend the Company generally anticipates will continue.
The increase in average ticket prices was due to price increases and the
growing number of megaplexes in the Company's theatre circuit, which yield
higher average ticket prices than multiplexes. Concessions revenues
increased 26.4%, or $49,165,000, due to the increase in total attendance,
which contributed $37,173,000 of the increase, and a 5.4% increase in
average concessions per patron, which contributed $11,992,000 of the
increase. The increase in average concessions per patron was attributable
to the increasing number of megaplexes in the Company's theatre circuit,
where concession spending per patron is higher than in multiplexes.
Total international revenues increased by 32.6%, or $6,435,000, from
the prior year. Admissions revenues increased 30.0%, or $4,860,000, due
primarily to increases in attendance from the addition of a 24-screen
megaplex in Spain, a 16-screen megaplex in Japan, an 11-screen megaplex in
China (Hong Kong) and two new megaplexes with a total of 44 screens in
Canada during the thirteen weeks ended December 31, 1998. Attendance at
comparable international megaplexes increased 17.5% for the thirty-nine
weeks ended December 31, 1998 compared to the thirty-nine weeks ended
January 1, 1998. Concessions revenues increased 38.8%, or $1,357,000, due
primarily to the increase in total attendance. International revenues were
negatively impacted by a stronger U.S. dollar, compared to the prior year,
although this did not have a material impact on consolidated net earnings.
On-screen advertising and other revenues increased 18.9%, or
$3,111,000, due to an increase in the number of screens served, offset by a
change in the number of periods included in the results of operations of the
Company's on-screen advertising business.
Cost of Operations. Total cost of operations increased 29.0%, or
$145,929,000, during the thirty-nine weeks ended December 31, 1998 compared
to the thirty-nine weeks ended January 1, 1998.
Total domestic cost of operations increased 29.4%, or $138,712,000,
from the prior year. Film exhibition costs increased 22.0%, or $48,095,000,
due to higher attendance, which contributed $51,905,000 of the increase,
offset by a decrease in the percentage of admissions paid to film
distributors, which caused a decrease of $3,810,000. As a percentage of
admissions revenues, film exhibition costs decreased to 54.6% in the current
year compared with 55.4% in the prior year. Film exhibition costs in the
first thirteen weeks of the prior year included the effects of a change in
attendance patterns and the popularity of films released during the period
which had higher film exhibition terms. Attendance was more concentrated in
the early weeks for the films released during the first quarter of the prior
year, which typically results in higher film exhibition costs. Attendance
patterns during the first thirteen weeks of the current year were more
evenly distributed than in the prior year. The 25.4%, or $7,501,000,
increase in concession costs is attributable to the increase in concessions
revenues, which contributed $7,792,000 of the increase, offset by a decrease
in concession costs as a percentage of concessions revenue, which produced a
decrease in concession costs of $291,000. As a percentage of concessions
revenues, concession costs decreased from 15.8% to 15.7%. Rent expense
increased 66.9%, or $45,700,000, due to the higher number of screens in
operation, the growing number of megaplexes in the Company's circuit, which
generally have higher rent per screen than multiplexes, and the Sale and
Lease Back Transaction. Other cost of operations increased 24.1%, or
$37,416,000. Other cost of operations includes $2,801,000 of theatre closure
expense related to actual and estimated lease exit costs on five multiplexes
during the current year. As a percentage of total revenues, other cost of
operations decreased from 26.2% in the prior year to 26.1% in the current
year.
Total international cost of operations increased 32.3%, or $6,065,000,
from the prior year. Film exhibition costs increased 29.4%, or $2,585,000,
due to higher attendance offset by a decrease in the percentage of
admissions paid to film distributors. Rent expense increased 14.2%, or
$623,000, and other cost of operations increased 62.3%, or $2,669,000, from
the prior year primarily due to the increased number of international
screens in operation. International cost of operations were positively
impacted by a stronger U.S. dollar, compared to the prior year, although
this did not have a material impact on consolidated net earnings.
On-screen advertising and other cost of operations increased 9.8%, or
$1,152,000, due to an increase in the number of screens served offset by the
decrease in the number of periods included in the results of operations of
the Company's on-screen advertising business.
General and Administrative. General and administrative expenses
increased 6.7%, or $2,824,000, during the thirty-nine weeks ended December
31, 1998.
Corporate and domestic general and administrative expenses increased
3.3%, or $1,108,000, primarily due to increased payroll and other costs
associated with the Company's expansion program.
International general and administrative expenses increased 37.4%, or
$1,798,000, primarily due to the Company's international expansion program.
On-screen advertising and other general and administrative costs
decreased 2.2%, or $82,000, primarily due to the change in the number of
periods included in the results of operations for the Company's on-screen
advertising business.
Depreciation and Amortization. Depreciation and amortization increased
28.6%, or $14,356,000, during the thirty-nine weeks ended December 31, 1998.
This increase was caused by an increase in employed theatre assets resulting
from the Company's expansion plan which was partially offset by reduced
depreciation and amortization as a result of the reduced carrying amount of
impaired multiplex assets.
Impairment of Long-lived Assets. During the thirty-nine weeks ended
January 1, 1998, the Company recognized a non-cash impairment loss of
$46,998,000 ($27,728,000 after tax, or $1.51 per share) on 59 multiplex
theatres with 412 screens in 14 states (primarily California, Texas,
Missouri, Arizona and Florida) including a loss of $523,000 associated with
10 theatres that were included in impairment losses recognized in previous
periods. The expected future cash flows of these theatres, undiscounted
and without interest charges, were less than the carrying value of the
theatre assets.
The summer of 1997 was the first summer film season, generally the
highest grossing period for the film industry, that a significant number of
megaplexes of the Company and its competitors were operating (the first
megaplex, Grand 24, was opened by the Company in May 1995). During this
period, the financial results of certain multiplexes of the Company were
significantly less than anticipated at the beginning of fiscal 1998 due
primarily to competition from the newer megaplex theatres. As a result, the
Company initiated a review of its portfolio of theatres to identify those
theatres which are not expected to provide an adequate financial return in
the future. The Company anticipates that certain of its multiplexes may be
disposed of or closed in the intermediate term, but continues to evaluate
its future plans for such theatres. 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.
Interest Expense. Interest expense decreased 4.7%, or $1,303,000,
during the thirty-nine weeks ended December 31, 1998, primarily due to a
reduction in capital lease obligations.
Gain on Disposition of Assets. Gain on disposition of assets decreased
$1,101,000 to a gain of $2,259,000 during the thirty-nine weeks ended
December 31, 1998 from a gain of $3,360,000 in the prior year and includes
the sale of three of the Company's multiplexes during the current period and
two during the prior period.
Income Tax Provision. The provision for income taxes increased
$15,950,000 to an expense of$1,800,000 during the current year from a
benefit of $14,150,000 in the prior year. The effective tax rate was 36.6%
during the current year compared to 40.5% in the prior year. The change in
the effective tax rate is primarily due to a change in the expected annual
effective tax rate for the current fiscal year from the prior year. The
Company adjusts its expected annual effective tax rate on a quarterly basis
based on current projections of non-deductible expenses and pre-tax earnings
or losses.
Net Earnings. Net earnings increased $23,884,000 during the thirty-
nine weeks ended December 31, 1998 to earnings of $3,115,000 from a loss
of $20,769,000 in the prior year. Net earnings per common share, after
deducting preferred dividends, was $.13 compared to a loss of $1.34 in the
prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's revenues are collected in cash, principally through box
office admissions and theatre concessions sales. The Company has an
operating "float" which partially finances its operations and which
generally permits the Company to maintain a smaller amount of working
capital capacity. This float exists because admissions revenues are
received in cash, while exhibition costs (primarily film rentals) are
ordinarily paid to distributors from 30 to 45 days following receipt of box
office admissions revenues. The Company is only occasionally required to
make advance payments or non-refundable guaranties of film rentals. Film
distributors generally release during the summer and holiday seasons the
films which they anticipate will be the most successful. Consequently, the
Company typically generates higher revenues during such periods. Cash flows
from operating activities, as reflected in the Consolidated Statements of
Cash Flows, were $82,457,000 and $83,727,000 for the thirty-nine weeks ended
December 31, 1998 and January 1, 1998, respectively.
The Company is currently expanding its domestic theatre circuit and
entering select international markets. During the current fiscal year, the
Company opened 15 megaplexes with 327 screens and acquired four multiplexes
with 29 screens. The Company plans to continue this expansion by opening 24
screens in one megaplex during the remainder of fiscal 1999. In addition,
the Company sold three multiplexes with 17 screens, closed five multiplexes
with 32 screens and discontinued operating one managed theatre with one
screen resulting in a circuit total of 59 megaplexes with 1,314 screens and
180 multiplexes with 1,434 screens as of December 31, 1998.
The costs of constructing new theatres are funded by the Company
through internally generated cash flow or borrowed funds. The Company
generally leases its theatres pursuant to long-term non-cancelable operating
leases which require the developer, who owns the property, to reimburse the
Company for a portion of the construction costs. However, the Company 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 operating leases. During fiscal 1999, 13 new theatres
with 277 screens were leased from developers. Historically, the Company has
owned and paid for the equipment necessary to fixture a theatre. However,
the Company has recently entered into a master lease agreement for up to
$25,000,000 of equipment necessary to fixture certain theatres. The master
lease agreement has an initial term of six years and includes early
termination and purchase options. The Company classifies these leases as
operating leases. As of December 31, 1998, the Company had construction in
progress of $57,052,000 and reimbursable construction advances (amounts due
from developers on leased theatres) of $16,180,000. The Company had 10
megaplexes with 242 screens under construction on December 31, 1998.
During the thirty-nine weeks ended December 31, 1998, the Company had
capital expenditures of $177,063,000 and estimates that total capital
expenditures for 1999 will aggregate approximately $290 million. The
Company estimates that total capital expenditures for 2000 will aggregate
approximately $310 million. Included in these amounts are real estate
assets which the Company plans to place into sale and leaseback or other
comparable financing programs, which will have the effect of reducing the
Company's net cash outlays.
On August 11, 1998, the Company loaned one of its officers $5,625,000
to purchase 375,000 shares of Common Stock of the Company in the Secondary
Offering. On September 14, 1998, the Company loaned $3,765,000 to another
of its officers to purchase 250,000 shares of Common Stock of the Company.
The 250,000 shares were purchased in the open market and unused proceeds of
$811,000 were repaid to the Company leaving a remaining unpaid principal
balance of $2,954,000. The loans are unsecured and are due in August and
September of 2003, respectively, may be prepaid in part or full without
penalty, and are represented by promissory notes which bear interest at a
rate (5.57% per annum) at least equal to the applicable federal rate
prescribed by Section 1274 (d) of the Internal Revenue Code in effect on the
date of such loans, payable at maturity.
The Company's Board of Directors has also approved a loan under the
same terms described above to Mr. Stanley H. Durwood not to exceed
$10,000,000 to purchase up to 500,000 shares of the Company's Common Stock.
Mr. Durwood's eligibility to participate in this program expires in March,
1999.
On January 27, 1999, the company sold $225 million aggregate principal
amount of 9 1/2% Senior Subordinated Notes due 2011 (the "Notes") in a private
offering. Net proceeds from the issuance of the Notes (approximately $219.3
million) were used to reduce borrowings under the Credit Facility.
The Notes bear interest at the rate of 9 1/2% per annum, payable in
February and August. The Notes are redeemable at the option of the Company,
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% of the principal
amount thereof on or after February 1, 2007, plus in each case interest
accrued to the redemption date. Upon a change of control (as defined in the
Note Indenture), the Company will be required to make an offer to repurchase
each holder's Notes at a price equal to 101% of the principal amount thereof
plus accrued and unpaid interest to the date of repurchase. The Notes are
subordinated to all existing and future senior indebtedness (as defined in
the Note Indenture) of the Company. The Notes are unsecured senior
subordinated indebtedness of the Company ranking equally with the Company's
9 1/2% Senior Subordinated Notes due 2009.
The Company has entered into a registration rights agreement in which
it has agreed to use its best efforts to (i) file and cause to become
effective by June 26, 1999, a registration statement relating to a
registered offer to exchange the Notes (the "Exchange Offer") for notes of
AMCE with terms identical in all material respects to the Notes. If the
Exchange Offer registration statement is not consummated by July 26, 1999,
the Company has agreed that it will file a shelf registration statement with
respect to the Notes. In the event that (a) neither the Exchange Offer
registration statement nor the shelf registration statement is filed on or
prior to April 27, 1999, (b) neither the Exchange Offer registration
statement nor the shelf registration statement is declared effective on or
prior to June 26, 1999, (c) neither the Exchange Offer is consummated nor a
shelf registration statement, with respect to the Notes, is declared
effective on or prior to July 26, 1999 or (d) 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 the
Exchange Offer, in the case of the Exchange Offer registration statement, or
resales of Notes in the case of a shelf registration statement, in
accordance with and during the periods specified in the registration rights
agreement (each such event referred to in clauses (a) through (d), a
("Registration Default"), interest ("Special Interest") will accrue on the
principal amount of the Notes (in addition to the stated interest on the
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.
The Company's Credit Facility permits borrowings at interest rates
based on either the bank's base rate or LIBOR and requires an annual
commitment fee based on margin ratios that could result in a rate of .1875%
to .375% on the unused portion of the commitment. The Credit Facility
matures on April 10, 2004. The commitment thereunder will be reduced by $25
million on each of December 31, 2002, March 31, 2003, June 30, 2003 and
September 30, 2003 and by $50 million on December 31, 2003. As of December
31, 1998, the Company had outstanding borrowings of $253 million under the
Credit Facility at an average interest rate of 6.85% per annum, and
$165,000,000 was available for borrowing under the Credit Facility.
The total commitment under the Credit Facility is $425 million, but the
facility contains covenants that limit the Company's ability to incur debt
(whether under the Credit Facility or from other sources). The Company
believes that, as of December 31, 1998, after giving effect to the use of
the net proceeds from the sale of the Notes, it would have had available
approximately $183 million additional borrowing capacity under the Credit
Facility. The Company is in the process of negotiating with its banks to
increase its capacity to utilize the bank commitment or otherwise incur
debt. Subject to favorable market conditions, the Company also plans to sell
and leaseback the real estate assets associated with newly constructed
megaplex theatres, which would be an additional source of financing.
Covenants under the Credit Facility impose limitations on indebtedness,
creation of liens, change of control, transactions with affiliates, mergers,
investments, guaranties, asset sales, dividends, business activities and
pledges. In addition, the Credit Facility contains certain financial
covenants. Covenants under the Indenture relating to the Company's 9 1/2 %
Senior Subordinated Notes due 2009 impose limitations on the incurrence of
indebtedness, dividends, purchases or redemptions of stock, transactions
with affiliates, and mergers and sale of assets, and require the Company to
make an offer to purchase the 9 1/2% Senior Subordinated Notes due 2009 upon
the occurrence of a change in control, as defined in the Indenture. As of
December 31, 1998, the Company was in compliance with all financial
covenants relating to the Credit Facility.
During fiscal 1998, the Company sold the real estate assets associated
with 13 megaplex theatres, including seven theatres opened during fiscal
1998, to EPT for an aggregate purchase price of $283,800,000. Proceeds from
the Sale and Lease Back Transaction were applied to reduce indebtedness
under the Company's Credit Facility. The Company leased the real estate
assets associated with the theatres from EPT pursuant to non-cancelable
operating leases with terms ranging from 13 to 15 years with options to
extend for up to an additional 20 years. The Company has granted an
option to EPT to acquire one megaplex theatre for the cost to the Company of
developing and constructing such property. In addition, for a period of
five years subsequent to November 1997, EPT will have a right of first
refusal and first offer to purchase and lease back to the Company the real
estate assets associated with any megaplex theatre and related entertainment
property owned or ground-leased by the Company, exercisable upon the
Company's intended disposition of such property. As of December 31, 1998,
the Company had one open megaplex and one megaplex under construction that
would be subject to EPT's right of first refusal and first offer to purchase
should the Company seek to dispose of such megaplexes. The leases are
triple net leases that require the Company to pay substantially all expenses
associated with the operation of the theatres, such as taxes and other
governmental charges, insurance, utilities, service, maintenance and any
ground lease payments.
The Company believes that cash generated from operations, existing cash
and equivalents, amounts received from sale and lease back transactions and
the available commitment amount under its Credit Facility will be sufficient
to fund operations and planned capital expenditures for the next 12 months.
However, a failure to amend the Credit Facility as contemplated and or enter
into sale and lease back transactions could adversely affect the Company's
ability to continue its expansion program.
During the thirty-nine weeks ended December 31, 1998, various holders
of the Company's Convertible Preferred Stock converted 1,796,485 shares into
3,097,113 shares of Common Stock at a conversion rate of 1.724 shares of
Common Stock for each share of Convertible Preferred Stock. On April 14,
1998, the Company redeemed the remaining 3,846 shares of Convertible
Preferred Stock at a redemption price of $25.75 per share plus accrued and
unpaid dividends. Preferred Stock dividend payments decreased $3,884,000
during the thirty-nine weeks ended December 31, 1998 compared to the prior
year as a result of the conversions.
Year 2000 - State of Readiness
Potential Impact 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 the Company's 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, the Company relies upon outside third
parties (?business partners") to supply many of the products and services
that it needs in its business. Such products include films which it
exhibits and concession products which it sells. Attendance at the
Company's theatres could be severely impacted if one or more film producers
are unable to produce new films because of Year 2000 issues. The Company
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 the Company's operations.
IT Systems. The Company utilizes a weighted methodology to evaluate
the readiness of its corporate and theatre level IT systems. For this
purpose, corporate and theatre system types include commercial off-the-shelf
software, custom in-house developed software, ticketing system software,
concession system software and hardware systems such as workstations and
servers. The Company has weighted each corporate and theatre system based
on its overall importance to the organization. The Company's readiness is
evaluated in terms of a five-phase process utilized in the Year 2000
strategic plan (the "Plan") with appropriate weighting given to each phase
based on its relative importance to IT system Year 2000 readiness. The
phases may generally be described as follows: (i) develop company-wide
awareness; (ii) inventory and assess internal systems and business partners,
and develop contingency plans for systems that cannot be renovated; (iii)
renovate critical systems and contact material business partners; (iv)
validate and test critical systems, analyze responses from critical business
partners and develop contingency plans for non-compliant partners; and (v)
implement renovated systems and contingency plans. The Company has placed a
high level of importance on its corporate and theatre software systems and a
lesser degree of importance on its hardware systems when evaluating Year
2000 readiness. As a result, the Company has focused more of its initial
efforts toward Year 2000 readiness with respect to its software systems than
it has with respect to its hardware systems. Additionally, the Company
believes that the assessment, validation and testing and implementation
phases are the most important phases in its Plan.
Based on the weighting methodology described above, the Company has
assessed 91% of its corporate IT systems and as of December 31, 1998 has
renovated 62% of those systems that require renovation as a result of the
Year 2000 issue. In the aggregate, as of December 31, 1998, 72% of the
Company's corporate IT systems have been tested and verified as being Year
2000 ready. The percentage of corporate IT systems that have been tested
and verified as being Year 2000 ready assumes that a significant component
of commercial-off-the-shelf software, the recently installed Oracle
financial applications, is Year 2000 ready. This system was warranted to be
Year 2000 ready when purchased. Although the Company has plans to test and
verify the Oracle financial applications to validate that the implementation
is in fact Year 2000 ready, it does not believe that it has a significant
risk with respect to the Oracle financial applications.
Based on the weighting methodology described above, the Company has
assessed 81% of its theatre IT systems and as of December 31, 1998 has
renovated 51% of those systems that require renovation as a result of the
Year 2000 issue. In the aggregate, as of December 31, 1998, 35% of the
Company's theatre IT systems have been tested and verified as being Year
2000 ready.
Overall, the Company has assessed its Plan with respect to IT systems
as being 63% complete as of December 31, 1998. Although, no assurance can
be given, the Company does not believe that it has material exposure to the
Year 2000 issue with respect to its internal IT systems.
Non-IT Systems. The Company's non-IT systems are currently being
assessed. Based on budgeted and expended personnel hours, assessment of non-
IT systems was approximately 80% complete as of December 31, 1998. The
Company's revised goals are to complete assessment and develop a plan of
remediation for non-IT systems by March 1, 1999 and to commence remediation
by April 30, 1999.
Third Parties. The Company is in the process of identifying and
assessing potential Year 2000 readiness risks associated with its outside
business partners. Based on budgeted and expended personnel hours,
assessment of third parties was approximately 31% complete as of December
31, 1998. The Company's revised goals are to complete its inventory of
business partners and to communicate with material business partners
regarding their Year 2000 readiness by March 31, 1999, and to develop
contingency plans for dealing with non-ready partners by April 30, 1999.
Contingency Planning. Although the Company presently does not have
all contingency plans in place to address the possibility that either it or
its material business partners may not be Year 2000 ready, it has started a
process to develop such plans and expects that contingency plans will be in
place by April 30, 1999. The Company has the ability to issue theatre
tickets manually in the event of a system failure.
Costs. Although a definitive estimate of costs associated with
required modifications to address the Year 2000 issue cannot be made until
the Company has at least completed the assessment phase of its Plan,
presently management does not expect such costs to be material to the
Company's results of operations, liquidity or financial condition. The
total amount expended from July 1, 1996 through December 31, 1998 was
approximately $230,000. Based on information presently known, the total
amount expected to be expended on the Year 2000 effort for IT systems is
approximately $1,600,000, primarily comprised of software upgrades and
replacement costs, internal personnel hours and consulting costs. To date,
the Year 2000 effort has been funded primarily from the existing IT budget.
Readers are cautioned that forward looking statements contained in this
section should be read in conjunction with the Company's disclosures under
the heading ?Forward Looking Statements". In addition to the factors listed
therein which could cause actual results to be different from those
anticipated, the following special factors could affect the Company's
ability to be Year 2000 ready: (i) the Company's ability to implement the
Plan, (ii) cooperation and participation by business partners, (iii) the
availability and cost of trained personnel and the ability to recruit and
retain them and (iv) the ability to locate all system coding requiring
correction.
Euro Conversion
A single currency called the euro was introduced in Europe on January
1, 1999. Eleven of the fifteen member countries of the European Union
adopted the euro as their common legal currency on that date. Fixed
conversion rates between these participating countries' existing currencies
(the "legacy currencies") and the euro were established as of that date.
The legacy currencies are scheduled to remain legal tender as denominations
of the euro until January 1, 2002. During this transition period, parties
may pay for items using either the euro or a participating country's legacy
currency.
The Company currently operates one theatre in Portugal and one theatre
in Spain. Both countries are member countries that adopted as of January 1,
1999. The Company has implemented necessary changes to accounting,
operational, and payment systems to accommodate the introduction of the
euro. The Company does not anticipate that the conversion will have a
material impact on its consolidated financial position, results of
operations or cash flows.
New Accounting Pronouncements
During fiscal 1999, the Emerging Issues Task Force (EITF) released
Issue No. 97-10, The Effect of Lessee Involvement in Asset Construction.
Issue No. 97-10 is applicable to entities involved on behalf of an owner-
lessor with the construction of an asset that will be leased to the lessee
when construction of the asset is completed. The Company typically is
responsible for directly paying project costs that are in excess of an
agreed upon amount to be paid for by the owner-lessor. Generally, these
project costs paid by the Company include elements that are considered to be
structural in nature as defined by Issue No. 97-10. As a result, the Company
believes it would be considered the owner of these projects during
construction. The consensus reached in Issue No. 97-10 applies to
construction projects committed to after May 21, 1998 and also to those
projects that were committed to on May 21, 1998 if construction does not
commence by December 31, 1999. Unless the Company changes the manner in
which it contracts for the construction of theatres, the Company believes
that Issue No. 97-10 will require certain of its future operating leases to
be recorded on its Balance Sheet as lease financing obligations. The
Company is in the process of evaluating the impact of Issue 97-10 on its
consolidated financial position, results of operations and cash flows.
During fiscal 1999, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"), Accounting
for Derivative Instruments and Hedging Activities. The statement requires
companies to recognize all derivatives as either assets or liabilities, with
the instruments measured at fair value. The accounting for changes in fair
value of a derivative depends on the intended use of the derivative and the
resulting designation. The statement is effective for all fiscal years
beginning after June 15, 1999. The statement will become effective for the
Company in fiscal 2001. Adoption of this statement is not expected to have a
material impact on the Company's consolidated financial position, results of
operations or cash flows.
During fiscal 1999, the American Institute of Certified Public
Accountants issued Statement of Position 98-5 ("SOP 98-5"), Reporting on the
Costs of Start-up Activities. SOP 98-5 requires costs of start-up
activities to be expensed when incurred. The Company currently capitalizes
such costs and amortizes them over a two-year period. SOP 98-5 is effective
for fiscal years beginning after December 15, 1998. The Company will adopt
this statement in fiscal 2000, which will result in a cumulative effect
adjustment to the Company's results of operations and financial position
based on balances as of April 1, 1999. Had the Company adopted SOP 98-5 at
the beginning of fiscal 1999, such adjustment would have been approximately
$10.6 million, before taxes.
During fiscal 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 131 ("SFAS 131"),
Disclosures About Segments of an Enterprise and Related Information and
Statement of Financial Accounting Standards No. 132 ("SFAS 132"), Employers'
Disclosures about Pensions and Other Postretirement Benefits. SFAS 131
requires new disclosures of segment information in a company's financial
statements and is effective for fiscal years beginning after December 15,
1997. SFAS 132 requires disclosures about pension and other postretirement
benefit plans in a company's financial statements and is effective for
fiscal years beginning after December 15, 1997. These statements will
become effective for the Company in fiscal 1999. Adoption of these
statements will not impact the Company's consolidated financial position,
results of operations or cash flows.
Other
A subsidiary of the Company is involved with the pre-development of a
retail/entertainment district in downtown Kansas City, Missouri known as the
"Power & Light District." Under the terms of the subsidiary's agreement
with the Tax Increment Financing Commission of Kansas City, Missouri and the
City of Kansas City, Missouri, the subsidiary is required to engage a
developer and meet certain financial and other conditions in order to
receive assistance in financing the project. In the event that
the Company is not successful in meeting those requirements, carrying costs
related to the project will have to be expensed. Carrying costs related to
the project were approximately $3 million as of December 31, 1998.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As previously disclosed in the Company's Form 10-Q's for the quarters
ended July 2, 1998 and October 1, 1998, in the summer of 1998, the Civil
Rights Division of the Department of Justice ("DOJ") threatened to sue the
Company based on an alleged pattern or practice of violations of Title III
of the Americans with Disabilities Act of 1990 (the "ADA") at its newly
constructed and renovated theatres having stadium-style seating. Since that
time, the Company has been engaging 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, the Company was 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 the Company has
designed, constructed and operated two of its 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 a civil penalty.
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, the Company has attempted to conform to the
evolving standards imposed by the DOJ and believes its theatres are in
substantial compliance with the ADA. However, the Company believes 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. The Company intends to file an answer
denying the allegations 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.
Although no assurances can be given, based on existing precedent involving
stadiums or stadium seating, the Company believes that an adverse decision
in this matter is not likely to have a material adverse effect on its
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 that the Company has 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 the Company has 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,
CV989547SLRNBX, alleging that one of the Company's 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 remove the
alleged barriers. The Company has filed an answer denying the allegations
in the Bell suit and expects to file an answer denying the allegations in
the Harris suit.
On July 27, 1998, in the United States District Court for the Northern
District of California, Drexler Technology Corporation filed actions against
each of Sony Corporation and its affiliated companies and Dolby
Laboratories, Inc., and has included as defendants various motion picture
distributors and exhibitors, including AMC, Drexler Technology Corp. v. Sony
corp. et al, C98-02936, and Drexler Technology Corp. v. Dolby Labs. et al,
C98-02935. These actions allege infringement of two patents relating to
optical data storage and retrieval systems, which are allegedly infringed by
the encoding of digital sound on motion picture films. These infringement
allegations are based on the production, distribution and exhibition of film
with Sony Dynamic Digital Sound (SDDS) or Dolby Digital technology.
Plaintiff seeks an injunction against continued use of this technology and
also seeks damages. AMC has filed counter claims alleging that plaintiff's
patents are invalid. The court has ordered that the issues of liability and
damages be tried separately, but has not set a trial date.
AMC currently utilizes SDDS systems with respect to 2,338 of its
screens and owns 136 portable systems employing Dolby Digital technology.
AMC is the beneficiary of indemnification arrangements with respect to these
actions. Pursuant to AMC's contractual arrangements with Sony Cinema
Products Corporation ("Sony Cinema"), a subsidiary of Sony Corporation of
America, Sony Cinema is obligated to indemnify, defend and hold harmless AMC
from and against any and all liabilities, damages, losses, costs and
expenses (including attorneys' fees) suffered or incurred by AMC in
connection with any third party claim for alleged infringement of any
patent, trademark or similar right relating to the SDDS systems. The
agreement with Sony Cinema provides that Sony Cinema at its expense and
option, shall (i) settle or defend against such a claim, (ii) procure for
AMC the right to use the SDDS systems in a manner that will cause them to
perform as originally intended under the agreement between AMC and Sony
Cinema; (iii) replace or modify the SDDS systems to avoid infringement; or
(iv) remove the SDDS systems from AMC's facilities (at such time and in such
manner as to not disrupt AMC's business operations) and refund to AMC the
purchase price less depreciation. Dolby Laboratories has agreed (i) to
defend, indemnify and hold AMC harmless from any losses arising out of the
Drexler v. Dolby Labs. action and (ii) in the event the Dolby Digital
technology is found to infringe one or more of the Drexler patents, to
procure for AMC at Dolby's expense the right to make, use and sell the Dolby
Digital technology or to modify it so that it is non-infringing. As a
result, although no assurance can be given, the Company believes that these
actions will not have a material adverse effect on the Company's financial
condition, liquidity or results of operations.
As previously reported in its quarterly report on Form 10-Q for the
quarter ended October 1, 1998, on September 2, 1998 the Company was served
with a lawsuit filed in Canada in the Ontario Court (General Division)
against the Company and its subsidiary, AMC Entertainment International,
Inc. (1107656 Ontario Inc. v. AMC Entertainment Inc. and AMC Entertainment
International Inc., 98-CV- 154393). The lawsuit arose in connection with a
decision by the Company not to execute a lease for a proposed theatre at an
entertainment center being planned by the plaintiff in Markham, Ontario.
Plaintiff's petition claimed that the alleged lease was consistent with the
terms of a prior offer to lease executed in 1997 by the plaintiff and AMC
Entertainment International, Inc. and alleged that the lease had been fully
negotiated and agreed to by the parties. Plaintiff alleged the Company's
action resulted in the wrongful repudiation of the offer to lease and
alleged lease for the proposed theatre and forced the plaintiff to abandon
plans for the entertainment center. Plaintiff claimed damages of
$32,200,000 (Canadian) (approximately $20,700,000 U.S. at current exchange
rates), of which $2,200,000 (approximately $1,400,000 U.S.) was based on
lost development costs allegedly incurred and $30,000,000 (approximately
$19,300,000 U.S.) in lost profits.
Subsequently, the Company and plaintiff entered into a lease for a
theatre, and plaintiff agreed to file a motion to dismiss the lawsuit with
prejudice. The suit was dismissed on November 5, 1998.
The Company is party to various legal proceedings in the ordinary
course of business, none of which is expected to have a material adverse
effect on the Company.
Item 4. Submission of Matters To a Vote of Security Holders
(a) The Company held its Annual Meeting of Stockholders on November 12,
1998.
(b) At the meeting, the following matters were voted upon by the
stockholders:
(i)The election of Directors for the upcoming year.
(ii)A proposal to ratify the appointment of
PricewaterhouseCoopers LLP as independent public accountants
of the Company for the fiscal year ending April 1, 1999.
(iii)A proposal to amend the AMC Entertainment Inc. 1994
Stock Option and Incentive Plan.
The Board of Directors of the Company is composed of seven (7) members.
Five (5) of the directors are elected by the holders of Class B Stock,
voting as a class, and two (2) of the directors are elected by the holders
of Common Stock, voting as a class.
The following were the nominees of management voted upon and elected by
the holders of the Company's Class B Stock and Common Stock as of the record
date:
Class B Stock Common Stock
Stanley H. Durwood William T. Grant, II
Peter C. Brown John P. Mascotte
Philip M. Singleton
Charles J. Egan, Jr.
Paul E. Vardeman
All of the shares of Class B Stock (4,041,993 shares) were voted for the
nominees of management. In the election of directors by the holders of
Common Stock, there were 15,949,962 votes "for" William T. Grant, II and
63,072 votes "against" and 15,950,262 "for" John P. Mascotte and 62,772
"against".
The total votes cast concerning the ratification of the appointment of
PricewaterhouseCoopers LLP were as follows: 56,413,679 voted "for", 15,134
voted "against" and 4,151 "abstentions".
The total votes cast concerning the proposal regarding the Proposed
Amendments to the AMC Entertainment Inc. 1994 Stock Option and Incentive
Plan were as follows: 53,456,897 "for", 2,837,989 voted "against", 11,830
"abstentions" and 126,248 broker non-votes.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION
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 AMCE'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 AMCE'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.
*4.4 Registration Rights Agreement, dated January 27, 1999,
respecting AMC Entertainment Inc.'s 9 1/2% Senior
Subordinated Notes due 2011.
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.
*10.1 Employment agreement between AMC Entertainment Inc. and
Peter C. Brown dated January 1, 1999
*10.2 Employment agreement between AMC Entertainment Inc.,
American Multi-Cinema, Inc. and Philip M. Singleton
dated January 1, 1999
*10.3 Employment agreement between AMC Entertainment Inc.,
American Multi-Cinema, Inc. and Richard M. Fay dated
February 1, 1999.
*10.4 Employment agreement between AMC Entertainment Inc.,
American Multi-Cinema, Inc. and Richard T. Walsh dated
February 1, 1999.
*10.5 AMC Entertainment Inc. 1994 Stock Option and Incentive
Plan, as amended.
*10.6 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.
*27 Financial Data Schedule
_______
* Filed herewith
(b) Reports on Form 8-K
On January 15, 1999, the Company filed a Form 8-K reporting under Item
5(a) the Company's plans to make a private offering of $225 million of
Senior Subordinated Notes.
On January 15, 1999, the Company filed a Form 8-K reporting under Item
5(a) the earnings for the third quarter of fiscal 1999 and under Item 5(b)
the Company's unaudited Consolidated Statements of Operations for the
thirteen and thirty-nine weeks ended December 31, 1998 and January 1, 1998
and the unaudited Consolidated Balance Sheets as of December 31, 1998 and
April 2, 1998.
On January 25, 1999, the Company filed a Form 8-K reporting under item
5(a) the Company's completion of a private offering of $225 million of
Senior Subordinated Notes.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMC ENTERTAINMENT INC.
Date: February 10, 1999 /s/ Peter C. Brown
Peter C. Brown
Co-Chairman of the Board,
President and Chief Financial
Officer
Date: February 10, 1999 /s/ Richard L. Obert
Richard L. Obert
Senior Vice President-
Chief Accounting and
Information Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
Consolidated Financial Statements of AMC Entertainment Inc. as of and for the
thirty-nine weeks ended December 31, 1998, submitted in response to the
requirements to Form 10-Q and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-01-1999
<PERIOD-END> DEC-31-1998
<CASH> 34,277
<SECURITIES> 0
<RECEIVABLES> 39,230
<ALLOWANCES> 698
<INVENTORY> 0
<CURRENT-ASSETS> 101,216
<PP&E> 1,045,762
<DEPRECIATION> 370,441
<TOTAL-ASSETS> 904,452
<CURRENT-LIABILITIES> 189,540
<BONDS> 497,458
0
0
<COMMON> 12,965
<OTHER-SE> 123,640
<TOTAL-LIABILITY-AND-EQUITY> 904,452
<SALES> 239,998
<TOTAL-REVENUES> 785,353
<CGS> 38,499
<TOTAL-COSTS> 648,376
<OTHER-EXPENSES> 64,472
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,217
<INCOME-PRETAX> 4,915
<INCOME-TAX> 1,800
<INCOME-CONTINUING> 3,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,115
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
EXHIBIT 4.3
EXECUTION COPY
AMC Entertainment Inc.
9 1/2% Senior Subordinated Notes due 2011
INDENTURE
Dated as of January 27, 1999
The Bank of New York
Trustee
<PAGE>
INDENTURE dated as of January 27, 1999, between AMC Entertainment
Inc., a Delaware corporation (the "Company") and The Bank of New York,
a New York banking corporation, as Trustee (the "Trustee").
Each party agrees as follows for the benefit of the other party
and for the equal and ratable benefit of the Holders of the Company's
9 1/2% Senior Subordinated Notes due 2011, to be issued, from time to
time, in one or more series as in this Indenture provided (the
"Initial Securities") and, if and when issued pursuant to a registered
or private exchange for the Initial Securities, the Company's 9 1/2%
Senior Subordinated Notes due 2011 (the "Exchange Securities") and if
and when issued pursuant to a private exchange for Initial Securities,
the Company's 9 1/2% Senior Subordinated Notes due 2011 (the "Private
Exchange Securities" and, together with the Initial Securities and the
Exchange Securities, the "Securities"):
ARTICLE I
Definitions and Incorporation by Reference
SECTION 1.01. Definitions.
