-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Gd4fdT7XInh4Bau6DSWN8Q4j/yu+wa/gOhnC6IsgpX+6LvkrAsAnlyJyfFMiieBt ExMDkJgaLGqweaHqC+zYQQ== 0000891554-01-502299.txt : 20010430 0000891554-01-502299.hdr.sgml : 20010430 ACCESSION NUMBER: 0000891554-01-502299 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20010427 GROUP MEMBERS: APOLLO ADVISORS IV, L.P. GROUP MEMBERS: APOLLO ADVISORS V, L.P. GROUP MEMBERS: APOLLO INVESTMENT FUND IV LP GROUP MEMBERS: APOLLO INVESTMENT FUND V, L.P. GROUP MEMBERS: APOLLO MANAGEMENT IV, L.P. GROUP MEMBERS: APOLLO MANAGEMENT V, L.P. GROUP MEMBERS: APOLLO OVERSEAS PARTNERS IV, L GROUP MEMBERS: APOLLO OVERSEAS PARTNERS V, L. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMC ENTERTAINMENT INC CENTRAL INDEX KEY: 0000722077 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE THEATERS [7830] IRS NUMBER: 431304369 STATE OF INCORPORATION: DE FISCAL YEAR END: 0401 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-34911 FILM NUMBER: 1614307 BUSINESS ADDRESS: STREET 1: 106 WEST 14TH STREET CITY: KANSAS CITY STATE: MO ZIP: 64105 BUSINESS PHONE: 8164804744 MAIL ADDRESS: STREET 1: 106 WEST 14TH STREET CITY: KANSAS CITY STATE: MO ZIP: 64105 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: APOLLO INVESTMENT FUND IV LP CENTRAL INDEX KEY: 0001068331 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: TWO MANHATTANVILLE ROAD CITY: PURCHOSE STATE: NY ZIP: 10577 MAIL ADDRESS: STREET 1: TWO MANHATTANVILLE ROAD CITY: PURCHASE STATE: NY ZIP: 10577 SC 13D 1 d25605_13d.txt SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) Under the Securities Exchange Act of 1934 INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. )* AMC Entertainment Inc. (Name of Issuer) Common Stock, par value $0.662/3 per share (Title of Class of Securities) 001669 10 0 (CUSIP Number) Bruce S. Mendelsohn Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1333 New Hampshire Avenue N.W. Washington, D.C. 20036 (202) 887-4000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) April 20, 2001 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box . Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. Seess.240.13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. Continued on following page(s) Page 1 of ___Pages Exhibit Index: Page ___ CUSIP No. 001669 10 0 Page 2 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Investment Fund IV, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - ------------------- ------------------------------------------------------------ 7. Sole Voting Power 0 (See footnote below) Number of Shares ------------------------------------------------------------ Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each ------------------------------------------------------------ Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With ------------------------------------------------------------ 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - ------------------- ------------------------------------------------------------ 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. *SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 001669 10 0 Page 3 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Overseas Partners IV, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Cayman Islands - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 (See footnote below) Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 4 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Advisors IV, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 5 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Management IV, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person Delaware - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 6 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Investment Fund V, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 (See footnote below) Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 7 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Overseas Partners V, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Cayman Islands - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 (See footnote below) Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 8 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Advisors V, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. CUSIP No. 001669 10 0 Page 9 of Pages - -------------------------------------------------------------------------------- 1. Names of Reporting Persons. I.R.S. Identification Nos. of above persons (entities only). Apollo Management V, L.P. - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a Member of a Group (a) [ ] (b) [X] - -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Source of Funds OO - -------------------------------------------------------------------------------- 5. Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization Delaware - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 7. Sole Voting Power 0 Number of Shares --------------------------------------------------------- Shares Beneficially 8. Shared Voting Power 0 (See footnote below) Owned by Each --------------------------------------------------------- Reporting Person 9. Sole Dispositive Power 0 (See Item 5 below) With --------------------------------------------------------- 10. Shared Dispositive Power 12,867,133 (See Item 5 below) - -------------------------------------------------------------------------------- 11. Aggregate Amount Beneficially Owned by Each Reporting Person 12,867,133 shares of Common Stock (See Item 5 below) - -------------------------------------------------------------------------------- 12. Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ] - -------------------------------------------------------------------------------- 13. Percent of Class Represented by Amount in Row (11) 39.8 % (See Item 5 below) - -------------------------------------------------------------------------------- 14. Type of Reporting Person PN - -------------------------------------------------------------------------------- (*) The Reporting Person together with the other Reporting Persons named herein may be deemed to beneficially own shares of the Issuer's Series A Preferred Stock that are convertible into shares of Common Stock as indicated herein, however, the Reporting Person has agreed pursuant to an Investment Agreement, dated as of April 19, 2001, by and among the Issuer, the Reporting Person named on this cover page and certain other persons named in such Investment Agreement, for a period commencing on the Closing Date and ending on the fifth anniversary thereof, not to convert such Series A Preferred Stock into Common Stock except in connection with the disposition of such Common Stock to an unaffiliated third party. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Person has no ability to exercise voting power with respect to the Common Stock following conversion during such time period. Page 10 of Pages Item 1. Security and Issuer. This statement on Schedule 13D (this "Statement" or this "Schedule 13D") relates to the common stock, par value $0.662/3 per share (the "Common Stock"), of AMC Entertainment Inc., a Delaware corporation (the "Issuer"). The principal executive offices of the Issuer are located at 106 West 14th Street, Kansas City, Missouri 64141. Item 2. Identity and Background. This statement is being filed jointly on behalf of the following persons (collectively, the "Reporting Persons"): Apollo Investment Fund IV, L.P., a Delaware limited partnership ("AIF IV"); Apollo Overseas Partners IV, L.P., a Cayman Islands exempted limited partnership ("AOP IV"); Apollo Advisors IV, L.P., a Delaware limited partnership ("Advisors IV"); Apollo Management IV, L.P., a Delaware limited partnership ("Management IV" and together with AIF IV, AOP IV and Advisors IV, the "AIF IV Reporting Persons"); Apollo Investment Fund V, L.P., a Delaware limited partnership ("AIF V"); Apollo Overseas Partners V, L.P., a Cayman Islands exempted limited partnership ("AOP V" and together with AIF IV, AOP IV and AIF V, the "Apollo Funds"); Apollo Advisors V, L.P., a Delaware limited partnership ("Advisors V"); and Apollo Management V, L.P., a Delaware limited partnership ("Management V" and together with AIF V, AOP V and Advisors V, the "AIF V Reporting Persons"). AIF IV and AOP IV are principally engaged in the business of investment in securities. The general partner of AIF IV and managing general partner AOP IV is Advisors IV, which is principally engaged in the business of serving as the general partner of such entities. The general partner of Advisors IV is Apollo Capital Management IV, Inc., a Delaware corporation ("Capital Management IV"), which is principally engaged in the business of serving as general partner of Advisors IV. Management IV serves as manager of AIF IV and AOP IV and manages their day-to-day operations. AIF IV Management, Inc. a Delaware corporation ("AIF Management IV"), is the general partner of Management IV. AIF Management IV is principally engaged in the business of serving as general partner to Management IV. Apollo Fund Administration IV, LLC, a Delaware limited liability company ("Administration IV"), is the administrative general partner of AOP IV. Administration IV is principally engaged in the business of serving as administrative general partner of AOP IV. AIF V and AOP V are principally engaged in the business of investment in securities. The general partner of AIF V and the managing general partner of AOP V is Advisors V, which is principally engaged in the business of serving as the general partner of such entities. The general partner of Advisors V is Apollo Capital Management V, Inc., a Delaware corporation ("Capital Management V"), which is principally engaged in the business of serving as general partner of Advisors V. Management V serves as manager of AIF V and AOP V and manages their day-to-day operations. AIF V Management, Inc. a Delaware corporation ("AIF Management V"), is the general partner of Management V. AIF Management V is principally engaged in the business of serving as general partner to Management V. Apollo Fund Administration V, LLC, a Delaware limited liability company ("Administration V"), is the Page 11 of Pages administrative general partner of AOP V. Administration V is principally engaged in the business of serving as administrative general partner of AOP V. The address of AIF IV, AOP IV, Capital Management IV, Management IV, AIF Management IV, and Administration IV is c/o Apollo Advisors IV, L.P., Two Manhattanville Road, Purchase, New York 10577. The address of Advisors IV is Two Manhattanville Road, Purchase, New York 10577. The address of AIF V, AOP V, Capital Management V, Management V, AIF Management V, and Administration V is c/o Apollo Advisors V, L.P., Two Manhattanville Road, Purchase, New York 10577. The address of Advisors V is Two Manhattanville Road, Purchase, New York 10577. Set forth in Schedule 1, attached hereto and incorporated herein by reference, are the names, business addresses, principal occupation and citizenship of each executive officer and director of the Reporting Persons and other entities as to which such information is required to be disclosed in response to Item 2 and General Instruction C to Schedule 13D. During the last five years, none of the Reporting Persons, Capital Management IV, AIF Management IV, Administration IV, Capital Management V, AIF Management V and Administration V, or, to the best of their respective knowledge, any executive officer or director of such entities, has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or state securities laws or finding any violation with respect to such laws. The filing of this Schedule 13D shall not be construed as an admission that any Reporting Person is, for the purposes of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, or for any other purpose, the beneficial owner of any shares of Common Stock other than those shares of Common Stock over which the Reporting Person has sole voting and dispositive power, as reported herein. Further, each of the Reporting Persons disclaims any pecuniary interest in any securities of the Issuer owned by any other Reporting Person or any other party, and expressly disclaims the existence of a group. Item 3. Source and Amount of Funds or Other Consideration. On April 20, 2001 (the "Closing Date"), the Apollo Funds purchased an aggregate of 92,000 shares of the Issuer's Series A Convertible Preferred Stock, par value $0.662/3 per share (the "Series A Preferred Stock") and 158,000 shares of the Issuer's Series B Exchangeable Preferred Stock, par value $0.662/3 per share (the "Series B Preferred Stock" and collectively with the Series A Preferred Stock, the "Preferred Stock") for an aggregate purchase price of $250,000,000 (the "Purchase Price"). The purchases were financed with cash on hand from contributions of partners of each of the Apollo Funds. All such contributions are in the ordinary course and pursuant to (equity) investor commitments to the respective entities. Page 12 of Pages Item 4. Purpose of Transaction. Pursuant to an Investment Agreement dated April 19, 2001, a copy of which is attached hereto as Exhibit 2 and incorporated herein by reference (the "Investment Agreement"), the Apollo Funds acquired from the Issuer an aggregate of 92,000 shares of Series A Preferred Stock and 158,000 shares of Series B Preferred Stock. The purpose of the transaction was to facilitate an investment in the Issuer. The following is a description of certain terms of the Preferred Stock: Conversion of Series A Preferred Stock. At any time after the shares of Common Stock issuable upon conversion of the Series A Preferred Stock, including the shares of Series A Preferred Stock issued upon exchange of the Series B Preferred Stock (the "Conversion Shares"), sold on the Closing Date are approved for listing on the American Stock Exchange, the holders of Series A Preferred Stock may convert their shares of Series A Preferred Stock (subject to the last sentence of this paragraph), in whole or in part, into Common Stock at a price of $7.15 per share of Common Stock (the "Conversion Price") (subject to adjustments noted below) with each share of Series A Preferred Stock being valued at the then current Series A Preferred Stock liquidation preference amount. The Conversion Price shall be adjusted to reflect any corporate reorganizations, mergers, stock dividends, stock splits, stock reclassifications, or stock combinations. Notwithstanding the foregoing, the Apollo Funds agreed in the Investment Agreement not to convert any shares of Series A Preferred Stock into Common Stock until April 2006, except in connection with certain dispositions to third parties. Exchange of Series B Preferred Stock for Series A Preferred Stock. The Series B Preferred Stock will automatically exchange into Series A Preferred Stock if and when the stockholders of the Issuer approve an amendment to the Issuer's Certificate of Incorporation increasing the number of authorized shares of Common Stock to allow for the conversion of Series A Preferred Stock into Common Stock, including those shares of Series A Preferred Stock received as a result of the exchange of Series B Preferred Stock into Series A Preferred Stock (the "Shareholder Approval") and upon receipt of HSR Approval (as defined in the Certificate of Designations). Upon receipt of such Shareholder Approval and HSR Approval, each share of Series B Preferred Stock shall be automatically exchanged for an equal number of shares of Series A Preferred Stock. Under the Investment Agreement, the Issuer is required to seek Shareholder Approval at its next regularly scheduled annual meeting (the "Initial Solicitation") which shall take place no later than 270 days after the Closing Date. Liquidation Preference. The Series A Preferred Stock has a liquidation preference equal to the greater of (i) $1,000.00 (the "Issue Price") per share plus all accrued and unpaid dividends as of the date of payment and (ii) such amount per share of Series A Preferred Stock, as would have been payable had each share been converted into Common Stock immediately prior to the event requiring the payment of such liquidation preference. The Series B Preferred Stock has a liquidation preference equal to the greater of (i) $1,000 plus all accrued and unpaid dividends as of the date of payment and (ii) such amount per share of Series B Preferred Stock, as would have been payable had each share first been exchanged for Series A Preferred Stock (assuming that all Page 13 of Pages conditions to conversion had occurred) and then such shares of Series A Preferred Stock were converted