"9 1/2% Notes due 2009" means the Company's 9 1/2% Senior
Subordinated Notes due 2009.
"Acquired Indebtedness" of any particular Person means
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" means, with respect to any specified Person, (1)
any other Person directly or indirectly controlling or controlled by
or under direct or indirect common control with such specified Person
or (ii) any other Person that owns, directly or indirectly, ten
percent 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.
"Bankruptcy Laws" means the bankruptcy laws of the United
States and the law of any other jurisdiction relating to bankruptcy,
insolvency, winding up, liquidation, reorganization or relief of
debtors.
"Board of Directors" means the Board of Directors of the
Company or any committee of such Board of Directors duly authorized to
act under the Indenture.
"Board Resolution" means 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" means 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 Security is outstanding,
the city in which the principal corporate trust office of the Trustee
is located.
"Capital Lease Obligation" of any Person means 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 means 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 (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the
United States government or any agency or instrumentality,
(iii) 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, (iv) repurchase
obligations with a term of not more than seven days for underlying
securities of the types described in clauses (ii) and (iii) entered
into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) 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
(vi) 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" means the occurrence of, after the date
of the Indenture, either of the following events (a) 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 (b) 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" means the date on which the Original
Securities are originally issued under the Indenture.
"Company" means the Person named as the "Company" in the
first paragraph of this Indenture, until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture,
and thereafter "Company" shall mean such successor Person. To the
extent necessary to comply with the requirements of the provisions of
Trust Indenture Act Sections 310 through 317 as they are applicable to
the Company, the term "Company" shall include any other obligor with
respect to the Securities for the purposes of complying with such
provisions.
"Consolidated EBITDA" means, 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: (i) 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
nonrecurring gains or losses); (ii) Consolidated Interest Expense of
such Person and its Subsidiaries for such period; (iii) depreciation
expense of such Person and its Subsidiaries for such period; (iv)
amortization expense of such Person and its Subsidiaries for such
period including amortization of capitalized debt issuance costs; and
(v) 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: (i) 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, (ii) 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 (iii) 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 means, 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
financial costs); provided that, in making such computation, (A) 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
(B) 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 means, without
duplication, for any period, as applied to any Person, (A) 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 (B) 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 means, 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" means Indebtedness incurred by
the Company or its Subsidiaries in connection with the construction of
motion picture theatres or screens.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be
principally administered, which office at the date of execution of
this Indenture is located at 101 Barclay Street, 21 W, New York, New
York 10286.
"Credit Facility" means 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 extension, revisions, refinancing or
replacement thereof by a lender or syndicate of lenders.
"Currency Hedging Obligations" means the obligations of any
Person pursuant to an arrangement designed to protect such Person
against fluctuations in currency exchange rates.
"Debt Rating" means the rating assigned to the Securities by
Moody's or S&P, as the case may be.
"Default" means any event which is, or after notice or the
passage of time or both, would be, an Event of Default.
"Designated Senior Indebtedness" means (i) all Senior
Indebtedness under the Credit Facility and (ii) 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. The
"authorized representative" of Designated Senior Indebtedness shall be
the agent under the Credit Facility (initially, The Bank of Nova
Scotia) or other representative, designated in writing by the Company
to the Trustee, of the holders of any class or issue of Designated
Senior Indebtedness.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Fair Market Value" means, 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" means
generally accepted accounting principles in the United States,
consistently applied.
"Guarantee" means, 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 (i) 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 (ii) 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 means, 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.
"Holder" or "Securityholder" means the Person in whose name
a Security is registered on the Security register described in
Section 2.04. as the registered holder of any Security.
"Indebtedness" means, with respect to any Person, without
duplication, (i) 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,
(ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) 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, (iv) 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, (v) all Indebtedness referred
to in clauses (i) through (iv) 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 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, (vi) all
Guaranteed Indebtedness of such Person, (vii) all obligations under
Interest Rate Protection Agreements of such Person, (viii) all
Currency Hedging Obligations of such Person (ix) all Capital Lease
Obligations of such Person, and (x) any amendment, supplement,
modification, deferral, renewal, extension or refunding of any
liability of the types referred to in clauses (i) through (ix) above.
"Indenture" means this instrument as originally executed
(including all exhibits and schedules hereto) and as it may from time
to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Interest Rate Protection Agreement" means 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 (i) the Debt Rating of Moody's is at least Baa3
(or the equivalent) or higher or (ii) the Debt Rating of S&P is at
least BBB- (or the equivalent) or higher.
"Lien" means 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 Security, the date on
which the principal of such Security becomes due and payable as
provided in such Security or the Indenture, whether at the Stated
Maturity or by declaration of acceleration, call for redemption or
otherwise.
"Moody's" means Moody's Investors Service, Inc. or any
successor to the rating agency business thereof.
"Non-Payment Default" means any event of default with
respect to any Designated Senior Indebtedness (other than a Payment
Default) pursuant to which the Maturity thereof may be accelerated.
"Non-Recourse Indebtedness" means Indebtedness as to which
(i) 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 (ii) 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.
"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" means the Chairman of the Board, any Co-Chairman
of the Board, President, the Chief Executive Officer, any Executive
Vice President, any Senior Vice President and the Chief Financial
Officer of the Company.
"Officers' Certificate" means a certificate signed by two
Officers. Each such certificate shall include the statements provided
for in Trust Indenture Act Section 314(e) to the extent applicable.
"Opinion of Counsel" means a written opinion of counsel to
the Company or any other Person reasonably satisfactory to the
Trustee.
"Payment Default" means 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.
"Permitted Holder" means (i) 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, (ii) 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 (iii) below, (iii) 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 (iv) 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 (iv), then such securities shall no
longer be deemed to be held by a Permitted Holder.
"Permitted Indebtedness" means the following:
(i) Indebtedness of the Company under the Original
Securities or upon an exchange of such Original Securities
for Exchange Securities or Private Exchange Securities, such
Exchange Securities or Private Exchange Securities;
(ii) Indebtedness of the Company under the Credit
Facility in an aggregate principal amount at any one time
outstanding not to exceed $425 million;
(iii) Indebtedness of the Company or any of its
Subsidiaries outstanding on the Closing Date;
(iv) Indebtedness of the Company or any of its
Subsidiaries consisting of Permitted Interest Rate
Protection Agreements;
(v) Indebtedness of the Company or any of its
Subsidiaries to any one or the other of them;
(vi) 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;
(vii) Indebtedness of any Subsidiary incurred in
connection with the Guarantee of any Indebtedness of the
Company;
(viii) 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;
(ix) Capital Lease Obligations of the Company or any of
its Subsidiaries;
(x) 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;
(xi) Indebtedness represented by property, liability and
workers' compensation insurance (which may be in the form of
letters of credit);
(xii) Acquired Indebtedness, provided that such
Indebtedness, if incurred by the Company, would be in
compliance with Section 4.05;
(xiii) Indebtedness of the Company or any of its
Subsidiaries to an Unrestricted Subsidiary for money
borrowed; provided that (a) such Indebtedness is
subordinated in right of payment to the Securities by
incorporation by reference of and in accordance with the
provisions set forth in Schedule I hereto and (b) the
Weighted Average Life of such Indebtedness is greater than
the Weighted Average Life of the Securities;
(xiv) Construction Indebtedness in an aggregate principal
amount that does not exceed $100 million; and
(xv) Indebtedness not otherwise permitted to be incurred
pursuant to clauses (i) through (xiv) above which, together
with any other Indebtedness pursuant to this clause (xv),
has an aggregate principal amount that does not exceed
$100 million at any time outstanding.
"Permitted Interest Rate Protection Agreements" means, 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" means 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 Securities 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.
"Representative" means the trustee, agent or representative
expressly authorized to act in such capacity, if any, for an issue of
Senior Indebtedness.
"Restricted Payments Computation Period" means 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" means Standard & Poor's Ratings Service or any
successor to the rating agency business thereof.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as
amended.
"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 (ii) the
principal of, premium, if any, and interest on all other Indebtedness
of the Company (other than the Securities 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
Securities. Notwithstanding the foregoing, "Senior Indebtedness"
shall not include (i) Indebtedness evidenced by the Securities and the
9 1/2% Notes due 2009, (ii) Indebtedness of the Company that is expressly
subordinated in right of payment to any Senior Indebtedness of the
Company, the Securities or the Indebtedness evidenced by the 9 1/2% Notes
due 2009, (iii) Indebtedness of the Company that by operation of law
is subordinate to any general unsecured obligations of the Company,
(iv) Indebtedness of the Company to the extent incurred in violation
of any covenant of the Indenture, (v) any liability for federal, state
or local taxes or other taxes, owed or owing by the Company, (vi)
trade account payables owed or owing by the Company, (vii) amounts
owed by the Company for compensation to employees or for services
rendered to the Company, (viii) Indebtedness of the Company to any
Subsidiary or any other Affiliate of the Company and (ix) 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.
"Stated Maturity," when used with respect to any Security or
any installment of interest thereof, means the date specified in such
Security as the fixed date on which the principal of such Security or
such installment of interest is due and payable.
"Subsidiary" of any person means (i) 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 (ii) 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.
"Theatre Completion" means any motion picture theatre or
screen which was first opened for business during any applicable
period.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that, in the event the TIA is amended after such date, "Trust
Indenture Act" means, to the extent required by any such amendments,
the Trust Indenture Act of 1939 as so amended.
"Trust Officer" means any officer within the Corporate Trust
Administration department of the Trustee (or any successor group of
the trustee) with direct responsibility for the administration of this
Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of
his knowledge of and familiarity with the particular subject.
"Trustee" means the Person named as the "Trustee" in the
first paragraph of this instrument, until a successor Trustee shall
have become such pursuant to the applicable provisions of this
Indenture, and thereafter "Trustee" shall mean such successor Trustee.
"U.S. Dollars", "United States Dollars"; "US$" and the
symbol "$" each mean currency of the United States of America.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means a Subsidiary of the Company
designated in writing to the Trustee (i) whose properties and assets,
to the extent they secure Indebtedness, secure only Non-Recourse
Indebtedness, (ii) that has no Indebtedness other than Non-Recourse
Indebtedness and (iii) that has no Subsidiaries.
"Weighted Average Life" means, as of any date, with respect
to any debt security, the quotient obtained by dividing (i) 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 (ii) the sum of all such
principal payments.
"Wholly-Owned Subsidiary" of any Person means 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.
SECTION 1.02. Other Definitions.
Term
Defined in
Section
"Bankruptcy Order"
6.01
"Change of Control Offer"
4.09
"Change of Control Payment Date"
4.09
"Change of Control Purchase Price"
4.10
"covenant defeasance option"
8.01
"Custodian"
6.01
"Event of Default"
6.01
"Exchange Security"
Appendix A
"Global Security"
Appendix A
"Initial Blockage Period"
10.02
"legal defeasance option"
8.01
"Legal Holiday"
11.08
"OID"
2.01
"Original Securities
2.01
"Paying Agent"
2.04
"Payment Blockage Period"
10.03
"Permitted Junior Securities"
10.02
"Private Exchange Security"
Appendix A
"Registered Exchange Offer
Appendix A
"Registrar"
2.04
"Restricted Payments"
4.06
"Shelf Registration statement
Appendix A
"Subordinated Obligations"
10.01
"Surviving Entity"
5.01
"U.S. Government Obligations"
8.02
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. Prior to the effectiveness of the registration statement
relating to the Registered Exchange Offer or the Shelf Registration
Statement, this Indenture shall incorporate and be governed by the
provisions of the TIA. After the effectiveness of either the
registration statement relating to the Registered Exchange Offer or
the Shelf Registration statement, this Indenture shall be subject to
the provisions of the TIA that are required to be a part of this
Indenture and shall, to the extent applicable, be governed by such
provisions. The following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by
SEC rule have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in
the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to secured Indebtedness merely by virtue of
its nature as unsecured Indebtedness; and
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer
dated such date prepared in accordance with GAAP.
ARTICLE II
The Securities
SECTION 2.01. Amount of Securities; Issuable in Series.
As provided for in Appendix A hereto, the aggregate principal amount
of the Initial Securities which may be authenticated and delivered
under this Indenture is $325,000,000. All Securities shall be
substantially identical in all respects other than issue prices,
issuance dates and denominations. The Securities may be issued in one
or more series; provided, however, that any Securities issued with
original issue discount ("OID") for Federal income tax purposes shall
not be issued as part of the same series as any Securities that are
issued with a different amount of OID or are not issued with OID.
Subject to Section 2.03, the Trustee shall authenticate
Securities for original issue on the Closing Date in the aggregate
principal amount of $225,000,000 (the "Original Securities"). With
respect to any Securities issued after the Closing Date (except for
Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, Original Securities pursuant to
Section 2.07, 2.09 or 3.06 or Appendix A), there shall be established
in or pursuant to a resolution of the Board of Directors, and subject
to Section 2.03, set forth, or determined in the manner provided in an
Officers' Certificate, or established in one or more indentures
supplemental hereto, prior to the issuance of such Securities:
(1) whether such Securities shall be issued as part of a new
or existing series of Securities and the title of such Securities
(which shall distinguish the Securities of the series from
Securities of any other series);
(2) the aggregate principal amount of such Securities that
may be authenticated and delivered under this Indenture, which
shall be in an aggregate principal amount not to exceed
$100,000,000 (except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities of the same series pursuant to Section 2.07,
2.09 or 3.06 or Appendix A and except for Securities which,
pursuant to Section 2.03, are deemed never to have been
authenticated and delivered hereunder);
(3) the issue price and issuance date of such Securities,
including the date from which interest on such Securities shall
accrue;
(4) if applicable, that such Securities shall be issuable in
whole or in part in the form of one or more Global Securities
and, in such case, the respective depositories for such Global
Securities, the form of any legend or legends that shall be borne
by any such Global Security in addition to or in lieu of that set
forth in Exhibit 1 to Appendix A and any circumstances in
addition to or in lieu of those set forth in Section 2.3 of
Appendix A in which any such Global Security may be exchanged in
whole or in part for Securities registered, and any transfer of
such Global Security in whole or in part may be registered, in
the name or names of Persons other than the depository for such
Global Security or a nominee thereof; and
(5) if applicable, that such Securities shall not be issued
in the form of Initial Securities subject to Appendix A, but
shall be issued in the form of Private Exchange Securities or
Exchange Securities as set forth in Exhibit A.
If any of the terms of any series are established by action
taken pursuant to a resolution of the Board of Directors, a copy of an
appropriate record of such action shall be certified by the Secretary
or any Assistant Secretary of the Company and delivered to the Trustee
at or prior to the delivery of the Officers' Certificate or the trust
indenture supplemental hereto setting forth the terms of the series.
SECTION 2.02. Form and Dating. Provisions relating to the
Initial Securities of each series, the Private Exchange Series and the
Exchange Securities are set forth in Appendix A, which is hereby
incorporated in and expressly made part of this Indenture. The
Initial Securities of each series and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to
Appendix A which is hereby incorporated in and expressly made a part
of this Indenture. The Exchange Securities, the Private Exchange
Series and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated
in and expressly made a part of this Indenture. The Securities of
each series may have notations, legends or endorsements required by
law, stock exchange rule, agreements to which the Company is subject,
if any, or usage, provided that any such notation, legend or
endorsement is in a form reasonably acceptable to the Company. Each
Security shall be dated the date of its authentication. The terms of
the Securities of each series set forth in Exhibit 1 to Appendix A and
Exhibit A are part of the terms of this Indenture.
SECTION 2.03. Execution and Authentication. Two Officers
(or one Officer and the Vice President and Secretary of the Company)
shall sign the Securities for the Company by manual or facsimile
signature. The Company's seal shall be impressed, affixed, imprinted
or reproduced on the Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer
holds that office at the time the Trustee authenticates the Security,
the Security shall be valid nevertheless.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities of any
series executed by the Company to the Trustee for authentication,
together with a written order of the Company in the form of an
Officers' Certificate for the authentication and delivery of such
Securities, and the Trustee in accordance with such written order of
the Company shall authenticate and deliver such Securities.
A Security shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication on the
Security. The signature shall be conclusive evidence that the
Security has been authenticated under this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless
limited by the terms of such appointment, an authenticating agent may
authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same
rights as any Registrar, Paying Agent or agent for service of notices
and demands.
SECTION 2.04. Registrar and Paying Agent. The Company
shall maintain an office or agency where Securities may be presented
for registration of transfer or for exchange (the "Registrar") and an
office or agency where Securities may be presented for payment (the
"Paying Agent"). The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company may have
one or more co-registrars and one or more additional paying agents.
The term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this
Indenture, which shall incorporate the terms of the TIA. The
agreement shall implement the provisions of this Indenture that relate
to such agent. The Company shall notify the Trustee of the name and
address of any such agent. If the Company fails to maintain a Regis-
trar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to
Section 7.07. The Company or any of its domestically incorporated
Wholly-Owned Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.05. Paying Agent To Hold Money in Trust. Prior
to each due date of the principal and interest on any Security, the
Company shall deposit with the Paying Agent a sum sufficient to pay
such principal and interest so becoming due. The Company shall
require each Paying Agent (other than the Trustee) to agree in writing
that the Paying Agent shall hold in trust for the benefit of Security-
holders or the Trustee all money held by the Paying Agent for the
payment of principal of or interest on the Securities and shall notify
the Trustee of any default by the Company in making any such payment.
If the Company or a Wholly-Owned Subsidiary acts as Paying Agent, it
shall segregate the money held by it as Paying Agent and hold it as a
separate trust fund. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for
any funds disbursed by the Paying Agent. Upon complying with this
Section, the Paying Agent shall have no further liability for the
money delivered to the Trustee.
SECTION 2.06. Securityholder Lists. The Trustee shall
preserve in as current a form as is reasonably practicable the most
recent list available to it of the names and addresses of
Securityholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee, in writing at least five Business Days
before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses
of Securityholders.
SECTION 2.07. Replacement Securities. If a mutilated
Security is surrendered to the Registrar or if the Holder of a
Security claims that such Security has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If
required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the
Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may
suffer if a Security is replaced. The Company and the Trustee may
charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of
the Company.
SECTION 2.08. Outstanding Securities. Securities
outstanding at any time are all Securities authenticated by the
Trustee except for those canceled by it, those delivered to it for
cancelation and those described in this Section as not outstanding. A
Security does not cease to be outstanding because the Company or an
Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it
ceases to be outstanding unless the Trustee and the Company receive
proof satisfactory to them that the replaced Security is held by a
bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date
money sufficient to pay all principal and interest payable on that
date with respect to the Securities (or portions thereof) to be
redeemed or maturing, as the case may be, and the Paying Agent is not
prohibited from paying such money to the Securityholders on that date
pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and
interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the
Trustee shall authenticate temporary Securities. Temporary Securities
shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and
the Trustee shall authenticate definitive Securities and deliver them
in exchange for temporary Securities.
SECTION 2.10. Cancelation. The Company at any time may
deliver Securities to the Trustee for cancelation. The Registrar and
the Paying Agent shall forward to the Trustee any Securities
surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel (subject to the record reten-
tion requirements of the Exchange Act) all Securities surrendered for
registration of transfer, exchange, payment or cancelation and deliver
canceled Securities to the Company upon a written direction of the
Company. Except as expressly permitted herein, the Company may not
issue new Securities to replace Securities it has redeemed, paid or
delivered to the Trustee for cancelation.
SECTION 2.11. Defaulted Interest. If the Company defaults
in a payment of interest on the Securities, the Company shall pay the
defaulted interest (plus interest on such defaulted interest at the
rate borne by the Securities to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the persons who
are Securityholders on a subsequent special record date. The Company
shall fix or cause to be fixed any such special record date and
payment date to the reasonable satisfaction of the Trustee and shall
promptly mail to each Securityholder a notice that states the special
record date, the payment date and the amount of defaulted interest to
be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if
so, the Trustee shall use "CUSIP" numbers in notices of redemption as
a convenience to Holders; provided, however, that neither the Company
nor the Trustee shall have any responsibility for any defect in the
"CUSIP" number that appears on any Security, check, advice of payment
or redemption notice, and any such notice may state that no
representation is made as to the correctness of such numbers either as
printed on the Securities or as contained in any notice of a
redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such
numbers.
ARTICLE III
Redemption
SECTION 3.01. Notices to Trustee. If the Company elects
to redeem Securities pursuant to paragraph 5 of the Securities, it
shall notify the Trustee in writing of the redemption date, the
principal amount of Securities to be redeemed and that such redemption
is being made pursuant to paragraph 5 of the Securities.
The Company shall give each notice to the Trustee provided
for in this Section at least 45 days before the redemption date unless
the Trustee consents to a shorter period. Such notice shall be
accompanied by an Officers' Certificate and an Opinion of Counsel from
the Company to the effect that such redemption will comply with the
conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, not more than 60
days prior to the Redemption Date, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements,
if any, and that the Trustee considers fair and appropriate and in
accordance with methods generally used at the time of selection by
fiduciaries in similar circumstances. The Trustee shall make the
selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000.
Securities and portions of them the Trustee selects shall be in
amounts of $1,000 or a whole multiple of $1,000. Provisions of this
Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall
notify the Company promptly of the Securities or portions of
Securities to be redeemed.
SECTION 3.03. Notice of Redemption. At least 30 days but
not more than 60 days before a date for redemption of Securities, the
Company shall mail a notice of redemption by first-class mail to each
Holder of Securities to be redeemed.
The notice shall identify the Securities (or portion
thereof) to be redeemed and shall state (including CUSIP numbers if
any):
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, or if a Security is to be redeemed in part only, the
identification and principal amounts of the particular Securities
(or portion thereof) to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making
such payment pursuant to the terms of this Indenture, interest on
Securities (or portion thereof) called for redemption ceases to
accrue on and after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's
expense. In such event, the Company shall provide the Trustee with
the information required by this Section at least 45 days before the
redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice
of redemption is mailed, Securities called for redemption become due
and payable on the redemption date and at the redemption price stated
in the notice. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price stated in the notice, plus
accrued interest to the redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due
on the related interest payment date that is on or prior to the date
of redemption). Failure to give notice or any defect in the notice to
any Holder shall not affect the validity of the notice to any other
Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or,
if the Company or a Wholly-Owned Subsidiary is the Paying Agent, shall
segregate and hold in trust) money sufficient to pay the redemption
price of and accrued interest (subject to the right of Holders of
record on the relevant record date to receive interest due on the
related interest payment date that is on or prior to the date of
redemption) on all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption that have
been delivered by the Company to the Trustee for cancelation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender
of a Security that is redeemed in part, the Company shall execute and
the Trustee shall authenticate for the Holder (at the Company's
expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV
Covenants
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities, in
immediately available funds, on the dates and in the manner provided
in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the
Paying Agent holds in accordance with this Indenture money sufficient
to pay all principal and interest then due and the Trustee or the
Paying Agent, as the case may be, is not prohibited from paying such
money to the Securityholders on that date pursuant to the terms of
this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest
on overdue installments of interest at the rate borne by the
Securities to the extent lawful.
SECTION 4.02. Corporate Existence. Subject to Article
Five, the Company will do or cause to be done all things necessary to
preserve and keep in full force and effect the corporate existence and
corporate power and authority of the Company and each Subsidiary;
provided, however, that the Company shall not be required to preserve
any such corporate existence and corporate power and authority if the
Company shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its
Subsidiaries taken as a whole.
SECTION 4.03. Payment of Taxes and Other Claims. The
Company will pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the
Company or any Subsidiary or upon the income, profits or property of
the Company or any Subsidiary and (b) all material lawful claims for
labor, materials and supplies, which, if unpaid, might by law become a
Lien upon the property of the Company or any Subsidiary that could
produce a material adverse effect on the Consolidated financial
condition of the Company; provided, however, that the Company shall
not be required to pay or discharge or cause to be paid or discharged
any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate
proceedings.
SECTION 4.04. Maintenance of Properties. The Company
will cause all properties owned by the Company or any Subsidiary or
used or held for use in the conduct of its business or the business of
any Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause
to be made all necessary repairs, renewals, replacements, betterments
and improvements thereof, all as in the judgment of the Company may be
necessary so that the business carried on in connection therewith may
be properly and advantageously conducted at all times, except, in
every case, as and to the extent that the Company may be prevented by
fire, strikes, lockouts, acts of God, inability to obtain labor or
materials, governmental restrictions, enemy action, civil commotion or
unavoidable casualty or similar causes beyond the control of the
Company; provided, however, that nothing in this Section shall prevent
the Company from discontinuing the maintenance of any of such
properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the
Holders.
SECTION 4.05. Limitation on Consolidated Indebtedness.
The Company will not, and will 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 (4) 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.
SECTION 4.06. Limitation on Restricted Payments. The
Company shall not directly or indirectly:
(A)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
(B)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 (A) and (B) 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), (1) no Default or
Event of Default shall have occurred and be continuing, (2) the
Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the provisions of Section 4.05 and
(3) 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:
(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
(a) 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
(b) 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).
SECTION 4.07. Limitation on Transactions with Affiliates.
(a) The Company will not, and will 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 (A) 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, (B) such transaction or series of transactions is in the best
interests of the Company and (C) 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 (A) and (B) above, as evidenced by
a Board Resolution.
(b)Notwithstanding the foregoing limitation, the Company
and its Subsidiaries may enter into or suffer to exist the following:
(i) any transaction pursuant to any contract in existence on the
Closing Date; (ii) any Restricted Payment permitted to be made
pursuant to the provisions of Section 4.06; (iii) 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 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 (iv) 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.
SECTION 4.08. 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 Securities.
SECTION 4.09. 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 Securities at a
purchase price equal to 101% (the "Change of Control Purchase Price")
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.
In the event that the Company makes a Change of Control
Offer to purchase the Securities pursuant to this Section 4.09, the
Company will comply with any applicable securities laws and
regulations, including any applicable requirements of Section 14(e)
of, and Rule l4e-1 under, the Exchange Act.
SECTION 4.10. Provision of Financial Information.
(a) Whether or not the Company is subject to the reporting
requirements of the Exchange Act, or any successor provision thereto,
the Company will furnish without cost to each Holder of Securities and
file with the Commission and the Trustee (i) within 90 days after the
end of each fiscal year of the Company (x) audited year-end
consolidated financial statements (including a balance sheet, income
statement and statement of cash flows) prepared in accordance with
GAAP and (y) the information described in Item 303 of Regulation S-K
under the Securities Act, with respect to such period, and (ii) within
45 days after the end of each of the first three fiscal quarters of
each fiscal year of the Company, (x) unaudited quarterly consolidated
financial statements (including a balance sheet, income statement and
statement of cash flows) prepared in accordance with GAAP and (y) the
information described in Item 303 of Regulation S-K under the
Securities Act, with respect to such period. The Company may satisfy
this obligation by furnishing copies of reports filed by it under
Section 13(d) or 15 of the Exchange Act.
(b) In addition, unless it is then subject to the reporting
requirements of Section 13(d) or 15 of the Exchange Act, the Company
will furnish to any prospective purchaser of Securities or beneficial
owner of Securities in connection with any sale thereof the
information required by Rule 144A(d)(4) under the Securities Act,
until such time as the Company has either exchanged the Securities for
the Exchange Securities or until such time as the Holders thereof have
disposed of such Securities pursuant to a Shelf Registration
statement.
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt
of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.11. Statement as to Compliance. The Company
shall deliver to the Trustee, within 90 days after the end of each
fiscal year ending after the date hereof (the fiscal year as of the
date hereof is the 52/53 week period ending on the Thursday nearest
March 31), a brief certificate of its principal executive officer,
principal financial officer or principal accounting officer stating
whether, to such officer's knowledge, the Company is in compliance
with all covenants and conditions to be complied with by it under this
Indenture; provided that the first such certificate shall be delivered
no later than June 30, 1999. For purposes of this Section 4.11, such
compliance shall be determined without regard to any period of grace
or requirement of notice under this Indenture.
When a Default has occurred and is continuing or if the
Trustee, any Holder or the trustee for or the holder of any other
evidence of Indebtedness of the Company or any Subsidiary gives any
notice or takes any other action with respect to a claimed default,
the Company shall deliver to the Trustee an Officers' Certificate
specifying such Default, notice or other action within 10 Business
Days of its occurrence.
SECTION 4.12. Waiver of Certain Covenants. The Company
may omit in any particular instance to comply with any covenant or
condition set forth in Sections 4.03 to 4.09 and Section 4.10(a), if
before the time for such compliance, the Holders of a majority in
aggregate principal amount of the Securities at the time outstanding
shall, by written direction of such Holders, waive such compliance in
such instance with such covenant or condition, but no such waiver
shall extend to or affect such covenant or condition except to the
extent so expressly waived, and, until such waiver shall become
effective, the obligations of the Company and the duties of the
Trustee in respect of any such covenant or condition shall remain in
full force and effect.
SECTION 4.13. Fall-away of Certain Covenants. In the
event that the Securities attain 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 Sections 5.01(c) and 4.05 to 4.08 will
no longer be applicable to the Company and its Subsidiaries; provided
that the Company delivers to the Trustee (i) an Officers' Certificate
certifying that the Fall-away Event shall have occurred and (ii) a
letter from Moody's or S&P, as the case may be, dated not more than
three days prior to the date such covenants are to become subject to
this Section 4.13, verifying the Investment Grade Status of the
Securities.
SECTION 4.14. OID Certificate. The Company shall file
with the Trustee promptly after the end of each calendar year (i) a
written notice specifying the amount of original issue discount
(including daily rates and accrual periods) accrued on outstanding
Securities as of the end of such year and (ii) such other specific
information relating to such original issue discount as may then be
relevant under the Internal Revenue Code of 1986, as amended from time
to time.
SECTION 4.15. Further Instruments and Acts. Upon request
of the Trustee, the Company shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
ARTICLE V
Successor Company
SECTION 5.01. Consolidation . 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:
(a)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 Securities and the
Indenture,
(b)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
(c)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) pursuant to
Section 4.05 hereof (determined in either case on a Consolidated
basis).
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 Officers' 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.
SECTION 5.02. Successor Substituted. Upon any
consolidation or merger or any transfer of all or substantially all of
the assets of the Company in accordance with Section 5.01, 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 Securities and this Indenture, with the same effect
as if such successor corporation had been named as the Company herein.
In the event of any transaction (other than a lease) described and
listed in Section 5.01 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 Securities and this Indenture.
ARTICLE VI
Defaults and Remedies
SECTION 6.01Events of Default. "Event of Default",
wherever used herein, means any one of the following events (whatever
the reason for such Event of Default and whether it shall be voluntary
or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a)default in the payment of any interest on any Security
when it becomes due and payable, whether or not such payment
shall be prohibited by Article Ten, and continuance of such
default for a period of 30 days;
(b)default in the payment of the principal of or premium,
if any, on any Security at its Maturity (upon acceleration,
optional redemption, required purchase or otherwise), whether or
not such payment, redemption or purchase shall be prohibited by
Article Ten;
(c)default in the performance, or breach, of any covenant
or warranty of the Company contained in this Indenture (other
than a default in the performance, or breach, of a covenant or
warranty which is specifically dealt with in clause (a) or (b)
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 Securities
then outstanding;
(d)(A) one or more defaults in the payment of principal of
or premium, if any, on Indebtedness of the Company or its Wholly-
Owned subsidiary, American Multi-Cinema, Inc., a Missouri
corporation ("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;
(e)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;
(f)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
(g)the Company or AMC pursuant to or under or within the
meaning of any Bankruptcy Law:
(1)commences a voluntary case or proceeding;
(2)consents to the entry of a Bankruptcy Order in an
involuntary case or proceeding or the commencement of any
case against it;
(3)consents to the appointment of a Custodian of it
or for any substantial part of its property;
(4)makes a general assignment for the benefit of its
creditors or files a proposal or other scheme of arrangement
involving the rescheduling or composition of its
indebtedness;
(5)files a petition in bankruptcy or an answer or
consent seeking reorganization or relief; or
(6)consents to the filing of such petition in
bankruptcy or the appointment of or taking possession by a
Custodian; or
(h)a court of competent jurisdiction in any involuntary
case or proceeding enters a Bankruptcy Order against the Company
or AMC, and such Bankruptcy Order remains unstayed and in effect
for 60 consecutive days; or
(i)a Custodian shall be appointed out of court with
respect to the Company or AMC, or with respect to all or any
substantial part of the property of the Company or AMC.
"Custodian" means any receiver, interim receiver, receiver
and manager, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law or any other person with like
powers. "Bankruptcy Order" means any court order made in a proceeding
pursuant to or within the meaning of any Bankruptcy Law, containing an
adjudication of bankruptcy or insolvency, or providing for
liquidation, winding up, dissolution or reorganization, or appointing
a Custodian of a debtor or of all or any substantial part of a
debtor's property, or providing for the staying, arrangement,
adjustment or composition of indebtedness or other relief of a debtor.
SECTION 6.02. Acceleration; Rescission and Annulment. If
an Event of Default (other than an Event of Default specified in
Section 6.01(g), (h) or (i)) occurs and is continuing, then and in
every such case the Trustee, by notice to the Company, or the Holders
of not less than 25% in principal amount of the Securities
outstanding, by notice to the Company and the Trustee, may declare the
principal of all the Securities to be due and payable; provided,
however, that so long as any Indebtedness permitted to be incurred
pursuant to the Credit Facility shall be outstanding (including
letters of credit and bankers' acceptances), no such acceleration
shall be effective until the earlier of (i) acceleration of any such
Indebtedness under the Credit Facility and (ii) five Business Days
after the giving of written notice to the Company and an authorized
representative of the holders of Designated Senior Indebtedness of
such acceleration. If an Event of Default specified in
Section 6.01(g), (h) or (i) occurs and is continuing, then the
principal of all the Securities shall automatically become and be
immediately due and payable without any declaration or other act on
the part of the Trustee or any Holder. The Company will deliver to
the Trustee, within 10 days after the occurrence thereof, notice of
any default or acceleration referred to in Sections 6.01(c) and
6.01(d).
At any time after a declaration of acceleration has been
made and before a judgment or decree for payment of the money due has
been obtained by the Trustee as hereinafter in this Article provided,
the Holders of a majority in principal amount of the Securities
outstanding, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(a)the Company has paid or deposited, or caused to be paid
or deposited, with the Trustee a sum sufficient to pay
(1)all overdue interest on all Securities,
(2)the principal of (and premium, if any, on) any
Securities that has become due otherwise than by such
declaration of acceleration and interest thereon at the rate
borne by the Securities,
(3)to the extent that payment of such interest is
lawful, interest upon overdue interest at the rate borne by
the Securities, and
(4)all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel; and
(b)all Events of Default, other than the non-payment of
principal of the Securities which have become due solely by such
declaration of acceleration, have been cured or waived as
provided in Section 6.04.
No such rescission shall affect any subsequent default or impair any
right consequent thereon.
Notwithstanding the preceding paragraph, in the event of a declaration
of acceleration in respect of the Securities because an Event of
Default specified in Section 6.01(d) shall have occurred and be
continuing, such declaration of acceleration shall be automatically
annulled if the Indebtedness that is the subject of such Event of
Default, (1) is Indebtedness in the form of an operating lease 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, (2) has been discharged or the holders thereof have
rescinded their declaration of acceleration in respect of such
Indebtedness, and (3) written notice of such discharge or rescission,
as the case may be, shall have been given to the Trustee by the
Company and countersigned by the holders of such Indebtedness or a
trustee, fiduciary or agent for such holders, within 30 days after
such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30 day period which
has not been cured or waived during such period.
SECTION 6.03. Other Remedies. If an Event of Default
occurs and is continuing, the Trustee may pursue any available remedy
to collect the payment of principal of or interest on the Securities
or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Securityholder
in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in aggregate principal amount of the Securities then
outstanding by notice to the Trustee may waive an existing Default and
its consequences except (i) a Default in the payment of the principal
of or interest on a Security, (ii) a Default arising from a failure to
make or consummate a Change of Control Offer in accordance with the
provisions of Section 4.09, or (iii) a Default in respect of a
provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it
is deemed cured, but no such waiver shall extend to any subsequent or
other Default or impair any consequent right.
SECTION 6.05. Control by Majority. The Holders of a
majority in aggregate principal amount of the Securities then
outstanding may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of exercising
any trust or power conferred on the Trustee with respect to the
Securities. However, the Trustee may refuse to follow any direction
that conflicts with law or this Indenture or, subject to Section 7.01,
that the Trustee determines is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal
liability; provided, however, that subject to Section 315 of the TIA,
the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction. Prior to taking any
action hereunder, the Trustee shall be entitled to reasonable indemni-
fication against all losses and expenses caused by taking or not
taking such action.