into Common Stock immediately prior to the event requiring the payment of such liquidation preference. The Preferred Stock liquidation payment amounts shall be adjusted for any stock split, reverse stock split, stock combination, reclassification or pursuant to any other adjustment with respect to the Series A Preferred Stock or Series B Preferred Stock, as the case may be. No distributions as specified above may be made to holders of Common Stock of the Issuer until the holders of the Preferred Stock have received the liquidation preference. Dividends. Dividends on Series A Preferred Stock. Holders of Series A Preferred Stock are entitled to receive quarterly dividends at the rate of 6.75% per annum of the liquidation preference per share of Series A Preferred Stock. During the period from the Closing Date until the third anniversary thereof, the Series A Preferred Stock dividends will be paid in additional shares of Series A Preferred Stock. From the third anniversary of the Closing Date until the seventh anniversary thereof, dividends on the Series A Preferred Stock may be paid in additional shares of Series A Preferred Stock or in cash, at the option of the Issuer. After the seventh anniversary of the Closing Date, dividends on the Series A Preferred Stock will be paid in cash, unless the Issuer is otherwise prohibited from making such cash payments, in which case dividends will be paid in additional shares of Series A Preferred Stock. If at any time the Issuer is unable to pay cash and issuance of additional shares of Series A Preferred Stock would result in a change of control (as defined in certain of the Issuer's indentures) or there are not enough shares of Common Stock authorized for additional shares of Series A Preferred Stock, the dividends payable in Series A Preferred Stock will instead be payable in Series B Preferred Stock. Generally, upon a Change of Control on or before the fifth anniversary of the Closing Date, the holders of Series A Preferred Stock shall receive a one-time dividend of additional shares of Series A Preferred Stock on each share of Series A Preferred Stock. Dividends on Series B Preferred Stock. The holders of Series B Preferred Stock initially are entitled to receive quarterly dividends at the rate of 12.0% per annum of the liquidation preference per share of Series B Preferred Stock. During the period from the Closing Date until the third anniversary thereof, dividends on the Series B Preferred Stock will be paid in additional shares of Series B Preferred Stock. From the third anniversary of the Closing Date until the fifth anniversary thereof, dividends on the Series B Preferred Stock may be paid in additional shares of Series B Preferred Stock or in cash, at the option of the Issuer. After the fifth anniversary of the Closing Date, dividends on the Series B Preferred Stock will be paid in cash, unless the Issuer is otherwise prohibited from making such cash payments, in which case dividends will be paid in additional shares of Series B Preferred Stock. If and when the Issuer obtains Shareholder Approval and the Series B Preferred Stock is exchanged for Series A Preferred Stock, the Series B Preferred Stock dividend rate, as to the then outstanding shares of Series B Preferred Stock so converted only, will be reduced, retroactively to the Closing Date, from 12.0% per annum to 6.75% per annum. Generally, upon a Change of Control on or before the fifth anniversary of the Closing Date, the holders of Series B Preferred Stock will receive a one-time dividend of additional shares of Series B Preferred Stock on each share of Series B Preferred Stock. In addition, the Series B Preferred Stock is entitled to receive certain special dividends upon the occurrence of certain events specified in the Certificate of Designations. Page 14 of Pages Issuer's Optional Redemption. At any time after five years following the Closing Date, the Issuer may, upon 45 days notice to the holders of the Preferred Stock, redeem all, but not less than all, of the then outstanding shares of Preferred Stock at a cash redemption price per share equal to the liquidation preference for each share of Preferred Stock (the "Issuer Redemption Price"), so long as the average trading price of the Common Stock for the previous 20 trading days is in excess of 150% of the Conversion Price. Additionally, upon the occurrence of a "change of control" of the Issuer (defined with respect to the indentures governing the Issuers outstanding debt) the Issuer may, upon ten days notice, redeem all, but not less than all, of the then outstanding shares of Preferred Stock at the Issuer Redemption Price; provided, however, that notwithstanding the foregoing, the Issuer may not redeem the Series B Preferred Stock unless the "change of control" giving rise to such right of redemption is also a Reorganization Event. Holder's Optional Redemption. At any time after the tenth anniversary of the Initial Issuance Date, a holder of Series A Preferred Stock may, upon 15 days notice to the Issuer, require the Issuer to redeem, in whole or in part, the holder's shares of Series A Preferred Stock for either cash or Common Stock, at the option of the Issuer, at a redemption price per share equal to the Series A Preferred Stock liquidation preference. Board Representation. So long as the Apollo Funds continue to hold more than 50% of the Preferred Stock issued pursuant to the Investment Agreement, the Apollo Funds shall have the right to elect three directors to the Board of Directors of the Issuer. Specifically, AIF IV shall have the right to elect one member to the Board of Directors, AIF V shall have the right to elect one member to the Board of Directors and the Apollo Funds, collectively, shall have the right to elect one member to the Board of Directors. Additionally so long as the Apollo Funds continue to hold more than 50% of the Preferred Stock issued pursuant to the Investment Agreement and subject to the provisions of applicable law and fiduciary duties of members of the Board of Directors, one of the directors elected to the Issuer's Board of Directors by the Apollo Funds shall be a member of each of the committees of the Board of Directors, including the Nominating Committee. The Nominating Committee is established for the purpose of providing nominees for the two independent director positions on the Issuer's Board of Directors. The nominees selected by the Nominating Committee must be selected by a unanimous vote of the members of the Nominating Committee, and if such unanimous approval is not received, the member of the Nominating Committee elected by the Apollo Funds shall have the right to appoint one of the two nominees for independent director. Voting Rights. Subject to the occurrence of an event of default (as defined in the Certificate of Designations), the Apollo Funds shall not have any voting rights with respect to Preferred Stock held by the Apollo Funds. Notwithstanding the foregoing, upon the transfer by the Apollo Funds to any third party of any shares of the Series A Preferred Stock, the transferee of such Series A Preferred Stock will be entitled to vote on all matters presented to the holders of the Issuer's Common Stock on an as-converted basis, voting together with the shareholders of the Issuer's Common Stock and Class B Stock as a single class; provided, however, that such voting rights will not extend to the election of directors or to any matter that is reserved (by law or the Issuer's Certificate of Incorporation) for consideration exclusively by the holders of the Common Stock and/or the Class B Stock. The Apollo Funds have agreed, however, not to convert any Page 15 of Pages shares of Series A Preferred Stock into Common Stock until April 2006, except in connection with certain dispositions to third parties. The affirmative consent of the Reporting Persons is required prior to the Issuer taking certain actions as described in Section 8 of the Investment Agreement, the terms of which are incorporated herein by reference. The foregoing descriptions do not purport to be complete and are qualified in their entirety by reference to the Investment Agreement, the Certificate of Designations, the Registration Rights Agreement, and the Standstill Agreement, a copy of each of which has been filed as an Exhibit to this Schedule 13D and is incorporated herein by reference. Certain capitalized terms used herein shall have the meaning ascribed in the applicable agreement referenced herein. The shares of Preferred Stock described herein were acquired for general investment purposes. Notwithstanding the foregoing, the Reporting Persons retain the right to change their investment intent, to propose one or more possible transactions to the Issuer's Board of Directors, to acquire additional shares of Preferred Stock or Common Stock from time to time or to sell or otherwise dispose of all or part of the Preferred Stock beneficially owned by them (or any shares of Common Stock into which such Preferred Stock are converted) in any manner permitted by law. In addition, the Apollo Funds have the right to elect three members to the Issuer's Board of Directors. As directors of the Issuer, the three members of the Issuer's Board of Directors elected by the Apollo Funds may have influence over the corporate activities of the Issuer, including activities which may relate to transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. (a) and (b) The Reporting Persons may be deemed to collectively beneficially own an aggregate of 92,000 shares of Series A Preferred Stock. Such 92,000 shares of Series A Preferred Stock represents 39.8% of the Outstanding Shares (as described below), subject to the restrictions on conversion of Series A Preferred Stock as described in Section 4 herein. For purposes of calculating ownership percentages in this Schedule 13D, the number of "Outstanding Shares" includes (i) 19,427,098 shares of Common Stock outstanding on April 19, 2001 based on information provided to the Reporting Persons by the Issuer and (ii) the shares of Common Stock issuable to the Apollo Funds upon conversion of the shares of Series A Preferred Stock currently held by the Apollo Fund or Apollo Funds whose ownership is being measured. The Reporting Persons may be deemed to collectively beneficially own in the aggregate 158,000 shares of Series B Preferred Stock. The shares of Series B Preferred Stock are not presently exchangeable into Series A Preferred Stock and therefore not presently convertible into Common Stock. Therefore, the Common Stock ownership information set forth in this Item 5 and in the cover pages to this Schedule 13D does not include the shares of Common Stock that would be received by the Apollo Funds upon a future potential exchange of their respective shares of Series B Page 16 of Pages Preferred Stock into Series A Preferred Stock and the conversion of such shares of Series A Preferred Stock into shares of Common Stock. Assuming receipt of Shareholder Approval and HSR Approval, each share of Series B Preferred Stock would be automatically exchanged into one share of Series A Preferred Stock. The number of shares of Common Stock into which shares of Series A Preferred Stock (including the shares of Series A Preferred Stock received upon exchange of the shares of Series B Preferred Stock) are convertible may vary upon the occurrence of certain events as described in Item 4. Beneficial ownership of all such securities was acquired as described in Item 3 and Item 4. See also the information contained on the cover pages to this Schedule 13D which is incorporated by reference. Each of the Reporting Persons expressly disclaims beneficial ownership of those shares of Preferred Stock not directly held by them. Furthermore, the filing of this Schedule 13D shall not be deemed an admission that any of the Reporting Persons is, for purposes of Section 13(d) of the Act, the beneficial owner of the securities (including the Common Stock) of the Issuer described herein. (b) The Reporting Persons may be deemed to have shared dispositive power with respect to an aggregate of 12, 867,133 shares of Common Stock. As explained in the footnotes to the cover pages to this statement on Schedule 13D, the Apollo Funds have agreed in the Investment Agreement not to convert any shares of Series A Preferred Stock into Common Stock until April 2006, except in connection with certain dispositions to unaffiliated third parties. As such, notwithstanding the right of the Reporting Persons to elect directors as described herein, the Reporting Persons have no ability to exercise voting power with respect to the Common Stock following conversion during such period. (c) There have been no reportable transactions with respect to the Common Stock of the Issuer within the last 60 days by the Reporting Persons. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. The responses to Item 2, Item 3, and Item 4 are incorporated herein by reference. Pursuant to the Investment Agreement, the Apollo Funds may not transfer to any person (other than their respective affiliates which may include one or more special or general investment funds under management) any shares of Series B Preferred Stock until a date that is eighteen months after the Closing Date. The Issuer and the Apollo Funds have entered into a registration rights agreement (the "Registration Rights Agreement") which provides the Apollo Funds with certain rights to demand registration of the Preferred Stock and Common Stock held by the Apollo Funds (the "Demand Registration Rights") along with certain rights to participate in any registration of the shares implemented by the Issuer (the "Piggyback Registration Rights"). Page 17 of Pages The Reporting Persons and the Issuer have entered into an agreement to restrict for a period of five years (the "Standstill Period") the ability of the Apollo Funds (and certain affiliates of the Reporting Persons) to take certain actions with regard to the Issuer and the acquisition of securities of the Issuer (the "Standstill Agreement"), as set forth in the Standstill Agreement, the terms of which are incorporated herein by reference. As set forth in the Standstill Agreement, certain restrictions on the acquisition of securities of the Issuer set forth therein shall continue beyond the Standstill Period. The Standstill Agreement also contains certain limitations on dispositions by the Apollo Funds of securities of the Issuer. The Standstill Agreement generally terminates on the earlier of (i) the tenth anniversary of the Closing Date, (ii) the acquisition by a third party of more than 20% of the "voting power" of the Issuer unless such Person has entered into a Purchaser Standstill Agreement in connection with such acquisition or (iii) the termination by the Issuer with the approval of the Requisite Independent Directors. The foregoing response to this Item 6 is qualified in its entirety by reference to the Investment Agreement, the Certificate of Designations, the Registration Rights Agreement, and the Standstill Agreement, each of which is filed as an exhibit to this Schedule 13D and is incorporated hereby by this reference. Page 18 of Pages Item 7. Material to be Filed as Exhibits. The following documents are filed as exhibits to this Schedule 13D: Exhibit No. - ---------- 1. Joint Filing Agreement dated as of April 27, 2001 by and among the Reporting Persons. 