SECTION 6.06. Limitation on Suits. A Securityholder may
not pursue any remedy with respect to this Indenture or the Securities
unless:
(1) such Holder shall have previously given to the Trustee
written notice of a continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal
amount of the Securities then outstanding shall have made a
written request, and such Holder of or Holders shall have offered
reasonable indemnity, to the Trustee to pursue such proceeding as
trustee; and
(3) the Trustee has failed to institute such proceeding and
has not received from the Holders of at least a majority in
aggregate principal amount of the Securities outstanding a
direction inconsistent with such request, within 60 days after
such notice, request and offer.
The foregoing limitations on the pursuit of remedies by a
Securityholder shall not apply to a suit instituted by a Holder of
Securities for the enforcement of payment of the principal of or
interest on such Security on or after the applicable due date
specified in such Security. A Securityholder may not use this
Indenture to prejudice the rights of another Securityholder or to
obtain a preference or priority over another Securityholder.
SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on the
Securities held by such Holder, on or after the respective due dates
expressed in the Securities, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(a) or (b) occurs and is continuing,
the Trustee may recover judgment in its own name and as trustee of an
express trust against the Company for the whole amount then due and
owing (together with interest on any unpaid interest to the extent
lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The
Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the
Trustee and the Securityholders allowed in any judicial proceedings
relative to the Company, its creditors or its property and, unless
prohibited by law or applicable regulations, may vote on behalf of the
Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the
Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders, to pay to the Trustee any
amount due it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and its counsel, and any other
amounts due the Trustee under Section 7.07.
SECTION 6.10. Priorities. If the Trustee collects any
money or property pursuant to this Article Six, it shall pay out the
money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article Ten;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the Securities for principal and interest,
respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days
before such record date, the Company shall mail to each Securityholder
and the Trustee a notice that states the record date, the payment date
and amount to be paid.
SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit
against the Trustee for any action taken or omitted by it as Trustee,
a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including rea-
sonable attorneys' fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a
suit by Holders of more than 10% in aggregate principal amount of the
Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The
Company (to the extent it may lawfully do so) shall not at any time
insist upon, or plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer
and permit the execution of every such power as though no such law had
been enacted.
ARTICLE VII
Trustee
SECTION 7.01. Duties of Trustee. (a) If an Event of
Default has occurred and is continuing, the Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same
degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of such
Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall
examine the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture (but need not
confirm or investigate the accuracy of mathematical calculations
or other facts stated therein).
(c) The Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own
wilful misconduct, except that:
(1) this paragraph does not limit the effect of
paragraph (b) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(3) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (a), (b) and (c) of
this Section.
(e) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with
the Company.
(f) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial
liability in the performance of any of its duties hereunder or in the
exercise of any of its rights or powers.
(h) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the
Trustee shall be subject to the provisions of this Section and to the
provisions of the TIA and the provisions of this Article Seven shall
apply to the Trustee in its role as Registrar, Paying Agent and
Security Custodian.
(i) The Trustee shall not be deemed to have notice of a
Default or an Event of Default unless (a) the Trustee has received
written notice thereof from the Company or any Holder or (b) a Trust
Officer shall have actual knowledge thereof.
SECTION 7.02. Rights of Trustee. Subject to 315(a)-(d)
of the TIA:
(a) the Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper person.
The Trustee need not investigate any fact or matter stated in the
document. The Trustee may, however, in its discretion make such
further inquiry or investigation into such facts or matters as it may
see fit and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The
Trustee shall not be liable for any action it takes or omits to take
in good faith in reliance on the Officers' Certificate or Opinion of
Counsel.
(c) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or
within its rights or powers; provided, however, that the Trustee's
conduct does not constitute wilful misconduct or negligence.
(e) The Trustee may consult with counsel of its selection,
and the advice or opinion of counsel with respect to legal matters
relating to this Indenture and the Securities shall be full and
complete authorization and protection from liability in respect to any
action taken, omitted or suffered by it hereunder in good faith and in
accordance with the advice or opinion of such counsel.
(f) The permissive rights of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty unless
so specified herein.
SECTION 7.03. Individual Rights of Trustee. The Trustee
in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.
Any Paying Agent, Registrar or co-registrar may do the same with like
rights. However, the Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not
be responsible for and makes no representation as to the validity,
priority or adequacy of this Indenture or the Securities, it shall not
be accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement of the
Company in this Indenture or in any document issued in connection with
the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default or Event
of Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Securityholder notice of the Default or
Event of Default within 90 days after it is known to a Trust Officer
or written notice of it is received by the Trustee. Except in the
case of a Default or Event of Default in payment of principal of or
interest on any Security, the Trustee may withhold the notice if and
so long as a committee of its Trust Officers in good faith determines
that withholding the notice is in the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly
as practicable after each December 31 beginning with December 31,
1999, and in any event prior to March 31 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of
December 31 each year that complies with TIA 313(a), if and to the
extent required by such subsection. The Trustee shall also comply
with TIA 313(b) and (c).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange
(if any) on which the Securities are listed. The Company agrees to
notify promptly the Trustee whenever the Securities become listed on
any stock exchange and of any delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company
shall pay to the Trustee and any predecessor Trustee from time to time
such compensation for its services as shall from time to time be
agreed to in writing by the Company and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the Trustee
upon request for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, in addition to the
compensation for its services. Such expenses shall include the
reasonable compensation and expenses, disbursements and advances of
the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or
expense (including reasonable attorneys' fees) incurred by it in
connection with the acceptance and administration of this trust and
the performance of its duties hereunder. The Trustee shall notify the
Company promptly of any claim for which it may seek indemnity. Failure
by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder. The Company shall defend the claim and
the Trustee may have separate counsel and the Company shall pay the
fees and expenses of such counsel. The Company need not reimburse any
expense or indemnify against any loss, liability or expense incurred
by the Trustee through the Trustee's own wilful misconduct, negligence
or bad faith. The Company need not pay for any settlement made by the
Trustee without the Company's consent, such consent not to be
unreasonably withheld. All indemnifications and releases from
liability granted hereunder to the Trustee shall extend to its
officers, directors, employees, agents, successors and assigns.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or
property held or collected by the Trustee other than money or property
held in trust to pay principal of and interest on particular
Securities.
The Company's payment obligations pursuant to this Section
shall survive the resignation or removal of the Trustee and the
discharge of this Indenture. When the Trustee incurs expenses after
the occurrence of a Default specified in Section 6.01(g), (h) or (i)
with respect to the Company, the expenses are intended to constitute
expenses of administration under the Bankruptcy Law.
The provisions of this Section shall survive the termination
of this Indenture.
SECTION 7.08. Replacement of Trustee. The Trustee may
resign at any time by so notifying the Company. The Holders of a
majority in aggregate principal amount of the Securities then
outstanding may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Company shall remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in aggregate principal amount of the Securities
then outstanding and such Holders do not reasonably promptly appoint a
successor Trustee, or if a vacancy exists in the office of Trustee for
any reason (the Trustee in such event being referred to herein as the
retiring Trustee), the Company shall promptly appoint a successor
Trustee.
A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon
the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. The successor Trustee
shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided for in
Section 7.07.
If a successor Trustee does not take office within 30 days
after the retiring Trustee resigns or is removed, the retiring Trustee
or the Holders of 10% in aggregate principal amount of the Securities
then outstanding may petition any court of competent jurisdiction for
the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder who has been a bona fide Holder of a Security for at
least six months may petition any court of competent jurisdiction for
the removal of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall
continue for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or
transferee corporation or banking association without any further act
shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts
created by this Indenture any of the Securities shall have been
authenticated but not delivered, any such successor to the Trustee may
adopt the certificate of authentication of any predecessor trustee,
and deliver such Securities so authenticated; and in case at that time
any of the Securities shall not have been authenticated, any such
successor to the Trustee may authenticate such Securities either in
the name of any predecessor hereunder or in the name of the successor
to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of TIA 310(a). The
Trustee shall have (or, in the case of a corporation included in a
bank holding company system, the related bank holding company shall
have) a combined capital and surplus of at least $50,000,000 as set
forth in its (or its related bank holding company's) most recent
published annual report of condition. The Trustee shall comply with
TIA 310(b), subject to the penultimate paragraph thereof; provided,
however, that there shall be excluded from the operation of
TIA 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other
securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA 310(b)(1) are met. For purposes of this
Section 7.10 and clause (i) of the first proviso contained in TIA
Section 310(b), the Indenture dated as of March 19, 1997 as amended,
among the Company and The Bank of New York, providing for the issuance
of the 9 1/2% Notes due 2009, is hereby deemed to be specifically
described.
SECTION 7.11. Preferential Collection of Claims
Against Company. The Trustee shall comply with TIA 311(a),
excluding any creditor relationship listed in TIA 311(b). A Trustee
who has resigned or been removed shall be subject to TIA 311(a) to
the extent indicated.
ARTICLE VIII
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on
Securities; Defeasance. (a) When (i) the Company delivers to the
Trustee all outstanding Securities (other than Securities replaced
pursuant to Section 2.07) for cancelation or (ii) all outstanding
Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to
Article Three and the Company irrevocably deposits with the Trustee
funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption
date (other than Securities replaced pursuant to Section 2.07), and if
in either case the Company pays all other sums payable hereunder by
the Company, then this Indenture shall, subject to Section 8.01(c),
cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and
at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at
any time may terminate (i) all of its obligations under the Securities
and this Indenture ("legal defeasance option") or (ii) its obligations
under Section 5.01(c), Article Ten and Sections 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09 and 4.10(a), and the operation of
Sections 6.01 (c) through (f) ("covenant defeasance option"). The
Company may exercise its legal defeasance option notwithstanding its
prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option,
payment of the Securities may not be accelerated because of an Event
of Default. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event
of Default specified in Sections 6.01(c) (with respect to the
covenants of Article Four identified in the immediately preceding
paragraph and the provisions of 5.01(c)), 6.01(d), (e) or (f).
Upon satisfaction of the conditions set forth herein and
upon request of the Company, the Trustee shall acknowledge in writing
the discharge of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the
Company's obligations in Sections 2.04, 2.05, 2.06, 2.07, 2.09, 4.11,
7.07, 7.08, 8.05 and 8.06 shall survive until the Securities have been
paid in full. Thereafter, the Company's obligations in Sections 7.07
and 8.05 shall survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option
only if:
(1)The Company shall irrevocably have deposited or caused
to be deposited with the Trustee (or another trustee satisfying
the requirements of Section 7.10 who shall agree to comply with
the provisions of this Article Eight applicable to it) as trust
funds in trust for the purpose of making the following payments,
specifically pledged as security for, and dedicated solely to,
the benefit of the Holders of such Securities, (A) cash in U.S.
Dollars in an amount, or (B) U.S. Government Obligations which
through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not
later than one day before the due date of any payment, cash in
U.S. Dollars in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and
discharge and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of (and
premium, if any) and interest on the outstanding Securities on
the Stated Maturity (or redemption date, if applicable) of such
principal (and premium, if any) or installment of interest;
provided that the Trustee shall have been irrevocably instructed
to apply such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities.
Before such a deposit, the Company may give the Trustee, in
accordance with Section 3.01 hereof, a notice of its election to
redeem all of the outstanding Securities at a future date in
accordance with Article Three which notice shall be irrevocable.
For this purpose, "U.S. Government Obligations" means securities
that are (x) direct obligations of the United States of America
for the timely payment of which its full faith and credit is
pledged or (y) obligations of a Person controlled or supervised
by and acting as an agency or instrumentality of the United
States of America the timely payment of which is unconditionally
guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in
Section 3(a)(2) of the Securities Act), as custodian with respect
to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation
held by such custodian for the account of the holder of such
depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the
amount payable to the holder of such depository receipt from any
amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such
depository receipt.
(2)No Default or Event of Default shall have occurred and
be continuing on the date of such deposit or, insofar as
Section 6.01(g), (h) or (i) is concerned, at any time during the
period ending on the 91st day after the date of such deposit (it
being understood that this condition shall not be deemed
satisfied until the expiration of such period).
(3)the deposit does not constitute a default hereunder or
under any other material agreement binding on the Company and is
not prohibited by Article Ten;
(4) the Company delivers to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit
does not constitute, or is qualified as, a regulated investment
company under the Investment Company Act of 1940;
(5) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating
that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or
(ii) since the date of this Indenture there has been a change in
the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall
confirm that, the Securityholders will not recognize income, gain
or loss for Federal income tax purposes as a result of such
defeasance and will be subject to 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;
(6) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel
to the effect that the Securityholders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to 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; and
(7) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the
Securities as contemplated by this Article Eight have been
complied with.
SECTION 8.03. Application of Trust Money. The Trustee
shall hold in trust money or U.S. Government Obligations deposited
with it pursuant to this Article Eight. It shall apply the deposited
money and the money from U.S. Government Obligations through the
Paying Agent and in accordance with this Indenture to the payment of
principal of and interest on the Securities. Money and securities so
held in trust are not subject to Article Ten.
SECTION 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any
excess money or securities held by them at any time.
Subject to any applicable abandoned property law, the
Trustee and the Paying Agent shall pay to the Company upon request any
money held by them for the payment of principal or interest that
remains unclaimed for two years, and, thereafter, Securityholders
entitled to the money must look to the Company for payment as general
creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against deposited U.S.
Government Obligations or the principal and interest received on
such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying
Agent is unable to apply any money or U.S. Government Obligations in
accordance with this Article Eight by reason of any legal proceeding
or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the
Securities shall be revived and reinstated as though no deposit had
occurred pursuant to this Article Eight until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S.
Government Obligations in accordance with this Article Eight;
provided, however, that, if the Company has made any payment of
interest on or principal of any Securities because of the
reinstatement of its obligations, the Company shall be subrogated to
the rights of the Holders of such Securities to receive such payment
from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE IX
Amendments
SECTION 9.01. Without Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without notice
to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article Five;
(3) to provide for uncertificated Securities in addition to
or in place of certificated Securities; provided, however, that
the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code or in a manner such that
the uncertificated Securities are described in
Section 163(f)(2)(B) of the Code;
(4) to make any change in Article Ten that would limit or
terminate the benefits available to any holder of Senior
Indebtedness (or Representatives therefor) under Article Ten;
(5) to add Guarantees with respect to the Securities or to
secure the Securities;
(6) to add to the covenants of the Company for the benefit
of the Holders or to surrender any right or power herein
conferred upon the Company;
(7) to comply with any requirements of the SEC in connection
with qualifying, or maintaining the qualification of, this
Indenture under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
An amendment under this Section may not make any change that
adversely affects the rights under Article Ten of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or their Representative) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or
any defect therein, shall not impair or affect the validity of an
amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company and
the Trustee may amend this Indenture or the Securities without notice
to any Securityholder but with the written consent of the Holders of
at least a majority in aggregate principal amount of the Securities
then outstanding (including consents obtained in connection with a
tender offer or exchange offer for the Securities). However, without
the consent of each Securityholder affected thereby, an amendment may
not:
(a) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, 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 the principal of any Security 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); or
(b) 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; or
(c) reduce the percentage in principal amount of the
outstanding Securities, the consent of whose Holders is required
for any such supplemental indenture, or the consent of whose
Holders is required for any waiver (of compliance with certain
provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture; or
(d) modify any of the provisions of this Section or
Sections 6.04, 6.07 and 4.12, except to increase any such
percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the
Holder of each Security affected thereby; or
(e)modify any of the provisions of this Indenture relating
to the subordination of the Securities in a manner adverse to any
Holder.
It shall not be necessary for the consent of the Holders
under this Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such consent approves the
substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article Ten of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior
Indebtedness (or their Representative) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or
any defect therein, shall not impair or affect the validity of an
amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the
TIA as then in effect.
SECTION 9.04. Revocation and Effect of Consents and
Waivers. A consent to an amendment or a waiver by a Holder of a
Security shall bind the Holder and every subsequent Holder of that
Security or portion of the Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent or
waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes
effective. After an amendment or waiver becomes effective, it shall
bind every Securityholder. An amendment or waiver becomes effective
upon the execution of such amendment or waiver by the Trustee.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to
give their consent or take any other action described above or
required or permitted to be taken pursuant to this Indenture. Such
record date shall be a date not more than 30 days prior to the first
solicitation of holders generally in connection therewith and no later
than the date such solicitation is completed. If a record date is
fixed, then notwithstanding the immediately preceding paragraph or
Section 316(c) of the TIA, those Persons who were Securityholders at
such record date (or their duly designated proxies), and only those
Persons, shall be entitled to give such consent or to revoke any
consent previously given or to take any such action, whether or not
such Persons continue to be Holders after such record date. No such
consent shall be valid or effective for more than 180 days after such
record date.
For all purposes of the Indenture, all Initial Securities,
Exchange Securities and Private Exchange Securities shall vote
together as one series of Securities under the Indenture.
SECTION 9.05. Notation on or Exchange of Securities. If
an amendment changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver such Security to the Trustee.
The Trustee may place an appropriate notation on the Security
regarding the changed terms and return such Security to the Holder.
Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure
to make the appropriate notation or to issue a new Security shall not
affect the validity of such amendment.
SECTION 9.06. Trustee To Sign Amendments. The Trustee
shall sign any amendment authorized pursuant to this Article Nine if
the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee. If it does, the Trustee may
but need not sign it. In signing such amendment the Trustee shall be
entitled to receive indemnity reasonably satisfactory to it and to
receive, and (subject to Section 7.01) shall be fully protected in
relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such amendment is authorized or permitted by this
Indenture.
SECTION 9.07. Payment for Consent. Neither the Company
nor any Affiliate of the Company shall, directly or indirectly, pay or
cause to be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of this
Indenture or the Securities unless such consideration is offered to be
paid to all Holders that so consent, waive or agree to amend in the
time frame set forth in solicitation documents relating to such
consent, waiver or agreement.
ARTICLE X
Subordination
SECTION 10.01. Agreement To Subordinate. The Company
covenants and agrees, and each Holder of a Security, by his acceptance
thereof, likewise covenants and agrees, that, to the extent and in the
manner hereinafter set forth in this Article, the Obligations in
respect of the Securities (the "Subordinated Obligations") are hereby
expressly made subordinate and postponed to and subject in right of
payment as provided in this Article to the prior payment in full in
cash or Cash Equivalents of all Senior Indebtedness. The Securities
shall in all respects rank pari passu with the 9 1/2% Notes due 2009 and
any future senior subordinated Indebtedness and senior to all existing
and future junior subordinated Debt of the company, and only Senior
Indebtedness shall rank senior to the Securities in accordance with
the provisions set forth herein. All provisions of this Article Ten
shall be subject to Section 10.11.
This Article Ten shall constitute a continuing offer to all
Persons who, in reliance upon such Article, become holders of, or
continue to hold, Senior Indebtedness, and such provisions are made
for the benefit of the holders of Senior Indebtedness, and such
holders are made obligee hereunder and they or each of them may
enforce such provisions.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. In
the event of (a) any insolvency or bankruptcy case or proceeding, or
any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Company or to its
assets, whether voluntary or involuntary from any source, or (b) any
liquidation, dissolution or other winding-up of the Company, whether
voluntary or involuntary and whether or not involving insolvency or
bankruptcy, or (c) any assignment for the benefit of creditors or any
other marshaling of assets or liabilities of the Company, then and in
any such event:
(1) the holders of Senior Indebtedness shall receive
payment in full in cash or Cash Equivalents of all amounts due on
or in respect 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 of the Securities are entitled to receive any payment or
distribution of any kind or character from any source (other than
a payment or distribution in the form of equity securities or
subordinated securities of the Company or any successor obligor
with respect to the Senior Indebtedness provided for by a plan of
reorganization or readjustment that, in the case of any such
subordinated securities, are subordinate in right of payment to
all Senior Indebtedness that may at the time be outstanding to at
least the same extent as the Securities are so subordinated as
provided in this Article (such equity securities or subordinated
securities hereinafter being "Permitted Junior Securities")) on
account of the Subordinated Obligations or on account of the
purchase or redemption or other acquisition of Securities; and
(2) any payment or distribution of assets of the Company of
any kind or character from any source, whether in cash, property
or securities (other than a payment or distribution in the form
of Permitted Junior Securities), including by way of set-off or
enforcement of any guarantee or otherwise, which the Trustee or
the Holders would be entitled to receive but for the provisions
of this Article shall be paid by the liquidating trustee or agent
or other person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of Senior Indebtedness or
their authorized representative or representatives or to the
trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining
unpaid on account of the Senior Indebtedness held or represented
by each, to the extent necessary to make payment in full in cash
or Cash Equivalents of all Senior Indebtedness of the Company
remaining unpaid, after giving effect to any concurrent payment
or distribution, or provision therefor to the satisfaction of the
holders of the Senior Indebtedness, to or for the holders of such
Senior Indebtedness; and
(3) any Taxes that have been withheld or deducted from any
payment or distribution in respect of the Securities, or any
Taxes that ought to have been withheld or deducted from any such
payment or distribution that have been remitted to the relevant
taxing authority, shall not be considered to be an amount that a
Holder or the Trustee is entitled to receive for the purposes of
Section 10.02(2).
The consolidation of the Company with, or the merger of the
Company into, another Person or the liquidation or dissolution of the
Company following the conveyance, transfer, lease or other disposal of
its properties and assets substantially as an entirety to another
Person upon the terms and conditions set forth in Article Five shall
not be deemed a dissolution, winding-up, liquidation, reorganization,
assignment for the benefit of creditors or marshaling of assets and
liabilities of the Company for the purposes of this Section if the
Person formed by such consolidation or into which the Company is
merged or the Person which acquires such assets substantially as an
entirety, as the case may be, shall, as a part of such consolidation,
merger, conveyance, transfer, lease or disposal, comply with the
conditions set forth in Article Five.
SECTION 10.03. Default on Senior Indebtedness. (a) Unless
Section 10.02 shall be applicable, upon (1) the occurrence of a
Payment Default and (2) receipt by the Trustee from the Company or a
holder of Senior Indebtedness of written notice of such occurrence, no
payment (other than any payments made pursuant to the provisions
contained in Section 8.02 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),
shall be made by the Company including by way of set-off or
enforcement of any guarantee or otherwise, on account of the
Subordinated Obligations or on account of the purchase or redemption,
deposit for defeasance or other acquisition of Securities unless and
until such Payment Default shall have been cured or waived in writing
or shall have ceased to exist or such Senior Indebtedness shall have
been discharged or paid in full in cash or Cash Equivalents, after
which the Company shall resume making any and all required payments in
respect of the Securities, including any missed payments.
(b) Unless Section 10.02 shall be applicable, upon (1) the
occurrence of a Non-payment Default and (2) receipt by the Trustee
from an authorized representative of the holders of Designated Senior
Indebtedness of written notice of such occurrence, then no payment
(other than any payments made pursuant to the provisions contained in
Section 8.02 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), shall
be made by the Company including by way of set-off or enforcement of
any guarantee or otherwise, on account of the Subordinated Obligations
or on account of the purchase or redemption, deposit for defeasance or
other acquisition of Securities for a period (the "Payment Blockage
Period") commencing on the date of receipt by the Trustee of such
notice from an authorized representative of the holders of Designated
Senior Indebtedness or the Company at the direction of such
representative unless and until (subject to any blockage of payments
that may then be in effect under subsection (a) of this Section)
(w) more than 179 days shall have elapsed since receipt of such
written notice by the Trustee, (x) such Non-payment Default shall have
been cured or waived in writing or shall have ceased to exist,
(y) such Designated Senior Indebtedness has been discharged or paid in
full in cash or Cash Equivalents or (z) such Payment Blockage Period
shall have been terminated by written notice to the Trustee from an
authorized representative of the holders of Designated Senior
Indebtedness initiating such Payment Blockage Period or from the
holders of at least a majority in principal amount of such Designated
Senior Indebtedness), after which, in the case of clause (w), (x), (y)
or (z), the Company shall resume making any and all required payments
in respect of the Securities, including any missed payments.
Notwithstanding any other provision of this Indenture, in no event
shall a Payment Blockage Period extend beyond 179 days from the date
of the receipt by the Trustee of the notice referred to in clause (2)
above (the "Initial Blockage Period"). No more than one Payment
Blockage Period may be commenced during any period of 365 consecutive
days. Notwithstanding any other provision of this Indenture, no event
of default with respect to Designated Senior Indebtedness which
existed or was continuing on the date of the commencement of any
Payment Blockage Period initiated by an authorized representative of
the holders of Designated Senior Indebtedness for such Designated
Senior Indebtedness shall be, or be made, the basis for the
commencement of a second Payment Blockage Period for such Designated
Senior Indebtedness, whether or not within the Initial Blockage
Period, unless such event of default shall have been cured or waived
for a period of not less than 90 consecutive days.
(c)In the event that, notwithstanding the foregoing
provisions of this Section, the Company shall make any payment to the
Trustee (which is not paid over to Holders of Securities) prohibited
by the foregoing provisions of this Section, then and in such event
such payment shall be paid over to the authorized 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.
SECTION 10.04. Payment Permitted. Nothing contained in
this Article or elsewhere in this Indenture or in any of the
Securities shall prevent the Company, at any time except during the
pendency of any event referred to in clause (a), (b) or (c) of
Section 10.02 or under the conditions described in Section 10.03, from
making payments at any time of principal of (and premium, if any) or
interest on the Securities.
SECTION 10.05. Subrogation. After all Senior Indebtedness
is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated (equally and ratably with the
holders of all indebtedness of the Company which by its express terms
is subordinated and postponed to Senior Indebtedness to the same
extent as the Securities are subordinated and postponed and which is
entitled to like rights of subrogation) to the rights of holders of
Senior Indebtedness to receive distributions applicable to Senior
Indebtedness. A distribution made under this Article Ten to holders
of Senior Indebtedness that otherwise would have been made to
Securityholders is not, as between the Company and Securityholders, a
payment by the Company on such Senior Indebtedness.
SECTION 10.06. Relative Rights. This Article Ten defines
the relative rights of Securityholders and holders of Senior
Indebtedness. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional,
to pay principal of and interest on the Securities in accordance
with their terms; or
(2) affect the relative rights against the Company of
Securityholders and creditors of the Company other than the
holders of Senior Indebtedness; or
(3) except as set forth in Section 6.02 prevent the Trustee
or any Securityholder from exercising its available remedies upon
a Default or an Event of Default, subject to the rights of
holders of Senior Indebtedness to receive distributions otherwise
payable to Securityholders.
SECTION 10.07. Subordination May Not Be Impaired by Company.
(a) No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Securities shall be
impaired by any act or failure to act by the Company or by its failure
to comply with this Indenture.
(b) Without in any way limiting the generality of
subsection (a) of this Section, the holders of Senior Indebtedness
may, at any time and from time to time, without the consent of or
notice to the Trustee or the Holders of the Securities, without
incurring responsibility to the Holders of the Securities and without
impairing or releasing the subordination provided in this Article or
the obligations hereunder of the Holders of the Securities to the
holders of Senior Indebtedness, do any one or more of the following:
(1) change the manner, place or terms of payment or extend the time of
payment of, or renew or alter, the terms of Senior Indebtedness or the
terms of any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding (including any increase in
the aggregate principal amount of any indebtedness thereunder, it
being understood that any such additional indebtedness shall not
constitute Senior Indebtedness to the extent incurred in violation of
Section 4.05 of this Indenture); (2) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise
securing Senior Indebtedness; (3) release any Person liable in any
manner for the collection of Senior Indebtedness; and (4) exercise or
refrain from exercising any rights against the Company and/or any
other Person.
(c) If the Trustee on behalf of the Holders or any Holders
should fail to file a proof of claim in any bankruptcy, insolvency,
receivership or similar proceeding relating to the Company at least
30 days before the expiration of the time to file such claim or
claims, each holder of Senior Indebtedness (or its representative) is
hereby authorized to file an appropriate claim for and on behalf of
all or any of the Holders.
SECTION 10.08. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may
continue to make payments on the Securities and shall not be charged
with knowledge of the existence of facts that would prohibit the
making of any such payments unless, not less than one Business Day
prior to the date of such payment, a Trust Officer receives notice
satisfactory to it that payments may not be made under this
Article Ten. The Company, the Registrar or co-registrar, the Paying
Agent, a Representative or a holder of Senior Indebtedness may give
the notice; provided, however, that, if an issue of Senior
Indebtedness has a Representative, only the Representative may give
the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the
rights set forth in this Article Ten with respect to any Senior
Indebtedness that may at any time be held by it, to the same extent as
any other holder of such Senior Indebtedness; and nothing in
Article Seven shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article Ten shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
SECTION 10.09. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness, the distribution may be made and the notice given
to their Representative (if any).
SECTION 10.10. Article Ten Not To Prevent Events of Default
or Limit Right To Accelerate. The failure to make a payment pursuant
to the Securities by reason of any provision in this Article Ten shall
not be construed as preventing the occurrence of a Default. Nothing
in this Article Ten shall have any effect on the right of the Secu-
rityholders or the Trustee to accelerate the maturity of the
Securities; provided, however, that, so long as any Indebtedness
permitted by this Indenture to be incurred pursuant to the Credit
Facility shall be outstanding (including letters of credit and
bankers' acceptances), upon the occurrence and during the continuance
of an Event of Default under this Indenture, neither the Trustee nor
any Holder shall be entitled to accelerate all or any of the
Subordinated Obligations until the earlier to occur of the fifth
Business Day following receipt by the Company and by an authorized
representative of the holders of Designated Senior Indebtedness of a
written declaration of acceleration as provided in Section 6.02 and
the date of acceleration of any such Indebtedness under the Credit
Facility.
SECTION 10.11. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in
trust under Article Eight by the Trustee and which were deposited in
accordance with the terms of Article Eight and not in violation of
Section 10.03 for the payment of principal of and interest on the
Securities shall not be subordinated to the prior payment of any
Senior Indebtedness or subject to the restrictions set forth in this
Article Ten, and none of the Securityholders shall be obligated to pay
over any such amount to the Company or any holder of Senior
Indebtedness or any other creditor of the Company.
SECTION 10.12. Trustee Entitled To Rely. Upon any payment
or distribution pursuant to this Article Ten, the Trustee and the
Securityholders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the
nature referred to in Section 10.02 are pending, (ii) upon a
certificate of the liquidating trustee or agent or other Person making
such payment or distribution to the Trustee or to the Securityholders
or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article Ten. In the
event that the Trustee determines, in good faith, that evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution pursuant to
this Article Ten, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the
amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person
under this Article Ten, and, if such evidence is not furnished, the
Trustee may defer any payment to such Person pending judicial deter-
mination as to the right of such Person to receive such payment. The
provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this
Article Ten.
SECTION 10.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the
Trustee on his behalf to take such action as may be necessary or
appropriate to acknowledge or effectuate the subordination between the
Securityholders and the holders of Senior Indebtedness as provided in
this Article Ten and appoints the Trustee as attorney-in-fact for any
and all such purposes.
SECTION 10.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness and shall not be liable to
any such holders if it shall mistakenly pay over or distribute to
Securityholders or the Company or any other Person, money or assets to
which any holders of Senior Indebtedness shall be entitled by virtue
of this Article Ten or otherwise.
SECTION 10.15. Reliance by Holders of Senior Indebtedness
on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination
provisions are, and are intended to be, an inducement and a
consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of such
Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or
in continuing to hold, such Senior Indebtedness.
ARTICLE XI
Miscellaneous
SECTION 11.01. Trust Indenture Act Controls. If any
provision of this Indenture limits, qualifies or conflicts with
another provision that is required to be included in this Indenture by
the TIA, the required provision shall control.
SECTION 11.02. Notices. Any notice or communication shall
be in writing and delivered in person or mailed by first-class mail or
sent by facsimile (with a hard copy delivered in person or by mail
promptly thereafter) and addressed as follows:
if to the Company:
AMC Entertainment Inc.
106 West 14th Street
Kansas City, Missouri 64105
Attention of: Secretary
if to the Trustee:
The Bank of New York
101 Barclay Street
21W
New York, NY 10286
Attention of: Corporate Trust Administration
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications. Where this Indenture provides for notice in any
manner, such notice may be waived in writing by the Person entitled to
receive such notice, either before or after the event, and such waiver
shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance
upon such waiver.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it
appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency
with respect to other Securityholders. If a notice or communication
is mailed in the manner provided above, it is duly given, whether or
not the addressee receives it.
SECTION 11.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA 312(b) with other
Securityholders with respect to their rights under this Indenture or
the Securities. The Company, the Trustee, the Registrar and anyone
else shall have the protection of TIA 312(c).
SECTION 11.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the
Trustee to take or refrain from taking any action under this
Indenture, the Company shall furnish to the Trustee:
(1) an Officers' Certificate in form and substance
reasonably satisfactory to the Trustee stating that, in the
opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 11.05. Statements Required in Certificate or
Opinion. Each certificate or opinion with respect to compliance with
a covenant or condition provided for in this Indenture shall include:
(1) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
has made such examination or investigation as is necessary to
enable him to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is
not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give
an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer
knows, or in the exercise of reasonable care should know, that the
certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it
relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that
the information with respect to such factual matters is in the
possession of the Company, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or
opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements,
opinions or other instruments under this Indenture, they may, but need
not, be consolidated and form one instrument.
SECTION 11.06. When Securities Disregarded. In
determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent,
Securities owned by the Company or by any Person directly or
indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to
be outstanding, except that, for the purpose of determining whether
the Trustee shall be protected in relying on any such direction,
waiver or consent, only Securities that the Trustee knows are so owned
shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar. The Trustee may make reasonable rules for action by or a
meeting of Securityholders. The Registrar and the Paying Agent or co-
registrar may make reasonable rules for their functions.
SECTION 11.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not
required to be open in the States of New York or Missouri. If a
payment date is a Legal Holiday, payment shall be made on the next
succeeding day that is not a Legal Holiday, and no interest shall
accrue for the intervening period. If a regular record date is a
Legal Holiday, the record date shall not be affected.
SECTION 11.09. Governing Law. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 11.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not
have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a
Security, each Securityholder shall waive and release all such lia-
bility. The waiver and release shall be part of the consideration for
the issue of the Securities.
SECTION 11.11. Successors. All agreements of the Company
in this Indenture and the Securities shall bind its successors. All
agreements of the Trustee in this Indenture shall bind its successors.
SECTION 11.12. Separability Clause. In case any provision
in this Indenture or in the Securities shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 11.13. Reliance on Financial Data. In computing
any amounts under this Indenture,
(i) to the extent relevant in computing any amounts under
this Indenture, the Company shall use audited financial
statements of the Company, its Subsidiaries, any Person that
would become a Subsidiary in connection with the transaction that
requires the computation and any Person from which the Company or
a Subsidiary has acquired an operating business, or is acquiring
an operating business in connection with the transaction that
requires the computation (each such Person whose financial
statements are relevant in computing any particular amount, a
"Relevant Person") for the period or portions of the period to
which the computation relates for which audited financial
statements are available on the date of computation and unaudited
financial statements and other current financial data based on
the books and records of the Relevant Person or Relevant Persons,
as the case may be, to the extent audited financial statements
for the period or any portion of the period to which the
computation relates are not available on the date of computation,
and
(ii) the Company shall be permitted to rely in good faith on
the financial statements and other financial data derived from
the books and records of any Relevant Person that are available
on the date of the computation.
SECTION 11.14. Multiple Originals. The parties may sign
any number of copies of this Indenture. Each signed copy shall be an
original, but all of them together represent the same agreement. One
signed copy is enough to prove this Indenture.
SECTION 11.15. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and
Sections of this Indenture have been inserted for convenience of
reference only, are not intended to be considered a part hereof and
shall not modify or restrict any of the terms or provisions hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Indenture
to be duly executed as of the date first written above.
AMC ENTERTAINMENT INC.,
by /s/ Peter C. Brown
Name: Peter C. Brown
Title: Co-Chairman of the Board and
President
THE BANK OF NEW YORK, as Trustee
by /s/ Mary La Gumina
Name: Mary La Gumina
Title: Assistant Vice President
<PAGE>
SCHEDULE I
PROVISIONS FOR INTER-COMPANY SUBORDINATED DEBT
1.1 Certain Definitions. Unless otherwise defined in this
Schedule I, terms defined in the Indenture in respect of the
9 1/2% Senior Subordinated Notes due 2011 dated as of January 27, 1999
(the "Indenture") between AMC Entertainment Inc. (the "Company") and
The Bank of New York, as trustee (the "Trustee") and used herein have
the meanings attributed to such terms in the Indenture. As used
herein, (a) the term "Relevant Obligor" means the obligor creating,
incurring, assuming or suffering to exist any indebtedness under
clause (xiii) under the definition of Permitted Indebtedness under the
Indenture and (b) the term "Permitted Junior Securities" means equity
securities other than Redeemable Capital Stock or subordinated
securities of the Relevant Obligor or any successor obligor provided
for by a plan of reorganization or readjustment that, in the case of
any such subordinated securities, are subordinate in right of payment
to all Securities and Indenture Obligations to at least the same
extent as the indebtedness evidenced by this agreement or instrument
is so subordinated as provided herein.
2.1 Agreement to Subordinate. The Relevant Obligor and the
relevant creditor who is owed such indebtedness (the "Relevant
Creditor") agree that the indebtedness represented by this agreement
or instrument (including, without limitation, principal, interest,
premium, fees, penalties, indemnities and "post-petition interest" in
bankruptcy) is subordinate and junior in right of payment, to the
extent and in the manner provided in this Section 2, to the prior
payment in full of all Securities and Indenture Obligations of the
Company.
The Relevant Obligor agrees to hold the benefit of these
provisions as incorporated in this agreement or this instrument as
trustee for and on behalf of the Trustee and the Holders and the
Relevant Obligor shall be a party to the agreement or instrument in
such capacity and shall give the Relevant Creditor (and the Relevant
Obligor on its own behalf) one dollar as valuable consideration in
respect of the agreements given to it in such capacity as trustee.
The provisions of this Section 2 are for the benefit of the
Holders, and such Holders are hereby made obligees hereunder to the
same extent as if their names were written herein as such, and they
(collectively or singly) may proceed to enforce such provisions.
2.2 Liquidation; Dissolution; Bankruptcy. (a) 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, relative to the Relevant Obligor or to its
assets, whether voluntary or involuntary from any source, or (b) any
liquidation, dissolution or other winding-up of the Relevant Obligor,
whether voluntary or involuntary and whether or not involving
insolvency or bankruptcy, or (c) any assignment for the benefit of
creditors or any other marshaling of assets or liabilities of the
Relevant Obligor; then, and in any such event:
(i)the Trustee and the Holders shall be entitled to
receive payment in full of all Securities and Indenture
Obligations before the Relevant Creditor shall be entitled to
receive any payment (other than in Permitted Junior Securities)
of principal of or interest on, or any other amount owing in
respect of, the indebtedness evidenced by this agreement or
instrument;
(ii)until payment in full of all the Securities and
Indenture Obligations, any distribution of assets of any kind or
character (other than in Permitted Junior Securities) to which
the Relevant Creditor would be entitled but for this Section 2
shall be paid by the Relevant Obligor or by any receiver, trustee
in bankruptcy, liquidating trustee, agents or other Persons
making such payment or distribution to, or if received by the
Relevant Creditor shall be held for the benefit of and shall be
forthwith paid or delivered to, the Trustee and Holders in
respect of the Securities and Indenture Obligations; and
(iii)in the event that, notwithstanding the foregoing,
any payment or distribution of assets of the Relevant Obligor of
any kind or character, whether in cash, property or securities
(other than in Permitted Junior Securities), shall be received by
the Relevant Creditor before all the Securities and Indenture
Obligations are paid in full, such payment or distribution shall
be held in trust for the benefit of and shall be paid over to the
Trustee and the Holders in respect of the Securities and
Indenture Obligations, for application to the payment of all
Securities and Indenture Obligations until all Securities and
Indenture Obligations shall have been paid in full after giving
effect to any concurrent payment or distribution to the Trustee
or the Holders in respect of such Securities and Indenture
Obligations.
(b) If the Relevant Creditor does not file proper claims or
proofs of claim in the form required in a bankruptcy, reorganization,
insolvency, receivership or similar proceeding relating to the
Relevant Obligor or its property prior to 45 days before the
expiration of the time to file such claims, then (i) upon the request
of the Trustee, the Relevant Creditor shall file such claims and
proofs of claim in respect of the indebtedness evidenced by this
agreement or instrument and execute and deliver such powers of
attorney, assignments and proofs of claim as may be directed by the
Trustee to enable it to enforce any and all claims upon or in respect
of the indebtedness evidenced by this agreement or instrument and to
collect and receive any and all payments or distributions which may be
payable or deliverable at any time upon or in respect of the
indebtedness evidenced by this agreement or instrument, and
(ii) whether or not the Trustee shall take the action described in
clause (i) above, the Trustee shall nevertheless be deemed to have
such powers of attorney as may be necessary to file appropriate claims
and proofs of claim and otherwise exercise the powers described above.
For purpose of this Section 2, "payment in full" means the
receipt on an irrevocable basis of cash or Cash Equivalents in an
amount equal to the unpaid principal amount of the indebtedness and
premium, if any, and interest thereon to the date of such payment,
together with all other amounts owing with respect to such
indebtedness.
2.3 Securities and Indenture Obligations. (a) The Relevant
Obligor shall not pay any principal, interest or premium on the
indebtedness evidenced by this agreement or instrument, acquire the
indebtedness evidenced by this agreement or instrument for cash or
property other than capital stock (other than in Permitted Junior
Securities) of the Relevant Obligor, or make any loans, advances or
extensions of credit to the Relevant Creditor with respect to the
indebtedness evidenced by this agreement or instrument, or pay or
acquire any obligation or liability upon which the Relevant Creditor
is the obligor, and the Relevant Creditor shall not demand, accept or
receive any payment of any principal, interest or premium on the
indebtedness evidenced by this agreement or instrument or any such
cash, property (other than capital stock (other than in Permitted
Junior Securities) of the Relevant Obligor), loans, advances or
extensions of credit at any time when:
(i) a default in the payment of any Securities and Indenture
Obligations has occurred, whether at maturity or at a date fixed
for prepayment or by declaration of an acceleration or otherwise,
and such default either (A) shall be continuing or (B) shall not
have been cured and shall have been waived by the Holders on the
express condition that payments on and acquisitions of the
indebtedness evidenced by this agreement or instrument by the
Relevant Obligor be prohibited pursuant to this clause (i); or
(ii) any default (other than as described in clause (i) of
this Section 2.3(a)) under any agreement or instrument evidencing
Securities and Indenture Obligations shall have occurred and
either (x) shall be continuing or (y) shall not have been cured
and shall have been waived by the Holders on the express
condition that payments on or acquisition of the indebtedness
evidenced by this agreement or instrument be prohibited pursuant
to this clause (ii); or
(iii) any Payment Default or Non-payment Default shall have
occurred and shall not have been cured or waived; or
(iv) such payment of principal, interest or premium on the
indebtedness evidenced by this agreement or instrument, or
acquisition of the indebtedness evidenced by this agreement or
instrument for cash or property other than capital stock of the
Relevant Obligor would cause a Default or Event of Default under
the Indenture.
(b) If at any time when a payment on the indebtedness
evidenced by this agreement or instrument is due, the Relevant Obligor
would (but for this subsection (b)) be prohibited by Section 2.3(a)
from making such payment, the Relevant Obligor shall nonetheless be
obligated to make such payment if all of the Holders with respect to
which any default shall have occurred shall have consented thereto in
writing.
(c) If, notwithstanding the foregoing, any payment of any
kind or character, whether in cash, property or otherwise, shall be
received by the Relevant Creditor before all the Securities and
Indenture Obligations are paid in full, such payment shall be held in
trust for the benefit of and shall be paid over to the Trustee and the
Holders in respect of the Securities and Indenture Obligations for
application to the payment of all such Securities and Indenture
Obligations until all Securities and Indenture Obligations shall have
been paid in full after giving effect to any concurrent payment or
distribution to the Trustee or the Holders in respect of such
Securities and Indenture Obligations.
2.4. Subrogation. After all Securities and Indenture
Obligations are paid in full and until the indebtedness evidenced by
this agreement or instrument is paid in full, the Relevant Creditor
shall be subrogated to the rights of the Holders. For purposes of
this Section 2.4, a distribution made under this Section 2 to Holders
which otherwise would have been made to the Relevant Creditor, or a
payment made by the Relevant Creditor to Holders in respect of a
turnover obligation under this Section 2, is not, as between the
Relevant Obligor and such Holders, a payment by the Relevant Obligor
on account of Securities and Indenture Obligations.
2.5. Relative Rights. This Section 2 defines the relative
rights of the Relevant Creditor on the one hand and the Holders on the
other hand. Nothing in this Section 2 shall:
(a) impair, as between the Relevant Obligor and the Relevant
Creditor, the obligation of the Relevant Obligor, which is
absolute and unconditional, to pay the principal of and interest
on the indebtedness evidenced by this agreement or instrument in
accordance with its terms; or
(b) affect the relative rights of the Relevant Creditor on
the one hand and creditors of the Relevant Obligor other than the
Holders on the other hand; or
(c) affect the relative rights of the Holders among
themselves; or
(d) prevent the Relevant Creditor from exercising its
available remedies upon a default, subject to Section 2.3 hereof
and the rights of the Holders to receive cash, property or other
assets otherwise payable to the Relevant Creditor.
2.6. Subordination May Not Be Impaired. (a) No right of the
Trustee or any Holder to enforce the subordination of indebtedness
evidenced by this agreement or instrument shall in any way be
prejudiced or impaired by any act or failure to act by the Relevant
Obligor or by any act or failure to act in good faith, by the Trustee
or any Holder or by any non-compliance by the Relevant Obligor with
the terms, provisions or covenants herein, regardless of any knowledge
thereof which the Trustee or any such Holder may have or be otherwise
charged with. Neither the subordination of the indebtedness
represented by this agreement or instrument as herein provided nor the
rights of the Trustee and the Holders with respect hereto shall be
affected by any extension, renewal or modification of the terms, or
the granting of any security in respect of, any Securities and
Indenture Obligations or any exercise or non-exercise of any right,
power or remedy with respect thereto.
(b) The Relevant Creditor agrees that all indebtedness
evidenced by this agreement or instrument will be unsecured by any
Lien upon or with respect to any property of the Relevant Obligor, and
that the Relevant Creditor will not permit to subsist any Liens upon
its claim in respect of or upon the proceeds of the indebtedness
represented by this agreement or instrument.
(c) The Relevant Creditor agrees not to exercise any offset
or counterclaim or similar right in respect of the indebtedness
evidenced by this agreement or instrument except to the extent payment
of such indebtedness is permitted and will not assign or otherwise
dispose of this agreement or instrument or the indebtedness which it
evidences unless the assignee or acquiror, as the case may be, agrees
to be bound by the terms of this Section 2.
2.7 Relevant Creditor Entitled to Rely. Upon any payment or
distribution pursuant to this Section 2, the Relevant Creditor shall
be entitled to rely (i) upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred
to in Section 2.2 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other person in such proceedings
making such payment or distribution to the Relevant Creditor or its
representative, if any, or (iii) upon a certificate of the Trustee for
the purpose of ascertaining the persons entitled to participate in
such payment or distribution, the Holders, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and
all other facts pertinent thereto or to this Section 2.
3. Miscellaneous. (a) The provisions contained herein may not
be amended or modified in any respect, nor may any of the terms or
provisions hereof be waived, except by an instrument signed by the
Relevant Obligor, the Relevant Creditor and the Trustee.
(b) The provisions contained herein shall be binding upon each
of the parties to this agreement or instrument and their respective
successors and assigns and shall inure to the benefit of the Trustee
and each and every Holder and their respective successors and assigns.
(c) The provisions contained herein shall be governed by and
construed in accordance with the laws of the State of New York.
(d) The Relevant Creditor and the Relevant Obligor each hereby
irrevocably agrees that any suits, actions or proceedings arising out
of or in connection with the provisions contained herein may be
brought in any state or federal court sitting in The City of New York
and submits and attorneys to the non-exclusive jurisdiction of each
such court.
<PAGE>
APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix A the following terms shall
have the meanings indicated below:
"Definitive Security" means a certificated Initial Security
or an Exchange Security or Private Exchange Security bearing, if
required, the restricted securities legend set forth in Section
2.3(c).
"Depository" means The Depository Trust Company, its
nominees and their respective successors.
"Distribution Compliance Period", with respect to any
Securities, means the period of 40 consecutive days beginning on and
including the later of (i) the day on which such Securities are first
offered to persons other than distributors (as defined in Regulation S
under the Securities Act) in reliance on Regulation S and (ii) the
Closing Date with respect to such Securities.
"Exchange Securities" means the 9 1/2% Senior Subordinated
Notes due 2011 to be issued pursuant to this Indenture in connection
with a Registered Exchange Offer pursuant to the Registration
Agreement.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"Initial Purchasers" means Salomon Smith Barney Inc. and
NationsBanc Montgomery Securities LLC.
"Initial Securities" means the 9 1/2% Senior Subordinated Notes
due 2011, to be originally issued from time to time, excluding
Exchange Securities and Private Exchange Securities, in one or more
series as provided for in this Indenture.
"New Securities" shall have the meaning set forth in
Section I of the Registration Agreement.
"Original Securities" means Initial Securities in the
aggregate principal amount of $225,000,000 issued on January 27, 1999.
"Private Exchange" means the offer by the Company, pursuant
to Section 2 of the Registration Agreement dated January 21, 1999, or
pursuant to any similar provision of any other Registration Agreement,
to issue and deliver to certain purchasers, in exchange for the
Initial Securities held by such purchasers as part of their initial
distribution, a like aggregate principal amount of Private Exchange
Securities.
"Private Exchange Securities" means those New Securities to
be issued pursuant to this Indenture in connection with a Private
Exchange pursuant to a Registration Agreement.
"Purchase Agreement" means the Purchase Agreement dated
January 21, 1999, between the Company and the Initial Purchasers
relating to the Original Securities, or any similar agreement relating
to any future sale of Initial Securities by the Company.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the
Initial Securities, a like aggregate principal amount of Exchange
Securities registered under the Securities Act.
"Registration Agreement" means the Registration Rights
Agreement dated January 21, 1999, between the Company and the Initial
Purchasers relating to the Original Securities, or any similar
agreement relating to any additional Initial Securities.
"Rule 144A Securities" means all Initial Securities offered
and sold to QIBs in reliance on Rule 144A.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single
class.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository) or any successor
person thereto, who shall initially be the Trustee.
"Shelf Registration Statement" means a registration
statement issued by the Company in connection with the offer and sale
of Initial Securities or Private Exchange Securities pursuant to a
Registration Agreement.
"Transfer Restricted Securities" means Definitive Securities
and any other Securities that bear or are required to bear the legend
set forth in Section 2.3(c) hereto.
1.2 Other Definitions
Defined in
Term Section:
"Agent Members"2.1(b)
"Global Security"2.1(a)
"Regulation S" 2.1
"Rule 144A"2.1
2. The Securities
2.1 Form and Dating
The Initial Securities will be offered and sold by the
Company, from time to time, pursuant to one or more Purchase
Agreements. Unless registered under the Securities Act, the Initial
Securities will be resold, initially only to QIBs in reliance on
Rule 144A under the Securities Act ("Rule 144A") and in reliance on
Regulation S under the Securities Act ("Regulation S"). Initial
Securities may thereafter be transferred to, among others, QIBs,
purchasers in reliance on Regulation S and IAIs under Rule 501(a)(1),
(2), (3) or (7) under the Securities Act, subject to the restrictions
on transfers set forth herein.
(a) Global Securities. Except as provided in Section 2.4,
Securities shall be in the form of one or more permanent global
Securities in definitive, fully registered form ( each a "Global
Security") in each case without interest coupons and with the global
securities legend and, except as otherwise provided herein, the
restricted securities legend set forth in Exhibit 1 hereto. The
Initial Securities shall be deposited on behalf of the purchasers of
the Initial Securities represented thereby with the Securities
Custodian, and registered in the name of the Depository or a nominee
of the Depository, duly executed by the Company and authenticated by
the Trustee as provided in this Indenture. The aggregate principal
amount of the Global Securities may from time to time be increased or
decreased by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the
Depository.
The Company shall execute and the Trustee shall, in
accordance with this Section 2.1(b) and pursuant to an order of the
Company, authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository
for such Global Security or Global Securities or the nominee of such
Depository and (b) shall be delivered by the Trustee to such
Depository or pursuant to such Depository's instructions or held by
the Trustee as Securities Custodian.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to
any Global Security held on their behalf by the Depository or by the
Trustee as Securities Custodian or under such Global Security, and the
Depository may be treated by the Company, the Trustee and any agent of
the Company or the Trustee as the absolute owner of such Global
Security for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Trustee or any agent of
the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the
Depository or impair, as between the Depository and its Agent Members,
the operation of customary practices of such Depository governing the
exercise of the rights of a holder of a beneficial interest in any
Global Security.
(c) Definitive Securities. Except as provided in
Section 2.4, owners of beneficial interests in Global Securities will
not be entitled to receive physical delivery of certificated
Securities.
2.2 Authentication. The Trustee shall authenticate and deliver:
(1) Original Securities for original issue in an aggregate principal
amount of $225,000,000, (2) additional Initial Securities, if and when
issued, in an aggregate principal amount of up to $100,000,000, and
(3) the Exchange Securities for issue only in a Registered Exchange
Offer or a Private Exchange, respectively, pursuant to a Registration
Agreement, for a like principal amount of Initial Securities, in each
case upon a written order of the Company signed by two Officers or by
an Officer and either a Treasurer or an Assistant Treasurer or a
Secretary or an Assistant Secretary of the Company. Such order shall
specify the amount of the Securities to be authenticated and the date
on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities, Exchange
Securities or Private Exchange Securities. The aggregate principal
amount of Securities outstanding at any time may not exceed
$325,000,000 except as provided in Section 2.08 of this Indenture.
2.3 Transfer and Exchange.(a) Transfer and Exchange of
Definitive Securities. When Definitive Securities are presented to
the Registrar or a co-registrar with a request:
(x) to register the transfer of such Definitive Securities;
or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the
exchange as requested if its reasonable requirements for such
transaction are met; provided, however, that the Definitive Securities
surrendered for transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the
Company and the Registrar or co-registrar, duly executed by the
Holder thereof or his attorney duly authorized in writing; and
(ii) are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act or
pursuant to clause (A), (B) or (C) below, and are accompanied by
the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect; or
(B) if such Definitive Securities are being
transferred to the Company, a certification to that effect;
or
(C) if such Definitive Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144 under the Securities Act, (i) a
certification to that effect and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in
Section 2.3(c)(i).
(b) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests
therein shall be effected through the Depository, in accordance with
this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depository therefor.
A transferor of a beneficial interest in a Global Security shall
deliver a written order given in accordance with the Depository's
procedures containing information regarding the participant account of
the Depository to be credited with a beneficial interest in the Global
Security and such account shall be credited in accordance with such
instructions with a beneficial interest in the Global Security and the
account of the Person making the transfer shall be debited by an
amount equal to the beneficial interest in the Global Security being
transferred. In the case of a transfer of a beneficial interest in a
Global Security to an IAI, the transferee must furnish a signed letter
to the Trustee containing certain representations and agreements (the
form of which letter can be obtained from the Trustee or the Company
and is attached as Exhibit B).
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in
another Global Security, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of
the Global Security to which such interest is being transferred
in an amount equal to the principal amount of the interest to be
so transferred, and the Registrar shall reflect on its books and
records the date and a corresponding decrease in the principal
amount of Global Security from which such interest is being
transferred.
(iii) Notwithstanding any other provisions of this Appendix
A (other than the provisions set forth in Section 2.4), a Global
Security may not be transferred as a whole except by the
Depository to a nominee of the Depository or by a nominee of the
Depository to the Depository or another nominee of the Depository
or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to Section 2.4
prior to the consummation of a Registered Exchange Offer or the
effectiveness of a Shelf Registration Statement with respect to
such Securities, such Securities may be exchanged only in
accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the
certification requirements set forth on the reverse of the
Initial Securities intended to ensure that such transfers comply
with Rule 144A, Regulation S or such other applicable exemption
from registration under the Securities Act, as the case may be)
and such other procedures as may from time to time be adopted by
the Company.
(c) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii), (iv) and (v), each certificate evidencing the Global
Securities and the Definitive Securities (and all Securities
issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF,
BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY
ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME
DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE
REVERSE OF THIS SECURITY), (4) TO AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR
(7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY
THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF
THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE
OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE (PROVIDED THAT NO
FOREIGN PURCHASER WHO HAS PURCHASED SECURITIES FROM AN INITIAL
PURCHASER (AN "INITIAL FOREIGN PURCHASER") OR ANY PERSON WHO HAS
PURCHASED SECURITIES FROM AN INITIAL FOREIGN PURCHASER OR FROM
ANY OTHER PERSON PURSUANT TO CLAUSE (3) SHALL BE PERMITTED TO
TRANSFER ANY SECURITIES SO PURCHASED BY IT TO AN INSTITUTIONAL
ACCREDITED INVESTOR PURSUANT TO THIS CLAUSE (4) PRIOR TO 40 DAYS
FOLLOWING THE CLOSING DATE), (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF
ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED
INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH TO THE
COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT
OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE
HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT
IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR
DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS
OF PARAGRAPH (K)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT."
Each Definitive Security will also bear the following additional
legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented
by a Global Security) pursuant to Rule 144 under the Securities
Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legends set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar
shall permit the beneficial owner thereof to exchange such
Transfer Restricted Security for a beneficial interest in a
Global Security that does not bear the legends set forth
above and rescind any restriction on the transfer of such
Transfer Restricted Security,
in either case, if the Holder certifies in writing to the Registrar
that its request for such exchange was made in reliance on Rule 144
(such certification to be in the form set forth on the reverse of the
Initial Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities, as the case may be, during the period of the
effectiveness of a Shelf Registration Statement with respect to
such Initial Securities or Private Exchange Securities, all
requirements pertaining to restricted legends on such Initial
Security or such Private Exchange Securities will cease to apply,
and a global Initial Security or Private Exchange Security
without restricted legends will be available to the transferee of
the beneficial interests in such Initial Securities or Private
Exchange Securities. Upon the occurrence of any of the
circumstances described in this paragraph, the Company will
deliver an Officers' Certificate to the Trustee instructing the
Trustee to issue Securities without legends.
(iv) Upon the consummation of a Registered Exchange Offer
with respect to the Initial Securities pursuant to which certain
Holders of such Initial Securities are offered Exchange
Securities in exchange for their Initial Securities, Exchange
Securities in global form without restrictive legends will be
available to Holders or beneficial owners that exchange such
Initial Securities (or beneficial interests therein) in such
Registered Exchange Offer. Upon the occurrence of any of the
circumstances described in this paragraph, the Company will
deliver an Officers' Certificate to the Trustee instructing the
Trustee to issue Securities without restricted legends.
(v) Upon the consummation of a Private Exchange with
respect to the Initial Securities pursuant to which Holders of
such Initial Securities are offered Private Exchange Securities
in exchange for their Initial Securities, all requirements
pertaining to such Initial Securities that Initial Securities
issued to certain Holders be issued in global form will continue
to apply, and Private Exchange Securities in global form with, to
the extent required by applicable law, the Restricted Securities
Legend set forth in Exhibit 1 hereto will be available to Holders
that exchange such Initial Securities in such Private Exchange.
(d) Cancelation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been
exchanged for certificated or Definitive Securities, redeemed,
repurchased or canceled, such Global Security shall be returned by the
Depository to the Trustee for cancelation or retained and canceled by
the Trustee. At any time prior to such cancelation, if any beneficial
interest in a Global Security is exchanged for certificated or
Definitive Securities, redeemed, repurchased or canceled, the
principal amount of Securities represented by such Global Security
shall be reduced and an adjustment shall be made on the books and
records of the Trustee (if it is then the Securities Custodian for
such Global Security) with respect to such Global Security, by the
Trustee or the Securities Custodian, to reflect such reduction.
(e) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate
certificated Securities, Definitive Securities and Global
Securities at the Registrar's or co-registrar's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than
any such transfer taxes, assessments or similar governmental
charge payable upon exchange or transfer pursuant to
Sections 3.06 and 9.05 of this Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of any Security for a period
beginning 15 days before the mailing of a notice of redemption or
an offer to repurchase Securities or 15 days before an interest
payment date.
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying
Agent, the Registrar or any co-registrar may deem and treat the
person in whose name a Security is registered as the absolute
owner of such Security for the purpose of receiving payment of
principal of and interest on such Security and for all other
purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar
or any co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same
debt and shall be entitled to the same benefits under this
Indenture as the Securities surrendered upon such transfer or
exchange.
(f) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation
to any beneficial owner of a Global Security, a member of, or a
participant in the Depository or any other Person with respect to
the accuracy of the records of the Depository or its nominee or
of any participant or member thereof, with respect to any
ownership interest in the Securities or with respect to the
delivery to any participant, member, beneficial owner or other
Person (other than the Depository) of any notice (including any
notice of redemption or repurchase) or the payment of any amount,
under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be
made to Holders under the Securities shall be given or made only
to the registered Holders (which shall be the Depository or its
nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only
through the Depository subject to the applicable rules and pro-
cedures of the Depository. The Trustee may rely and shall be
fully protected in relying upon information furnished by the
Depository with respect to its members, participants and any
beneficial owners.
(ii) The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in
any Security (including any transfers between or among Depository
participants, members or beneficial owners in any Global
Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
2.4 Certificated Securities.
(a)A Global Security deposited with the Depository or with
the Trustee as Securities Custodian pursuant to Section 2.1 shall be
transferred to the beneficial owners thereof in the form of
certificated Securities in an aggregate principal amount equal to the
principal amount of such Global Security, in exchange for such Global
Security, only if(i) the Depository notifies the Company that it is
unwilling or unable to continue as a Depository for such Global
Security or if at any time the Depository ceases to be a "clearing
agency" registered under the Exchange Act, and a successor depositary
is not appointed by the Company within 90 days of such notice, or
(ii) a Default or an Event of Default has occurred and is continuing
or (iii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of certificated
Securities under this Indenture.
(b) Any Global Security that is transferable to the
beneficial owners thereof pursuant to this Section 2.4 shall be
surrendered by the Depository to the Trustee located in the Borough of
Manhattan, The City of New York, to be so transferred, in whole or
from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such
Global Security, an equal aggregate principal amount of certificated
Securities of authorized denominations. Certificated Securities
issued in exchange for any portion of a Global Security transferred
pursuant to this Section shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple
thereof and registered in such names as the Depository shall direct.
Any certificated Initial Security delivered in exchange for an
interest in the Global Security shall, except as otherwise provided by
Section 2.3(c), bear the restricted securities legend set forth in
Exhibit 1 hereto.
(c) The registered Holder of a Global Security may grant
proxies and otherwise authorize any Person, including Agent Members
and Persons that may hold interests through Agent Members, to take any
action that a Holder is entitled to take under this Indenture or the
Securities.
(d) In the event of the occurrence of any of the events
specified in Section 2.4(a)(i), (ii) or (iii), the Company will
promptly make available to the Trustee a reasonable supply of
certificated Securities in definitive, fully registered form without
interest coupons.
<PAGE>
EXHIBIT 1
To APPENDIX A
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION
("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A
SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF
PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN
ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED
TO ON THE REVERSE HEREOF.
[Restricted Securities Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT
THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED
(X) PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY
PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN
AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT
TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN
OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE
SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON
THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4) TO
AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY
THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH
MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE (PROVIDED THAT NO FOREIGN
PURCHASER WHO HAS PURCHASED SECURITIES FROM AN INITIAL PURCHASER (AN
"INITIAL FOREIGN PURCHASER") OR ANY PERSON WHO HAS PURCHASED
SECURITIES FROM AN INITIAL FOREIGN PURCHASER OR FROM ANY OTHER PERSON
PURSUANT TO CLAUSE (3) SHALL BE PERMITTED TO TRANSFER ANY SECURITIES
SO PURCHASED BY IT TO AN INSTITUTIONAL ACCREDITED INVESTOR PURSUANT TO
THIS CLAUSE (4) PRIOR TO 40 DAYS FOLLOWING THE CLOSING DATE),
(5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR
(6) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL
ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF
THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS. THE HOLDER
HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT
SATISFYING THE REQUIREMENTS OF PARAGRAPH (K)(2) OF RULE 902 UNDER)
REGULATION S UNDER THE SECURITIES ACT.
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.]
<PAGE>
[FORM OF FACE OF INITIAL SECURITY]
No.Up to $__________
9 1/2% Senior Subordinated Note due 2011
CUSIP No. ______
AMC Entertainment Inc., a Delaware corporation, promises to
pay to Cede & Co., or registered assigns, the principal sum as set
forth on the Schedule of Increases or Decreases annexed hereto on
February 1, 2011.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
<PAGE>
Additional provisions of this Security are set forth on the
other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument
to be duly executed.
AMC ENTERTAINMENT INC.,
by
Name:
Title:
by
Name:
Title:
[CORPORATE SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9 1/2% Senior Subordinated Note
due 2011
1. Interest
(a) AMC Entertainment Inc., a Delaware corporation (such
corporation, and its successors under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per
annum shown above. The Company will pay interest semiannually on
February 1 and August 1 of each year in immediately available funds.
Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from
January 27, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per
annum, and it shall pay interest on overdue installments of interest
at the rate borne by the Securities to the extent lawful.
(b) Special Interest. The holder of this Security is
entitled to the benefits of a Registration Agreement, dated as of
January 21, 1999, between the Company and the Purchasers named therein
(the "Registration Agreement"). Capitalized terms used in this
paragraph (b) but not defined herein have the meanings assigned to
them in the Registration Agreement. In the event that (i) neither the
Exchange Offer Registration Statement nor the Shelf Registration
Statement has been filed with the Commission on or prior to the 90th
day following the date of the original issuance of the Securities,
(ii) neither the Exchange Offer Registration Statement nor the Shelf
Registration Statement has been declared effective on or prior to the
150th day following the date of the original issuance of the
Securities, (iii) neither the Registered Exchange Offer has been
consummated nor the Shelf Registration Statement has been declared
effective on or prior to the 180th day following the date of the
original issuance of the Securities, or (iv) after the Exchange Offer
Registration Statement or the Shelf Registration Statement has been
declared effective, such Registration Statement thereafter ceases to
be effective or usable in connection with the Exchange Offer, in the
case of the Exchange Offer Registration Statement, or resales of the
Securities, in the case of the Shelf Registration Statement, at any
time that the Company is obligated to maintain the effectiveness
thereof pursuant to the Registration Agreement (each such event
referred to in clauses (i) through (iv) above being referred to herein
as a "Registration Default"), interest (the "Special Interest") shall
accrue (in addition to stated interest on the Securities) from and
including the date on which the first such Registration Default shall
occur to but excluding the date on which all Registration Defaults
have been cured, at a rate per annum equal to .50% of the principal
amount of the Securities; provided, however, that such rate per annum
shall increase by .50% per annum from and including the 91st day after
the first such Registration Default (and each successive 30th day
thereafter) unless and until all Registration Defaults have been
cured; provided further, however, that in no event shall the Special
Interest accrue at a rate in excess of 1.00% per annum. The Special
Interest will be payable in cash semiannually in arrears each February
1 and August 1, in immediately available funds.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of
Securities at the close of business on the January 15 or July 15 next
preceding the interest payment date even if Securities are canceled
after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in
money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including
principal, premium and interest) will be made by wire transfer of
immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on the Securities may also
be made, in the case of a Holder of at least $1,000,000 aggregate
principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due
date for payment (or such other date as the Trustee may accept in its
discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
association (the "Trustee"), will act as Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any of its domestically
incorporated Wholly-Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated
as of January 27, 1999 (the "Indenture"), between the Company and the
Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect
on the date of the Indenture (the "TIA"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are senior subordinated unsecured obligations
of the Company limited to $325,000,000 aggregate principal amount at
any one time outstanding (subject to Sections 2.01 and 2.08 of the
Indenture). The Indenture imposes certain limitations on the ability
of the Company and its Subsidiaries to, among other things, incur
additional indebtedness, pay dividends or make distributions in
respect of their capital stock, purchase or redeem capital stock,
enter into transactions with stockholders or certain affiliates, or
consolidate, merge or sell all or substantially all of the Company's
assets, other than in certain transactions between the Company and one
or more of its Wholly-Owned Subsidiaries. These limitations are
subject to significant exceptions, and most would cease to be
effective if the Securities attain Investment Grade Status.
5. Optional Redemption
Except as set forth below, the Securities may not be
redeemable prior to February 1, 2004. On and after that date, the
Company may redeem the Securities in whole at any time or in part from
time to time at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record
on the relevant record date to receive interest due on the relevant
interest payment date that is on or prior to the date of redemption),
if redeemed during the 12-month period beginning on or after
February 1 of the years set forth below:
Period
2004
2005
2006
2007 and thereafter
<PAGE>
Redemption
Price
104.750%
103.167%
101.583%
100.000%
<PAGE>
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his or her registered
address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date
is deposited with the Paying Agent on or before the redemption date
and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.
8. Subordination
The Securities are subordinated to Senior Indebtedness of
the Company. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a
Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints
the Trustee as attorney-in-fact for such purpose.
9.Repurchase of Securities at the Option of Holders upon Change of
Control
Upon a Change of Control, the Company will be required to
make an offer, subject to certain conditions specified in the
Indenture, to repurchase all or any part of the Securities of each
Holder at a purchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture.
Upon any transfer or exchange, the Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorse-
ments or transfer documents and to pay any taxes required by law or
permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion
of the Security not to be redeemed) or to transfer or exchange any
Securities for a period of 15 days prior to a selection of Securities
to be redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the
money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment,
Holders entitled to the money must look only to the Company and not to
the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on
the Securities to redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture,
(i) the Indenture or the Securities may be amended without prior
notice to any Securityholder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the
outstanding Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the
consent of any Holder of Securities, the Company and the Trustee may
amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article Five of
the Indenture; (iii) to provide for uncertificated Securities in
addition to or in place of certificated Securities; (iv) to make
certain changes in the subordination provisions; (v) to add Guarantees
with respect to the Securities; (vi) to secure the Securities;
(vii) to add additional covenants or to surrender rights and powers
conferred on the Company; (viii) to comply with the requirements of
the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; or (ix) to make any change that does not
adversely affect the rights of any Securityholder.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding, subject to certain limitations, may
declare all the Securities to be immediately due and payable. Certain
events of bankruptcy or insolvency are Events of Default and shall
result in the Securities being immediately due and payable upon the
occurrence of such Events of Default without any further act of the
Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities
then outstanding may direct the Trustee in its exercise of any trust
or power under the Indenture. The Holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict
with any judgment or decree, and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its
Affiliates and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation.
By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration
for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs
the certificate of authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience
to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon
written request and without charge to the Holder a copy of the
Indenture which has in it the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer
this Security on the books of the Company. The agent may substitute
another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by
this certificate occurring prior to the expiration of the period
referred to in Rule 144(k) under the Securities Act after the later of
the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such
Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1)Gto the Company; or
(2)Gpursuant to an effective registration statement under
the Securities Act of 1933; or
(3)Gto a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act of 1933) that
purchases for its own account or for the account of a
qualified institutional buyer to whom notice is given
that such transfer is being made in reliance on Rule
144A, in each case pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(4)Goutside the United States in an offshore transaction
within the meaning of Regulation S under the Securities
Act in compliance with Rule 904 under the Securities
Act of 1933; or
(5)Gto an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act of 1933) that has furnished to the Trustee a signed
letter containing certain representations and
agreements (the form of which letter can be obtained
from the Trustee or the Company); or
(6)Gpursuant to another available exemption from
registration provided by Rule 144 under the Securities
Act of 1933.
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the
name of any person other than the registered holder thereof;
provided, however, that if box (4), (5) or (6) is checked, the
Trustee may require, prior to registering any such transfer of the
Securities, such legal opinions, certifications and other
information as the Company has reasonably requested to confirm that
such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act of 1933.
__________________________
Your Signature
Signature Guarantee:
Date: ___________________ __________________________
Signature must be guaranteedSignature of Signature
by a participant in aGuarantee
recognized signature guaranty
medallion program or other
signature guarantor acceptable
to the Trustee
____________________________________________________________
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The initial principal amount of this Global Security is
$[ ]. The following increases or decreases in this Global
Security have been made:
Date of
Exchange
Amount of decrease
in Principal
Amount of this
Global Security
Amount of increase
in Principal Amount
of this Global
Security
Principal amount of
this Global
Security following
such decrease or
increase
Signature of
authorized
signatory of
Trustee or
Securities
Custodian
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Company pursuant to Section 4.11 (Change of Control) of the
Indenture, check the box:
___
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.11 of the Indenture,
state the amount:
$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or
other signature guarantor acceptable to the Trustee.
<PAGE>
EXHIBIT A
[FORM OF FACE OF SECURITY]
No.Up to $__________
9 1/2% Senior Subordinated Note due 2011
CUSIP No. ______
AMC Entertainment Inc., a Delaware corporation, promises to
pay to Cede & Co., or registered assigns, the principal sum as set
forth on the Schedule of Increases or Decreases annexed hereto on
February 1, 2011.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
<PAGE>
Additional provisions of this Security are set forth on
the other side of this Security.
IN WITNESS WHEREOF, the parties have caused this instrument
to be duly executed.
AMC ENTERTAINMENT INC.,
by
Name:
Title:
by
Name:
Title:
[CORPORATE SEAL]
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
Dated:
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
By:_________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE SIDE OF SECURITY]
9 1/2% Senior Subordinated Note due 2011
1. Interest.
AMC Entertainment Inc., a Delaware corporation (such
corporation, and its successors under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay
interest on the principal amount of this Security at the rate per
annum shown above. The Company will pay interest semiannually on
February 1 and August 1 of each year in immediately available funds.