2. Investment Agreement, dated April 19, 2001, by and among AMC Entertainment Inc., Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo IV Management, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., and Apollo V Management, L.P. 3. Certificate of Designations of Series A Convertible Preferred Stock and Series B Exchangeable Preferred Stock of AMC Entertainment Inc. 4. Registration Rights Agreement, dated April 19, 2001, by and among AMC Entertainment Inc., Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo Investment Fund, L.P., Apollo Overseas Partners V, L.P. 5. Standstill Agreement, dated April 19, 2001, by and among AMC Entertainment Inc., Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., Apollo IV Management, L.P., Apollo Investment Fund V, L.P., Apollo Overseas Partners V, L.P., and Apollo V Management, L.P. Page 19 of Pages Signature After reasonable inquiry and to the best of their knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. April 27, 2001 APOLLO INVESTMENT FUND IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO OVERSEAS PARTNERS IV, L.P. By: APOLLO ADVISORS IV, L.P. its managing general partner By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President APOLLO ADVISORS IV, L.P. its capacity as managing general partner to Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President Page 20 of Pages April 27, 2001 APOLLO MANAGEMENT IV, L.P. in its capacity as investment manager to Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. By: AIF IV Management, Inc. By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO INVESTMENT FUND V, L.P. By: APOLLO ADVISORS V, L.P. its general partner By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO OVERSEAS PARTNERS V, L.P. By: APOLLO ADVISORS V, L.P. its managing general partner By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President Page 21 of Pages APOLLO ADVISORS V, L.P. in its capacity as managing general partner of Apollo Investment Fund V, L.P. and Apollo Overseas Partners V, L.P. By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO MANAGEMENT V, L.P. in its capacity as investment manager to Apollo Investment Fund V, L.P. and Apollo Overseas Partners V, L.P. By: AIF V Management, Inc. By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President Page 22 of Pages Schedule 1 The following sets forth information with respect to the general partners, executive officers, directors and principal shareholders of the Reporting Persons that is not set forth in the Schedule 13D to which this Schedule 1 relates. Except as otherwise indicated in this Schedule 1 or in the Schedule 13D to which this Schedule 1 relates, the principal business address of each person set forth below is c/o Apollo Advisors IV, L.P. and c/o Apollo Advisors V, L.P., Two Manhattanville Road, Purchase, New York 10577. The directors and principal executive officers of Capital Management IV and Capital Management V are Messrs. Leon D. Black and John J. Hannan. The principal occupation of each of Messrs. Black and Hannan is to act as an executive officer and director of Capital Management IV, Capital Management V and the other entities identified below. Messrs. Black and Hannan are also limited partners of Advisors IV and Advisors V. Mr. Black is the President and a director of AIF Management IV and AIF Management V. Mr. Hannan is a Vice President and a director of AIF Management IV and AIF Management V. Messrs. Black and Hannan are both United States citizens. Page 23 of Pages Exhibit 1 JOINT FILING AGREEMENT In accordance with Rule 13d-1(k) promulgated under the Securities Exchange Act of 1934, as amended, the undersigned hereby agree to the joint filing with all other Reporting persons listed below on behalf of each of them of a Statement on Schedule 13D (including any amendments thereto) with respect to the common stock, par value $0.662/3 per share, of AMC Entertainment Inc., a Delaware corporation. The undersigned further consent and agree to the inclusion of this Agreement as an Exhibit to such Schedule 13D. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the undersigned have executed this agreement as of the 27th day of April, 2001. April 27, 2001 APOLLO INVESTMENT FUND IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO OVERSEAS PARTNERS IV, L.P. By: APOLLO ADVISORS IV, L.P. its managing general partner By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ----------------------------------------- Name: Michael D. Weiner Title: Vice President Page 24 of Pages APOLLO ADVISORS IV, L.P. its capacity as managing general partner to Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. By: Apollo Capital Management IV, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO MANAGEMENT IV, L.P. in its capacity as investment manager to Apollo Investment Fund IV, L.P. and Apollo Overseas Partners IV, L.P. By: AIF IV Management, Inc. By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO INVESTMENT FUND V, L.P. By: APOLLO ADVISORS V, L.P. its general partner By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ----------------------------------------- Name: Michael D. Weiner Title: Vice President Page 25 of Pages April 27, 2001 APOLLO OVERSEAS PARTNERS V, L.P. By: APOLLO ADVISORS V, L.P. its managing general partner By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President APOLLO ADVISORS V, L.P. in its capacity as managing general partner of Apollo Investment Fund V, L.P. and Apollo Overseas Partners V, L.P. By: Apollo Capital Management V, Inc. its general partner By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President April 27, 2001 APOLLO MANAGEMENT V, L.P. in its capacity as investment manager to Apollo Investment Fund V, L.P. and Apollo Overseas Partners V, L.P. By: AIF V Management, Inc. By: /s/ Michael D. Weiner ------------------------------------------ Name: Michael D. Weiner Title: Vice President EX-99.2 2 d25605_ex99-2.txt EXHIBIT 99.2 INVESTMENT AGREEMENT This INVESTMENT AGREEMENT (this "Agreement") is made and entered into this 19th day of April 2001 by and among (i) AMC ENTERTAINMENT INC., a Delaware corporation (the "Company"), (ii) APOLLO INVESTMENT FUND IV, L.P., a Delaware limited partnership ("AIF IV") and APOLLO OVERSEAS PARTNERS IV, L.P., a Cayman Islands exempted limited partnership ("AOP IV") and any other partnership or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, including voting and dispositive rights; and to which either AIF IV or AOP IV assigns any of their respective interests hereunder (collectively, the "Apollo IV Purchasers"), (iii) APOLLO INVESTMENT FUND V, L.P., a Delaware limited partnership ("AIF V") and APOLLO OVERSEAS PARTNERS V, L.P., a Cayman Islands exempted limited partnership ("AOP V") and any other partnership or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, including voting and dispositive rights; and to which either AIF V or AOP V assigns any of their respective interests hereunder (collectively, the "Apollo V Purchasers", and together with the Apollo IV Purchasers the "Apollo Purchasers" and/or sometimes referred to herein collectively as the "Purchasers" and individually, a "Purchaser"), (iv) APOLLO MANAGEMENT IV, L.P., a Delaware limited partnership, in its capacity as investment manager to the Apollo IV Purchasers ("Apollo IV Management") and (v) APOLLO MANAGEMENT V, L.P., a Delaware limited partnership, in its capacity as investment manager to the Apollo V Purchasers ("Apollo V Management" and together with Apollo IV Management and their Affiliates, "Apollo"). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 10 of this Agreement. W I T N E S S E T H - - - - - - - - - - WHEREAS, the Company desires to issue and to sell to the Purchasers, shares of Series A Convertible Preferred Stock of the Company, par value $0.66 2/3 per share (the "Series A Preferred Stock"), and shares of Series B Exchangeable Preferred Stock, par value $0.66 2/3 per share (the "Series B Preferred Stock") (the Series A Preferred Stock and the Series B Preferred Stock shall be referred to collectively as the "Preferred Stock"); and WHEREAS, the Purchasers, severally, desire to purchase shares of the Company's Preferred Stock on the terms and conditions set forth in this Agreement. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties and covenants herein contained, the parties hereto hereby agree as follows: 1. Sale and Purchase of the Preferred Stock. Subject to the terms ------------------------------------------- and subject to the conditions of this Agreement, the Company agrees to issue, sell and deliver to each Purchaser, and each Purchaser, severally and not jointly, agrees to purchase from the Company, at the Closing, on the Closing Date (as hereinafter defined), (i) 92,000 shares of Series A Preferred Stock for an aggregate purchase price of Ninety-Two Million Dollars ($92,000,000.00) and (ii) 158,000 shares of Series B Preferred Stock for an aggregate purchase price of One Hundred Fifty-Eight Million Dollars ($158,000,000.00) for an aggregate purchase price of Two Hundred Fifty Million Dollars ($250,000,000.00) (the "Purchase Price"). Each Purchaser shall pay its respective portion of the Purchase Price and shall receive such number of shares of Preferred Stock as set forth in Schedule 1 hereto. ---------- 1 2. Closing. The closing of the sale to, and purchase by, the ------- Purchasers of the shares of Preferred Stock referred to in Section 1 hereof (the "Closing") shall occur at the offices of Akin, Gump, Strauss, Hauer & Feld, L.L.P., 590 Madison Avenue, New York, New York 10022, at 9:00 a.m., New York time, on or before the next business day after the satisfaction or waiver of all of the conditions to the Closing set forth in Section 5 hereof or such other location, date and time as agreed upon by the Purchasers and the Company (the "Closing Date"). At the Closing, the Company shall issue and deliver to each Purchaser certificates evidencing the Preferred Stock (in such denominations as shall be specified in writing by each Purchaser), each of which shall be registered in each Purchaser's name, against delivery to the Company by each Purchaser of the Purchase Price payable by (i) wire transfer, in immediately available funds to an account that the Company shall designate in writing to the Purchaser at least two business days prior to the Closing Date, (ii) certified or cashier's check payable to the order of the Company or (iii) such other form of payment as may be acceptable to the Company. In addition, the parties shall execute and deliver the documents referred to in Section 5 hereof. 3. Representations and Warranties of the Purchasers. ------------------------------------------------ Each Apollo Purchaser severally, and not jointly, represents and warrants to the Company as follows: 3.1 Organization. It (a) is a partnership duly organized, validly ------------ existing and in good standing in the jurisdiction of its organization, (b) is duly qualified or licensed to do business and is in good standing in each jurisdiction where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification or license necessary, except where the failure to be so qualified or licensed (individually or in the aggregate) would either prevent or materially delay its ability to consummate the transactions contemplated by the Transaction Documents, and (c) has all power and authority to carry on its operations and to consummate the transactions contemplated by the Transaction Documents. 3.2 Authorization; Enforcement. It has the requisite corporate or --------------------------- partnership power and has taken all necessary corporate or partnership action required for the due authorization, execution, delivery and performance by it of this Agreement, each of the Transaction Documents and other documents and instruments referred to herein and to consummate the transactions contemplated hereby (including, without limitation, the purchase of the shares of Preferred Stock). The execution, delivery and performance by it of this Agreement, each of the other Transaction Documents and consummation by it of the transactions contemplated hereby and thereby, have been duly authorized by all necessary action on the part of it. This Agreement and each of the other Transaction Documents have been duly and validly executed and delivered by it and constitute a valid and binding obligation of it, enforceable against it in accordance with their respective terms except as such enforcement may be limited by bankruptcy or similar laws affecting the rights of creditors generally or by general equitable principles. 2 3.3 Consents. Except for filings, permits, authorizations, consents -------- and approvals as may be required under, and other applicable requirements of the Exchange Act, the Delaware Revised Uniform Limited Partnership Act, state anti-takeover laws or under relevant state blue sky laws, neither the execution, delivery or performance of this Agreement or of any other Transaction Document by such Apollo Purchaser, nor the consummation by it of the obligations and transactions contemplated hereby or thereby requires any consent of, authorization by, exemption from, filing with, or notice to any Governmental Entity or any other Person. 3.4 No Conflicts. The execution, delivery and performance of this ------------ Agreement and each of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby will not (a) conflict with or result in any breach of any provision of its agreement of limited partnership, operating agreement or other organizational documents, (b) conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any material agreement, lease, mortgage, license, indenture, instrument or other contract to which it is a party or by which any of its properties or assets are bound, or (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to it or by which any of its properties or assets are bound or affected, except in the case of clauses (b) or (c), where such conflicts or violations would not prevent or materially delay its ability to consummate the transactions contemplated by the Transaction Documents. 3.5 Investment Representations and Warranties. ----------------------------------------- (a) The shares of Preferred Stock being purchased by it hereunder are being acquired for its own account, for the purpose of investment and not with a view to or for sale in connection with any public resale or distribution thereof in violation of applicable securities laws. (b) It is an "accredited investor" within the meaning of Rule 501(a) promulgated under the Securities Act. (c) It (i) has been furnished with or has had full access to all of the information that it considers necessary or appropriate to make an informed investment decision with respect to the shares of Preferred Stock and that it has requested from the Company, (ii) has had an opportunity to discuss with management of the Company the intended business and financial affairs of the Company and to obtain information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify, any information furnished to it or to which it had access, and (iii) can bear the economic risk of such investment in the Preferred Stock, has such knowledge and experience in business and financial matters so as to enable it to understand and evaluate the risks of and form an investment decision with respect to its investment in the Preferred Stock and to protect its own interests in connection with such investment. 3 (d) It has no need for liquidity in its investment in the shares of Preferred Stock and is able to bear the economic risk of its investment in the shares of Preferred Stock and the complete loss of all of such investment. (e) It understands that the transferability of the shares of Preferred Stock is restricted, and that such restrictions will be reflected in an appropriate legend on the instruments representing the shares of Preferred Stock. (f) It recognizes that an investment in the Company involves certain risks and has taken full cognizance of, and understands all of, the risks related to the purchase of the shares of Preferred Stock. It further acknowledges and understands that no federal or state agency has made any recommendation or endorsement of the Preferred Stock or any finding or determination as to the fairness of the investment therein. 3.6 Information Supplied. None of the written information supplied by -------------------- it specifically for inclusion or incorporation by reference in any documents to be filed by the Company with the SEC or any Governmental Entity in connection with the transactions contemplated hereby (including in connection with the Company's solicitation of shareholder approval of an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of the Common Stock) will, on the date of its filing and on the date any such materials are mailed to stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. 3.7 Ownership of Capital Stock of the Company. As of the date hereof ----------------------------------------- and prior to giving effect to the transactions contemplated under this Agreement, the Purchasers do not in the aggregate, own of record or beneficially including by virtue of membership in a "group" for purposes of Section 13(d) of the Exchange Act (i) a number of shares of Common Stock which exceeds 1% of the outstanding shares of Common Stock on the date hereof; (ii) any shares of the Company's Class B Stock; or (iii) any debt securities issued by the Company. The Purchasers shall not acquire or dispose of any shares of Common Stock or Class B Stock or any debt securities issued by the Company (i) before the Closing and (ii) thereafter, except in the case of clause (ii), in compliance with the terms of the Standstill Agreement. 3.8 Financing. On the Closing Date, it will have adequate funds --------- available to pay its portion of the Purchase Price. 