Interest on the Securities will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from
January 27, 1999. Interest shall be computed on the basis of a
360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per
annum, and it shall pay interest on overdue installments of interest
at the rate borne by the Securities to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of
Securities at the close of business on the January 15 or July 15 next
preceding the interest payment date even if Securities are canceled
after the record date and on or before the interest payment date.
Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in
money of the United States of America that at the time of payment is
legal tender for payment of public and private debts. Payments in
respect of the Securities represented by a Global Security (including
principal, premium and interest) will be made by wire transfer of
immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in
respect of a certificated Security (including principal, premium and
interest), by mailing a check to the registered address of each Holder
thereof; provided, however, that payments on the Securities may also
be made, in the case of a Holder of at least $1,000,000 aggregate
principal amount of Securities, by wire transfer to a U.S. dollar
account maintained by the payee with a bank in the United States if
such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such
account no later than 30 days immediately preceding the relevant due
date for payment (or such other date as the Trustee may accept in its
discretion).
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking
association (the "Trustee"), will act as Paying Agent and Registrar.
The Company may appoint and change any Paying Agent, Registrar or
co-registrar without notice. The Company or any of its domestically
incorporated Wholly-Owned Subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated
as of January 27, 1999 (the "Indenture"), between the Company and the
Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the
Trust Indenture Act of 1939 (15 U.S.C. 77aaa-77bbbb) as in effect
on the date of the Indenture (the "TIA"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the TIA for a
statement of those terms.
The Securities are senior subordinated unsecured obligations
of the Company limited to $325,000,000 aggregate principal amount at
any one time outstanding (subject to Sections 2.01 and 2.08 of the
Indenture). The Indenture imposes certain limitations on the ability
of the Company and its Subsidiaries to, among other things, incur
additional indebtedness, pay dividends or make distributions in
respect of their capital stock, purchase or redeem capital stock,
enter into transactions with stockholders or certain affiliates, or
consolidate, merge or sell all or substantially all of the Company's
assets, other than in certain transactions between the Company and one
or more of its Wholly-Owned Subsidiaries. These limitations are
subject to significant exceptions, and most would cease to be
effective if the Securities attain Investment Grade Status.
5. Optional Redemption
Except as set forth below, the Securities may not be
redeemable prior to February 1, 2004. On and after that date, the
Company may redeem the Securities in whole at any time or in part from
time to time at the following redemption prices (expressed in
percentages of principal amount), plus accrued and unpaid interest, if
any, to the redemption date (subject to the right of Holders of record
on the relevant record date to receive interest due on the relevant
interest payment date that is on or prior to the date of redemption),
if redeemed during the 12-month period beginning on or after
February 1 of the years set forth below:
Period<PAGE>
Redemption
Price <PAGE>
2004<PAGE>
104.750%
2005<PAGE>
103.167%
2006 <PAGE>
101.583%
2007 and thereafter <PAGE>
100.000%
<PAGE>
6. Sinking Fund
The Securities are not subject to any sinking fund.
7. Notice of Redemption
Notice of redemption will be mailed by first-class mail at
least 30 days but not more than 60 days before the redemption date to
each Holder of Securities to be redeemed at his or her registered
address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date
is deposited with the Paying Agent on or before the redemption date
and certain other conditions are satisfied, on and after such date
interest ceases to accrue on such Securities (or such portions
thereof) called for redemption.
8. Subordination
The Securities are subordinated to Senior Indebtedness of
the Company. To the extent provided in the Indenture, Senior
Indebtedness of the Company must be paid before the Securities may be
paid. The Company agrees, and each Securityholder by accepting a
Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give it effect and appoints
the Trustee as attorney-in-fact for such purpose.
9.Repurchase of Securities at the Option of Holders upon Change of
Control
Upon a Change of Control, the Company will be required to
make an offer, subject to certain conditions specified in the
Indenture, to repurchase all or any part of the Securities of each
Holder at a purchase price equal to 101% of the principal amount of
the Securities to be repurchased plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the
relevant interest payment date that is on or prior to the date of
purchase) as provided in, and subject to the terms of, the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture.
Upon any transfer or exchange, the Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorse-
ments or transfer documents and to pay any taxes required by law or
permitted by the Indenture. The Registrar need not register the
transfer of or exchange any Securities selected for redemption
(except, in the case of a Security to be redeemed in part, the portion
of the Security not to be redeemed) or to transfer or exchange any
Securities for a period of 15 days prior to a selection of Securities
to be redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the
money back to the Company at its written request unless an abandoned
property law designates another Person. After any such payment,
Holders entitled to the money must look only to the Company and not to
the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some of or all its obligations under the Securities and the
Indenture if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on
the Securities to redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture,
(i) the Indenture or the Securities may be amended without prior
notice to any Securityholder but with the written consent of the
Holders of at least a majority in aggregate principal amount of the
outstanding Securities and (ii) any default or noncompliance with any
provision may be waived with the written consent of the Holders of at
least a majority in principal amount of the outstanding Securities.
Subject to certain exceptions set forth in the Indenture, without the
consent of any Holder of Securities, the Company and the Trustee may
amend the Indenture or the Securities (i) to cure any ambiguity,
omission, defect or inconsistency; (ii) to comply with Article Five of
the Indenture; (iii) to provide for uncertificated Securities in
addition to or in place of certificated Securities; (iv) to make
certain changes in the subordination provisions; (v) to add Guarantees
with respect to the Securities; (vi) to secure the Securities;
(vii) to add additional covenants or to surrender rights and powers
conferred on the Company; (viii) to comply with the requirements of
the SEC in order to effect or maintain the qualification of the
Indenture under the TIA; or (ix) to make any change that does not
adversely affect the rights of any Securityholder.
15. Defaults and Remedies
If an Event of Default occurs and is continuing, the Trustee
or the Holders of at least 25% in aggregate principal amount of the
Securities then outstanding, subject to certain limitations, may
declare all the Securities to be immediately due and payable. Certain
events of bankruptcy or insolvency are Events of Default and shall
result in the Securities being immediately due and payable upon the
occurrence of such Events of Default without any further act of the
Trustee or any Holder.
Holders of Securities may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may
refuse to enforce the Indenture or the Securities unless it receives
reasonable indemnity or security. Subject to certain limitations,
Holders of a majority in aggregate principal amount of the Securities
then outstanding may direct the Trustee in its exercise of any trust
or power under the Indenture. The Holders of a majority in aggregate
principal amount of the Securities then outstanding, by written notice
to the Company and the Trustee, may rescind any declaration of
acceleration and its consequences if the rescission would not conflict
with any judgment or decree, and if all existing Events of Default
have been cured or waived except nonpayment of principal or interest
that has become due solely because of the acceleration.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the
Trustee under the Indenture, in its individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal
with and collect obligations owed to it by the Company or its
Affiliates and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of
the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation.
By accepting a Security, each Securityholder waives and releases all
such liability. The waiver and release are part of the consideration
for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized
signatory of the Trustee (or an authenticating agent) manually signs
the certificate of authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common),
TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with
rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING
EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED
THEREBY.
21. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers in notices of redemption as a convenience
to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in
any notice of redemption and reliance may be placed only on the other
identification numbers placed thereon.
The Company will furnish to any Holder of Securities upon
written request and without charge to the Holder a copy of the
Indenture which has in it the text of this Security.
<PAGE>
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer
this Security on the books of the Company. The agent may substitute
another to act for him.
____________________________________________________________
Date: ________________ Your Signature: _____________________
____________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature must be guaranteed by a participant in a recognized
signature guaranty medallion program or other signature guarantor
acceptable to the Trustee.
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by
the Company pursuant to Section 4.11 (Change of Control) of the
Indenture, check the box:
___
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.11 of the Indenture,
state the amount:
$
Date: __________________ Your Signature: __________________
(Sign exactly as your name appears on the other side of the Security)
Signature Guarantee:_______________________________________
Signature must be guaranteed by a participant in a
recognized signature guaranty medallion program or
other signature guarantor acceptable to the
Trustee.
<PAGE>
EXHIBIT B
Form of
Transferee Letter of Representation
AMC Entertainment Inc.
In care of
[ ]
[ ]
[ ]
Ladies and Gentlemen:
This certificate is delivered to request a transfer of $[ ]
principal amount of the 9 1/2% Senior Subordinated Notes due 2011 (the
"Securities") of AMC Entertainment Inc. (the "Company").
Upon transfer, the Securities would be registered in the name of
the new beneficial owner as follows:
Name:________________________
Address:_____________________
Taxpayer ID Number:__________
The undersigned represents and warrants to you that:
1. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended (the "Securities Act")), purchasing for our own account or for
the account of such an institutional "accredited investor" at least
$250,000 principal amount of the Securities, and we are acquiring the
Securities not with a view to, or for offer or sale in connection
with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Securities, and we invest in or purchase securities similar to the
Securities in the normal course of our business. We, and any accounts
for which we are acting, are each able to bear the economic risk of
our or its investment.
2. We understand that the Securities have not been registered
under the Securities Act and, unless so registered, may not be sold
except as permitted in the following sentence. We agree on our own
behalf and on behalf of any investor account for which we are
purchasing Securities to offer, sell or otherwise transfer such
Securities prior to the date that is two years after the later of the
date of original issue and the last date on which the Company or any
affiliate of the Company was the owner of such Securities (or any
predecessor thereto) (the "Resale Restriction Termination Date") only
(a) to the Company, (b) pursuant to a registration statement that has
been declared effective under the Securities Act, (c) in a transaction
complying with the requirements of Rule 144A under the Securities Act
("Rule 144A"), to a person we reasonably believe is a qualified
institutional buyer under Rule 144A (a "QIB") that is purchasing for
its own account or for the account of a QIB and to whom notice is
given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States
within the meaning of Regulation S under the Securities Act, (e) to an
institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing
for its own account or for the account of such an institutional
"accredited investor," in each case in a minimum principal amount of
Securities of $250,000, or (f) pursuant to any other available
exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that
the disposition of our property or the property of such investor
account or accounts be at all times within our or their control and in
compliance with any applicable state securities laws. The foregoing
restrictions on resale will not apply subsequent to the Resale
Restriction Termination Date. If any resale or other transfer of the
Securities is proposed to be made pursuant to clause (e) above prior
to the Resale Restriction Termination Date, the transferor shall
deliver a letter from the transferee substantially in the form of this
letter to the Company and the Trustee, which shall provide, among
other things, that the transferee is an institutional "accredited
investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under
the Securities Act and that it is acquiring such Securities for
investment purposes and not for distribution in violation of the
Securities Act. Each purchaser acknowledges that the Company and the
Trustee reserve the right prior to the offer, sale or other transfer
prior to the Resale Restriction Termination Date of the Securities
pursuant to clause (d), (e) or (f) above to require the delivery of an
opinion of counsel, certifications or other information satisfactory
to the Company and the Trustee.
TRANSFEREE:_________________,
by:_______________________
<PAGE>
EXHIBIT 4.4
Execution Copy
AMC Entertainment Inc.
9-1/2% Senior Subordinated Notes Due 2011
REGISTRATION RIGHTS AGREEMENT
New York, New York
January 27, 1999
Salomon Smith Barney Inc.
NationsBanc Montgomery Securities LLC
As Representatives of the Initial Purchasersc/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Dear Sirs:
AMC Entertainment Inc., a corporation organized under the laws of
Delaware (the "Company"), proposes to issue and sell to certain purchasers
(the "Initial Purchasers"), upon the terms set forth in a purchase agreement
of even date herewith (the "Purchase Agreement"), its 9-1/2% Senior
Subordinated Notes Due 2011 (the "Securities") relating to the initial
placement of the Securities (the "Initial Placement"). To induce the Initial
Purchasers to enter into the Purchase Agreement and to satisfy a condition
of your obligations thereunder, the Company agrees with you for your benefit
and the benefit of the holders from time to time of the Securities
(including the Initial Purchasers) (each a "Holder" and, together, the
"Holders"), as follows:
1. Definitions. Capitalized terms used herein without definition
shall have their respective meanings set forth in the Purchase Agreement.
As used in this Agreement, the following capitalized defined terms shall
have the following meanings:
"Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified Person shall mean any other Person
that, directly or indirectly, is in control of, is controlled by, or is
under common control with, such specified Person. For purposes of this
definition, control of a Person shall mean the power, direct or indirect, to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; and the terms "controlling" and
"controlled" shall have meanings correlative to the foregoing.
"Broker-Dealer" shall mean any broker or dealer registered as such
under the Exchange Act.
"Business Day" shall mean any day other than a Saturday, a Sunday
or a legal holiday or a day on which banking institutions or trust companies
are authorized or obligated by law to close in New York City.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
"Exchange Offer Registration Period" shall mean the one-year period
following the consummation of the Registered Exchange Offer, exclusive of
any period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" shall mean a registration
statement of the Company on an appropriate form under the Act with respect
to the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments thereto, in each
case including the Prospectus contained therein, all exhibits thereto and
all material incorporated by reference therein.
"Exchanging Dealer" shall mean any Holder (which may include any
Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired 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).
"Final Memorandum" shall have the meaning set forth in the Purchase
Agreement.
"Holder" shall have the meaning set forth in the preamble hereto.
"Indenture" shall mean the Indenture relating to the Securities,
dated as of January 27, 1999, between the Company and The Bank of New York,
as trustee, as the same may be amended from time to time in accordance with
the terms thereof.
"Initial Placement" shall have the meaning set forth in the
preamble hereto.
"Initial Purchaser" shall have the meaning set forth in the
preamble hereto.
"Losses" shall have the meaning set forth in Section 6(d) hereof.
"Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.
"Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that shall administer an
underwritten offering.
"New Securities" shall mean debt securities of the Company
identical in all material respects to the Securities (except that the cash
interest and interest rate step-up provisions and the transfer restrictions
shall be modified or eliminated, as appropriate) and to be issued under the
Indenture or the New Securities Indenture.
"New Securities Indenture" shall mean an indenture between the
Company and the New Securities Trustee, identical in all material respects
to the Indenture (except that the cash interest and interest rate step-up
provisions will be modified or eliminated, as appropriate).
"New Securities Trustee" shall mean a bank or trust company
reasonably satisfactory to the Initial Purchasers, as trustee with respect
to the New Securities under the New Securities Indenture.
"Prospectus" shall mean the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an
effective registration statement in reliance upon Rule 430A under the Act),
as amended or supplemented by any prospectus supplement, with respect to the
terms of the offering of any portion of the Securities or the New Securities
covered by such Registration Statement, and all amendments and supplements
thereto and all material incorporated by reference therein.
"Purchase Agreement" shall have the meaning set forth in the
preamble hereto.
"Registered Exchange Offer" shall mean the proposed offer of the
Company to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of
the New Securities.
"Registration Statement" shall mean any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities
or the New Securities pursuant to the provisions of this Agreement, any
amendments and supplements to such registration statement, including post-
effective amendments (in each case including the Prospectus contained
therein), all exhibits thereto and all material incorporated by reference
therein.
"Securities" shall have the meaning set forth in the preamble
hereto.
"Shelf Registration" shall mean a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof
which covers some or all of the Securities or New Securities, as applicable,
on an appropriate form under Rule 415 under the Act, or any similar rule
that may be adopted by the Commission, amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trustee" shall mean the trustee with respect to the Securities
under the Indenture.
"underwriter" shall mean any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer. (a) The Company shall prepare
and, not later than 90 days following the date of the original issuance of
the Securities (or if such 90th day is not a Business Day, the next
succeeding Business Day), shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 150 days of the date of
the original issuance of the Securities (or if such 150th day is not a
Business Day, the next succeeding Business Day).
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange
Offer, it being the objective of such Registered Exchange Offer to enable
each Holder electing to exchange Securities for New Securities (assuming
that such Holder is not an Affiliate of the Company, acquires the New
Securities in the ordinary course of such Holder's business, has no
arrangements with any Person to participate in the distribution of the New
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such New Securities
from and after their receipt without any limitations or restrictions under
the Act and without material restrictions under the securities laws of a
substantial proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the Company
shall:
(i) mail to each Holder a copy of the Prospectus forming part of
the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;
(ii) keep the Registered Exchange Offer open for not less than
30 days and not more than 45 days after the date notice thereof is
mailed to the Holders (or, in each case, longer if required by
applicable law);
(iii) use its best efforts to keep the Exchange Offer
Registration Statement continuously effective under the Act,
supplemented and amended as required, under the Act to ensure that it
is available for sales of New Securities by Exchanging Dealers during
the Exchange Offer Registration Period;
(iv) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan in New York
City, which may be the Trustee, the New Securities Trustee or an
Affiliate of either of them;
(v) permit Holders to withdraw tendered Securities at any time
prior to the close of business, New York time, on the last Business Day
on which the Registered Exchange Offer is open;
(vi) prior to effectiveness of the Exchange Offer Registration
Statement, provide a supplemental letter to the Commission (A) stating
that the Company is conducting the Registered Exchange Offer in
reliance on the position of the Commission in Exxon Capital Holdings
Corporation (pub. avail. May 13, 1988) and, Morgan Stanley and Co.,
Inc. (pub. avail. June 5, 1991); and (B) including a representation
that the Company has not entered into any arrangement or understanding
with any Person to distribute the New Securities to be received in the
Registered Exchange Offer and that, to the best of the Company's
information and belief, each Holder participating in the Registered
Exchange Offer is acquiring the New Securities in the ordinary course
of business and has no arrangement or understanding with any Person to
participate in the distribution of the New Securities; and
(vii) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities tendered and not validly
withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancelation in accordance with
Section 4(s) all Securities so accepted for exchange; and
(iii) cause the New Securities Trustee promptly to authenticate
and deliver to each Holder of Securities a principal amount of New
Securities equal to the principal amount of the Securities of such
Holder so accepted for exchange.
(e) Each Holder hereby acknowledges and agrees that any Broker-
Dealer and any such Holder using the Registered Exchange Offer to
participate in a distribution of the New Securities (x) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission in Morgan Stanley and Co., Inc. (pub. avail.
June 5, 1991) and Exxon Capital Holdings Corporation (pub. avail. May 13,
1988), as interpreted in the Commission's letter to Shearman & Sterling
dated July 2, 1993 and similar no-action letters; and (y) must comply with
the registration and prospectus delivery requirements of the Act in
connection with any secondary resale transaction and such transaction must
be covered by an effective registration statement containing the selling
security holder information required by Item 507 or 508, as applicable, of
Regulation S-K under the Act if the resales are of New Securities obtained
by such Holder in exchange for Securities acquired by such Holder directly
from the Company or one of its Affiliates. Accordingly, each Holder
participating in the Registered Exchange Offer shall be required to
represent to the Company that, at the time of the consummation of the
Registered Exchange Offer:
(i) any New Securities received by such Holder will be acquired
in the ordinary course of business;
(ii) such Holder will have no arrangement or understanding with
any Person to participate in the distribution of the Securities or the
New Securities within the meaning of the Act; and
(iii) such Holder is not an Affiliate of the Company (or if it
is, that it will comply with the registration and prospectus delivery
requirements of the Securities Act to the extent applicable).
(f) If any Initial Purchaser determines that it is not eligible
to participate in the Registered Exchange Offer with respect to the exchange
of Securities constituting any portion of an unsold allotment, at the
request of such Initial Purchaser, the Company shall issue and deliver to
such Initial Purchaser or the Person purchasing New Securities registered
under a Shelf Registration Statement as contemplated by Section 3 hereof
from such Initial Purchaser, in exchange for such Securities, a like
principal amount of New Securities. The Company shall use its best efforts
to cause the CUSIP Service Bureau to issue the same CUSIP number for such
New Securities as for New Securities issued pursuant to the Registered
Exchange Offer.
3. Shelf Registration. (a) If (i) due to any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to
effect the Registered Exchange Offer as contemplated by Section 2 hereof; or
(ii) for any other reason the Registered Exchange Offer is not consummated
within 180 days of the date hereof; (iii) any Initial Purchaser so requests
with respect to Securities that are not eligible to be exchanged for New
Securities in the Registered Exchange Offer and that are held by it
following consummation of the Registered Exchange Offer; (iv) any Holder
(other than an Initial Purchaser) is not eligible to participate in the
Registered Exchange Offer; or (v) in the case of any Initial Purchaser that
participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Initial Purchaser does not receive
freely tradeable New Securities in exchange for Securities constituting any
portion of an unsold allotment (it being understood that (x) the requirement
that an Initial Purchaser deliver a Prospectus containing the information
required by Item 507 or 508 of Regulation S-K under the Act in connection
with sales of New Securities acquired in exchange for such Securities shall
result in such New Securities being not "freely tradeable"; and (y) the
requirement that an Exchanging Dealer deliver a Prospectus in connection
with sales of New Securities acquired in the Registered Exchange Offer in
exchange for Securities acquired as a result of market-making activities or
other trading activities shall not result in such New Securities being not
"freely tradeable"), the Company shall effect a Shelf Registration Statement
in accordance with subsection (b) below.
(b) (i) The Company shall as promptly as practicable (but in no
event more than 90 days after so required or requested pursuant to this
Section 3), file with the Commission and thereafter shall use its best
efforts to cause to be declared effective under the Act a Shelf Registration
Statement relating to the offer and sale of the Securities or the New
Securities, as applicable, by the Holders thereof from time to time in
accordance with the methods of distribution elected by such Holders and set
forth in such Shelf Registration Statement; provided, however, that no
Holder (other than an Initial Purchaser) shall be entitled to have the
Securities held by it covered by such Shelf Registration Statement unless
such Holder agrees in writing to be bound by all of the provisions of this
Agreement applicable to such Holder; and provided further, that with respect
to New Securities received by an Initial Purchaser in exchange for
Securities constituting any portion of an unsold allotment, the Company may,
if permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Item 507 or 508 of Regulation S-K, as
applicable, in satisfaction of its obligations under this subsection with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to herein as, and governed by the provisions
herein applicable to, a Shelf Registration Statement.
(ii) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, supplemented and amended as
required by the Act, in order to permit the Prospectus forming part thereof
to be usable by Holders for a period of two years after the Closing Date or
such shorter period that will terminate when all the Securities or New
Securities, as applicable, covered by the Shelf Registration Statement have
been sold pursuant to the Shelf Registration Statement (in any such case,
such period being called the "Shelf Registration Period"). The Company shall
be deemed not to have used its best efforts to keep the Shelf Registration
Statement effective during the requisite period if it voluntarily takes any
action that would result in Holders of Securities covered thereby not being
able to offer and sell such Securities during that period, unless (A) such
action is required by applicable law; or (B) such action is taken by the
Company in good faith and for valid business reasons (not including
avoidance of the Company's obligations hereunder), including the acquisition
or divestiture of assets, so long as the Company promptly thereafter
complies with the requirements of Section 4(k) hereof, if applicable.
(iii) The Company shall cause the Shelf Registration Statement
and the related Prospectus and any amendment or supplement thereto, as of
the effective date of the Shelf Registration Statement or such amendment or
supplement, (A) to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission; and (B) not to contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
4. Additional Registration Procedures. In connection with any
Shelf Registration Statement and, to the extent applicable, any Exchange
Offer Registration Statement, the following provisions shall apply.
(a) The Company shall:
(i) furnish to you, not less than five Business Days prior to the
filing thereof with the Commission, a copy of any Exchange Offer
Registration Statement and any Shelf Registration Statement, and each
amendment thereof and each amendment or supplement, if any, to the
Prospectus included therein (including all documents incorporated by
reference therein after the initial filing) and shall use its best
efforts to reflect in each such document, when so filed with the
Commission, such comments as you reasonably propose;
(ii) include the information set forth in Annex A hereto on the
facing page of the Exchange Offer Registration Statement, in Annex B
hereto in the forepart of the Exchange Offer Registration Statement in
a section setting forth details of the Exchange Offer, in Annex C
hereto in the underwriting or plan of distribution section of the
Prospectus contained in the Exchange Offer Registration Statement, and
in Annex D hereto in the letter of transmittal delivered pursuant to
the Registered Exchange Offer;
(iii) if requested by an Initial Purchaser, include the
information required by Item 507 or 508 of Regulation S-K, as
applicable, in the Prospectus contained in the Exchange Offer
Registration Statement; and
(iv) in the case of a Shelf Registration Statement, include the
names of the Holders that propose to sell Securities pursuant to the
Shelf Registration Statement as selling security holders.
(b) The Company shall ensure that:
(i) any Registration Statement and any amendment thereto and any
Prospectus forming part thereof and any amendment or supplement thereto
complies in all material respects with the Act and the rules and
regulations thereunder; and
(ii) any Registration Statement and any amendment thereto does
not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The Company shall advise you, the Holders of Securities
covered by any Shelf Registration Statement and any Exchanging Dealer under
any Exchange Offer Registration Statement that has provided in writing to
the Company a telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, shall confirm such
advice in writing (which notice pursuant to clauses: (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the Prospectus until
the Company shall have remedied the basis for such suspension):
(i) when a Registration Statement and any amendment thereto has
been filed with the Commission and when the Registration Statement or
any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for any amendment or
supplement to the Registration Statement or the Prospectus or for
additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation of any
proceeding for such purpose; and
(v) of the happening of any event that requires any change in the
Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading.
(d) The Company shall use its best efforts to obtain the
withdrawal of any order suspending the effectiveness of any Registration
Statement or the qualification of the securities therein for sale in any
jurisdiction at the earliest possible time.
(e) The Company shall furnish to each Holder of Securities
covered by any Shelf Registration Statement, without charge, at least one
copy of such Shelf Registration Statement and any post-effective amendment
thereto, including all material incorporated therein by reference, and, if
the Holder so requests in writing, all exhibits thereto (including exhibits
incorporated by reference therein).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Securities covered by any Shelf Registration
Statement, without charge, as many copies of the Prospectus (including each
preliminary Prospectus) included in such Shelf Registration Statement and
any amendment or supplement thereto as such Holder may reasonably request.
The Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of the selling Holders of securities in
connection with the offering and sale of the securities covered by the
Prospectus, or any amendment or supplement thereto, included in the Shelf
Registration Statement.
(g) The Company shall furnish to each Exchanging Dealer which so
requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
all material incorporated by reference therein, and, if the Exchanging
Dealer so requests in writing, all exhibits thereto (including exhibits
incorporated by reference therein).
(h) The Company shall promptly deliver to each Initial Purchaser,
each Exchanging Dealer and each other Person required to deliver a
Prospectus during the Exchange Offer Registration Period, without charge, as
many copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as any such Person may
reasonably request. The Company consents to the use of the Prospectus or
any amendment or supplement thereto by any Initial Purchaser, any Exchanging
Dealer and any such other Person that may be required to deliver a
Prospectus following the Registered Exchange Offer in connection with the
offering and sale of the New Securities covered by the Prospectus, or any
amendment or supplement thereto, included in the Exchange Offer Registration
Statement.
(i) Prior to the Registered Exchange Offer or any other offering
of Securities pursuant to any Registration Statement, the Company shall
arrange, if necessary, for the qualification of the Securities or the New
Securities for sale under the laws of such jurisdictions as any Holder shall
reasonably request and will maintain such qualification in effect so long as
required; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to service of process in suits,
other than those arising out of the Initial Placement, the Registered
Exchange Offer or any offering pursuant to a Shelf Registration Statement,
in any such jurisdiction where it is not then so subject.
(j) The Company shall cooperate with the Holders of Securities to
facilitate the timely preparation and delivery of certificates representing
New Securities or Securities to be issued or sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as Holders may request.
(k) Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Company shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to initial purchasers of the
securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. In such circumstances, the period of
effectiveness of the Exchange Offer Registration Statement provided for in
Section 2 and the Shelf Registration Statement provided for in Section 3(b)
shall each be extended by the number of days from and including the date of
the giving of a notice of suspension pursuant to Section 4(c) to and
including the date when the Initial Purchasers, the Holders of the
Securities and any known Exchanging Dealer shall have received such amended
or supplemented Prospectus pursuant to this Section.
(l) Not later than the effective date of any Registration
Statement, the Company shall provide a CUSIP number for the Securities or
the New Securities, as the case may be, registered under such Registration
Statement and provide the Trustee with printed certificates for such
Securities or New Securities, in a form eligible for deposit with The
Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New Securities
Indenture, as the case may be, to be qualified under the Trust Indenture Act
in a timely manner.
(o) The Company may require each Holder of securities to be sold
pursuant to any Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of such securities as
the Company may from time to time reasonably require for inclusion in such
Registration Statement. The Company may exclude from such Shelf
Registration Statement the Securities of any Holder that unreasonably fails
to furnish such information within a reasonable time after receiving such
request.
(p) In the case of any Shelf Registration Statement, the Company
shall enter into such agreements and take all other appropriate actions
(including if requested an underwriting agreement in customary form) in
order to expedite or facilitate the registration or the disposition of the
Securities, and in connection therewith, if an underwriting agreement is
entered into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6 (or such
other provisions and procedures acceptable to the Majority Holders and the
Managing Underwriters, if any, with respect to all parties to be indemnified
pursuant to Section 6).
(q) In the case of any Shelf Registration Statement, the Company
shall:
(i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating
in any disposition pursuant to such Registration Statement, and any
attorney, accountant or other agent retained by the Holders or any such
underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by the Holders or
any such underwriter, attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
the Holders or any such underwriter, attorney, accountant or agent,
unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to the Holders of
Securities registered thereunder and the underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to the Managing Underwriters, if any)
addressed to each selling Holder and the underwriters, if any, covering
such matters as are customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such Holders and underwriters;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the
underwriters, if any, in customary form and covering matters of the
type customarily covered in "cold comfort" letters in connection with
primary underwritten offerings; and
(vi) deliver such documents and certificates as may be reasonably
requested by the Majority Holders and the Managing Underwriters, if
any, including those to evidence compliance with Section 4(k) and with
any customary conditions contained in the underwriting agreement or
other agreement entered into by the Company.
The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section
shall be performed at (A) the effectiveness of such Registration Statement
and each post-effective amendment thereto; and (B) each closing under any
underwriting or similar agreement as and to the extent required thereunder.
(r) In the case of any Exchange Offer Registration Statement, the
Company shall:
(i) make reasonably available for inspection by said Initial
Purchaser, and any attorney, accountant or other agent retained by such
Initial Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries;
(ii) cause the Company's officers, directors and employees to
supply all relevant information reasonably requested by such Initial
Purchaser or any such attorney, accountant or agent in connection with
any such Registration Statement as is customary for similar due
diligence examinations; provided, however, that any information that is
designated in writing by the Company, in good faith, as confidential at
the time of delivery of such information shall be kept confidential by
such Initial Purchaser or any such attorney, accountant or agent,
unless such disclosure is made in connection with a court proceeding or
required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation
of confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement;
(iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to such Initial Purchaser and its
counsel, addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Initial
Purchaser or its counsel;
(v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Company (and, if
necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company
for which financial statements and financial data are, or are required
to be, included in the Registration Statement), addressed to such
Initial Purchaser, in customary form and covering matters of the type
customarily covered in "cold comfort" letters in connection with primary
underwritten offerings, or if requested by such Initial Purchaser or
its counsel in lieu of a "cold comfort" letter, an agreed-upon
procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by such Initial Purchaser or its counsel;
and
(vi) deliver such documents and certificates as may be reasonably
requested by such Initial Purchaser or its counsel, including those to
evidence compliance with Section 4(k) and with conditions customarily
contained in underwriting agreements.
The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of
this Section shall be performed at the close of the Registered Exchange
Offer and the effective date of any post-effective amendment to the Exchange
Offer Registration Statement.
(s) If a Registered Exchange Offer is to be consummated, upon
delivery of the Securities by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the New Securities, the
Company shall mark, or caused to be marked, on the Securities so exchanged
that such Securities are being canceled in exchange for the New Securities.
In no event shall the Securities be marked as paid or otherwise satisfied.
(t) The Company will use its best efforts (i) if the Securities
have been rated prior to the initial sale of such Securities, to confirm
such ratings will apply to the Securities or the New Securities, as the case
may be, covered by a Registration Statement; or (ii) if the Securities were
not previously rated, to cause the Securities covered by a Registration
Statement to be rated with at least one nationally recognized statistical
rating agency, if so requested by Majority Holders with respect to the
related Registration Statement or by any Managing Underwriters.
(u) In the event that any Broker-Dealer shall underwrite any
Securities or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of the
Rules of Fair Practice and the By-Laws of the National Association of
Securities Dealers, Inc.) thereof, whether as a Holder of such Securities or
as an underwriter, a placement or sales agent or a broker or dealer in
respect thereof, or otherwise, assist such Broker-Dealer in complying with
the requirements of such Rules and By-Laws, including, without limitation,
by:
(i) if such Rules or By-Laws shall so require, engaging a
"qualified independent underwriter" (as defined in such Rules) to
participate in the preparation of the Registration Statement, to
exercise usual standards of due diligence with respect thereto and, if
any portion of the offering contemplated by such Registration Statement
is an underwritten offering or is made through a placement or sales
agent, to recommend the yield of such Securities;
(ii) indemnifying any such qualified independent underwriter to
the extent of the indemnification of underwriters provided in Section 6
hereof; and
(iii) providing such information to such Broker-Dealer as may be
required in order for such Broker-Dealer to comply with the
requirements of such Rules.
(v) The Company shall use its best efforts to take all other
steps necessary to effect the registration of the Securities or the New
Securities, as the case may be, covered by a Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under
Sections 2, 3 and 4 hereof and, in the event of any Shelf Registration
Statement, will reimburse the Holders for the reasonable fees and
disbursements of one firm or counsel designated by the Majority Holders to
act as counsel for the Holders in connection therewith, and, in the case of
any Exchange Offer Registration Statement, will reimburse the Initial
Purchasers for the reasonable fees and disbursements of counsel acting in
connection therewith.
6. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Holder of Securities or New Securities, as
the case may be, covered by any Registration Statement (including each
Initial Purchaser and, with respect to any Prospectus delivery as
contemplated in Section 4(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each Person who
controls any such Holder within the meaning of either the Act or the
Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the
Act, the Exchange Act or other Federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or the Prospectus, or in
any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable
in any case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and
in conformity with written information furnished to the Company by or on
behalf of any such Holder specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Company
may otherwise have.
The Company also agrees to indemnify or contribute as provided in
Section 6(d) to Losses of each underwriter of any Securities or New
Securities, as the case may be, registered under a Shelf Registration
Statement, their directors, officers, employees or agents and each Person
who controls such underwriter on substantially the same basis as that of the
indemnification of the Initial Purchasers and the selling Holders provided
in this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in
Section 4(p) hereof.
With respect to any untrue statement or omission of material fact
made in any preliminary Prospectus, the indemnity agreement contained in
this Section 6(a) shall not inure to the benefit of any indemnified person
from whom the person asserting any such loss, claim, damage or liability
purchased the securities concerned, to the extent that any such loss, claim,
damage or liability of such indemnified person occurs under the circumstance
where it shall have been determined by a court of competent jurisdiction by
final and nonappealable judgment that (w) the Company had previously
furnished copies of the Final Prospectus to such indemnified person, (x)
delivery of the Final Prospectus was required by the Act to be made to such
person, (y) the untrue statement or omission of a material fact contained in
the preliminary Prospectus was corrected in the Final Prospectus and (z)
there was not sent or given to such person, at or prior to the written
confirmation of the sale of such securities to such person, a copy of the
Final Prospectus.
(b) Each Holder of securities covered by a Registration Statement
(including each Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless the Company, each of its
directors, each of its officers who signs such Registration Statement and
each Person who controls the Company within the meaning of either the Act or
the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each such Holder, but only with reference to written information
relating to such Holder furnished to the Company by or on behalf of such
Holder specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under
paragraph (a) or (b) above unless and to the extent it did not otherwise
learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses; and (ii) will not, in
any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to
appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel chosen
by the indemnifying party to represent the indemnified party would present
such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party; (iii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of the
institution of such action; or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent
to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit
or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party
shall have a joint and several obligation to contribute to the aggregate
losses, claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which such indemnified party may be subject in
such proportion as is appropriate to reflect the relative benefits received
by such indemnifying party, on the one hand, and such indemnified party, on
the other hand, from the Initial Placement and the Registration Statement
which resulted in such Losses; provided, however, that in no case shall any
Initial Purchaser or any subsequent Holder of any Security or New Security
be responsible, in the aggregate, for any amount in excess of the purchase
discount or commission applicable to such Security, or in the case of a New
Security, applicable to the Security that was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall
any underwriter be responsible for any amount in excess of the underwriting
discount or commission applicable to the securities purchased by such
underwriter under the Registration Statement which resulted in such Losses.