3.9 Brokers. Except as set forth in Schedule 3.9 hereof, it has not ------- engaged a broker, investment banker, financial advisor, finder or other person entitled to any brokerage, investment banker's, financial advisor's, finder's or other fee or commission for which the Company will be liable in connection with the execution of this Agreement or the performance by the parties hereto of their respective obligations hereunder. 3.10 Hart-Scott-Rodino. Each Purchaser is a separate "person" within ----------------- the meaning of the HSR Act. 4 3A. Representations and Warranties of Apollo. ---------------------------------------- 3A.1 Control of Apollo Purchasers. Apollo is the investment manager ----------------------------- of, and possesses the ability to direct the investments of, each Purchaser. Apollo controls the Purchasers and has the authority to cause the Purchasers to perform their respective obligations under the Transaction Documents. Apollo, in its capacity as investment manager, general partner or manager of the Apollo Purchasers, has the requisite power and has taken all necessary corporate or partnership action required to cause the Apollo Purchasers to execute and deliver this Agreement and the other Transaction Documents and perform their respective obligations hereunder and thereunder. The execution and delivery by Apollo of this Agreement and each of the other Transaction Documents to which it is a party has been duly authorized by all requisite action on the part of Apollo. 4. Representations and Warranties by the Company. The Company (which --------------------------------------------- term as used in this Section 4 shall, unless the context otherwise requires, be deemed to include any Subsidiary of the Company) represents and warrants to each Purchaser and Apollo as follows: 4.1 Capitalization. (a) Immediately before the Closing, the -------------- authorized capital stock of the Company shall consist of (i) 45,000,000 shares of common stock (the "Common Stock"), par value $0.66 2/3 per share; (ii) 30,000,000 shares of class B stock (the "Class B Stock"), par value $0.66 2/3 per share; and (iii) 10,000,000 shares of preferred stock, par value $0.66 2/3 per share, which are undesignated as to series. The Company has no other class of capital stock authorized, issued or outstanding. The capitalization of the Company as of the date hereof, including, without limitation, the number of shares issued and outstanding, the number of shares issuable and reserved for issuance pursuant to the Company's stock option plans, the number of shares issuable and reserved for issuance pursuant to securities (other than the Preferred Stock) exercisable for, or convertible into or exchangeable for any shares of capital stock is set forth on Schedule 4.1(a). (b) Except as set forth on Schedule 4.1(b), as of the date of this ---------------- Agreement, (i) there are no outstanding options, warrants, scrip, dividends, rights to subscribe to, calls or commitments of any character whatsoever to which the Company is a party relating to, or securities or rights convertible into or exercisable or exchangeable for, any shares of capital stock of the Company, or arrangements by which the Company is or may become bound to issue additional shares of capital stock, (ii) there are no agreements or arrangements under which the Company is obligated to register the sale of any of its securities under the Securities Act of 1933, as amended (the "Securities Act")(except as provided hereunder), and (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof. Except as set forth on Schedule 4.1(b), there --------------- are no securities or instruments containing antidilution or similar provisions that will be triggered by the issuance of the shares of Preferred Stock in accordance with the terms of this Agreement or any of the other Transaction Documents. Except as set forth on Schedule 4.1(b) and other than this Agreement, --------------- the Company is not a party to, and has no knowledge of the existence of, any voting trust or other voting agreement with respect to any of the securities of the Company or to any agreement relating to the issuance, sale, redemption, transfer or other disposition of the capital stock of the Company. To the best of the Company's knowledge, no stockholder of the Company has any agreement obligating such stockholder to transfer shares of the Company. 5 (c) The Company has furnished or made available to the Purchaser true and correct copies of the Company's and each Subsidiary's articles or certificate of incorporation or other governing document (the "Certificate of Incorporation") as in effect on the date hereof, and the Company's and each Subsidiary's bylaws or other governing document (the "Bylaws") as in effect on the date hereof. 4.2 Issuance; Authorization. ----------------------- (a) All of the issued and outstanding shares of capital stock of the Company have been duly authorized and are validly issued, fully paid and nonassessable. The issuance, sale and delivery of the shares of Preferred Stock to be purchased hereunder have been duly authorized by all requisite action of the Company, and when issued, sold and delivered in accordance with this Agreement, such shares of Preferred Stock will be validly issued and outstanding, fully paid and non-assessable with no personal liability attaching to the ownership thereof and will not be subject to any lien, claim, judgment, charge, mortgage, security interest, pledge, other encumbrance or preemptive or any other similar right of the shareholders of the Company or others (collectively, "Encumbrances"). (b) Except with respect to the Common Stock to be issued upon conversion of Series A Preferred Stock that, in turn, would have been issued upon the exchange of Series B Preferred Stock, the issuance, sale, and delivery of the shares of Common Stock to be issued upon conversion of the Preferred Stock in accordance with the terms of the Certificate of Designations have been duly authorized by all requisite action of the Company, and when issued upon conversion of the Preferred Stock in accordance with the Certificate of Designations, the Conversion Shares will be validly issued and outstanding, fully paid, and non-assessable with no personal liability attaching to the ownership thereof and not subject to any Encumbrance or preemptive or any other similar rights of the shareholders of the Company or others. (c) The Company has all requisite corporate power and has taken all necessary corporate action required for the due authorization, execution, delivery and performance by the Company of this Agreement, each of the other Transaction Documents and the other documents and instruments referred to herein and to consummate the transactions contemplated hereby (including, without limitation, the issuance of the shares of Preferred Stock (but excluding the issuance of any shares of Common Stock issuable upon conversion of the Series A Preferred Stock that, in turn, would have been issued upon exchange of Series B Preferred Stock)). The execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly authorized by all necessary corporate action on the part of the Company except for Shareholder Approval. At the Closing, except for Shareholder Approval, the Company will have taken all actions under its Certificate of Incorporation and its Bylaws as may be necessary or advisable to provide the Purchaser with the rights hereby contemplated. 6 (d) This Agreement and each of the other Transaction Documents have been duly and validly executed and delivered by the Company and constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with their respective terms except as such enforcement may be limited by bankruptcy or similar laws affecting the rights of creditors generally or by general equitable principles. 4.3 Organization. The Company (a) is a corporation duly organized, ------------ validly existing and in good standing under the laws of the State of Delaware, (b) is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification or license necessary, except where the failure to be so qualified or licensed would not reasonably be expected to have a Material Adverse Effect, (c) has its principal place of business and chief executive office at 106 West 14th Street, P.O. Box 419615, Kansas City, Missouri and (d) has all corporate power and authority to own or lease and operate its assets and carry on its business as presently being conducted and to consummate the transactions contemplated by the Transaction Documents. 4.4 Subsidiaries. (a) Schedule 4.4(a) lists the name of each ------------ Subsidiary in which the Company has a direct or indirect equity interest. All of the outstanding shares of capital stock or the ownership interests of each Subsidiary are, except as set forth on Schedule 4.4(a), owned directly or indirectly by the Company free and clear of any Encumbrances. Each Subsidiary is (i) duly organized, validly existing and in good standing under the laws of its jurisdiction of organization; (ii) duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction where the nature of the property owned or leased by it or the nature of the business conducted by it makes such qualification necessary, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect and (iii) has all requisite corporate power and authority to own or lease and operate its assets and carry on its business as presently being conducted. (b) Except as provided on Schedule 4.4(b), there are (i) no outstanding securities convertible into, exchangeable for or carrying the right to acquire any class of securities of the Subsidiaries (whether from the Company, the Subsidiaries or otherwise), or subscriptions, warrants, options, rights or other arrangements or commitments of any kind that relate to or require the issuance, sale or other disposition or transfer of any of the Subsidiaries' respective equity securities (whether or not presently issued) or any interest therein, (ii) no arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of capital stock of any Subsidiary, nor are any such issuances or arrangements contemplated, and (iii) no obligations (contingent or otherwise) of any Subsidiary to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof. There are no outstanding options, warrants or other rights to acquire shares of any Subsidiary's stock. 4.5 Absence of Certain Changes. Except as set forth on Schedule 4.5 --------------------------- ------------ or as disclosed in the Company SEC Documents, since March 30, 2000, neither the Company nor any of the Subsidiaries has suffered any change or development in its assets, business, operations, condition (financial or otherwise), or results of operations (but not prospects) which has had a Material Adverse Effect. Except as set forth on Schedule 4.5 or as disclosed in the Company SEC ------------- 7 Documents, since March 30, 2000, the Company and the Subsidiaries have conducted their business in the ordinary and usual course consistent with past practices and have not (a) sold, leased, mortgaged, pledged, transferred or otherwise disposed of any material assets (other than dispositions in the ordinary course of business consistent with past practices), (b) terminated or amended in any material respect any Material Contract or Real Property Lease (or any series of related contracts or series of related leases that are, in either such case, in the aggregate, material) to which the Company or the Subsidiaries is a party or to which it is bound or to which its properties are subject, (c) made any change in the accounting methods or practices it follows, whether for general financial or tax purposes, (d) incurred, created or suffered to exist any Encumbrances (other than Permitted Encumbrances) on its assets, (e) increased the compensation payable or to become payable to any of its Executive Officers or increased any bonus, severance, accrued vacation, insurance, pension or other employee benefit plan, payment or arrangement made by the Company or any of the Subsidiaries for or with any such Executive Officers, in each case outside of the ordinary course of business, (f) suffered any labor dispute, strike, or other work stoppage with respect to their respective employees, (g) except as may be provided in the Real Property Leases, made or obligated itself to make (in one transaction or in a series of related transactions) any capital expenditures, capital additions or betterments in excess of $5 million outside the ordinary course of business, (h) except as may be provided in the Real Property Leases, entered into any contract or other agreement (or series of related contracts or agreements) requiring the Company or a Subsidiary to make payments in excess of $5 million other than in the ordinary course of business, (i) declared, set a record date, set aside, authorized the payment of, or paid any dividends or other distribution, whether in cash or property, on account of, or repurchased any of the outstanding shares of capital stock or other securities of, or other ownership interest in, the Company, (j) suffered or experienced any change in the relationship or course of dealings between the Company and any of its suppliers which supply goods or services to the Company which has had a Material Adverse Effect on the Company, (k) paid to, or received any payment from, or made or received any investment in, or entered into any transaction or series of transactions (including without limitation, the purchase, sale, exchange or lease of assets, property or services, or the making of a loan or guarantee) with any Affiliate in excess of $5 million (other than transactions involving Entertainment Properties Trust, a real estate investment trust), or (l) entered into any agreement or commitment (contingent or otherwise) to do any of the foregoing. 4.6 Assets and Property. ------------------- (a) Except as set forth on Schedule 4.6(a), the Company and each ---------------- Subsidiary has good, legal and marketable title to all of the personal property and non-real property assets owned by it, in each case free and clear of all Encumbrances except Permitted Encumbrances. With respect to the personal property and non-real property assets that the Company and its Subsidiaries leases, the Company and its Subsidiaries are in compliance with all material provisions of such leases and the Company and its Subsidiaries hold a valid leasehold interest free and clear of any Encumbrances except for Permitted Encumbrances. All material non-real property facilities, machinery, equipment, fixtures, vehicles and other assets owned, leased or used by the Company and its Subsidiaries are in good operating condition and repair, are reasonably fit and usable for the purposes for which they are being used, are adequate and sufficient for the Company's business and conform in all respects with all applicable laws except as would not reasonably be expected to have a Material Adverse Effect. 8 (b) Except as set forth on Schedule 4.6(b), neither the Company nor any Subsidiary owns any real property. (c) The Company has delivered or otherwise made available to the Purchasers true, correct and complete copies of all material Real Property Leases (together with all amendments, modifications, supplements or side letters affecting the obligations of any party thereunder) affecting all material real property and interests in real property leased by the Company and its Subsidiaries (each a "Real Property Lease," and collectively, the "Real Property Leases") as lessee or lessor. Schedule 4.6(c) sets forth a complete list of all --------------- Real Property Leases. The information contained in the Real Property Lease Recap Book delivered to the Purchasers by the Company on April 13, 2001 is true, correct and complete in all material respects. Except as set forth on Schedule -------- 4.6(c), the Company and its Subsidiaries have good, legal and marketable title - ------ to the leasehold estates in all Real Property Leases in each case free and clear of all Encumbrances (except for Permitted Encumbrances). The Company has no reason to believe that such title would not be insurable subject to customary exceptions. (d) To the knowledge of the Company, each of the Real Property Leases is valid and enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent transfer and other laws of general application relating to and affecting the enforceability of creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity), and, except as set forth on Schedule 4.6(d), there is no material default under any Real Property ---------------- Lease by the Company and its Subsidiaries or, to the knowledge of the Company, by any other party thereto, and, to the knowledge of the Company, no event has occurred that with the lapse of time or the giving of notice or both would constitute a material default by the Company or its Subsidiaries thereunder. (e) To the Company's knowledge, no previous or current party to any Real Property Lease has given notice of or made a claim with respect to any material breach or material default by the Company or any Subsidiary thereunder. With respect to those Real Property Leases that were assigned or subleased to the Company or its Subsidiaries by a third party, all necessary consents to such assignments or subleases have been obtained except as would not reasonably be expected to have a Material Adverse Effect. 4.7 Company SEC Documents. Since March 31, 1997, the Company has ----------------------- timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and after March 31, 1997, and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to herein as the "Company SEC Documents"). As of their respective dates or as heretofore amended, the Company SEC Documents complied in all material respects with the requirements of the Exchange Act or the Securities Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to the Company SEC Documents, and none of the Company SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of 9 the written information supplied by the Company specifically for inclusion or incorporation by reference in any documents to be filed jointly by the Company and the Purchasers with the SEC or any Governmental Entity in connection with the transactions contemplated hereby (including in connection with the Company's solicitation of shareholder approval of an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of the Common Stock) will, on the date of its filing and on the date any such materials are mailed to stockholders, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. 4.8 Financial Statements. The audited consolidated financial ---------------------- statements and unaudited consolidated interim financial statements of the Company included in the Company's Annual Report on Form 10-K for the fiscal year ended March 30, 2000 (the "Company 10-K") and its Quarterly Report on Form 10-Q for the fiscal quarters ended June 29, 2000, September 28, 2000 and December 28, 2000 (the "Company 10-Q") have been prepared in accordance with GAAP and the published rules and regulations of the SEC applicable thereto (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject to normal year-end adjustments in the case of the unaudited interim financial statements). For the purposes of this Agreement, "Company Balance Sheet" means the consolidated balance sheet of the Company as of December 28, 2000 set forth in the Company 10-Q and "Company Balance Sheet Date" means December 28, 2000. 4.9 No Undisclosed Liabilities. Neither the Company nor any of its ---------------------------- Subsidiaries has any liabilities (whether accrued, absolute, contingent or otherwise, and whether due or to become due or asserted or unasserted) not quantified on the face of the Company Balance Sheet (other than the notes thereto) which are of the type required to be reflected as liabilities on a balance sheet, except liabilities incurred since the date of the Company Balance Sheet in the ordinary course of business consistent with past practice which are not material and liabilities which individually, or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. 4.10 Litigation. Except as disclosed in the Company SEC Documents or ---------- listed on Schedule 4.10, there is no claim, action, proceeding, lawsuit, -------------- inquiry, arbitration or investigation before or by any court, governmental agency, public board, self-regulatory organization or body, pending or, to the knowledge of the Company or any Subsidiary, threatened against or affecting (a) the Company, any Subsidiary, or their respective directors or officers in their capacities as such, (b) the Company's or any Subsidiary's properties or assets or (c) the validity of this Agreement or any of the other Transaction Documents or any action taken or to be taken by the Company in connection with such agreements or the consummation of the transactions contemplated hereby or thereby which if decided adversely to the Company or such person would reasonably be expected to have a Material Adverse Effect. Except as listed on Schedule 4.10, neither the Company nor any Subsidiary is subject to any - -------------- outstanding order, ruling, judgment or decree that would reasonably be expected to have a Material Adverse Effect. 10 4.11 Compliance with Laws; Permits. Except as set forth on Schedule ------------------------------- -------- 4.11, the Company and each Subsidiary has complied, in all respects, with all - ---- laws, rules, regulations and orders applicable to its business, operations, properties, assets, products and services, except where the failure to do so would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Except as set forth in Schedule 4.11, the Company and ------------- each Subsidiary has all necessary permits, licenses and other authorizations required to conduct its business as conducted and as proposed to be conducted and the Company and each Subsidiary has been operating its business pursuant to and in compliance with the terms of all such permits, licenses and other authorizations except where the failure to do so would not reasonably be expected to have a Material Adverse Effect. Except as disclosed in the Company SEC Documents or on Schedule 4.11, neither the Company nor any Subsidiary has -------------- received notification from any Governmental Entity (a) asserting a violation of any law applicable to the conduct of its business, (b) threatening to revoke any license, franchise, permit or government authorization, or (c) restricting or in any way limiting its operations as currently conducted or proposed to be conducted, in each case which has not heretofore been remedied or resolved or which would not reasonably be expected to have a Material Adverse Effect. 4.12 Taxes. Except as set forth on Schedule 4.12, the Company and each ----- ------------- Subsidiary has filed, or caused to be filed, all federal and all material state, local and foreign income Tax Returns required to be filed with respect to the Company and each Subsidiary in a timely manner (taking into account all extensions of due dates) and all such material Tax Returns were true, correct and complete in all material respects. The Company and each Subsidiary has paid all material Taxes and other governmental assessments and charges, shown or determined to be due on such Tax Returns, except those not yet due and payable or those being contested in good faith and for which adequate reserves have been made, and has set aside on its books provisions reasonably adequate for the payment of all Taxes for periods subsequent to the periods to which such Tax Returns apply. Except as set forth on Schedule 4.5(d), there are no material ---------------- unpaid Taxes claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim which could reasonably be expected to have a Material Adverse Effect. Neither the Company or any Subsidiary has executed a waiver with respect to any statute of limitations relating to the assessment or collection of any material federal, state or local Tax. Except as set forth on Schedule 4.12, none of the Company or any Subsidiary ------------- (a) has been a member of an Affiliated Group filing a consolidated federal income Tax Return (other than a group the common parent of which is the Company) or (b) has any liability for the Taxes of any Person (other than the Company and each Subsidiary) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as transferee or successor, by contract or otherwise. Except as provided on Schedule 4.12, none of the Company ------------- or any Subsidiary is a party to any Tax allocation or sharing agreement. The net operating losses and built-in losses of the Company and each Subsidiary are not, prior to the sale and purchase of the Preferred Stock pursuant to this Agreement, subject to limitation pursuant to Section 382 of the Code (or any similar provision of federal, state, local or foreign law). 4.13 Consents. Except as set forth on Schedule 4.13, neither the -------- -------------- execution, delivery or performance of this Agreement or any of the other Transaction Documents by the Company, nor the consummation by it of the obligations and transactions contemplated hereby or thereby (including, without limitation, the issuance, the reservation for issuance and the delivery of the shares of Preferred Stock) requires any consent of, authorization by, exemption from, filing with or notice to any Governmental Entity or any other Person, other than (i) the approvals or filings required under the Exchange Act or under relevant state blue sky laws, (ii) approval for listing on the American Stock Exchange of the shares of Common Stock issuable upon conversion of the Preferred Stock and (iii) Shareholder Approval. 11 4.14 No Conflicts. The execution, delivery and performance of this ------------ Agreement and each of the other Transaction Documents, the execution and filing of the Certificate of Designations and the consummation of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance, as applicable, of the Preferred Stock and the Conversion Shares) will not (a) except for the requirement for Shareholder Approval, result in a violation of the Certificate of Incorporation or Bylaws of the Company or any Subsidiary, (b) conflict with or result in the breach of the terms, conditions or provisions of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give rise to any right of termination, acceleration or cancellation under, any material agreement, lease, mortgage, license, indenture, instrument or other contract to which the Company or any Subsidiary is a party (or any series of related agreements, leases, mortgages, licenses, indentures, instruments or other contracts that are, in the aggregate, material), (c) result in a violation of any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal and state securities laws and regulations) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected, or (d) result in the creation of any Encumbrance upon any of their assets except for such conflicts or violations referred to in clause (c) or such Encumbrances that would not reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary is in violation of its respective Certificate of Incorporation, Bylaws or other organizational documents, and neither the Company nor any Subsidiary is in default (and no event has occurred which, with notice or lapse of time or both, would cause the Company or any Subsidiary to be in default) under, nor has there occurred any event giving others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or cancellation of, any material agreement, indenture or instrument to which the Company or any Subsidiary is a party except for such violations, defaults, terminations, accelerations or cancellations as would not reasonably be expected to have a Material Adverse Effect. 4.15 Intellectual Property. The Company and each of its Subsidiaries ---------------------- owns or possesses rights to use all franchises, licenses, copyrights, copyright applications, patents, patent rights or licenses, patent applications, trademarks, trademark rights, trade names, trade name rights, copyrights and rights with respect to the foregoing which are required to conduct its business as currently conducted. To the knowledge of the Company, no event has occurred which permits, or after notice or lapse of time or both would permit, the revocation or termination of any such rights, and neither the Company nor any Subsidiary thereof is liable to any Person for infringement under applicable law with respect to any such rights as a result of its business operations, except for such infringements as would not reasonably be expected to have a Material Adverse Effect. 4.16 Foreign Corrupt Practices Act. Neither the Company, any --------------------------------- Subsidiary, nor any director, officer, Agent, employee or other Person acting on behalf of the Company or any Subsidiary has, in the course of his, her or its actions for, or on behalf of, the Company or any Subsidiary violated any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or the regulations thereunder. 12 4.17 Material Contracts. Except as set forth in Schedule 4.17, each ------------------- ------------- Material Contract of the Company is the legal, valid and binding obligation of the Company or its Subsidiary, enforceable against the Company or such Subsidiary in accordance with its terms, except to the extent that enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting creditors' rights generally or by general equitable principles, regardless of whether enforcement is sought in a proceeding at law or in equity. Except as set forth on Schedule 4.17, there has ------------- not occurred any breach, violation or default or any event that, with the lapse of time, the giving of notice or the election of any Person, or any combination thereof, would constitute a breach, violation or default by the Company or a Subsidiary under any such Material Contract or, to the knowledge of the Company, by any other Person to any such contract, in any such case as would reasonably be expected to have a Material Adverse Effect. Neither the Company nor any Subsidiary has been notified that any party to any Material Contract intends to cancel, terminate, not renew or exercise an option under any Material Contract, whether in connection with the transactions contemplated hereby or otherwise. 4.18 Right of First Refusal; Stockholders' Agreement; Voting and ----------------------------------------------------------------- Registration Rights. Except as set forth on Schedule 4.18, the Company is not a - ------------------- ------------- party to any agreement containing any right of first refusal, right of first offer, right of co-sale, preemptive right or other similar right regarding the Company's securities. There are no provisions of the Certificate of Incorporation or the Bylaws, and, except for this Agreement and the other Transaction Documents, there are no agreements to which the Company is a party by which the Company or any Subsidiary is bound which (a) may affect or restrict the voting rights of any Purchaser with respect to the Preferred Stock in its capacity as a stockholder of the Company, (b) restrict the ability of any Purchaser, or any successor thereto or assignee or transferee thereof, to transfer the Preferred Stock, and (c) would adversely affect the Company's or a Purchaser's right or ability to consummate this Agreement and the transactions contemplated hereby or thereby. Except as set forth in the Certificate of Incorporation as it exists as of the date hereof and except as contemplated by the Transaction Documents, the Company is not a party to any agreement which would (i) require the vote of more than a majority of the Company's issued and outstanding Common Stock, voting together as a single class, to take or prevent any corporate action, other than those matters requiring a class vote under Delaware law or (ii) entitle any party to nominate or elect any director of the Company or require any of the Company's stockholders to vote for any such nominee or other Person as a director of the Company. 4.19 Insurance. (a) Each insurance policy, including directors' and --------- officers' liability insurance, maintained by the Company is valid, enforceable, in full force and effect, and is of such type and amount of insurance, with respect to the Company's business and properties, on both a per occurrence and an aggregate basis, as customarily carried by Persons engaged in the same or similar business as the Company and its Subsidiaries. (b) There is no pending material claim under any of the Company's policies and, to the knowledge of the Company, no event has occurred, and no condition or circumstance exists, that might (with or without notice or lapse of time) directly or indirectly give rise to or serve as a basis for any such claim which would reasonably be expected to have a Material Adverse Effect. 13 (c) Except as set forth on Schedule 4.19(c), the Company has not ----------------- received: (i) any written notice or communication regarding the actual or possible cancellation or invalidation of any of such policies or regarding any actual or possible adjustment in the amount of premiums payable with respect to any of said policies; (ii) any written notice or communication regarding any actual or possible refusal of coverage under, or any actual or possible rejection of any claim under, any of such policies; or (iii) any written indication that the issuer of any such policies may be unwilling or unable to perform any of its obligations thereunder, except in each case which would not reasonably be expected to have a Material Adverse Effect. 