If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the indemnifying party and the indemnified party
shall contribute in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of such indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by
the Company shall be deemed to be equal to the sum of (x) the total net
proceeds from the Initial Placement (before deducting expenses) as set forth
on the cover page of the Final Memorandum and (y) the total amount of
additional interest which the Company was not required to pay as a result of
registering the securities covered by the Registration Statement which
resulted in such Losses. Benefits received by the Initial Purchasers shall
be deemed to be equal to the total purchase discounts and commissions as set
forth on the cover page of the Final Memorandum, and benefits received by
any other Holders shall be deemed to be equal to the value of receiving
Securities or New Securities, as applicable, registered under the Act.
Benefits received by any underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page
of the Prospectus forming a part of the Registration Statement which
resulted in such Losses. Relative fault shall be determined by reference
to, among other things, whether any alleged untrue statement or omission
relates to information provided by the indemnifying party, on the one hand,
or by the indemnified party, on the other hand, the intent of the parties
and their relative knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties agree
that it would not be just and equitable if contribution were determined by
pro rata allocation (even if the Holders were treated as one entity for such
purpose) or any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the
provisions of this paragraph (d), no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section, each Person who
controls a Holder within the meaning of either the Act or the Exchange Act
and each director, officer, employee and agent of such Holder shall have the
same rights to contribution as such Holder, and each Person who controls the
Company within the meaning of either the Act or the Exchange Act, each
officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as
the Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
(e) The provisions of this Section will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling Persons
referred to in this Section hereof, and will survive the sale by a Holder of
securities covered by a Registration Statement.
7. Underwritten Registrations. (a) If any of the Securities or
New Securities, as the case may be, covered by any Shelf Registration
Statement are to be sold in an underwritten offering, the Managing
Underwriters shall be selected by the Majority Holders.
(b) No Person may participate in any underwritten offering
pursuant to any Shelf Registration Statement, unless such Person (i) agrees
to sell such Person's Securities or New Securities, as the case may be, on
the basis reasonably provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements; and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.
8. No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with
the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
9. Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the Company has obtained the
written consent of the Majority Holders (or, after the consummation of any
Registered Exchange Offer in accordance with Section 2 hereof, of New
Securities); provided that, with respect to any matter that directly or
indirectly affects the rights of any Initial Purchaser hereunder, the
Company shall obtain the written consent of each such Initial Purchaser
against which such amendment, qualification, supplement, waiver or consent
is to be effective. Notwithstanding the foregoing (except the foregoing
proviso), a waiver or consent to departure from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
Securities or New Securities, as the case may be, are being sold pursuant to
a Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by the Majority Holders, determined on
the basis of Securities or New Securities, as the case may be, being sold
rather than registered under such Registration Statement.
10. Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-
class mail, telex, telecopier or air courier guaranteeing overnight
delivery:
(a) if to a Holder, at the most current address given by such
holder to the Company in accordance with the provisions of this Section,
which address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar under the Indenture, with a copy in like
manner to Salomon Smith Barney Inc;
(b) if to you, initially at the respective addresses set forth in
the Purchase Agreement; and
(c) if to the Company, initially at its address set forth in the
Purchase Agreement.
All such notices and communications shall be deemed to have been
duly given when received.
The Initial Purchasers or the Company by notice to the other
parties may designate additional or different addresses for subsequent
notices or communications.
11. Successors. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Securities and the New Securities.
The Company hereby agrees to extend the benefits of this Agreement to any
Holder of Securities and the New Securities, and any such Holder may
specifically enforce the provisions of this Agreement as if an original
party hereto.
12. Counterparts. This agreement may be in signed counterparts,
each of which shall an original and all of which together shall constitute
one and the same agreement.
13. Headings. The headings used herein are for convenience only
and shall not affect the construction hereof.
14. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York.
15. Severability. In the event that any one of more of the
provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for
any reason, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions hereof shall not be
in any way impaired or affected thereby, it being intended that all of the
rights and privileges of the parties shall be enforceable to the fullest
extent permitted by law.
16. Securities Held by the Company, etc. Whenever the consent or
approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other than
subsequent Holders of Securities or New Securities if such subsequent
Holders are deemed to be Affiliates solely by reason of their holdings of
such Securities or New Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a building
agreement among the Company and the several Initial Purchasers.
Very truly yours,
AMC Entertainment Inc.
By: /s/ Peter C. Brown
Name: Peter C. Brown
Title:Co-Chairman,
President & CFO
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
SALOMON SMITH BARNEY INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
By: SALOMON SMITH BARNEY INC.
By: /s/ David J. Wirdnam
Name: David J. Wirdnam
Title: Vice President
<PAGE>
ANNEX A
Each Broker-Dealer that receives New Securities for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. 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 New Securities received in exchange for
Securities where such Securities were acquired by such Broker-Dealer 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".
<PAGE>
ANNEX B
Each Broker-Dealer that receives New Securities for its own account in
exchange for Securities, where such Securities were acquired by such Broker-
Dealer as a result of market-making activities or other trading activities,
must acknowledge that it will deliver a prospectus in connection with any
resale of such New Securities. See "Plan of Distribution".
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each Broker-Dealer that receives New Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Securities. 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 New Securities
received in exchange for Securities where such Securities 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. In addition, until __________, 199__, all
dealers effecting transactions in the New Securities may be required to
deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New Securities 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 New
Securities 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-Dealer and/or
the purchasers of any such New Securities. Any Broker-Dealer that resells
New Securities 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 New Securities may be deemed to be an "underwriter" within the
meaning of the Securities Act and any profit of any such resale of New
Securities 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.
<PAGE>
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
Rider B
If the undersigned is not a Broker-Dealer, the undersigned represents that
it acquired the New Securities in the ordinary course of its business, it is
not engaged in, and does not intend to engage in, a distribution of New
Securities and it has no arrangements or understandings with any Person to
participate in a distribution of the New Securities. If the undersigned is
a Broker-Dealer that will receive New Securities for its own account in
exchange for Securities, it represents that the Securities to be exchanged
for New Securities were acquired by it as a result of market-making
activities or other trading activities and acknowledges that it will deliver
a prospectus in connection with any resale of such New Securities; however,
by so acknowledging and by delivering a prospectus, the undersigned will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.
EXHIBIT 10.1
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of January 1, 1999
by and between AMC ENTERTAINMENT INC., a Delaware corporation (the
"Company"), and PETER C. BROWN ("Employee"). In consideration of the
mutual promises and covenants contained herein, the parties hereto
agree as follows:
1.Position and Duties. During the Term (as defined in Section 2)
of his employment by the Company under this Agreement, Employee
shall devote his full time and attention to the business of the
Company as Co-Chairman of the Board, President and Chief Financial
Officer as directed by the Company's Chief Executive Officer or its
Board of Directors. Notwithstanding the foregoing, Employee shall
be permitted, to the extent such activities do not substantially
interfere with the performance by Employee of his duties and
responsibilities under this Agreement, (i) to manage Employee's
personal financial and legal affairs, (ii) to serve on corporate,
civic or charitable boards or committees, and (iii) to serve as
Chairman of the Board of Trustees and/or as a Trustee of
Entertainment Properties Trust.
2.Term. The term of this Agreement shall commence as of January
1, 1999 and shall terminate on December 31, 2001 or sooner as
provided in Section 6 below (such period, as it may be extended, the
"Term"). On each January 1 hereafter, commencing in 2000, one year
shall be added to the Term of Employee's employment with the Company
under this Agreement, so that as of each January 1 the Term of
Employee's employment hereunder shall be three (3) years.
3.Compensation.
(a)Base Salary. During the Term of his employment by the
Company under this Agreement, Employee shall receive an annual
salary of $400,000.00 ("Base Salary") (less withholding for
applicable taxes), payable in accordance with the Company's payroll
procedures for its salaried employees, subject to such increases as
may be approved by the Compensation Committee of the Company's Board
of Directors.
(b)Bonus. In addition to Base Salary, Employee shall be
eligible to receive an annual bonus (the "Bonus") as determined from
time to time in the sole discretion of the Compensation Committee of
the Company's Board of Directors based on the Company's applicable
incentive compensation program, as such may exist from time to time.
(c)Benefits. During the Term of Employee's employment by the
Company under this Agreement, Employee also shall be eligible for
the benefits offered by the Company from time to time to the
Company's other executive officers (such as group insurance, pension
plans, thrift plans, stock purchase plans and the like). Nothing
herein shall be construed so as to prevent the Company from
modifying or terminating any employee benefit plans or programs it
may adopt from time to time.
(d)Automobile. During the Term of Employee's employment by
the Company under this Agreement, the Company shall provide Employee
with a Company owned or leased automobile or an equivalent
automobile allowance.
4.Expense Reimbursements. During the Term of Employee's
employment by the Company under this Agreement, the Company shall
reimburse Employee for business travel and entertainment expenses
reasonably incurred by Employee on behalf of the Company in
accordance with the Company's procedures, as such may exist from
time to time.
5.Termination. Employee's employment by the Company under this
Agreement shall be terminated upon the earliest to occur of the
following events:
(a)Resignation. Employee's resignation, retirement or other
voluntary departure.
(b)Death. The death of Employee.
(c)Disability. If, as a result of Employee's incapacity due
to physical or mental illness, (i) Employee shall not have been
regularly performing his duties and obligations hereunder for a
period of one hundred twenty (120) consecutive days (a "Disability"),
(ii) the Company has given Employee the written Notice of
Termination pursuant to Section 6(a) hereof, and (iii) within thirty
(30) days after the Company gives Employee such written Notice of
Termination (which may occur before or after the end of such 120 day
period), Employee shall not have returned to the performance of his
duties and obligations hereunder on a regular basis.
(d)Cause. Employee is terminated for Cause. For purposes of
this Agreement, "Cause" is defined as (i) the willful and continued
failure by Employee to perform substantially his duties with the
Company (other than any such failure resulting from his incapacity
due to physical or mental illness), or (ii) the willful engaging by
Employee in misconduct which is materially and demonstrably
injurious to the Company. For purposes of this Agreement, no act,
or failure to act, on the part of Employee shall be considered
"willful" unless such act was committed, or such failure to act
occurred, in bad faith and without reasonable belief that Employee's
act or failure to act was in the best interests of the Company.
(e)Without Cause. The employment of Employee by the Company
under this Agreement may be terminated without Cause with severance
at any time by the Company's Chief Executive Officer with the
approval of the Company's Board of Directors in its sole discretion.
(f)The Company's Material Breach. Employee terminates his
employment by the Company hereunder for a Material Breach of this
Agreement by the Company. For purposes of this Agreement, a
"Material Breach" by the Company shall be deemed to occur upon (i) a
failure by the Company to comply with any material provisions of
this Agreement which has not been cured within thirty (30) days
after written notice of such noncompliance has been given to the
Company by Employee, (ii) any purported termination of Employee
which is not effected pursuant to a Notice of Termination, as
defined in Sections 6 and 11 below (and for purposes of this
Agreement no such purported termination shall be effective), or
(iii) the assignment to Employee of any duties inconsistent in any
material respect with Section 1 of this Agreement, or any other
actions by the Company that results in a material diminution of
Employee's position, authority, duties or responsibilities, other
than an action that is not taken in bad faith and is remedied by the
Company promptly after receipt of notice thereof from Employee.
Employee must notify the Company in writing within thirty (30) days
of becoming aware of the occurrence of a Material Breach in order to
receive the payments described in Section 7(c) below.
(g)Change of Control. Employee terminates his employment by
the Company hereunder in the event of a Change of Control. Employee
must not be the Person or part of the Group (or an Affiliate of such
Person or Group) which effected the Change in Control, and must
notify the Company in writing of such termination within sixty (60)
days after the occurrence of a Change of Control, in order to
receive the payments described in Section 7(c) below.
For purposes of this Agreement a "Change of Control" of the
Company means the occurrence of either of the following events
during the Term: (a) any Person (other than a Permitted Holder) or
any Persons (other than any Permitted Holders) acting together that
would constitute a Group, together with any Affiliates thereof
(other than any Permitted Holders), shall obtain beneficial
ownership of 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 currently has
ten votes per share and the Company's Common Stock currently has one
vote per share), or (b) 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(s) remaining on the Board of Directors of the Company after
such election who is an Affiliate (other than a Permitted Holder) of
such Group, will constitute a majority of the Board of Directors of
the Company. Unless otherwise specifically defined in this Section
5(g), all terms used in this Section 5(g) shall have the meaning
used in Section 13(d) of the Securities Exchange Act of 1934 and
regulations promulgated thereunder (or any successor provisions to
such law or regulations).
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person
or (ii) any other Person that owns, directly or indirectly, ten
percent 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.
"Capital Stock" of any Person means 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 this Agreement.
"Permitted Holder" means (i) Stanley H. Durwood, his spouse
(collectively, the "Durwood Family") and any Affiliate of any member
of the Durwood Family (other than any lineal descendant of Stanley
H. Durwood), (ii) Stanley H. Durwood's estate, (iii) the 1992
Durwood, Inc. Voting Trust dated December 12, 1992 and any successor
voting trust, and (iv) any Subsidiary, any employee benefit plan,
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 (iv), then such securities shall no longer be deemed to be
held by a Permitted Holder.
"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.
"Subsidiary" means (i) 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 the
Company and (ii) any partnership, limited liability company,
association, joint venture or other entity in which the Company,
directly or indirectly, has more than a 50% equity interest.
6.Termination Procedure.
(a)Notice of Termination. Any termination of Employee by the
Company or by Employee (other than termination pursuant to Section
5(a) or (b) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 11.
For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of Employee under the provisions so indicated.
(b)Date of Termination. "Date of Termination" shall mean (i)
if Employee's employment is terminated by Employee's resignation,
retirement or other voluntary departure, the date of such event,
(ii) if Employee's employment by the Company is terminated by his
death, the date of death, (iii) if Employee's employment by the
Company is terminated pursuant to Section 5(c) hereof, thirty (30)
days after Notice of Termination is given (provided that Employee
shall not have again become available for service to the Company on
a regular basis during such thirty (30) day period), (iv) if
Employee's employment by the Company is terminated for Cause, the
date specified in the Notice of Termination, and (v) if Employee's
employment by the Company is terminated for any other reason, the
date on which a Notice of Termination is given.
7.Compensation During Disability or Upon Termination.
(a)Disability. During any period that Employee fails to
perform his duties under this Agreement as a result of incapacity
due to physical or mental illness (a "disability period"), Employee
shall continue to receive his Base Salary at the rate then in effect
for such period until his employment by the Company is terminated
pursuant to Section 5(c) hereof, provided that payments so made to
Employee during the first 180 days of any such disability period
shall be reduced by the sum of the amounts, if any, paid to Employee
at or prior to the time of any such payment under disability benefit
plans of the Company or under the Social Security disability
insurance program, and which amounts were not previously applied to
reduce any such payment. Employee shall also receive a pro rata
portion of the Bonus described in Section 3(b) pursuant to the
Company's applicable incentive compensation program (the amount of
such pro rated Bonus to be determined as though the target level was
attained, multiplied by a fraction, the numerator of which is the
number of completed months in the then current Bonus program year
and the denominator of which is 12), as such may exist from time to
time. Employee shall also receive the compensation payments
described in Section 7(c)(iii) below.
(b)Termination for Cause, Death or Employee Resignation. If
Employee's employment by the Company is terminated for Cause, by
Employee's death or by Employee's resignation, retirement or other
voluntary departure, the Company shall pay Employee his accrued but
unpaid Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company
shall have no further obligations to Employee under this Agreement.
If Employee's employment by the Company is terminated by Employee's
death, Employee shall also receive (i) a pro rata portion of the
Bonus described in Section 3(b) pursuant to the Company's applicable
incentive compensation program (the amount of such pro rated Bonus
to be determined as though the target level was attained, multiplied
by a fraction, the numerator of which is the number of months in the
current Bonus program year and the denominator of which is 12), as
such may exist from time to time, and (ii) the compensation payments
described in Section 7(c)(iii) below.
(c)Termination without Cause or by Employee for Material
Breach or Change of Control. If Employee's employment by the
Company is terminated without Cause or by Employee following a
Material Breach by the Company or Change of Control, Employee shall
be entitled to receive the compensation payments described in (i),
(ii) and (iii) below; provided, that Employee also must have timely
notified the Company as provided in Sections 5(f) and (g), as
applicable, in order to receive such payments. All amounts under
this Section 7(c) shall be reduced by withholding for applicable
taxes, if any.
(i)A lump-sum cash payment equal to the lesser of
Employee's Base Amount (as defined below) multiplied by 2.99 or 150%
of Employee's current Base Salary multiplied by 3. "Base Amount"
means Employee's average annual earnings reported on Form W-2 for
Employee's last five tax years.
(ii)A lump-sum cash payment equal to the difference
between (A) the value of all vested and unvested stock options
granted by AMCE to Employee which have an exercise price per share
less than the closing price per share of the Company's Common Stock
as reported on the American Stock Exchange or other stock exchange
or automated quotation system (the "Closing Price") on the Date of
Termination and (B) the exercise price of such options. For
purposes of determining the option value, the Company's stock price
as described above as of the Date of Termination will be used. Upon
such payment by the Company to Employee, all such options will be
cancelled.
(iii)If Employee's note dated August 11, 1998 payable
to the Company in the original principal amount of $5,625,000, the
proceeds of which were used by Employee to purchase shares of the
Company's Common Stock (the "Note"), is outstanding on the Date of
Termination, then one of the following provisions shall apply:
(A)Stock Redemption and Note Forgiveness. If the
Company is so permitted under the Delaware General
Corporation Law and the terms of any of its applicable
loan agreements, debt covenants or other agreements, the
Company shall redeem all of the 375,000 shares of the
Company's Common Stock purchased by Employee with the
proceeds of the Note which Employee owns on the Date of
Termination, at a redemption price per share equal to the
Closing Price per share on the Date of Termination, and
the aggregate redemption price shall be applied by the
Company towards payment of the Note. If the aggregate
redemption price is greater than the amount of unpaid
principal and accrued interest on the Note, the Company
shall pay an amount equal to such excess to Employee. If
the aggregate unpaid principal and accrued interest on the
Note exceeds the redemption price, then the Company shall
forgive a portion of such excess amount, determined as
follows: multiply (1) the difference (expressed as a
positive number) between (x) an amount equal to the
Closing Price per share on the Date of Termination
multiplied by 375,000 and (y) the amount of outstanding
principal and accrued interest on the Note on the Date of
Termination, by (2) a ratio, the numerator of which is the
number of shares of the Company's Common Stock redeemed by
the Company pursuant to this paragraph and the denominator
of which is 375,000. The Company shall also pay to
Employee an amount equal to the federal, state and city
income taxes and excise taxes, if any, required to be paid
by Employee based upon the forgiveness of such portion of
the Note; or
(B)Note Forgiveness If Stock Redemption Not
Permitted. If the Company is not permitted under the
terms of the Delaware General Corporation Law or any of
its loan agreements, debt covenants or other agreements to
redeem all of the 375,000 shares of the Company's Common
Stock purchased by Employee with the proceeds of the Note
which Employee owns on the Date of Termination, and if the
amount of unpaid principal and accrued interest on the
Note on the Date of Termination exceeds the value of such
shares (determined by the Closing Price per share on the
Date of Termination), then the Company shall forgive a
portion of such excess amount, determined as follows:
multiply (1) the difference (expressed as a positive
number) between (x) an amount equal to the Closing Price
per share on the Date of Termination multiplied by 375,000
and (y) the amount of outstanding principal and accrued
interest on the Note on the Date of Termination, by (2) a
ratio, the numerator of which is the number of shares of
the Company's Common Stock purchased by Employee with the
proceeds of the Note which Employee owns on the Date of
Termination and the denominator of which is 375,000. The
Company shall also pay to Employee an amount equal to the
federal, state and city income taxes and excise taxes, if
any, required to be paid by Employee based upon the
forgiveness of such portion of the Note.
8.Confidentiality. Employee acknowledges that he knows and in
the future will know information relating to the Company and its
affiliated companies and their respective operations that is
confidential or a trade secret. Such information includes
information, whether obtained in writing, in conversation or
otherwise, concerning corporate strategy, intent and plans, business
operations, pricing, costs, budgets, equipment, the status, scope
and term of pending acquisitions, negotiations and transactions, the
terms of existing or proposed business arrangements, contracts and
obligations, and corporate and financial reports. Such confidential
or trade secret information shall not, however, include information
in the public domain unless Employee has, without authority, made it
public.
Employee shall (a) not disclose such information to anyone
except in confidence and as is necessary to the performance of his
duties for the Company, (b) keep such information confidential, (c)
take appropriate precautions to maintain the confidentiality of such
information, and (d) not use such information for personal benefit
or the benefit of any competitor or any other person.
Upon termination of his employment by the Company under this
Agreement, Employee shall return all materials in his possession or
under his control that were prepared by or relate to the Company or
its affiliates, including, but not limited to, materials containing
confidential information, files, memorandums, price lists, reports,
budgets and handbooks.
Employee's obligation under this Section 8 shall survive the
termination of Employee's employment by the Company under this
Agreement.
9.Equitable Remedies. The parties acknowledge that irreparable
damage will result to the Company from any violation of Section 8
above by Employee. The parties expressly agree that, in addition to
any and all remedies available to the Company for any such
violation, the Company shall have the remedy of restraining order
and injunction and any such equitable relief as may be declared or
issued by a court to enforce the provisions of Section 8 above and
Employee agrees not to claim in any such equitable proceeding that
a remedy at law is available to the Company. Notwithstanding
anything contained herein to the contrary and if, and only if, any
provision of the type contained in Section 8 above, as the case may
be, is enforceable in the jurisdiction in question, if any one or
more of the provisions contained in such Section shall for any
reason be held to be excessively broad as to duration, geographical
scope, activity or subject, such provision shall be construed by
limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law in such jurisdiction as it shall
then appear.
10.Successors: Binding Agreement.
(a)Company Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all the business
and/or assets of the Company, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place.
(b)Employee's Successors. This Agreement and all rights
hereunder shall be binding upon, inure to the benefit of and be
enforceable by Employee's personal or legal representatives, heirs,
successors and permitted assigns.
11.Notices. All notices, requests, demand or other communications
under this Agreement shall be in writing addressed as follows:
(a)If to the Company, to:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(b)If to Employee, to:
Peter C. Brown
AMC Entertainment Inc.
106 West 14th Street
P.O. Box 419615
Kansas City, Missouri 64141-6615
Any such notice, request, demand or other communication shall
be effective as of the date of actual delivery thereof. Either
party may change such notice address by written notice as provided
herein.
12.Total Compensation. The compensation to be paid to Employee
under this Agreement shall be in full payment for all services
rendered by Employee in any capacity to the Company or any affiliate
of the Company.
13.Additional Potential Compensation. Nothing in this Agreement
shall prohibit the Company from awarding additional compensation to
Employee if it is determined that such compensation is warranted
based on Employee's performance.
14.Other Provisions. This Agreement shall be governed by the laws
of the State of Missouri. This Agreement represents the entire
agreement of the parties hereto and shall not be amended except by
a written agreement signed by all the parties hereto. This
Agreement supersedes any prior oral or written agreements or
understandings between the Company or any affiliate of the Company
and Employee. This Agreement shall not be assignable by one party
without the prior written consent of the other party, except by the
Company if it complies with Section 10 above. In the event one or
more of the provision contained in this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provision
of this Agreement or any other application thereof shall not in any
way be affected or impaired thereby. Section headings herein have
no legal significance.
15.Arbitration. Any legal dispute, controversy or claim related
to this Agreement or breach thereof, shall, in lieu of being
submitted to a court of law, be submitted to arbitration, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The award of the arbitrators shall be
final and binding upon the parties.
The parties hereto agree that (i) three arbitrators shall be
selected pursuant to the rules and procedures of the American
Arbitration Association, (ii) at least one arbitrator shall be a
licensed attorney, (iii) the arbitrators shall have the power to
award injunctive relief or to direct specific performance, (iv) the
arbitrators will not have the authority to award punitive damages,
(v) each of the parties shall bear its own attorneys' fees, costs
and expenses and an equal share of the arbitrators' and
administrative fees of arbitration, (vi) the arbitrators will not
have the authority to award attorneys' fees other than to direct or
confirm in the award that each party shall pay its own fees, and
(vii) the arbitrators shall award to the prevailing party a sum
equal to that party's share of the arbitrators' and administrative
fees of arbitration.
Nothing in this Section shall be construed as providing
Employee a cause of action, remedy or procedure that Employee would
not otherwise have under this Agreement or the law.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
AMC ENTERTAINMENT INC.,
a Delaware corporation
By: /s/ Stanley H. Durwood
Stanley H. Durwood, Co-Chairman of the
Board and Chief Executive Officer
/s/ Peter C. Brown
PETER C. BROWN, EMPLOYEE
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of January 1, 1999 by and
among AMC ENTERTAINMENT INC., a Delaware corporation ("AMCE"), AMERICAN MULTI-
CINEMA, INC., a Missouri corporation ("AMC" and, collectively with AMCE, the
"Company"), and PHILIP M. SINGLETON ("Employee"). In consideration of the
mutual promises and covenants contained herein, the parties hereto agree as
follows:
1.Position and Duties. During the Term (as defined in Section 2) of his
employment by the Company under this Agreement, Employee shall devote his full
time and attention to the business of the Company as President and Chief
Operating Officer of AMC as directed by any Co-Chairman of the Board of AMCE
or the Board of Directors of AMC. Notwithstanding the foregoing, Employee
shall be permitted, to the extent that such activities do not substantially
interfere with the performance by Employee of his duties and responsibilities
under this Agreement, (i) to manage Employee's personal financial and legal
affairs and (ii) to serve on corporate, civic or charitable boards or
committees.
2.Term. The term of this Agreement shall commence as of January 1, 1999
and shall terminate on December 31, 2001 or sooner as provided in Section 6
below (such period, as it may be extended, the "Term"). On each January 1
hereafter, commencing in 2000, one year shall be added to the Term of
Employee's employment with the Company under this Agreement, so that as of
each January 1 the Term of Employee's employment hereunder shall be three (3)
years.
3.Compensation.
(a)Base Salary. During the Term of his employment by the Company under
this Agreement, Employee shall receive an annual salary of $375,000.00 ("Base
Salary") (less withholding for applicable taxes), payable in accordance with
the Company's payroll procedures for its salaried employees, subject to such
increases as may be approved by the Compensation Committee of AMC's Board of
Directors.
(b)Bonus. In addition to Base Salary, Employee shall be eligible to
receive an annual bonus (the "Bonus") as determined from time to time in the
sole discretion of the Compensation Committee of AMC's Board of Directors
based on the Company's applicable incentive compensation program, as such may
exist from time to time.
(c)Benefits. During the Term of Employee's employment by the Company
under this Agreement, Employee also shall be eligible for the benefits offered
by the Company from time to time to the Company's other executive officers
(such as group insurance, pension plans, thrift plans, stock purchase plans
and the like). Nothing herein shall be construed so as to prevent the Company
from modifying or terminating any employee benefit plans or programs it may
adopt from time to time.
(d)Automobile. During the Term of Employee's employment by the Company
under this Agreement, the Company shall provide Employee with a Company owned
or leased automobile or an equivalent automobile allowance.
4.Expense Reimbursements. During the Term of Employee's employment by the
Company under this Agreement, the Company shall reimburse Employee for
business travel and entertainment expenses reasonably incurred by Employee on
behalf of the Company in accordance with the Company's procedures, as such may
exist from time to time.
5.Termination. Employee's employment by the Company under this Agreement
shall be terminated upon the earliest to occur of the following events:
(a)Resignation. Employee's resignation, retirement or other voluntary
departure.
(b)Death. The death of Employee.
(c)Disability. If, as a result of Employee's incapacity due to
physical or mental illness, (i) Employee shall not have been regularly
performing his duties and obligations hereunder for a period of one hundred
twenty (120) consecutive days (a "Disability"), (ii) the Company has given
Employee the written Notice of Termination pursuant to Section 6(a) hereof,
and (iii) within thirty (30) days after the Company gives Employee such
written Notice of Termination (which may occur before or after the end of such
120 day period), Employee shall not have returned to the performance of his
duties and obligations hereunder on a regular basis.
(d)Cause. Employee is terminated for Cause. For purposes of this
Agreement, "Cause" is defined as (i) the willful and continued failure by
Employee to perform substantially his duties with the Company (other than any
such failure resulting from his incapacity due to physical or mental illness),
or (ii) the willful engaging by Employee in misconduct which is materially and
demonstrably injurious to the Company. For purposes of this Agreement, no
act, or failure to act, on the part of Employee shall be considered "willful"
unless such act was committed, or such failure to act occurred, in bad faith
and without reasonable belief that Employee's act or failure to act was in the
best interests of the Company.
(e)Without Cause. The employment of Employee by the Company under this
Agreement may be terminated without Cause with severance at any time by any
Co-Chairman of the Board of AMCE or the Board of Directors of AMC in such
officer's/its sole discretion.
(f)The Company's Material Breach. Employee terminates his employment
by the Company hereunder for a Material Breach of this Agreement by the
Company. For purposes of this Agreement, a "Material Breach" by the Company
shall be deemed to occur upon (i) a failure by the Company to comply with any
material provisions of this Agreement which has not been cured within thirty
(30) days after written notice of such noncompliance has been given to the
Company by Employee, or (ii) any purported termination of Employee which is
not effected pursuant to a Notice of Termination, as defined in Sections 6 and
11 below (and for purposes of this Agreement no such purported termination
shall be effective). Employee must notify the Company in writing within
thirty (30) days of becoming aware of the occurrence of a Material Breach in
order to receive the payments described in Section 7(c) below.
(g)Change of Control. Employee terminates his employment by the
Company hereunder in the event of a Change of Control. Employee must not be
the Person or part of the Group (or an Affiliate of such Person or Group)
which effected the Change in Control, and must notify the Company in writing
of such termination within sixty (60) days after the occurrence of a Change
of Control, in order to receive the payments described in Section 7(c) below.
For purposes of this Agreement a "Change of Control" of the Company means
the occurrence of either of the following events during the Term: (a) any
Person (other than a Permitted Holder) or any Persons (other than an Permitted
Holders) acting together that would constitute a Group, together with any
Affiliates thereof (other than any Permitted Holders), shall obtain beneficial
ownership of 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 currently has ten votes per share and the Company's
Common Stock currently has one vote per share), or (b) 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(s) remaining on the Board of Directors of the
Company after such election who is an Affiliate (other than a Permitted
Holder) of such Group, will constitute a majority of the Board of Directors
of the Company. Unless otherwise specifically defined in this Section 5(g),
all terms used in this Section 5(g) shall have the meaning used in Section
13(d) of the Securities Exchange Act of 1934 and regulations promulgated
thereunder (or any successor provisions to such law or regulations).
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any other Person
that owns, directly or indirectly, ten percent 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.
"Capital Stock" of any Person means 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 this Agreement.
"Permitted Holder" means (i) Stanley H. Durwood, his spouse (collectively,
the "Durwood Family") and any Affiliate of any member of the Durwood Family
(other than any lineal descendant of Stanley H. Durwood), (ii) Stanley H.
Durwood's estate, (iii) the 1992 Durwood, Inc. Voting Trust dated December 12,
1992 and any successor voting trust, and (iv) any Subsidiary, any employee
benefit plan, 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 (iv), then such securities shall no longer be
deemed to be held by a Permitted Holder.
"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.
"Subsidiary" means (i) 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 the Company and (ii)
any partnership, limited liability company, association, joint venture or
other entity in which the Company, directly or indirectly, has more than a 50%
equity interest.
6.Termination Procedure.
(a)Notice of Termination. Any termination of Employee by the Company
or by Employee (other than termination pursuant to Section 5(a) or (b) hereof)
shall be communicated by written Notice of Termination to the other party
hereto in accordance with Section 11. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Employee under the provisions so indicated.
(b)Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment is terminated by Employee's resignation, retirement or
other voluntary departure, the date of such event, (ii) if Employee's
employment by the Company is terminated by his death, the date of death, (iii)
if Employee's employment by the Company is terminated pursuant to Section 5(c)
hereof, thirty (30) days after Notice of Termination is given (provided that
Employee shall not have again become available for service to the Company on
a regular basis during such thirty (30) day period), (iv) if Employee's
employment by the Company is terminated for Cause, the date specified in the
Notice of Termination, and (v) if Employee's employment by the Company is
terminated for any other reason, the date on which a Notice of Termination is
given.
7.Compensation During Disability or Upon Termination.
(a)Disability. During any period that Employee fails to perform his
duties under this Agreement as a result of incapacity due to physical or
mental illness (a "disability period"), Employee shall continue to receive his
Base Salary at the rate then in effect for such period until his employment
by the Company is terminated pursuant to Section 5(c) hereof, provided that
payments so made to Employee during the first 180 days of any such disability
period shall be reduced by the sum of the amounts, if any, paid to Employee
at or prior to the time of any such payment under disability benefit plans of
the Company or under the Social Security disability insurance program, and
which amounts were not previously applied to reduce any such payment.
Employee shall also receive a pro rata portion of the Bonus described in
Section 3(b) pursuant to the Company's applicable incentive compensation
program (the amount of such pro rated Bonus to be determined as though the
target level was attained, multiplied by a fraction, the numerator of which
is the number of completed months in the then current Bonus program year and
the denominator of which is 12), as such may exist from time to time.
Employee shall also receive the compensation payments described in Section
7(c)(iii) below.
(b)Termination for Cause, Death or Employee Resignation. If Employee's
employment by the Company is terminated for Cause, by Employee's death or by
Employee's resignation, retirement or other voluntary departure, the Company
shall pay Employee his accrued but unpaid Base Salary through the Date of
Termination at the rate in effect at the time Notice of Termination is given,
and the Company shall have no further obligations to Employee under this
Agreement. If Employee's employment by the Company is terminated by
Employee's death, Employee shall also receive (i) a pro rata portion of the
Bonus described in Section 3(b) pursuant to the Company's applicable incentive
compensation program (the amount of such pro rated Bonus to be determined as
though the target level was attained, multiplied by a fraction, the numerator
of which is the number of months in the current Bonus program year and the
denominator of which is 12), as such may exist from time to time, and (ii) the
compensation payments described in Section 7(c)(iii) below.
(c)Termination without Cause or by Employee for Material Breach or
Change of Control. If Employee's employment by the Company is terminated
without Cause or by Employee following a Material Breach by the Company or
Change of Control, Employee shall be entitled to receive the compensation
payments described in (i), (ii) and (iii) below; provided, that Employee also
must have timely notified the Company as provided in Sections 5(f) and (g),
as applicable, in order to receive such payments. All amounts under this
Section 7(c) shall be reduced by withholding for applicable taxes, if any.
(i)A lump-sum cash payment equal to the lesser of Employee's Base
Amount (as defined below) multiplied by 2.99 or 150% of Employee's current
Base Salary multiplied by 3. "Base Amount" means Employee's average annual
earnings reported on Form W-2 for Employee's last five tax years.
(ii)A lump-sum cash payment equal to the difference between (A) the
value of all vested and unvested stock options granted by AMCE to Employee
which have an exercise price per share less than the closing price per share
of AMCE's Common Stock as reported on the American Stock Exchange or other
stock exchange or automated quotation system (the "Closing Price") on the Date
of Termination and (B) the exercise price of such options. For purposes of
determining the option value, AMCE's stock price as described above as of the
Date of Termination will be used. Upon such payment by the Company to
Employee, all such options will be cancelled.
(iii)If Employee's note dated September 14, 1998 payable to
AMCE in the original principal amount of $3,765,000, the proceeds of which
were used by Employee to purchase shares of AMCE's Common Stock (the "Note"),
is outstanding on the Date of Termination, then one of the following
provisions shall apply:
(A)Stock Redemption and Note Forgiveness. If AMCE is so
permitted under the Delaware General Corporation Law and the terms
of any of its applicable loan agreements, debt covenants or other
agreements, AMCE shall redeem all of the 250,000 shares of AMCE's
Common Stock purchased by Employee with the proceeds of the Note
which Employee owns on the Date of Termination, at a redemption
price per share equal to the Closing Price per share on the Date of
Termination, and the aggregate redemption price shall be applied by
AMCE towards payment of the Note. If the aggregate redemption price
is greater than the amount of unpaid principal and accrued interest
on the Note, AMCE shall pay an amount equal to such excess to
Employee. If the aggregate unpaid principal and accrued interest
on the Note exceeds the redemption price, then AMCE shall forgive
a portion of such excess amount, determined as follows: multiply
(1) the difference (expressed as a positive number) between (x) an
amount equal to the Closing Price per share on the Date of
Termination multiplied by 250,000 and (y) the amount of outstanding
principal and accrued interest on the Note on the Date of
Termination, by (2) a ratio, the numerator of which is the number
of shares of AMCE's Common Stock redeemed by AMCE pursuant to this
paragraph and the denominator of which is 250,000. AMCE shall also
pay to Employee an amount equal to the federal, state and city
income taxes and excise taxes, if any, required to be paid by
Employee based upon the forgiveness of such portion of the Note; or
(B)Note Forgiveness If Stock Redemption Not Permitted. If
AMCE is not permitted under the terms of the Delaware General
Corporation Law or any of its loan agreements, debt covenants or
other agreements to redeem all of the 250,000 shares of AMCE's
Common Stock purchased by Employee with the proceeds of the Note
which Employee owns on the Date of Termination, and if the amount
of unpaid principal and accrued interest on the Note on the Date of
Termination exceeds the value of such shares (determined by the
Closing Price per share on the Date of Termination), then AMCE shall
forgive a portion of such excess amount, determined as follows:
multiply (1) the difference (expressed as a positive number) between
(x) an amount equal to the Closing Price per share on the Date of
Termination multiplied by 250,000 and (y) the amount of outstanding
principal and accrued interest on the Note on the Date of
Termination, by (2) a ratio, the numerator of which is the number
of shares of AMCE's Common Stock purchased by Employee with the
proceeds of the Note which Employee owns on the Date of Termination
and the denominator of which is 250,000. AMCE shall also pay to
Employee an amount equal to the federal, state and city income taxes
and excise taxes, if any, required to be paid by Employee based upon
the forgiveness of such portion of the Note.