4.20 Environmental Matters. Except as would not reasonably be expected --------------------- to have a Material Adverse Effect, there is no environmental litigation or other environmental proceeding pending or, to the knowledge of the Company, threatened by any governmental regulatory authority or others with respect to the current or any former business of the Company or any Subsidiary or of any partnership or joint venture currently or at any time affiliated with the Company or any Subsidiary. To the knowledge of the Company, no state of facts exists as to environmental matters or Hazardous Substances that involves the reasonable likelihood of a material capital expenditure by the Company or any Subsidiary or that may otherwise reasonably be expected to have a Material Adverse Effect. To the knowledge of the Company, no Hazardous Substances have been treated, stored or disposed of, or otherwise deposited, in or on the properties owned or leased by the Company or any Subsidiary or by any partnership or joint venture currently or at any time affiliated with the Company or any Subsidiary in violation of any applicable Environmental Laws. 4.21 Employee Relations. (a) The Company and its Subsidiaries have ------------------- entered into individualized written employment agreements with the executive officers (as such term is defined for purposes of Item 401 of Regulation S-K under the Securities Act) of the Company and its Subsidiaries listed on Schedule -------- 4.21(a) (the "Executive Officers"), true and complete copies of which have been - ------- delivered to the Apollo Purchasers. To the knowledge of the Company, no Executive Officer of the Company or any Subsidiary is in violation of any material term of any employment contract or any other contract or agreement relating to the relationship of any such Executive Officer with the Company or any Subsidiary. The Company and each Subsidiary has operated and administered all plans, programs and arrangements providing compensation and benefits to employees in accordance with their terms and with all applicable laws except as would not reasonably be expected to have a Material Adverse Effect. To the Company's knowledge, no Executive Officer has any plans to terminate his or her employment with the Company or any Subsidiary, nor does the Company or any Subsidiary have any present intention to terminate the employment of any Executive Officer. (b) The Company and its Subsidiaries are not delinquent in payments to any of their employees, for any wages, salaries, commissions, bonuses or other direct compensation for any services performed through the date hereof or amounts required to be reimbursed to them to the date hereof except as would not reasonably be expected to have a Material Adverse Effect. The Company and it Subsidiaries are in compliance with all applicable federal, state and local laws, rules and regulations respecting employment, employment practices, labor, terms and conditions of employment and wages and hours, except as would not reasonably be expected to have a Material Adverse Effect. Except as provided on Schedule 4.21(b), neither the Company nor any Subsidiary is bound by or subject - ---------------- to (and none of its assets or properties is bound by or subject to) any written or oral commitment or arrangement with any labor union, and, to the knowledge of the Company, no labor union has requested or has sought to represent any of the employees, representatives or Agents of the Company or any Subsidiary. There is no labor strike, dispute, slowdown or stoppage actually pending or, to the knowledge of the Company, threatened against or involving the employees of the Company or of any Subsidiary. 14 (c) All material (which shall include all "Material Contracts" involving the types of plans, contracts and arrangements set forth in this Section 4.21(c)) bonus, deferred compensation, pension, retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, employment or severance contracts, health and medical insurance plans, life insurance and disability insurance plans, other material employee benefit plans, contracts or arrangements which cover employees or former employees of the Company or the Subsidiaries including, but not limited to, "employee benefit plans" within the meaning of Section 3(3) of ERISA (the "Employee Benefit Plans"), are listed on Schedule 4.21(c). Except as set forth on Schedule 4.21(c), no Employee Benefit - ---------------- ---------------- Plan is or was collectively bargained for or has terms requiring assumption or any guarantee by the Purchaser. (d) There have been no violations of ERISA or the Code relating to any Employee Benefit Plan that could reasonably be expected to have a Material Adverse Effect. All Employee Benefit Plans, to the extent subject to ERISA, are in substantial compliance with their terms and ERISA, the Code, and all other applicable law except where the failure to be in compliance would not reasonably be expected to have a Material Adverse Effect. The Company has timely filed all required documents, notes and reports (including IRS Form 5500) for each such Employee Benefit Plan with all applicable Governmental Authorities and has timely furnished all required documents to the participants or beneficiaries of each such Employee Benefit Plan except where the failure to file or furnish such reports or documents would not reasonably be expected to have a Material Adverse Effect. The Company and the subsidiaries have not incurred and do not expect to incur any withdrawal liability with respect to a multiemployer plan under Subtitle E of Title IV of ERISA in an amount which could reasonably be expected to have a Material Adverse Effect. Neither any Employee Benefit Plan nor any single-employer plan of any entity which is considered one employer with the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate") has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding funding waiver. Neither the Company nor any of its subsidiaries has provided, or, to the knowledge of the Company, is required to provide, security to any Employee Benefit Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code. All contributions required to be made under the terms of any Employee Benefit Plan have been timely made or have been reflected on the audited financial statements of the Company, except where the failure to make such contributions would not reasonably be expected to have a Material Adverse Effect. 15 4.22 Related Party Transactions. Except as set forth in Schedule 4.22 -------------------------- ------------- or in the Company's proxy statement relating to its 2000 Annual Meeting, no director, officer or Affiliate of the Company or any of the Subsidiaries (including, without limitation, spouses, children and relatives of any of the foregoing) is a party to any material transaction, arrangement or agreement with the Company or any Subsidiary (other than transactions, arrangements or agreements between or among the Company and any of its Subsidiaries) providing for the furnishing of services by or to or sale or rental of real or personal property from or to, or otherwise requiring payments to or by any such Person. 4.23 Investment Company Act. Neither the Company nor any of its ------------------------ Subsidiaries is an "investment company" or is directly or indirectly controlled by or acting on behalf of, any Person that is an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 4.24 Books and Records. The books of account, ledgers, order books, ----------------- records and documents of the Company and each Subsidiary accurately and completely reflect all material information relating to the business of the Company and each Subsidiary, the location and collection of its assets, and the nature of all transactions giving rise to the obligations or accounts receivable of the Company and each Subsidiary. 4.25 Disclosure. No event or circumstance has occurred or exists with ---------- respect to the Company or any Subsidiary or their respective businesses, properties, operations or financial conditions, which has not been publicly disclosed or which has not been disclosed to the Purchaser but, under applicable law, rule or regulation, would be required to be disclosed by the Company in a registration statement filed on the date hereof by the Company under the Securities Act with respect to an issuance of the Company's securities. 4.26 Change of Control. Without giving effect to (x) any dividends ----------------- that may be paid or become payable on the Preferred Stock pursuant to Section 2(b)(5) of the Certificate of Designations, (y) any sale, transfer, pledge, conveyance or conversion of the Class B Shares by the record holder thereof after the date of this Agreement or (z) any acquisition by the Apollo Purchasers of any shares of Common Stock or Class B Stock after the date hereof (other than those shares of Common Stock received upon conversion of the Preferred Stock), no Change of Control (as such term is defined in the indentures governing the Company's Existing High Yield Indebtedness or as defined in any employment agreements between the Company and any Executive Officer) will occur upon the following: (i) the purchase of the Preferred Stock at Closing or (ii) the payment of Additional Series A Securities or Additional Series B Securities (other than shares paid as dividends as set forth in clause (x) above) in accordance with the terms set forth in the Certificate of Designations (giving effect to Section 2(a)(4) thereof). 16 5. Conditions of Parties' Obligations. ----------------------------------- 5.1 Conditions of the Purchaser's Obligations. The obligations of ------------------------------------------- each Purchaser under Section 1 hereof are subject to the fulfillment prior to or on the Closing Date of all of the following conditions, any of which may be waived in whole or in part by the Purchasers. (a) Representations and Warranties Correct. The representations and ---------------------------------------- warranties of the Company under this Agreement shall be true, complete and correct in all material respects (except with respect to any provisions including the word "material" or words of similar import and the representation and warranty set forth in Section 4.8 with respect to which such representations and warranties must be true, complete and correct) on and as of the date hereof and on the Closing Date with the same force and effect as if they had been made on the Closing Date. (b) Compliance with Agreement. The Company shall have performed and --------------------------- complied with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date. (c) No Material Adverse Effect. No condition or event shall have ---------------------------- occurred that has had, or could reasonably be expected to have, a Material Adverse Effect. (d) Supporting Documents and Certificate of Officers. The Company ---------------------------------------------------- shall have delivered to the Purchaser the supporting documents and certificates set forth on Annex 5.1(d) hereto. ------------ (e) Opinion of the Company's Counsel. The Apollo Purchasers shall --------------------------------- have received from Skadden, Arps, Slate, Meagher & Flom LLP and Lathrop & Gage L.C., counsel for the Company, favorable opinions dated the Closing Date substantially in the form of Annex 5.1(e) hereto. (f) Certificate of Designations. The Certificate of Designations ---------------------------- substantially in the form of Annex 5.1(f) hereto (the "Certificate of ------------- Designations") shall have been duly adopted and executed and filed with the Secretary of State of the State of Delaware, the Company shall not have adopted or filed any other document designating terms, relative rights or preferences of the Preferred Stock, the Certificate of Designations shall be in full force and effect as of the Closing under the laws of Delaware and shall not have been amended or modified, and a copy of the Certificate of Designations certified by the Secretary of State of the State of Delaware shall have been delivered to counsel for the Purchasers. (g) Composition of Board of Directors. On the Closing Date, the ----------------------------------- Company's Board of Directors shall be expanded to eight persons comprising those five persons elected to the Board of Directors at the Company's 2000 Annual Meeting and the three designees of the Apollo Purchasers. Specifically, AIF IV shall have the right to elect one member to Board of Directors, AIF V shall have the right to elect one member to the Board of Directors and the Apollo Purchasers, collectively, shall have the right to elect the third member to the Board of Directors. If for any reason, any director appointed by any of AIF IV, AIF V or the Apollo Purchasers ceases to be a director before the expiration of his or her term, and the Apollo Purchasers have Preferred Stock Approval Rights at such time, the Apollo Purchaser who elected such director shall have the right to appoint a director to fill such vacancy. In addition, to the extent AIF IV or AIF V, as the case may be, is no longer a holder of any shares of Preferred Stock and the Apollo Purchasers have Preferred Stock Approval Rights at such time, the right of AIF IV or AIF V, as the case may be, to elect a member to the Board of Directors shall be deemed transferred to AIF V or AIF IV, as the case may be. To the extent neither AIF IV nor AIF V is a holder of any shares of Preferred Stock and the Apollo Purchasers have Preferred Stock Approval Rights at such time, the Apollo Purchasers, collectively, shall have the right to elect the two members of the Board of Directors previously elected by AIF IV and AIF V. 17 (h) Transaction Documents. The Company shall have executed and ---------------------- delivered each of the Transaction Documents, each substantially in the form of Annex 5.1(h) hereto. (i) Board Resolution and Bylaw Amendment. The Board of Directors --------------------------------------- shall have adopted (i) resolutions of the Board of Directors, substantially in the form attached hereto as Annex 5.1(i)(1), which resolutions shall include, among other items, the establishment of a Nominating Committee and matters relating to Capital Expenditures, amendments to the Senior Facility and certain employment arrangements for Executive Officers (the "Board Resolutions") and (ii) the Bylaw Amendments in the form attached hereto as Annex 5.1(i)(2). 5.2 Conditions of Company's Obligations. The Company's obligations ------------------------------------ under Section 1 hereof are subject to the fulfillment prior to or on the Closing Date of the following conditions, any of which may be waived in whole or in part by the Company. (a) Representations and Warranties Correct. The representations and --------------------------------------- warranties of the Purchaser under this Agreement shall in all material respects be true, correct and complete (except with respect to any provisions including the word "material" or words of similar import, which such representations must be true, complete and correct) on and as of the date hereof and on the Closing Date with the same force and effect as if they had been made on the Closing Date. (b) Compliance with Agreement. The Purchaser shall have performed and -------------------------- complied with all agreements and conditions required by this Agreement to be performed or complied with by it on or before the Closing Date. (c) Payment of Purchase Price. The Company shall have received from --------------------------- the Purchasers the Purchase Price as set forth on Schedule 1 hereto. (d) Standstill Agreement. The Apollo Purchasers shall have executed --------------------- and delivered the Standstill Agreement, substantially in the form of Annex 5.1(h) hereto. 5.3 Conditions of Each Party's Obligations. The respective --------------------------------------------- obligations of each party to consummate the transactions contemplated hereunder are subject to the fulfillment prior to or on the Closing Date of the following conditions: (a) No Injunction. No Governmental Entity or any other Person shall -------------- have issued an order which shall then be in effect restraining or prohibiting the completion of the transactions contemplated hereby or by the other Transaction Documents, nor shall any such order be threatened or pending. 