8.Confidentiality. Employee acknowledges that he knows and in the future
will know information relating to the Company and its affiliated companies and
their respective operations that is confidential or a trade secret. Such
information includes information, whether obtained in writing, in conversation
or otherwise, concerning corporate strategy, intent and plans, business
operations, pricing, costs, budgets, equipment, the status, scope and term of
pending acquisitions, negotiations and transactions, the terms of existing or
proposed business arrangements, contracts and obligations, and corporate and
financial reports. Such confidential or trade secret information shall not,
however, include information in the public domain unless Employee has, without
authority, made it public.
Employee shall (a) not disclose such information to anyone except in
confidence and as is necessary to the performance of his duties for the
Company; (b) keep such information confidential; (c) take appropriate
precautions to maintain the confidentiality of such information; and (d) not
use such information for personal benefit or the benefit of any competitor or
any other person.
Upon termination of his employment by the Company under this Agreement,
Employee shall return all materials in his possession or under his control
that were prepared by or relate to the Company or its affiliates, including,
but not limited to, materials containing confidential information, files,
memorandums, price lists, reports, budgets and handbooks.
Employee's obligation under this Section 8 shall survive the termination
of Employee's employment by the Company under this Agreement.
9.Equitable Remedies. The parties acknowledge that irreparable damage will
result to the Company from any violation of Section 8 above by Employee. The
parties expressly agree that, in addition to any and all remedies available
to the Company for any such violation, the Company shall have the remedy of
restraining order and injunction and any such equitable relief as may be
declared or issued by a court to enforce the provisions of Section 8 above and
Employee agrees not to claim in any such equitable proceeding that a remedy
at law is available to the Company. Notwithstanding anything contained herein
to the contrary and if, and only if, any provision of the type contained in
Section 8 above, as the case may be, is enforceable in the jurisdiction in
question, if any one or more of the provisions contained in such Section shall
for any reason be held to be excessively broad as to duration, geographical
scope, activity or subject, such provision shall be construed by limiting and
reducing it so as to be enforceable to the extent compatible with the
applicable law in such jurisdiction as it shall then appear.
10.Successors: Binding Agreement.
(a)Company Successors. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all the business and/or assets of the Company, by agreement
in form and substance satisfactory to Employee, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
(b)Employee's Successors. This Agreement and all rights hereunder
shall be binding upon, inure to the benefit of and be enforceable by
Employee's personal or legal representatives, heirs, successors and permitted
assigns.
11.Notices. All notices, requests, demand or other communications under
this Agreement shall be in writing addressed as follows:
(a)If to the Company, to:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(b)If to Employee, to:
Philip M. Singleton
11713 High Drive
Leawood, Kansas 66211
Any such notice, request, demand or other communication shall be
effective as of the date of actual delivery thereof. Either party may change
such notice address by written notice as provided herein.
12.Total Compensation. The compensation to be paid to Employee under this
Agreement shall be in full payment for all services rendered by Employee in
any capacity to the Company or any affiliate of the Company.
13.Additional Potential Compensation. Nothing in this Agreement shall
prohibit the Company from awarding additional compensation to Employee if it
is determined that such compensation is warranted based on Employee's
performance.
14.Other Provisions. This Agreement shall be governed by the laws of the
State of Missouri. This Agreement represents the entire agreement of the
parties hereto and shall not be amended except by a written agreement signed
by all the parties hereto. This Agreement supersedes any prior oral or
written agreements or understandings between the Company or any affiliate of
the Company and Employee. This Agreement shall not be assignable by one party
without the prior written consent of the other party, except by the Company
if it complies with Section 10 above. In the event one or more of the
provision contained in this Agreement or any application thereof shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provision of this Agreement or any other
application thereof shall not in any way be affected or impaired thereby.
Section headings herein have no legal significance.
15.Arbitration. Any legal dispute, controversy or claim related to this
Agreement or breach thereof, shall, in lieu of being submitted to a court of
law, be submitted to arbitration, in accordance with the Commercial
Arbitration Rules of the American Arbitration Association. The award of the
arbitrators shall be final and binding upon the parties.
The parties hereto agree that (i) three arbitrators shall be selected
pursuant to the rules and procedures of the American Arbitration Association,
(ii) at least one arbitrator shall be a licensed attorney, (iii) the
arbitrators shall have the power to award injunctive relief or to direct
specific performance, (iv) the arbitrators will not have the authority to
award punitive
damages, (v) each of the parties shall bear its own attorneys' fees, costs and
expenses and an equal share of the arbitrators' and administrative fees of
arbitration, (vi) the arbitrators will not have the authority to award
attorneys' fees other than to direct or confirm in the award that each party
shall pay its own fees, and (vii) the arbitrators shall award to the
prevailing party a sum equal to that party's share of the arbitrators' and
administrative fees of arbitration.
Nothing in this Section shall be construed as providing Employee a cause
of action, remedy or procedure that Employee would not otherwise have under
this Agreement or the law.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY BE
ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Employment Agreement
as of the day and year first above written.
AMC ENTERTAINMENT INC.,
a Delaware corporation
By: /s/ Stanley H. Durwood
Stanley H. Durwood, Co-Chairman of the
Board and Chief Executive Officer
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: /s/ Stanley H. Durwood
Stanley H. Durwood, Chairman of the Board
and Chief Executive Officer
/s/ Philip M. Singleton
PHILIP M. SINGLETON, EMPLOYEE
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of February 1, 1999
by and among AMC ENTERTAINMENT INC., a Delaware corporation ("AMCE"),
AMERICAN MULTI-CINEMA, INC., a Missouri corporation ("AMC" and,
collectively with AMCE, the "Company"), and RICHARD M. FAY
("Employee"). In consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1.Duties. During the Term (as defined in Section 2) of his
employment by the Company under this Agreement, Employee shall devote
his full time and attention to the business of the Company as directed
by AMC's President and Chief Operating Officer or such officer's
designee.
2.Term. The term of this Agreement shall commence as of February
1, 1999 and shall terminate on January 31, 2001 or sooner as provided
in Section 6 below (such period, as it may be extended, the "Term").
On each February 1 hereafter, commencing in 2000, one year shall be
added to the Term of Employee's employment with the Company under this
Agreement, so that as of each February 1 the Term of Employee's
employment hereunder shall be two (2) years.
3.Compensation.
(a)Base Salary. During the Term of his employment by the
Company under this Agreement, Employee shall receive an annual salary
of $285,031.00 ("Base Salary") (less withholding for applicable taxes),
payable in accordance with the Company's payroll procedures for its
salaried employees, subject to such increases as may be approved by
AMC's President and Chief Operating Officer with the approval of any
Co-Chairman of the Board of AMCE.
(b)Bonus. In addition to Base Salary, Employee shall be
eligible to "receive an annual bonus (the "Bonus") as determined from
time to time in the sole discretion of AMC's President and Chief
Operating Officer with the approval of any Co-Chairman of the Board of
AMCE based on the Company's applicable incentive compensation program,
as such may exist from time to time.
(c)Benefits. During the Term of Employee's employment by the
Company under this Agreement, Employee also shall be eligible for the
benefits offered by the Company from time to time to the Company's
other executive officers (such as group insurance, pension plans,
thrift plans, stock purchase plans and the like). Nothing herein shall
be construed so as to prevent the Company from modifying or terminating
any employee benefit plans or programs it may adopt from time to time.
(d)Automobile. During the Term of Employee's employment by the
Company under this Agreement, the Company shall provide Employee with
a Company owned or leased automobile or an equivalent automobile
allowance.
4.Expense Reimbursements. During the Term of Employee's employment
by the Company under this Agreement, the Company shall reimburse
Employee for business travel and entertainment expenses reasonably
incurred by Employee on behalf of the Company in accordance with the
Company's procedures, as such may exist from time to time.
5.Termination. Employee's employment by the Company under this
Agreement shall be terminated upon the earliest to occur of the
following events:
(a)Resignation. Employee's resignation, retirement or other
voluntary departure.
(b)Death. The death of Employee.
(c)Disability. If, as a result of Employee's incapacity due to
physical or mental illness, (i) Employee shall not have been regularly
performing his duties and obligations hereunder for a period of one
hundred twenty (120) consecutive days (a "Disability"), (ii) the
Company has given Employee the written Notice of Termination pursuant
to Section 6(a) hereof, and (iii) within thirty (30) days after the
Company gives Employee written notice of termination (which may occur
before or after the end of such 120 day period), Employee shall not
have returned to the performance of his duties and obligations
hereunder on a regular basis.
(d)Cause. Employee is terminated for Cause. For purposes of
this Agreement, "Cause" is defined as (i) the willful and continued
failure by Employee to perform substantially his duties with the
Company (other than any such failure resulting from his incapacity due
to physical or mental illness), or (ii) the willful engaging by
Employee in misconduct which is materially and demonstrably injurious
to the Company. For purposes of this Agreement, no act, or failure to
act, on the part of Employee shall be considered "willful" unless done,
or omitted to be done, in bad faith and without reasonable belief that
Employee's act or omission was in the best interests of the Company.
(e)Without Cause. The employment of Employee may be terminated
without cause with severance at any time by AMC's President and Chief
Operating Officer with the approval of any Co-Chairman of the Board of
AMCE.
(f)Change of Control. Employee may terminate his employment
hereunder due to the occurrence of any one or more of the events
described in clauses (i), (ii) and (iii) below subsequent to a Change
of Control (as defined below), provided that Employee has given the
Company the written Notice of Termination pursuant to Section 6(a)
hereof within sixty (60) days of the occurrence of any such event:
(i)a substantial adverse alteration in Employee's
responsibilities from those in effect immediately prior to the
Change of Control;
(ii)a reduction in Employee's Base Salary below the rate
that is in effect immediately prior to the Change of Control; or
(iii)a material reduction in the benefits provided to
Employee by the Company prior to the Change of Control.
For purposes of this Agreement a "Change of Control" of the
Company means the occurrence of either of the following events during
the Term: (a) any Person (other than a Permitted Holder) or any Persons
(other than an Permitted Holders) acting together that would constitute
a Group, together with any Affiliates thereof (other than any Permitted
Holders), shall obtain beneficial ownership of 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 currently has ten votes per share and the Company's
Common Stock currently has one vote per share), or (b) 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(s) remaining on the Board of Directors of the Company
after such election who is an Affiliate (other than a Permitted Holder)
of such Group, will constitute a majority of the Board of Directors of
the Company. Unless otherwise specifically defined in this Section
5(g), all terms used in this Section 5(g) shall have the meaning used
in Section 13(d) of the Securities Exchange Act of 1934 and regulations
promulgated thereunder (or any successor provisions to such law or
regulations).
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person or
(ii) any other Person that owns, directly or indirectly, ten percent
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.
"Capital Stock" of any Person means 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 this
Agreement.
"Permitted Holder" means (i) Stanley H. Durwood, his spouse
(collectively, the "Durwood Family") and any Affiliate of any member of
the Durwood Family (other than any lineal descendant of Stanley H.
Durwood), (ii) Stanley H. Durwood's estate, (iii) the 1992 Durwood,
Inc. Voting Trust dated December 12, 1992 and any successor voting
trust, and (iv) any Subsidiary, any employee benefit plan, 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
(iv), then such securities shall no longer be deemed to be held by a
Permitted Holder.
"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.
"Subsidiary" means (i) 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 the
Company and (ii) any partnership, limited liability company,
association, joint venture or other entity in which the Company,
directly or indirectly, has more than a 50% equity interest.
6.Termination Procedure.
(a)Notice of Termination. Any termination of Employee by the
Company or by Employee (other than termination pursuant to Section 5(a)
or (b) hereof) shall be communicated by written Notice of Termination
to the other party hereto in accordance with Section 11. For purposes
of this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate the specific termination provision in this Agreement
relied upon and shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee
under the provisions so indicated.
(b)Date of Termination. "Date of Termination" shall mean (i) if
Employee's employment by the Company is terminated by Employee's
resignation, retirement or other voluntary departure, the date of such
event, (ii) if Employee's employment by the Company is terminated by
his death, the date of death, (iii) if Employee's employment by the
Company is terminated pursuant to Section 5(c) hereof, thirty (30) days
after Notice of Termination is given (provided that Employee shall not
have again become available for service to the Company on a regular
basis during such thirty (30) day period), (iv) if Employee's
employment by the Company is terminated for Cause, the date specified
in the Notice of Termination, and (v) if Employee's employment by the
Company is terminated for any other reason, the date on which a Notice
of Termination is given.<PAGE>
7.Compensation During Disability or Upon Termination.
(a)Disability. During any period that Employee fails to perform
his duties under this Agreement as a result of incapacity due to
physical or mental illness (a "disability period"), Employee shall
continue to receive his Base Salary at the rate then in effect for such
period until his employment by the Company is terminated pursuant to
Section 5(d) hereof, provided that payments so made to Employee during
the first 180 days of any such disability period shall be reduced by
the sum of the amounts, if any, paid to Employee at or prior to the
time of any such payment under disability benefit plans of the Company
or under the Social Security disability insurance program, and which
amounts were not previously applied to reduce any such payment.
Employee shall also receive a pro rata portion of the Bonus described
in Section 3(b) pursuant to the Company's applicable incentive
compensation program (the amount of such pro rated Bonus to be
determined as though the target level was attained, multiplied by a
fraction, the numerator of which is the number of completed months in
the then current Bonus program year and the denominator of which is
12), as such may exist from time to time.
(b)Termination for Cause, Death or Employee Resignation. If
Employee's employment by the Company should be terminated for Cause,
by Employee's death or by Employee's resignation, retirement or other
voluntary departure, the Company shall pay Employee his accrued but
unpaid Base Salary through the Date of Termination at the rate in
effect at the time Notice of Termination is given, and the Company
shall have no further obligations to Employee under this Agreement.
If Employee's employment by the Company is terminated by Employee's
death, Employee shall also receive a pro rata portion of the Bonus
described in Section 3(b) pursuant to the Company's applicable
incentive compensation program (the amount of such pro rated Bonus to
be determined as though the target level was attained, multiplied by
a fraction, the numerator of which is the number of completed months
in the then current Bonus program year and the denominator of which is
12), as such may exist from time to time.
(c)Termination Without Cause or After a Change of Control. If
Employee's employment by the Company is terminated without Cause or
subsequent to a Change of Control as provided in Section 5(f) of this
Agreement, the Company shall pay to Employee a lump sum amount equal
to two years Base Salary (less withholdings for applicable taxes) of
Employee in effect on the Date of Termination.
8.Confidentiality. Employee acknowledges that he knows and in the
future will know information relating to the Company and its affiliated
companies and their respective operations that is confidential or a
trade secret. Such information includes information, whether obtained
in writing, in conversation or otherwise, concerning corporate
strategy, intent and plans, business operations, pricing, costs,
budgets, equipment, the status, scope and term of pending acquisitions,
negotiations and transactions, the terms of existing or proposed
business arrangements, contracts and obligations, and corporate and
financial reports. Such confidential or trade secret information shall
not, however, include information in the public domain unless Employee
has, without authority, made it public.
Employee shall (a) not disclose such information to anyone except
in confidence and as is necessary to the performance of his duties for
the Company; (b) keep such information confidential; (c) take
appropriate precautions to maintain the confidentiality of such
information; and (d) not use such information for personal benefit or
the benefit of any competitor or any other person.
Upon termination of his employment by the Company under this
Agreement, Employee shall return all materials in his possession or
under his control that were prepared by or relate to the Company or its
affiliates, including, but not limited to, materials containing
confidential information, files, memorandums, price lists, reports,
budgets and handbooks.
Employee's obligation under this Section 8 shall survive the
termination of Employee's employment by the Company under this
Agreement.
9.Equitable Remedies. The parties acknowledge that irreparable
damage will result to the Company from any violation of Section 8 above
by Employee. The parties expressly agree that, in addition to any and
all remedies available to the Company for any such violation, the
Company shall have the remedy of restraining order and injunction and
any such equitable relief as may be declared or issued by a court to
enforce the provisions of Section 8 above and Employee agrees not to
claim in any such equitable proceeding that a remedy at law is
available to the Company. Notwithstanding anything contained herein
to the contrary and if, and only if, any provision of the type
contained in Section 8 above, as the case may be, is enforceable in the
jurisdiction in question, if any one or more of the provisions
contained in such Section shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or
subject, such provision shall be construed by limiting and reducing it
so as to be enforceable to the extent compatible with the applicable
law in such jurisdiction as it shall then appear.
10.Successors: Binding Agreement.
(a)Company Successors. The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all the business and/or assets of
the Company, by agreement in form and substance satisfactory to
Employee, to expressly assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(b)Employee's Successors. This Agreement and all rights
hereunder shall be binding upon, inure to the benefit of and be
enforceable by Employee's personal or legal representatives, heirs,
successors and permitted assigns.
11.Notices. All notices, requests, demand or other communications
under this Agreement shall be in writing addressed as follows:
(a)If to the Company, to:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(b)If to Employee, to:
Richard M. Fay
5481 Collingswood Circle
Calabasas, California 91302
Any such notice, request, demand or other communication shall be
effective as of the date of actual delivery thereof. Either party may
change such notice address by written notice as provided herein.
12.Total Compensation. The compensation to be paid to Employee under
this Agreement shall be in full payment for all services rendered by
Employee in any capacity to the Company or any affiliate of the
Company.
13.Additional Potential Compensation. Nothing in this Agreement
shall prohibit the Company from awarding additional compensation to
Employee if it is determined that such compensation is warranted based
on Employee's performance.
14.Other Provisions. This Agreement shall be governed by the laws
of the State of Missouri. This Agreement represents the entire
agreement of the parties hereto and shall not be amended except by a
written agreement signed by all the parties hereto. This Agreement
supersedes any prior oral or written agreements or understandings
between the Company or any affiliate of the Company and Employee. This
Agreement shall not be assignable by one party without the prior
written consent of the other party, except by the Company if it
complies with Section 10 above. In the event one or more of the
provision contained in this Agreement or any application thereof shall
be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provision of this
Agreement or any other application thereof shall not in any way be
affected or impaired thereby. Section headings herein have no legal
significance.
15.Arbitration. Any legal dispute, controversy or claim related to
this Agreement or breach thereof, shall, in lieu of being submitted to
a court of law, be submitted to arbitration, in accordance with the
Commercial Arbitration Rules of the American Arbitration Association.
The award of the arbitrators shall be final and binding upon the
parties.
The parties hereto agree that (i) three arbitrators shall be
selected pursuant to the rules and procedures of the American
Arbitration Association, (ii) at least one arbitrator shall be a
licensed attorney, (iii) the arbitrators shall have the power to award
injunctive relief or to direct specific performance, (iv) the
arbitrators will not have the authority to award punitive damages, (v)
each of the parties shall bear its own attorneys' fees, costs and
expenses and an equal share of the arbitrators' and administrative fees
of arbitration, (vi) the arbitrators will not have the authority to
award attorneys' fees other than to direct or confirm in the award that
each party shall pay its own fees, and (vii) the arbitrators shall
award to the prevailing party a sum equal to that party's share of the
arbitrators' and administrative fees of arbitration.
Nothing in this Section shall be construed as providing Employee
a cause of action, remedy or procedure that Employee would not
otherwise have under this Agreement or the law.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH MAY
BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
AMC ENTERTAINMENT INC.,
a Delaware corporation
By: /s/ Peter C. Brown
Peter C. Brown, Co-Chairman of the Board
and President
<PAGE>
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: /s/ Philip M. Singleton
Philip M. Singleton, President
/s/ Richard M. Fay
RICHARD M. FAY, EMPLOYEE
EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into as of February 1,
1999 by and among AMC ENTERTAINMENT INC., a Delaware corporation
("AMCE"), AMERICAN MULTI-CINEMA, INC., a Missouri corporation ("AMC"
and, collectively with AMCE, the "Company"), and RICHARD T. WALSH
("Employee"). In consideration of the mutual promises and covenants
contained herein, the parties hereto agree as follows:
1.Duties. During the Term (as defined in Section 2) of his
employment by the Company under this Agreement, Employee shall
devote his full time and attention to the business of the Company as
directed by AMC's President and Chief Operating Officer or such
officer's designee.
2.Term. The term of this Agreement shall commence as of February
1, 1999 and shall terminate on January 31, 2001 or sooner as
provided in Section 6 below (such period, as it may be extended, the
"Term"). On each February 1 hereafter, commencing in 2000, one year
shall be added to the Term of Employee's employment with the Company
under this Agreement, so that as of each February 1 the Term of
Employee's employment hereunder shall be two (2) years.
3.Compensation.
(a)Base Salary. During the Term of his employment by the
Company under this Agreement, Employee shall receive an annual
salary of $230,041.00 ("Base Salary") (less withholding for
applicable taxes), payable in accordance with the Company's payroll
procedures for its salaried employees, subject to such increases as
may be approved by AMC's President and Chief Operating Officer with
the approval of any Co-Chairman of the Board of AMCE.
(b)Bonus. In addition to Base Salary, Employee shall be
eligible to "receive an annual bonus (the "Bonus") as determined from
time to time in the sole discretion of AMC's President and Chief
Operating Officer with the approval of any Co-Chairman of the Board
of AMCE based on the Company's applicable incentive compensation
program, as such may exist from time to time.
(c)Benefits. During the Term of Employee's employment by the
Company under this Agreement, Employee also shall be eligible for
the benefits offered by the Company from time to time to the
Company's other executive officers (such as group insurance, pension
plans, thrift plans, stock purchase plans and the like). Nothing
herein shall be construed so as to prevent the Company from
modifying or terminating any employee benefit plans or programs it
may adopt from time to time.
(d)Automobile. During the Term of Employee's employment by
the Company under this Agreement, the Company shall provide Employee
with a Company owned or leased automobile or an equivalent
automobile allowance.
4.Expense Reimbursements. During the Term of Employee's
employment by the Company under this Agreement, the Company shall
reimburse Employee for business travel and entertainment expenses
reasonably incurred by Employee on behalf of the Company in
accordance with the Company's procedures, as such may exist from
time to time.
5.Termination. Employee's employment by the Company under this
Agreement shall be terminated upon the earliest to occur of the
following events:
(a)Resignation. Employee's resignation, retirement or other
voluntary departure.
(b)Death. The death of Employee.
(c)Disability. If, as a result of Employee's incapacity due
to physical or mental illness, (i) Employee shall not have been
regularly performing his duties and obligations hereunder for a
period of one hundred twenty (120) consecutive days (a "Disability"),
(ii) the Company has given Employee the written Notice of
Termination pursuant to Section 6(a) hereof, and (iii) within thirty
(30) days after the Company gives Employee written notice of
termination (which may occur before or after the end of such 120 day
period), Employee shall not have returned to the performance of his
duties and obligations hereunder on a regular basis.
(d)Cause. Employee is terminated for Cause. For purposes of
this Agreement, "Cause" is defined as (i) the willful and continued
failure by Employee to perform substantially his duties with the
Company (other than any such failure resulting from his incapacity
due to physical or mental illness), or (ii) the willful engaging by
Employee in misconduct which is materially and demonstrably
injurious to the Company. For purposes of this Agreement, no act,
or failure to act, on the part of Employee shall be considered
"willful" unless done, or omitted to be done, in bad faith and
without reasonable belief that Employee's act or omission was in the
best interests of the Company.
(e)Without Cause. The employment of Employee may be
terminated without cause with severance at any time by AMC's
President and Chief Operating Officer with the approval of any Co-
Chairman of the Board of AMCE.
(f)Change of Control. Employee may terminate his employment
hereunder due to the occurrence of any one or more of the events
described in clauses (i), (ii) and (iii) below subsequent to a
Change of Control (as defined below), provided that Employee has
given the Company the written Notice of Termination pursuant to
Section 6(a) hereof within sixty (60) days of the occurrence of any
such event:
(i)a substantial adverse alteration in Employee's
responsibilities from those in effect immediately prior to the
Change of Control;
(ii)a reduction in Employee's Base Salary below the rate
that is in effect immediately prior to the Change of Control;
or
(iii)a material reduction in the benefits provided to
Employee by the Company prior to the Change of Control.
For purposes of this Agreement a "Change of Control" of the
Company means the occurrence of either of the following events
during the Term: (a) any Person (other than a Permitted Holder) or
any Persons (other than an Permitted Holders) acting together that
would constitute a Group, together with any Affiliates thereof
(other than any Permitted Holders), shall obtain beneficial
ownership of 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 currently has
ten votes per share and the Company's Common Stock currently has one
vote per share), or (b) 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(s) remaining on the Board of Directors of the Company after
such election who is an Affiliate (other than a Permitted Holder) of
such Group, will constitute a majority of the Board of Directors of
the Company. Unless otherwise specifically defined in this Section
5(g), all terms used in this Section 5(g) shall have the meaning
used in Section 13(d) of the Securities Exchange Act of 1934 and
regulations promulgated thereunder (or any successor provisions to
such law or regulations).
"Affiliate" means, with respect to any specified Person, (i) any
other Person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified Person
or (ii) any other Person that owns, directly or indirectly, ten
percent 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.
"Capital Stock" of any Person means 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 this Agreement.
"Permitted Holder" means (i) Stanley H. Durwood, his spouse
(collectively, the "Durwood Family") and any Affiliate of any member
of the Durwood Family (other than any lineal descendant of Stanley
H. Durwood), (ii) Stanley H. Durwood's estate, (iii) the 1992
Durwood, Inc. Voting Trust dated December 12, 1992 and any successor
voting trust, and (iv) any Subsidiary, any employee benefit plan,
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 (iv), then such securities shall no longer be deemed to be
held by a Permitted Holder.
"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.
"Subsidiary" means (i) 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 the
Company and (ii) any partnership, limited liability company,
association, joint venture or other entity in which the Company,
directly or indirectly, has more than a 50% equity interest.
6.Termination Procedure.
(a)Notice of Termination. Any termination of Employee by the
Company or by Employee (other than termination pursuant to Section
5(a) or (b) hereof) shall be communicated by written Notice of
Termination to the other party hereto in accordance with Section 11.
For purposes of this Agreement, a "Notice of Termination" shall mean
a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail
the facts and circumstances claimed to provide a basis for
termination of Employee under the provisions so indicated.
(b)Date of Termination. "Date of Termination" shall mean (i)
if Employee's employment by the Company is terminated by Employee's
resignation, retirement or other voluntary departure, the date of
such event, (ii) if Employee's employment by the Company is
terminated by his death, the date of death, (iii) if Employee's
employment by the Company is terminated pursuant to Section 5(c)
hereof, thirty (30) days after Notice of Termination is given
(provided that Employee shall not have again become available for
service to the Company on a regular basis during such thirty (30)
day period), (iv) if Employee's employment by the Company is
terminated for Cause, the date specified in the Notice of
Termination, and (v) if Employee's employment by the Company is
terminated for any other reason, the date on which a Notice of
Termination is given.<PAGE>
7.Compensation During Disability or Upon Termination.
(a)Disability. During any period that Employee fails to
perform his duties under this Agreement as a result of incapacity
due to physical or mental illness (a "disability period"), Employee
shall continue to receive his Base Salary at the rate then in effect
for such period until his employment by the Company is terminated
pursuant to Section 5(d) hereof, provided that payments so made to
Employee during the first 180 days of any such disability period
shall be reduced by the sum of the amounts, if any, paid to Employee
at or prior to the time of any such payment under disability benefit
plans of the Company or under the Social Security disability
insurance program, and which amounts were not previously applied to
reduce any such payment. Employee shall also receive a pro rata
portion of the Bonus described in Section 3(b) pursuant to the
Company's applicable incentive compensation program (the amount of
such pro rated Bonus to be determined as though the target level was
attained, multiplied by a fraction, the numerator of which is the
number of completed months in the then current Bonus program year
and the denominator of which is 12), as such may exist from time to
time.
(b)Termination for Cause, Death or Employee Resignation. If
Employee's employment by the Company should be terminated for Cause,
by Employee's death or by Employee's resignation, retirement or
other voluntary departure, the Company shall pay Employee his
accrued but unpaid Base Salary through the Date of Termination at
the rate in effect at the time Notice of Termination is given, and
the Company shall have no further obligations to Employee under this
Agreement. If Employee's employment by the Company is terminated by
Employee's death, Employee shall also receive a pro rata portion of
the Bonus described in Section 3(b) pursuant to the Company's
applicable incentive compensation program (the amount of such pro
rated Bonus to be determined as though the target level was
attained, multiplied by a fraction, the numerator of which is the
number of completed months in the then current Bonus program year
and the denominator of which is 12), as such may exist from time to
time.
(c)Termination Without Cause or After a Change of Control.
If Employee's employment by the Company is terminated without Cause
or subsequent to a Change of Control as provided in Section 5(f) of
this Agreement, the Company shall pay to Employee a lump sum amount
equal to two years Base Salary (less withholdings for applicable
taxes) of Employee in effect on the Date of Termination.
8.Confidentiality. Employee acknowledges that he knows and in
the future will know information relating to the Company and its
affiliated companies and their respective operations that is
confidential or a trade secret. Such information includes
information, whether obtained in writing, in conversation or
otherwise, concerning corporate strategy, intent and plans, business
operations, pricing, costs, budgets, equipment, the status, scope
and term of pending acquisitions, negotiations and transactions, the
terms of existing or proposed business arrangements, contracts and
obligations, and corporate and financial reports. Such confidential
or trade secret information shall not, however, include information
in the public domain unless Employee has, without authority, made it
public.
Employee shall (a) not disclose such information to anyone
except in confidence and as is necessary to the performance of his
duties for the Company; (b) keep such information confidential; (c)
take appropriate precautions to maintain the confidentiality of such
information; and (d) not use such information for personal benefit
or the benefit of any competitor or any other person.
Upon termination of his employment by the Company under this
Agreement, Employee shall return all materials in his possession or
under his control that were prepared by or relate to the Company or
its affiliates, including, but not limited to, materials containing
confidential information, files, memorandums, price lists, reports,
budgets and handbooks.
Employee's obligation under this Section 8 shall survive the
termination of Employee's employment by the Company under this
Agreement.
9.Equitable Remedies. The parties acknowledge that irreparable
damage will result to the Company from any violation of Section 8
above by Employee. The parties expressly agree that, in addition to
any and all remedies available to the Company for any such
violation, the Company shall have the remedy of restraining order
and injunction and any such equitable relief as may be declared or
issued by a court to enforce the provisions of Section 8 above and
Employee agrees not to claim in any such equitable proceeding that
a remedy at law is available to the Company. Notwithstanding
anything contained herein to the contrary and if, and only if, any
provision of the type contained in Section 8 above, as the case may
be, is enforceable in the jurisdiction in question, if any one or
more of the provisions contained in such Section shall for any
reason be held to be excessively broad as to duration, geographical
scope, activity or subject, such provision shall be construed by
limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law in such jurisdiction as it shall
then appear.
10.Successors: Binding Agreement.
(a)Company Successors. The Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all the business
and/or assets of the Company, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform
this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had
taken place.
(b)Employee's Successors. This Agreement and all rights
hereunder shall be binding upon, inure to the benefit of and be
enforceable by Employee's personal or legal representatives, heirs,
successors and permitted assigns.
11.Notices. All notices, requests, demand or other communications
under this Agreement shall be in writing addressed as follows:
(a)If to the Company, to:
Raymond F. Beagle, Jr.
Lathrop & Gage L.C.
2345 Grand Boulevard
Kansas City, Missouri 64108
(b)If to Employee, to:
Richard T. Walsh
23 Wrangler Lane
Canoga Park, California 91307
Any such notice, request, demand or other communication shall
be effective as of the date of actual delivery thereof. Either
party may change such notice address by written notice as provided
herein.
12.Total Compensation. The compensation to be paid to Employee
under this Agreement shall be in full payment for all services
rendered by Employee in any capacity to the Company or any affiliate
of the Company.
13.Additional Potential Compensation. Nothing in this Agreement
shall prohibit the Company from awarding additional compensation to
Employee if it is determined that such compensation is warranted
based on Employee's performance.
14.Other Provisions. This Agreement shall be governed by the laws
of the State of Missouri. This Agreement represents the entire
agreement of the parties hereto and shall not be amended except by
a written agreement signed by all the parties hereto. This
Agreement supersedes any prior oral or written agreements or
understandings between the Company or any affiliate of the Company
and Employee. This Agreement shall not be assignable by one party
without the prior written consent of the other party, except by the
Company if it complies with Section 10 above. In the event one or
more of the provision contained in this Agreement or any application
thereof shall be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provision
of this Agreement or any other application thereof shall not in any
way be affected or impaired thereby. Section headings herein have
no legal significance.
15.Arbitration. Any legal dispute, controversy or claim related
to this Agreement or breach thereof, shall, in lieu of being
submitted to a court of law, be submitted to arbitration, in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. The award of the arbitrators shall be
final and binding upon the parties.
The parties hereto agree that (i) three arbitrators shall be
selected pursuant to the rules and procedures of the American
Arbitration Association, (ii) at least one arbitrator shall be a
licensed attorney, (iii) the arbitrators shall have the power to
award injunctive relief or to direct specific performance, (iv) the
arbitrators will not have the authority to award punitive damages,
(v) each of the parties shall bear its own attorneys' fees, costs
and expenses and an equal share of the arbitrators' and
administrative fees of arbitration, (vi) the arbitrators will not
have the authority to award attorneys' fees other than to direct or
confirm in the award that each party shall pay its own fees, and
(vii) the arbitrators shall award to the prevailing party a sum
equal to that party's share of the arbitrators' and administrative
fees of arbitration.
Nothing in this Section shall be construed as providing
Employee a cause of action, remedy or procedure that Employee would
not otherwise have under this Agreement or the law.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION WHICH
MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement as of the day and year first above written.
AMC ENTERTAINMENT INC.,
a Delaware corporation
By: /s/ Peter C. Brown
Peter C. Brown, Co-Chairman of the Board
and President
<PAGE>
AMERICAN MULTI-CINEMA, INC.,
a Missouri corporation
By: /s/ Philip M. Singleton
Philip M. Singleton, President
/s/ Richard T. Walsh
RICHARD T. WALSH, EMPLOYEE
EXHIBIT 10.5
<PAGE>
APPENDIX
AMC ENTERTAINMENT INC.
1994 STOCK OPTION AND INCENTIVE PLAN, AS AMENDED
1. PURPOSE
The AMC Entertainment Inc. 1994 Stock Option and Incentive Plan is intended
to incorporate stock-based and results-oriented awards into the ongoing
compensation packages of executives and managers and to thereby increase the
alignment of the interests of such persons and stockholders. The Plan is
intended to foster in participants a strong incentive to exert maximum effort
for the continued success and growth of the Company and its Subsidiaries and the
enhancement of stockholders' interests, to aid in retaining individuals who
exert such efforts and to assist in attracting the best available individuals in
the future.
2. DEFINITIONS
When used herein, the following terms shall have the meaning set forth
below:
2.1 "AMC" means American Multi-Cinema, Inc., a wholly-owned subsidiary of
the Company.
2.2 "AWARD" means an Option, a Stock Award or a Performance Unit.
2.3 "BOARD" means the Board of Directors of the Company.
2.4 A"CHANGE OF CONTROL EVENT" shall be deemed to have occurred at the
first time that (a) a majority of the Board of Directors of the Company, over a
two-year period, is replaced from the directors who constituted the Board of
Directors of the Company at the beginning of such period, which replacement
shall not have been approved by the Board of Directors of the Company (or
replacement directors approved by the Board of Directors of the Company), as
constituted at the beginning of such period, or (b) a person or entity or group
of persons or entities acting in concert as a partnership or other group (other
than the DI affiliates, any Subsidiary, 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) shall, as a result of a tender
or exchange offer, open market purchases, privately negotiated purchases or
otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of securities of the Company representing 50% or more of
the combined voting power of the then outstanding securities of the Company
ordinarily (and apart from rights accruing under special circumstances) having
the right to vote in the election of Directors.
2.5 "CODE" means the Internal Revenue Code of 1986 as amended from time to
time.