18 (b) Absence of Litigation. The Purchasers and the Company shall be ---------------------- satisfied as to the absence of litigation which could result in the award of significant damages or which seeks to enjoin or void any material aspect of the transactions contemplated by this Agreement or by the Transaction Documents. (c) Approvals. The Company shall have obtained any and all consents, --------- waivers, approvals or authorizations, with or by any Governmental Entity and all material consents, waivers, approvals or authorizations of any other Person required for the valid execution of the Transaction Documents and the consummation of the transactions contemplated hereby, including the consent of the Company's Senior Lenders, except for such consents, waivers approvals or authorizations the failure of which to obtain would not reasonably be expected to have a Material Adverse Effect. 6. Covenants. The Company agrees that until the earlier of (x) the --------- Closing Date or (y) the termination of this Agreement pursuant to Section 12.3 (provided, however, that the obligations of the Company pursuant to the provisions of Sections 6.3 and 6.5 shall survive the Closing for so long as the Apollo Purchasers possess Preferred Stock Approval Rights and the obligations of the Company pursuant to the provisions of Sections 6.6, 6.8, and 6.9 shall survive the Closing until the redemption of all of the outstanding shares of Preferred Stock or conversion of all of the outstanding shares of Preferred Stock ultimately into Common Stock), the Company (and each of its Subsidiaries unless the context otherwise requires) will do the following: 6.1 Maintain Corporate Rights and Facilities. Maintain and preserve ----------------------------------------- its corporate existence and all rights, franchises, licenses, trademarks, service marks, trade names, copyrights and other authority, in each case to the extent reasonably deemed adequate by the Company for the conduct of its business. Maintain its properties, equipment and facilities in good order and repair; and conduct its business in an orderly manner without voluntary interruption except where failure to do so would not reasonably be expected to have a Material Adverse Effect. 6.2 Maintain Insurance. Maintain in full force and effect a policy or ------------------ policies of insurance issued by insurers of recognized responsibility, insuring it and its properties and business against such losses and risks, and in such types and amounts of insurance, with respect to the Company's business and properties, on both a per occurrence and an aggregate basis, as are customarily carried by Persons engaged in the same or similar business as the Company and its Subsidiaries. 19 6.3 Information Rights. ------------------ (a) Access to Records. ----------------- The Company shall, and shall cause each Subsidiary to, afford to the Apollo Purchasers and their respective Affiliates, officers, employees, advisors, counsel and other authorized representatives (collectively with the Affiliates of the Apollo Purchasers, the "Representatives"), during normal business hours, reasonable access, upon reasonable advance notice, to all of the books, records and properties of the Company and such Subsidiary and all officers and employees of the Company and such Subsidiary. Subject to compliance with customary confidentiality obligations, each Apollo Purchaser shall also be entitled to receive copies of all confidential financial information and reports prepared for the Company's lenders promptly upon furnishing such information to such lenders. The Apollo Purchasers and their Representatives shall maintain the confidentiality of any confidential and proprietary information regarding the Company and its Subsidiaries; provided, however, that the foregoing shall in no -------- ------- way limit or otherwise restrict the ability of the Apollo Purchasers or any of their Representatives to disclose any such information concerning the Company and each Subsidiary which it may be required to disclose (i) to its partners or limited partners to the extent required to satisfy its fiduciary obligations to such Persons, provided that the recipients of such information are informed of, -------- and agree to be bound by, the confidentiality provisions hereof, or (ii) otherwise pursuant to or as required by law. (b) Financial Reports. ----------------- The Company shall furnish each Purchaser, promptly upon becoming available, copies of all financial statements, reports, press releases, notices, proxy statements and other documents sent by the Company or its Subsidiaries to its stockholders generally or released to the public and copies of all regular and periodic reports, if any, filed by the Company or its Subsidiaries with the SEC, any securities exchange or the NASD to the extent such reports are not publicly available via EDGAR. 6.4 Conduct of Business. Conduct its business in accordance with all ------------------- applicable provisions of federal, state, local and foreign law, except for either (i) instances of noncompliance which would not reasonably be expected to have a Material Adverse Effect or (ii) instances of noncompliance which are or may be reasonably cured without the incurrence by the Company or any Subsidiary of any material cost or liability. 6.5 Indemnification of the Board of Directors. The Company shall ------------------------------------------- reimburse all directors of the Company for their reasonable out-of-pocket expenses in connection with attending meetings of the Company's Board of Directors and all committees thereof and all reasonable out-of-pocket expenses otherwise incurred in fulfilling their duties as directors. The Company's Bylaws or charter shall at all times require the indemnification of all of the Company's directors against liability for actions and omissions to act in their capacity as directors of the Company to the maximum extent that such individuals may lawfully be so indemnified by the Company. The Company shall maintain directors' and officers' liability insurance in an amount equal to at least $25,000,000.00. 20 6.6 Reservation of Common Stock. The Company shall reserve and keep ---------------------------- available out of its authorized but unissued Common Stock (that is not reserved for issuance under any stock or option plan or upon conversion of Class B Stock) the number of shares required for issuance upon the conversion of the Preferred Stock and otherwise complying with the terms of this Agreement, it being understood that the Company will require Shareholder Approval before it is able to reserve any shares of Common Stock issuable upon conversion of the Series A Preferred Stock that, in turn, would have been issued upon conversion of Series B Preferred Stock. If at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of the Preferred Stock or otherwise to comply with the terms of this Agreement, the Company will use its reasonable best efforts to obtain Shareholder Approval in accordance with Section 6.9 and shall take such other corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes. The Company will use its best reasonable efforts to obtain any authorization, consent, approval or other action by, and shall make any filing with any court or administrative body that may be required under applicable state securities laws in connection with the issuance of shares of Common Stock upon conversion of the Preferred Stock. 6.7 Advice of Changes; Filings. The Company shall confer with the --------------------------- Purchasers on a regular and frequent basis as reasonably requested by the Purchasers, orally and, if requested by Purchaser, in writing, with regard to any change that has had a Material Adverse Effect. The Company shall promptly provide to the Purchasers (or their counsel) copies of all filings made by the Company or any Affiliate with any Governmental Entity in connection with this Agreement and the transactions contemplated hereby. 6.8 Tax Treatment of the Preferred Stock. The Company agrees to treat ------------------------------------ the Series A Preferred Stock and the Series B Preferred Stock as stock that participates in the corporate growth of the Company to a significant extent within the meaning of Treasury Regulation ss.1.305-5(a), and hence will not treat the Preferred Stock as "preferred stock" for purposes of Section 305 of the Code and the Treasury Regulations promulgated thereunder, unless required to treat it otherwise pursuant to a "determination" within the meaning of Section 1313(a) of the Code. The Apollo Purchasers shall be entitled to receive prompt notice of any Tax assessment, deficiency, audit or judicial proceeding received by the Company or of which the Company is aware that relates to the taxation of the Preferred Stock. The Apollo Purchasers shall indemnify, and hold harmless, the Company for any Taxes imposed on or incurred by the Company as a result of any "determination" that the Preferred Stock is "preferred stock" for purposes of Section 305 of the Code and Treasury Regulations promulgated thereunder; provided that the Apollo Purchasers (i) have received prompt notice from the Company of any tax assessment, deficiency, audit or judicial proceeding received by the Company or of which the Company is aware that relates to the taxation of the Preferred Stock, (ii) are given the opportunity to participate, whether directly or indirectly, through the Company or counsel to the Company, in all proceedings that affect the taxation of Preferred Stock, and (iii) have consented to any closing or other agreement with the IRS or final disposition of a claim for refund by the IRS that affects the taxation of the Preferred Stock. In the event the Preferred Stock is outstanding at the time of a "determination," the Company will use its reasonable best efforts to restructure such Preferred Stock, with the advice and subject to the consent of the Apollo Purchasers, so that the Preferred Stock will not be treated as "preferred stock" for purposes of Section 305 of the Code and the Treasury Regulations promulgated thereunder. 21 6.9 Solicitation of Shareholder Approval. The Company shall solicit ------------------------------------- Shareholder Approval at its next regularly scheduled annual meeting following the Closing Date (the "Initial Solicitation") which shall take place no later than 270 days after the Closing Date. In addition, until Shareholder Approval is obtained, the Company shall solicit such Shareholder Approval whenever it solicits proxies subject to Section 14(a) of the Exchange Act and until Shareholder Approval is obtained, any shares of Common Stock that are authorized after the date hereof shall be reserved for issuance (i) subject to Section 8 of this Agreement, upon the exercise of options pursuant to any option plan and (ii) upon conversion of Series A Preferred Stock to allow for exchange of the Series B Preferred Stock into the Series A Preferred Stock (including the Series A Preferred Stock that would be received upon a conversion of Series B Preferred Stock). 6.10 Board Resolution and Bylaw Amendment. The Board of Directors --------------------------------------- shall have adopted (a) resolutions of the Board of Directors, substantially in the form attached hereto as Annex 5.1(i)(1), which resolutions shall include, --------------- among other items, the establishment of a Nominating Committee and matters relating to capital expenditures, amendments to the Company's Senior Facility and certain employment arrangements for Executive Officers (the "Board Resolutions") and (b) the Bylaw Amendments in the form attached hereto as Annex ----- 5.1(i)(2). - --------- 6.11 Listing Obligation. The Company will take all reasonable steps ------------------- necessary, and pay all reasonable fees required, to list all of the shares of Common Stock issuable upon any conversion of shares of Series A Preferred Stock (including such additional shares as may be issuable after Shareholder Approval or as dividends) on the American Stock Exchange or such other stock exchanges or systems of automated dissemination of quotations of securities prices in the United States on which the Common Stock is then listed. Following the initial listing of such shares, the Company shall use its reasonable best efforts to maintain the listing of such shares for so long as the Company's Common Stock continues to be listed on any such exchange where the Common Stock is listed. 7. Negative Covenants. ------------------ 7.1 No Solicitation. On the date hereof, the Company shall and shall --------------- cause each Subsidiary and its Subsidiaries' officers and directors to, and each of the foregoing shall cause their respective Agents, representatives, advisors or subsidiaries, to cease any discussions or negotiations with any parties (other than the Purchaser) that may be ongoing with respect to (A) any acquisition or purchase of a material amount of assets of the Company and its Subsidiaries (other than properties disclosed in writing to Apollo as possible candidates for disposition), (B) the purchase of any equity securities of the Company or any Subsidiary (including a self tender offer) or any securities that are convertible, exchangeable or exercisable for any equity securities, (C) any merger, consolidation, business combination, sale of substantially all assets, recapitalization, liquidation, dissolution or similar transaction involving the Company or any Subsidiary (other than a Permitted Acquisition), or (D) any other 22 transaction the consummation of which would, or could reasonably be expected to, impede, interfere with, prevent or materially delay the transactions contemplated by this Agreement or which would, or could reasonably be expected to, materially dilute the benefits to the Purchaser of the transactions contemplated hereby (each of the foregoing items set forth in (A) through (D), an "Alternative Transaction"). From the date hereof through the Closing Date, the Company shall not, shall cause each Affiliate not to and shall not authorize or permit any of its or any such Person's officers, directors or employees or any investment banker, financial advisor, attorney, accountant or other representative representing any such Person to, directly or indirectly, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action to facilitate, any inquiries or the making of any proposal that may lead to an Alternative Transaction (it being understood that public announcement of the execution of this Agreement, and disclosure of the terms thereof, shall not in any way be deemed to be a solicitation in violation of this clause (i)) or (ii) participate in any discussions or negotiations with any third party regarding any proposed Alternative Transaction unless the Company's Board of Directors determines in good faith that failure to take such action would be a violation of its fiduciary duties under applicable law. Notwithstanding anything else in this Agreement to the contrary, if the Company's Board of Directors determines in good faith the terms of any Alternative Transaction are more favorable to the Company and its shareholders than the transactions contemplated by this Agreement, the Company may terminate this Agreement. In the event the Company or any of its Subsidiaries or Affiliates receives an indication of interest or engages in any discussions or negotiations with any parties (other than the Purchasers) with respect to any Alternative Transaction, the Company shall promptly notify the Apollo Purchasers of such occurrence within two business days. 8. Protective Provisions. --------------------- 8.1 Preferred Stock Approval Rights. In addition to any other rights ------------------------------- provided by applicable law, as long as the Apollo Purchasers continue to beneficially own shares of Preferred Stock representing more than 50% of the Preferred Stock issued pursuant to this Agreement, the Company shall not, and shall not permit any Subsidiary to, without the prior written consent of Apollo, acting at the direction of the Apollo Purchasers: (a) amend, alter or repeal, whether by merger, consolidation, combination, reclassification or otherwise, the Certificate of Incorporation or the Bylaws of the Company, or any provision thereof (including the adoption of a new provision thereof); (b) create, authorize or issue any class, series or shares of preferred stock (other than Additional Securities issued pursuant to section 2 of the Certificate of Designations) or