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2.6 "COMMITTEE" means the Board's Compensation Committee, or such other
committee of Directors as may be designated by the Board, authorized to
administer this Plan. The Committee shall consist of not fewer than two (2)
Directors and shall be constituted so as to permit the Plan to comply with Rule
16b-3 or any successor provision of similar import.
2.7 "COMMON STOCK" means the Company's Common Stock, par value 66 2/3 CENTS
per share.
2.8 "COMPANY" means AMC Entertainment Inc., a corporation organized and
existing under the laws of the State of Delaware, or such Company by whatever
name it may at the time have.
2.9 "DI AFFILIATES" means (a) Mr. Stanley H. Durwood, his spouse and any of
his lineal descendants and their respective spouses (collectively the Durwood
Family), (b) any controlled affiliate of any member of the Durwood Family and
(c) any trust for the benefit of one or more members of the Durwood Family
(whether or not any member of the Durwood Family is a trustee of such trust) or
one or more charitable organizations.
2.10 "DIRECTOR" means a member of the Board.
2.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time.
2.12 "FAIR MARKET VALUE" means with respect to the Company's Shares the
closing sales price of the Shares, as reported on the American Stock Exchange,
or, if not so reported, on the NASDAQ/National Market System, or, if not so
reported, the closing sales price as reported by any other appropriate reporting
system of general circulation, on the date for which the value is to be
determined, or if there is no closing sales price on such date, then on the last
day for which transactions in Shares were so reported prior to the date on which
the value is to be determined.
2.13 "GRANTEE" means a person to whom an Award is made.
2.14 "INCENTIVE STOCK OPTION" or "ISO" means an Option awarded under the
Plan which meets the terms and conditions established by Code Section 422 and
applicable regulations thereunder for such an Option.
2.15 "NON-QUALIFIED STOCK OPTION"or "NQSO" means an Option awarded under
the Plan which by its terms and conditions is not an ISO.
2.16 "Option" means the right to purchase, at a price, for a term, under
conditions, and for cash or other considerations (which may include a note from
the Grantee) fixed by the Committee in accordance with such restrictions as the
Plan and the Committee impose, a number of Shares specified by the Committee
(subject to limitations imposed by this Plan). An Option can be either an ISO or
NQSO or a combination thereof.
2.17 "PLAN" means the Company's 1994 Stock Option and Incentive Plan.
2.18 "PERFORMANCE UNIT" means an Award payable only in cash and valued by
reference to designated criteria (other than Shares) established by the
Committee.
2.19 "RULE 16B-3" means Rule 16b-3 promulgated under the Exchange Act, as
amended from time to time.
2.20 "SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
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2.21 "SHARES" means shares of the Company's Common Stock or if by reason of
the adjustment provisions hereof any rights under an Award under the Plan
pertain to any other security, such other security.
2.22 "STOCK AWARD" means the grant of a right to receive, at a time or
times fixed by the Committee in accordance with the Plan and subject to such
other limitations and restrictions as the Plan and the Committee impose, the
number of Shares specified by the Committee. A Stock Award may be either a
"Performance Stock Award", under which the receipt of Shares, subject to
provisions of the Plan permitting acceleration, will be conditioned on the
attainment by the Company or a Subsidiary or a division during a performance
period of performance goals established by the Committee, or a "Restricted Stock
Award", under which the receipt of Shares, subject to provisions of the Plan
permitting acceleration, is conditioned on the continued employment of the
Grantee or such other conditions as the Committee may impose, or both.
2.23 "SUBSIDIARY" means any business, including AMC, whether or not
incorporated, in which the Company, at the time an Award is granted or in other
cases at the time of reference, owns directly or indirectly not less than 50% of
the equity interest.
2.24 "SUCCESSOR" means the legal representative of the estate of a deceased
Grantee or the person or persons who shall acquire the right to exercise an
Option, to receive Shares issuable in satisfaction of a Stock Award or to
receive other amounts payable under an Award, by bequest or inheritance or by
reason of the death of the Grantee or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employment Retirement Income
Security Act, or the rules thereunder, and other transferees approved in advance
by the Committee.
2.25 "TAX DATE" means the date on which the amount of tax to be withheld
with respect to an Option or Stock Award is determined.
2.26 "TERM" means the period during which a particular Option may be
exercised or the period during which the conditions and/or restrictions placed
on an Award are in effect.
3. ADMINISTRATION OF THE PLAN
3.1 The Plan shall be administered by the Committee.
3.2 The Committee shall have plenary authority, subject to provisions of
the Plan, to: (a) determine when and to whom Awards shall be granted; (b)
determine the form of each Award, its Term, the amount of the Award or the
number of Shares covered by it, if any, the participation by a Grantee in other
plans, and any other terms or conditions of each such Award, including the time
and conditions of exercise or vesting; (c) determine whether Awards will be
granted singly or in combination or tandem; (d) determine the performance goals,
if any, that will be applicable to the Award and eliminate or reduce an Award
otherwise payable that is based on performance goals; (e) accelerate the
vesting, exercise, or payment of an Award when such action(s) would be in the
best interests of the Company; and (f) take any and all other action it deems
necessary or advisable for the proper operation or administration of the Plan.
The Committee also shall have the authority to grant Awards in replacement of
Awards previously granted under the Plan or any other plan of the Company or a
Subsidiary. The Committee's actions in making Awards and fixing their size,
Term, and other terms and conditions shall be final and conclusive on all
persons.
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3.3 The Committee shall have the sole responsibility for construing and
interpreting the Plan, for establishing (and amending) such rules and
regulations as it deems necessary or desirable for the proper administration of
the Plan, and for resolving all questions arising under the Plan. Any decision
or action taken by the Committee arising out of or in connection with the
construction, administration, interpretation and effect of the Plan and of its
rules and regulations shall, to the extent permitted by law, be within its
absolute discretion, except as otherwise specifically provided herein, and shall
be conclusive and binding upon all Grantees, all Successors, and any other
person, whether that person is claiming under or through any Grantee or
otherwise.
3.4 The Committee may designate one of its members as Chairman. It shall
hold its meetings at such times and places as it may determine. All
determinations of the Committee shall be made by a majority of its members. Any
determination reduced to writing and signed by all members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may make such rules and regulations for the conduct of its
business as it shall deem advisable.
3.5 The Committee, in its discretion, may delegate its authority and duties
under the Plan to the Chief Executive Officer and/or to other senior officers of
the Company under such conditions and/or limitations as the Committee may
establish; provided, however, that only the Committee may establish performance
goals and select and grant Awards to Grantees who are subject to Section 16 of
the Exchange Act.
3.6 Service on the Committee shall constitute service as a Director, so
that the members of the Committee shall be entitled to indemnification and
reimbursement as Directors pursuant to its Bylaws and to any agreements between
the Company and its Directors providing for indemnification.
3.7 The Committee shall regularly inform the Board as to its actions with
respect to all Awards under the Plan and the terms and conditions of such Awards
in a manner, at such times, and in such form as the Board may reasonably
request.
4. ELIGIBILITY
Awards may be made under the Plan to employees who are corporate or field
executives or senior managers, including executive officers of the Company and
its Subsidiaries, and other managers, including field and theatre managers.
Officers shall be employees for this purpose, whether or not they also are
Directors. A Director who is not an employee shall not be eligible to receive an
Award. Awards may be made to eligible employees whether or not they have
received prior Awards under the Plan or under any previously adopted plan, and
whether or not they are participants in other benefit plans of the Company, AMC
or any other Subsidiary.
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5. SHARES SUBJECT TO PLAN; LIMITATIONS
5.1 The Company hereby reserves 1,000,000 Shares for issuance in connection
with Awards under the Plan, subject to adjustment under Section 20. During the
Plan no Grantee may receive Options to acquire more than 425,000 Shares, Stock
Awards entitling the Grantee to receive more than 150,000 Shares or cash awards
aggregating more than $2.5 million under Performance Units. During any 12 month
period no Grantee may receive Options to acquire more than 150,000 Shares or
Performance Units for cash awards aggregating more than $800,000. No Grantee may
receive a Stock Award or Awards entitling the Grantee to receive free of
conditions more than 30,000 Shares with respect to any 12 month period, but
determined on an annualized basis so that more than 30,000 Shares may be
received at one time free of conditions with respect to a performance period
exceeding 12 months in duration.
5.2 Any Shares related to Awards which (a) terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such Shares, or
(b) are settled in cash in lieu of Shares, shall be available again for grant
under the Plan, provided the Participant received no other benefits of ownership
of such Award other than voting rights, if any. Notwithstanding the foregoing,
no Shares which are used by a Participant for the full or partial payment to the
Company of the purchase price of Shares upon exercise of an Option, or for any
withholding taxes due as a result of such exercise, may become available for
Awards under the Plan. The Shares available for issuance under the Plan may be
authorized and unissued shares or treasury shares.
6. GRANTING OF OPTIONS
6.1 Subject to the terms of the Plan, the Committee may from time to time
grant Options to persons eligible under Section 4 above and shall designate such
Options as ISOs or NQSOs.
6.2 Pursuant to Code Section 422 and applicable regulations, an Option shall
not be deemed to be an ISO to the extent that the aggregate Fair Market Value,
as determined on the date or dates of grant, of Shares with respect to which
such ISO is exercisable for the first time by any individual during any calendar
year (under all stock option incentive plans of the Company or a Subsidiary)
exceeds $100,000. ISOs which first become exercisable during a calendar year
shall be taken into account in the order granted. Options that exceed the
$100,000 limit shall be treated as NQSOs.
6.3 The purchase price of each Share subject to Option shall be fixed by the
Committee, provided the purchase price for Shares subject to an Option shall not
be less than 100% of the Fair Market Value of the Shares on the date the Option
is granted.
6.4 Notwithstanding Section 6.3 above, pursuant to Code Section 422 and
applicable regulations, the minimum purchase price of an ISO shall be 110% of
the Fair Market Value of the Shares on the date the ISO is granted with respect
to Grantees who at the time of Award are deemed to own 10% or more of the voting
power of the Company's outstanding Shares.
6.5 Each Option shall expire and all rights to purchase Shares thereunder
shall cease on the date fixed by the Committee.
6.6 Notwithstanding Section 6.5 above, pursuant to Code Section 422 and
applicable regulations, an ISO shall expire and all rights to purchase Shares
thereunder shall cease no later than the fifth anniversary of the date on which
the ISO was granted with respect to Grantees who at the
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time of Award are deemed to own 10% or more of the voting power of the Company,
and no later than the tenth anniversary of the date on which the ISO was granted
with respect to other Grantees.
6.7 No Option shall become exercisable prior to the expiration of six months
after the date of its grant, unless otherwise determined by the Committee or
permitted by the Plan, and, subject to the limitations in the Plan, each Option
shall be exercisable for the number of Shares fixed by the Committee.
7. STOCK AWARDS
7.1 The Committee may grant eligible employees Stock Awards which shall
entitle Grantees to receive Shares in the future for no cash consideration and
which may be subject to such terms, conditions and restrictions, if any, as the
Committee may deem appropriate, including, without limitation, satisfaction of
performance goals, restrictions on transferability and continued employment.
7.2 Subject to provisions of the Plan permitting acceleration, the receipt
of Shares under Stock Awards granted to persons subject to Section 16 of the
Exchange Act will be conditioned on the attainment during a performance period
of performance goals established by the Committee based on criterion described
in Section 9.
7.3 At the time of grant of a Stock Award, the Grantee shall receive written
evidence of the Award in such form as may be approved by the Committee but shall
not be entitled to issuance or delivery of a stock certificate evidencing the
Shares covered by the Award until the Committee certifies that performance goals
have been met and the lapse of any restrictions that may have been imposed
pursuant to the Award. Upon the attainment of such goals and the lapse of any
restrictions, a certificate or certificates representing the number of Shares
covered by the Award, free and clear of all restrictions, shall be issued and
registered in the name of, and delivered to, the Grantee.
7.4 Unless otherwise determined by the Committee or provided in the Plan, no
Shares may be issued under Restricted Stock Awards unless the Grantee remains
employed by the Company or a Subsidiary for one year after the date of the
Award.
8. PERFORMANCE UNITS
8.1 The Committee may grant Awards in the form of Performance Units.
8.2 Amounts payable under a Performance Unit may be payable at a specified
date or dates or upon attaining performance conditions. Subject to provisions of
the Plan permitting acceleration, a Performance Unit granted to persons subject
to Section 16 of the Exchange Act will be conditioned on the attainment during a
performance period of performance goals established by the Committee based on
criteria described in Section 9.
9. PERFORMANCE GOALS
Performance Stock and Performance Unit Awards made to persons subject to
Section 16 of the Exchange Act shall be based on performance goals established
by the Committee not later than 90 days after the start of a performance period
of 12 months duration or longer with respect
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to which such an Award is made. The Committee may not increase the compensation
payable under an Award that is otherwise due upon attainment of a performance
goal. The Committee shall certify that the performance goals have been achieved
before payment of any such Award. Performance goals established by the Committee
shall be based upon, as the Committee deems appropriate, one or more of the
following business criteria: (i) Company or Subsidiary EBITDA (earnings before
interest, taxes, depreciation and amortization); (ii) Company or Subsidiary
earnings or earnings per Share; (iii) public market prices of Shares; (iv)
division operating income, or "DOI" (operating income less general and
administrative expenses and extraordinary expenses); (v) division level EBITDA
(DOI less national film, home office and international general and
administrative expenses plus capitalized lease adjustments; (vi) private market
value of Shares on a fully-diluted basis (assuming full exercise of all
outstanding shares of preferred stock, Class B stock, options and other rights
to acquire Shares), based on a constant multiple of theatre level EBITDA
(Company EBITDA less National Cinema Network, Inc. EBITDA), plus the book value
of National Cinema Network, Inc., cash, cash equivalents and investments and
investments in other long-term assets, less corporate borrowings, capitalized
lease obligations and the carrying value of minority interests in other
long-term liabilities; (vii) return to stockholders, measured by increases in
the market value of an investment in Shares, assuming reinvestment of dividends
received; and (viii) return on assets within a participant's span of
responsibility; and the Committee may, in its discretion, determine whether an
Award will be paid under any one or more of such business criteria. In setting
performance goals, such criteria may be measured against one or more of the
following: (i) the prior year or years' performance of the Company, a
Subsidiary, or a division or other operations-based unit or span of a
participant's responsibility; (ii) the performance of a broad-based group of
stock such as, but not limited to, the Standard and Poor's 500 Index; and (iii)
the performance of a peer group of two or more companies. Such performance goals
may be (but need not be) different for each performance period. The Committee
may set different (or the same) goals for different Grantees and for different
Awards, and performance goals may include standards for minimum attainment,
target attainment, and maximum attainment. In all cases, however, performance
goals shall include a minimum performance standard below which no part of the
relevant Award will be earned.
10. NON-TRANSFERABILITY OF RIGHTS
Except for assignments made with the Committee's prior approval, no
Award, no rights under any Award, and no payment under the Plan shall be
assignable or transferable otherwise than by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined
by the Code or Title I of the Employment Retirement Income Security Act, or
the rules thereunder, and the rights and the benefits of any such Award may
be exercised during the lifetime of the Grantee only by his or her guardian
or legal representative or Successor.
11. DEATH, DISABILITY, RETIREMENT AND OTHER TERMINATION OF EMPLOYMENT
11.1 Subject to the terms of the Plan, the Committee may make such
provisions concerning exercise or lapse of Awards upon the Grantee's death,
disability, retirement, or other termination of employment as it shall in its
discretion determine, provided that:
(a) except as provided in paragraph (b) below, no provision shall permit an
ISO to be exercised after the date three months following the Grantee's
termination of employment,
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(b) no provision shall permit an Option to be exercised after the date which
is twelve months following a Grantee's death or disability,
(c) no provision shall permit a NQSO to be exercised after the date which is
three years following the Grantee's retirement from the Company or a
Subsidiary,
(d) except as provided in paragraphs (b) and (c) above, no provision shall
permit a NQSO to be exercised after the date which is six months
following a Grantee's termination of employment,
(e) except as provided in paragraph (f) below or as permitted by Sections 12
or 20, all Stock Awards shall be canceled and forfeited if a Grantee's
employment is terminated, and
(f) in the event of Grantee's death, disability or retirement, the Grantee
(or his Successor) shall be entitled immediately to be issued a
certificate or certificates for all of the Shares represented by his
Stock Award(s), free and clear of all performance goal requirements and
restrictions, based in each case on the extent to which performance
goals have been achieved, measured through the date of termination.
For purposes of this Section 11, the term "disability" shall mean "long term
disability", as defined in the AMC Long Term Disability Plan, or any comparable
plan of the Company or AMC, or, if there is no such plan, the inability of the
Grantee to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or to last for a continuous period of not less than twelve months as
determined by the Committee based on the opinion of a qualified physician (or
other medical certificate) and other evidence acceptable to the Committee, and
the term "retirement" shall mean "normal retirement" or, with the approval of
the Committee, "early retirement" pursuant to the applicable terms of the AMC
Defined Benefit Retirement Plan or any comparable plan of the Company or a
Subsidiary covering a Grantee.
11.2 Unless the Committee determines otherwise, Options which pursuant to
their terms are exercisable following termination of a Grantee's employment:
(a) may be exercised only to the extent exercisable upon the date such
employment terminates, if such termination is other than by reason of
the Grantee's death, disability or retirement, and
(b) shall be accelerated if not yet vested and shall be exercisable in full,
free and clear of all restrictions, if such termination is by reason of
the Grantee's death, disability or retirement.
11.3 Transfers of employment between the Company and a Subsidiary, or
between Subsidiaries, shall not constitute termination of employment for
purposes of any Award. The Committee may specify in the terms and conditions of
an Award whether any authorized leave of absence or absence for military or
governmental service or for any other reason shall constitute a termination of
employment for purposes of the Award and the Plan.
12. PROVISIONS RELATING TO CHANGE IN CONTROL
The Committee may provide, at the time of an Award or thereafter, that if a
Change of Control Event occurs or if termination results from such Change of
Control Event, (a) any restrictions on Stock Awards shall lapse immediately and
(b) outstanding Options shall become
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exercisable immediately. The Committee may also waive, at the time of an Award
or thereafter, the satisfaction of performance goals with respect to Performance
Stock Awards and Performance Units upon the occurrence of a Change in Control
Event or upon termination resulting from a Change in Control Event, and
authorize the issuance of Shares represented by Stock Awards or the payment of
amounts under Performance Unit Awards, based in each case on the extent to which
performance goals have been achieved, measured through the date a Change in
Control Event or termination resulting therefrom occurs.
13. WRITING EVIDENCING AWARDS
Each Award granted under the Plan shall be evidenced by a writing which may,
but need not, be in the form of an agreement to be signed by the Grantee. The
writing shall set forth the nature and size of the Award, its Term, the other
terms and conditions thereof, other than those set forth in the Plan, and such
other information as the Committee directs. Acceptance of, or receipt of the
benefits of, an Award by the Grantee shall be conclusively presumed to be assent
to the terms and conditions set forth therein, whether or not the writing is in
the form of an agreement to be signed by the Grantee.
14. EXERCISE OF RIGHTS UNDER AWARDS
14.1 A person entitled to exercise an Option may do so by delivery of a
written notice to that effect specifying the number of Shares with respect to
which the Option is being exercised and any other information the Committee may
prescribe.
14.2 The notice of exercise shall be accompanied by payment in full of the
purchase price for any Shares to be purchased, with such payment being made in
cash, certified or bank cashier's check or money order or in Shares having a
Fair Market Value equivalent to the purchase price of such Shares to be
purchased, or a combination thereof. If approved by the Committee, payment of
the purchase price of an Option may also be made by Note, provided that unless
the Shares issued are treasury shares at least the par value of the Shares
issued shall be paid in cash or equivalent or Shares as provided above. The
Committee shall establish appropriate methods for accepting Shares and may
impose such conditions as it deems appropriate on the use of such Shares to
exercise an Option.
14.3 Upon exercise of an Option, or after grant of a Stock Award but before
a distribution of Shares in satisfaction thereof, the Grantee may request in
writing that the Shares to be issued in satisfaction of the Award be issued in
the name of the Grantee and another person as joint tenants with right of
survivorship or as tenants in common.
14.4 All notices or requests to the Company provided for herein shall be
delivered to the Secretary of the Company.
15. EFFECTIVE DATE AND DURATION OF THE PLAN AND DATE OF AWARD
15.1 The Plan shall become effective on November 10, 1994, provided any
Awards granted hereunder shall be subject to approval of any governmental body
having jurisdiction over the Company with respect to this Plan within the time
limits applicable to any such governmental approvals.
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15.2 The Plan shall remain in effect until all Awards have been exercised or
satisfied in accordance herewith, but no Awards may be granted under the Plan
after the date of the first stockholders' meeting held in 1999 or December 31,
1999, whichever first occurs. The terms of any Award may be amended at any time
prior to the end of its Term in accordance with and subject to the limitations
of the Plan.
15.3 The date of an Award shall be the date on which the Committee's
determination to grant the same is final, or such later date as shall be
specified by the Committee in connection with its determination.
16. AMENDMENTS TO AWARDS
The Committee may at any time unilaterally amend or terminate and cash out
any unexercised or unpaid Award, whether earned or unearned, including, but not
by way of limitation, Awards earned but not yet paid, and/or substitute another
Award of the same or different type, to the extent it deems appropriate;
provided, however, that any amendment to (but not termination of) an outstanding
Award which, in the opinion of the Committee, is materially adverse to the
Grantee, or any amendment or termination which, in the opinion of the Committee,
may subject the Grantee to liability under Section 16 of the Exchange Act, shall
require the Grantee's consent. It shall be conclusively presumed that any
adjustment for changes in capitalization as provided for herein are not adverse
to a Grantee.
17. STOCKHOLDER STATUS
No person shall have any rights as a stockholder by virtue of the grant of
an Award under the Plan, except with respect to Shares actually issued to that
person.
18. POSTPONEMENT OR NON-EXERCISE
The Company shall not be required to issue any certificate or certificates
for Shares upon the exercise of an Option or upon the vesting of a Stock Award
granted under the Plan prior to (a) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable, (b) the taking of any action in order to comply
with restrictions or regulations incident to the maintenance of a public market
for its Shares, and (c) the completion of any registration or other
qualification of such Shares under any state or Federal law or rulings or
regulations of any governmental body which the Company shall, in its sole
discretion, determine to be necessary or advisable. The Company shall not be
obligated by virtue of any terms and conditions of any Award or any provisions
of the Plan to recognize the exercise of an Option or to sell or issue shares in
violation of the Securities Act or the law of any government having jurisdiction
thereof. Any postponement or delay by the Company in recognizing the exercise of
any Option or in issuing any Shares under a Stock Award or otherwise hereunder
shall not extend the Term of an Option nor shorten the Term of any restriction
attached to any Stock Award and neither the Company nor its directors or
officers shall have any obligation or liability to the Grantee of an Award, to a
Successor or to any other person with respect to any Shares as to which the
Option shall lapse because of such postponement or as to which issuance under a
Stock Award was delayed.
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19. TERMINATION, SUSPENSION OR MODIFICATION OF PLAN
The Board may terminate, suspend or modify the Plan at any time and in any
manner, provided, however, that without stockholder approval the Board will not
adopt an amendment that requires stockholder approval under Section 162(m) of
the Code.
No termination or suspension of the Plan shall adversely affect any right
acquired by any Grantee or any Successor under an Award granted before the date
of such termination or suspension except to the extent permitted in Section 16
of the Exchange Act.
20. ADJUSTMENTS FOR CORPORATE CHANGES
20.1 In the event of a recapitalization, stock split, stock dividend,
combination or exchange of shares, merger, consolidation, rights offering,
reorganization or liquidation, or any other change in the corporate structure or
shares of the Company, the Committee may (a) make such equitable adjustments,
designed to protect against dilution or enlargement, as it may deem appropriate
in the number and kind of Shares authorized by the Plan and, with respect to
outstanding Awards, in performance goals and in the number and kind of Shares
covered by Awards and in the Option price, and (b) make such arrangements, which
shall be binding upon the holders of unexpired Options and outstanding Stock
Awards, for the substitution of new Options or Stock Awards for any unexpired
Options or Stock Awards then outstanding under the Plan or for the assumption of
any such unexpired Options and outstanding Stock Awards.
20.2 In the event that the Company agrees (a) to sell or otherwise dispose
of all or substantially all of the Company's assets, or (b) to be wholly or
partially liquidated, or (c) to participate in a merger, consolidation or
reorganization, or (d) to sell or otherwise dispose of substantially all the
assets of, or a majority interest in, a Subsidiary or division, then the
Committee may determine that any and all Options granted under the Plan, in
situations involving an event described in clauses (a) through (c), and any and
all Options granted to employees of the affected Subsidiary or division, in
situations described in clause (d), shall be immediately exercisable in full,
and any and all Shares issuable pursuant to Stock Awards or cash payable under
Performance Units made under the Plan, in situations involving an event
described in clauses (a) through (c), and any and all Shares issuable pursuant
to Stock Awards or cash payable under Performance Units granted to employees of
the affected Subsidiary or division, in situations described in clause (d),
shall be immediately issuable or paid in full, as the case may be, based in each
case on the extent to which performance goals have been achieved to the date of
the event described in clause (a), (b), (c) or (d) above. The Committee may also
determine that any Options not exercised, and any Stock Awards or Performance
Units with respect to which any restrictions shall not have lapsed or conditions
shall not have been satisfied, prior to any such event, or within such period of
time thereafter (not to exceed 120 days) as the Committee shall determine, shall
terminate.
20.3 The grant of any Award pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
to consolidate or to dissolve, liquidate or sell, or transfer all or any part of
its business or assets or the business, assets or stock of a Subsidiary.
21. NON-UNIFORM DETERMINATION
The Committee's determination under the Plan including, without limitation,
determination of the persons to receive Awards, the form, amount and type of
Awards, the terms and provisions of
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Awards and the written material evidencing such Awards, any amendments to the
terms and provisions of any Awards, and the granting or rejecting of
applications for delivery of Shares need not be uniform and may be made
selectively among otherwise eligible employees whether or not such employees are
similarly situated.
22. TAXES
22.1 The Company may pay, withhold or require a Grantee to remit to it
amounts sufficient to satisfy the Company's federal, state, local or other tax
withholding obligations attributable to any Awards after giving notice to the
person entitled to receive such amount, and the Company may defer making payment
of any Award if any such tax, charge or assessment may be pending until
indemnified to its satisfaction.
22.2 Subject to the consent of the Committee, in connection with (a) the
exercise of a Non-Qualified Stock Option or (b) satisfaction of conditions
and/or lapse of restrictions on a Stock Award, a Grantee may elect to tender
back to the Company Shares received pursuant to (a) or (b), having a Fair
Market Value sufficient to satisfy all or part of the Company's total
federal, state, local and other tax withholding obligations associated with
the transaction. Any such election shall be made by a Grantee by delivering
written notice to the Secretary of the Company together with such information
and documents as the Committee may prescribe. The Committee must approve any
election, may suspend or terminate the right to make elections, or may
provide with respect to any Award under this Plan that the right to make
elections shall not apply to such Award.
22.3 If, pursuant to the provisions of the Code, the Tax Date of an Award is
deferred and a Grantee elects to have Shares withheld, the full number of Option
Shares or Stock Award Shares may be issued but the Grantee shall enter into an
agreement unconditionally obligating him or her to tender back to the Company
the proper number of Shares on the Tax Date.
23. NONCOMPETITION AND FORFEITURE PROVISION
If the Committee so determines, an Award may specify that a Grantee shall
forfeit all unexercised, unearned, and/or unpaid Awards, including, but not
limited to, Awards earned but not yet paid if, in the opinion of the Committee,
the Grantee, at any time during the period of Grantee's employment and for one
(1) year thereafter, without the written consent of the Committee, engages
directly or indirectly in any manner or capacity as principal, agent, partner,
officer, director, employee, or otherwise, in any business or activity
competitive with the business conducted by the Company, in the geographic area
in which the Company does business, or in any manner which is inimical to the
best interests of the Company.
24. TENURE
Nothing in the Plan or in any agreement entered into pursuant to the Plan
shall confer upon any participant the right to continue in the employment of the
Company or any Subsidiary or affect any right which the Company or Subsidiary
has to terminate the employment of such participant. An employee terminated for
cause, as determined by the Company, shall forfeit all of his rights under the
Plan, except as to Options already exercised and Awards on which restrictions
have already lapsed.
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25. APPLICATION OF PROCEEDS
The proceeds received by the Company from the sale of its Shares under the
Plan shall be used for general corporate purposes of the Company and its
Subsidiaries.
26. OTHER ACTIONS
Nothing in the Plan shall be construed to limit the authority of the Company
to exercise its corporate rights and powers, including, by way of illustration
and not by way of limitation, the right to grant options or pay bonuses for
proper corporate purposes otherwise than under the Plan to any employee or any
other person, firm, corporation, association or other entity, or to grant
options to, or assume options of, any person in connection with the acquisition
by purchase, lease, merger, consolidation or otherwise, of all or any part of
the business and assets of any person, firm, corporation, association or other
entity.
27. GENDER AND NUMBER
Except when otherwise indicated by the context, words in the masculine
gender when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular.
28. REQUIREMENTS OF LAW, GOVERNING LAW
The granting of Awards and the issuance of Shares shall be subject to all
applicable laws, rules and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required. The
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Missouri.
29. EFFECT ON OTHER PLANS
Participation in this Plan shall not affect an employee's eligibility to
participate in any other benefit or incentive plan of the Company or a
Subsidiary. Any Awards made pursuant hereto shall not be used in determining the
benefits provided under any other plan of the Company or a Subsidiary unless
specifically provided therein.
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EXHIBIT 10.6
FORM OF NON-QUALIFIED (NON-ISO) STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement"), made as of
the ____ day of __________, 19__ (the "Date of Grant"), by and between
AMC Entertainment Inc. ("AMCE") and________________ (the "Grantee"),
evidences the grant, by AMCE, of a Stock Option (the "Option") to the
Grantee on such date and the Grantee's acceptance of the Option in
accordance with the provisions of the AMCE 1994 Stock Option and
Incentive Plan, as amended (the "Plan"). AMCE and the Grantee agree
as follows:
1.Shares Optioned and Option Price. The Grantee shall have
an option to purchase 35,000 shares of AMCE Common Stock for $_____
per share, subject to the terms and conditions of this Agreement and
of the Plan, the provisions of which are hereby incorporated herein by
reference. The shares subject to the Option are not, nor are they
intended to be, Incentive Stock Option (ISO) shares as described in
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2.Vesting. This Option is fully vested as of the Date of
Grant.
3.Exercise Period. The Option may be exercised from time to
time with respect to all or any number of the then unexercised shares
as to which the Option has vested under section 2, on any regular
business day of AMCE at its then executive offices, until the earliest
to occur of the following dates:
(a) the tenth anniversary of the Date of Grant;
(b) the first anniversary of the date of the Grantee's
termination of employment with AMCE and all Subsidiaries (as
defined in the Plan) on account of death or disability;
(c) the third anniversary of the Grantee's retirement;
(d) the date three (3) months following the date upon which
the Grantee's employment with AMCE and all Subsidiaries terminates
for any reason other than those described in subsections (b) or (c)
next above or in (e) below; or
(e) the date Grantee is terminated for cause, provided that
for purposes of this Option no termination of employment occurring
within one year after the occurrence of a Change in Control Event
shall be deemed a termination for cause.
4.Exercise.
(a) During the period that the Option is exercisable, it may
be exercised in full or in part by the Grantee, his or her legal
representatives, guardian or Successor, as defined in the Plan, by
delivering or mailing written notice of the exercise to the
Secretary of AMCE. The written notice shall be signed by each
person entitled to exercise the Option and shall specify the
address and Social Security number of each such person. If any
person other than the Grantee purports to be entitled to exercise
all or any portion of the Option, the written notice shall be
accompanied by proof, satisfactory to the Secretary of AMCE, of
that entitlement.
(b) The written notice shall be accompanied by full payment
of the exercise price for the shares as to which the Option is
exercised either (i) in cash, certified or bank cashier's check or
money order, payable to AMCE, (ii) in shares of AMCE Common Stock
that have been held by the Grantee for at least six months and
evidenced by certificates either endorsed or with stock powers
attached transferring ownership to AMCE, with an aggregate Fair
Market Value (as defined in the Plan) equal to said exercise price
on the date the written notice is received by the Secretary, or
(iii) in any combination of the foregoing.
(c) Notwithstanding the provisions of subsection (b) next
above, shares acquired through the exercise of an Incentive Stock
Option granted under the Plan or any predecessor stock option plan
providing for options on shares of AMCE Common Stock may be used
as payment at exercise hereunder only if such shares have been held
for at least 12 months following such acquisition.
(d) The written notice of exercise will be effective and the
Option shall be deemed exercised to the extent specified in the
notice on the date that the written notice (together with required
accompaniments respecting payment of the exercise price) is
received by the Secretary of AMCE at its then executive offices
during regular business hours.
5.Transfer of Shares; Tax Withholding.
(a) As soon as practicable after receipt of an effective
written notice of exercise and full payment of the exercise price
as provided in section 4 above, the Secretary of AMCE shall cause
ownership of the appropriate number of shares of AMCE Common Stock
to be transferred to the person or persons exercising the Option
by having a certificate or certificates for such number of shares
registered in the name of such person or persons and shall have
each certificate delivered to the appropriate person.
Notwithstanding the foregoing, if AMCE or a Subsidiary requires
reimbursement of any tax required by law to be withheld with
respect to shares of AMCE Common Stock, the Secretary shall not
transfer ownership of shares until the required payment is made.
(b) Subject to the approval of the Committee and to the
provisions of the Plan, the Grantee may satisfy his tax withholding
obligations hereunder by electing to have shares otherwise issuable
upon exercise of this Option withheld, which shares shall have a
Fair Market Value on the date of exercise equal to the amount of
Grantee's tax withholding liability resulting from such exercise.
Any such election shall be made at or prior to exercise of the
Option by delivering written notice thereof to the Secretary of the
Company.
6.Transferability. Except for assignments made with the
Committee's prior written approval (which may be denied or
conditioned in the sole discretion of the Committee), the rights
under this Agreement may not be transferred except by will or the
laws of descent and distribution or pursuant to a qualified
domestic relations order as defined in the Code or Title I of the
Employment Retirement Income Security Act, or the rules promulgated
thereunder. The rights under this Agreement may be exercised
during the lifetime of the Grantee only by the Grantee (or by his
guardian, legal representative or Successor, as defined in the
Plan). The terms of this Option shall be binding upon the
executors, administrators, heirs, successors, and assigns of the
Grantee.
7.Authorized Leave. Authorized leaves of absence from AMCE
or a Subsidiary shall not constitute a termination of employment
for purposes of the Agreement. For purposes of this Agreement, an
authorized leave of absence shall be an absence while the Grantee
is on military leave, sick leave, or other bona fide leave of
absence so long as the Grantee's right to employment with AMCE or
a Subsidiary is guaranteed by statute, contract, or company policy.
8.Requirements of Law. This Option may not be exercised if
the issuance of shares of AMCE Common Stock upon such exercise
would constitute a violation of any applicable federal or state
securities or other law or valid regulation. The Grantee, as a
condition to his exercise of this Option, shall represent to AMCE
that the shares of AMCE Common Stock to be acquired by exercise of
this Option are being acquired for investment and not with a
present view to distribution or resale, unless counsel for AMCE is
then of the opinion that such a representation is not required
under the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
9.Forfeiture. To the extent this Option is unexercised, it
will be forfeited along with all rights thereunder effective as of
the date the Committee determines that the Grantee, at any time
during the period of the Grantee's employment and for one (1) year
thereafter, without the Committee's written consent, engaged
directly or indirectly in any manner or capacity as principal,
agent, partner, officer, director, employee, or otherwise, in any
business or activity competitive with the business conducted by
AMCE or its Subsidiaries, in the geographic area in which AMCE or
its Subsidiaries does business, or in any manner which is inimical
to the best interests of AMCE.
IN WITNESS WHEREOF, The Compensation Committee of the Board of
Directors has approved this Agreement and AMCE, by its duly authorized
officer, and the Grantee have signed this Agreement as of the date
first above written.
AMC ENTERTAINMENT INC.
By: ________________________________________
Co-Chairman & Chief Executive Officer
________________________________________
Grantee
APPROVED
Member of the Compensation Committee
Member of the Compensation Committee
Member of the Compensation Committee
The Grantee acknowledges receipt of copies of the Plan and the
Prospectus respecting the Plan. The Grantee represents that he is
familiar with the terms and provisions of the Plan and Prospectus. The
Grantee hereby accepts this Option subject to all the terms and
provisions of the Plan, including but not limited to Section 20
("Adjustments for Corporate Changes") thereof. The Grantee hereby
agrees to accept as binding, conclusive, and final all decisions and
interpretations of the Board of Directors and, where applicable, the
Committee (as defined in the Plan), respecting any questions arising
under the Plan.
Grantee