any other class, series or shares of capital stock (other than capital stock intended to be used in the redemption of the Preferred Stock or to be authorized and issued pursuant to the Shareholder Approval); or amend or alter the rights provided in any class, series or shares of preferred stock or any other class of capital stock; (c) purchase, redeem, repurchase or otherwise acquire for value (or pay into or set aside a sinking fund for such purpose) shares of the Company's capital stock or of any Affiliate thereof (other than Wholly-Owned Subsidiaries)(except for redemptions or repurchases of Preferred Stock or Common Stock issued upon conversion of the Preferred Stock) or any other options, warrants or other rights to acquire such capital stock; 23 (d) pay any dividend or declare any distribution on any shares of stock (subject to Section 8.1(b) above, excluding (i) dividends paid to the Company by any of its Wholly-Owned Subsidiaries and (ii) 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 shares of Redeemable Capital Stock or options, warrants or other rights to purchase Redeemable Capital Stock (other than dividends on Redeemable Capital Stock payable in such Redeemable Capital Stock) held by any person other than the Company or any of its Wholly-Owned Subsidiaries); (e) redeem, prepay, defease or repurchase any indebtedness of the Company (other than Permitted Debt Repayments); (f) merge, consolidate or consummate a similar transaction involving the Company (other than a merger, consolidation or similar transaction between the Company and a direct or indirect Wholly-Owned Subsidiary of the Company which transaction would not adversely impact the rights of the Preferred Stock); (g) incur any indebtedness (excluding any borrowings in the ordinary course of business under the Company's Senior Facility), other than debt that is used to redeem the Preferred Stock and other Permitted Indebtedness, or amend or alter the material terms of any existing or future material senior indebtedness (including term loans, revolvers and other similar bank loans, but excluding indebtedness incurred under the Company's Senior Facility); provided, the Company may amend or renew the Senior Facility; (h) voluntarily initiate any liquidation, dissolution or winding up of the Company or permit the commencement of a proceeding for bankruptcy, insolvency, receivership or similar action; (i) enter into any Affiliate Transactions; (j) increase or decrease the size of the Board of Directors of the Company; or (k) acquire or dispose (for either cash or non-cash consideration) of, in a single transaction or a series of related transactions, any business or assets (including investments in third parties) with an aggregate value in such transaction or series of related transactions in excess of $25,000,000 (including all assumed debt, all cash payments, and the fair market value of all securities or other property issued as consideration). Collectively, the consents of the Apollo Purchasers required by this Section 8.1 shall be hereinafter referred to as the "Preferred Stock Approval Rights." ------------------------------- 8.2 Committees of the Board of Directors. So long as the Apollo ---------------------------------------- Purchasers continue to possess Preferred Stock Approval Rights and subject to the provisions of applicable law and the fiduciary duties of the members of the Board of Directors, a member of the Board of Directors designated by the Apollo Purchasers pursuant to Section 5.1(g) shall be nominated to serve on each of the committees of the Board of Directors, including the Nominating Committee. 24 9. Transfer Restrictions. --------------------- 9.1 Private Placement. Each Purchaser understands and agrees that the ----------------- shares of Preferred Stock to be purchased hereunder have not been registered under the Securities Act by reason of their issuance in a transaction exempt from the registration requirements of the Securities Act, and that accordingly they will not be fully transferable except as permitted under various exemptions contained in the Securities Act or upon satisfaction of the registration and prospectus delivery requirements of the Securities Act. Each Purchaser acknowledges that it must bear the economic risk of the shares of Preferred Stock to be purchased hereunder for an indefinite period of time (subject, however, to the Company's obligation to redeem the Preferred Stock in accordance with the terms thereof, and to the Company's obligation to effect the registration of the registrable securities under the Securities Act in accordance with the Registration Rights Agreement) since they have not been registered under the Securities Act and therefore cannot be sold unless they are subsequently registered or an exemption from registration is available. Each Purchaser understands that the exemption from registration afforded by Rule 144 promulgated under the Securities Act depends upon the satisfaction of various conditions and that, if applicable, Rule 144 affords the basis for sales only in limited amounts. Furthermore, except as set forth in the Registration Rights Agreement, the Company has not agreed to make Rule 144 available for any resale of the Preferred Stock or the shares of Common Stock into which the Preferred Stock is convertible. 9.2 Legend. Each Purchaser agrees with the Company that the ------ certificates evidencing the shares of Preferred Stock to be purchased hereunder will bear the following legend: THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH IN A STANDSTILL AGREEMENT DATED AS OF APRIL 19, 2001 BETWEEN AMC ENTERTAINMENT INC. AND CERTAIN OTHER INVESTORS NAMED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF AMC ENTERTAINMENT INC. 9.3 Removal of Legend. The Securities Act legend endorsed on the ----------------- certificates pursuant to Section 9.2 hereof shall be removed and the Company shall issue a certificate without such legend to the holder thereof at such time as the securities evidenced thereby cease to be restricted securities upon the earliest to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) the securities shall have been sold to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, or (iii) such securities may be sold by the holder without restriction or registration under Rule 144(k) under the Securities Act (or any successor provision). 25 9.4 Standstill Agreement. Subject to the terms of the Standstill --------------------- Agreement and Section 9.5, the Preferred Stock shall be freely transferable by the holders thereof; provided that the Purchasers shall provide written notice to the Company within three days of any transfer of Preferred Stock. 9.5 Restrictions on Conversion of Series A Preferred. ------------------------------------------------ (a) During the period commencing on the date hereof and ending on the fifth anniversary of the date hereof, the Purchasers shall not convert any shares of Series A Preferred Stock into Common Stock, except in connection with a Disposition effected pursuant to paragraph (b) below. (b) If, at any time during the period commencing on the date hereof and ending on the fifth anniversary of the date hereof, any Apollo Purchaser desires to effect a Disposition of any shares of Series A Preferred Stock to any person other than members of the Apollo Group and Other Investor Affiliates, such Apollo Purchaser may, as part of such Disposition, elect to convert such shares of Series A Preferred Stock into Common Stock, prior to transfer to such purchasing Person. In order to convert shares of Preferred Stock to effect any such Disposition, the selling Apollo Purchaser shall deliver to the Company, on or before the proposed settlement date of such Disposition, written notice of its intention to convert Series A Preferred Stock as part of a Disposition (a "Disposition Notice"). The Disposition Notice shall set forth the number of shares of Series A Preferred Stock that shall be converted into Common Stock, the sale price for such shares and the purchasing Person in whose name the Common Stock shall be registered. Upon surrender by the selling Apollo Purchaser of certificates representing the shares of Series A Preferred Stock that are being converted as part of such Disposition, the Company shall issue to the purchasing Person certificates representing the appropriate number of shares of Common Stock. Any Disposition pursuant to a third party made under this Section 9.5 or Section 5.2(b) of the Standstill Agreement shall comply with the provisions of Section 5.1 of the Standstill Agreement. 9.6 Series B Preferred Stock. The Purchasers shall not transfer to -------------------------- any Person (other than their respective Affiliates) any shares of Series B Preferred Stock until a date that is eighteen (18) months after the Closing Date. 9.7 Preferred Stock Approval Rights. The Preferred Stock Approval ---------------------------------- Rights granted to the Apollo Purchasers are not transferable by the Apollo Purchasers and shall be exercised solely by Apollo. The Apollo Purchasers will not enter into any agreements with any person or entity limiting their discretion with respect to the exercise of their Preferred Stock Approval Rights. In the event (i) the Apollo Purchasers or their Affiliates cease to own at least 50% of the Preferred Stock issued, (ii) Apollo is terminated as the investment manager, or (iii) an Affiliate is removed as the general partner of the Apollo Purchasers (and, in either case, such terminated or removed party is not replaced by an Affiliate of Apollo), Apollo and the Apollo Purchasers shall promptly notify the Company and the Preferred Stock Approval Rights granted to the Apollo Purchasers shall terminate. 26 10. Definitions. Unless the context otherwise requires, the terms ----------- defined in this Section 10 shall have the meanings specified for all purposes of this Agreement. Except as otherwise expressly provided, all accounting terms used in this Agreement, whether or not defined in this Section 10, shall be construed in accordance with United States GAAP. If and so long as the Company has one or more Subsidiaries, such accounting terms shall be determined on a consolidated basis for the Company and each of its Subsidiaries, and the financial statements and other financial information to be furnished by the Company pursuant to this Agreement shall be consolidated and presented with consolidating financial statements of the Company and each of its Subsidiaries prepared in accordance with GAAP. "Additional Securities" shall mean the shares of Preferred Stock that are issued to the holders of Preferred Stock as payment of dividends thereon pursuant to the Certificate of Designations. "Additional Series A Securities" shall have the meaning assigned it in the Certificate of Designations. "Additional Series B Securities" shall have the meaning assigned it in the Certificate of Designations. "Affiliate" means, with respect to any Person, (i) any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person; (ii) any other Person that owns, directly or indirectly, ten percent or more of such Person's capital stock or other equity interests or any officer or director of any such Person or other Person; or (iii) 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; provided, however, that with respect to Apollo or the Apollo -------- ------- Purchasers, the term "Affiliate" shall not include any limited partner of the Apollo Purchasers or their Affiliates nor any portfolio or investee companies of the Apollo Purchasers or their Affiliates so long as, in either case, (x) Apollo does not control or have investment authority over such limited partner or portfolio or investee company; (y) such limited partner or portfolio or investee company does not operate in the domestic theatrical exhibition industry or otherwise compete with the Company and (z) Apollo does not own, directly or indirectly, 33% or more of such portfolio or investee company's capital stock or other equity interests. For 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" shall have correlative meanings. "Affiliate Transaction" shall mean 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 direct or indirect 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 arms-length dealing with an unaffiliated third party, (B) such 27 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; provided, however, that notwithstanding the foregoing the -------- ------- following transactions shall not be deemed Affiliate Transactions: (i) any transaction pursuant to any contract in existence on the Initial Issuance Date; (ii) any "Restricted Payment" (as such term is defined in the indentures governing the Company's Existing High Yield Indebtedness) permitted to be made pursuant to the provisions of such Existing High Yield Indebtedness; (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. "Affiliated Group" shall mean any affiliated group within the meaning of Section 1504(a) of the Code (or any similar group defined under a similar provision of state, local or foreign law). "Agent" of a Person shall mean any officer, director, employee, agent, partner stockholder or Affiliate of such Person. "Agreement" shall mean this Investment Agreement. "AIF IV" shall have the meaning assigned it in the introductory paragraph. "AIF V" shall have the meaning assigned it in the introductory paragraph. "Apollo" shall have the meaning assigned it in the introductory paragraph. "Apollo Group" shall have the meaning assigned it in Section 1.1.4 of the Standstill Agreement. "Apollo Management IV" shall have the meaning assigned it in the introductory paragraph. "Apollo Management V" shall have the meaning assigned it in the introductory paragraph. "Apollo IV Purchasers" shall have the meaning assigned it in the introductory paragraph. 28 "Apollo V Purchasers" shall have the meaning assigned it in the introductory paragraph. "Apollo Purchasers" shall have the meaning assigned it in the introductory paragraph of this Agreement. "Alternative Transaction" shall have the meaning assigned it in Section 7.1 hereof. "AOP IV" shall have the meaning assigned it in the introductory paragraph. "AOP V" shall have the meaning assigned it in the introductory paragraph. "B Trustees" shall mean Raymond F. Beagle, Jr. and Charles J. Egan, Jr., as (1) successor trustees of the 1992 Durwood, Inc. Voting Trust dated December 12, 1992, as amended and restated on August 12, 1997, (2) successor trustees of the trust created under the revocable Trust Agreement dated August 14, 1989 of Stanley H. Durwood, as amended and restated on May 12, 1999, and (3) surviving trustees of the Foundation, or any successor trustees of any of the trusts referred to in clauses (1), (2) or (3) above. "Board of Directors" shall mean the Board of Directors of the Company. "Board Resolutions" shall have the meaning assigned to it in Section 5.1(i) hereof. "Bylaw Amendments" shall mean the amendments to the Bylaws to be adopted by the Board of Directors at Closing, substantially in the form set forth in Annex 5.1(i)(2) hereto, which amendment shall provide that the maximum number of directors on the Board of Directors be increased by three and that the three additional directors shall be elected by holders of the Preferred Stock pursuant to the Certificate of Designations (and in accordance with Section 5.1(g) hereof). "Bylaws" shall have the meaning assigned it in Section 4.1(c) hereof. "Capital Expenditures" shall mean, for any fiscal period, all expenditures (including outlays of cash and incurrence of obligations) of the Company and its Subsidiaries in any such fiscal period which are required to be included in property, plant and equipment or a similar fixed or long-lived asset account on a consolidated balance sheet of the Company prepared in accordance with GAAP which shall include, for these purposes, Capitalized Lease Obligations. "Capitalized Lease Obligations" means any obligation to pay rent or other amounts under a lease (or other agreement conveying a right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capitalized lease obligation (including financing lease obligations) under generally accepted accounting principals. 29 "Certificate of Designations" shall mean the certificate of designations described in Section 5.1(f) hereof. "Certificate of Incorporation" shall have the meaning assigned it in Section 4.1(c) hereof. "Change of Control" shall have the meaning assigned it in Section 4.26 hereof. "Class B Stock" shall have the meaning assigned it in Section 4.1 hereof. "Closing" shall have the meaning assigned it in Section 2 hereof. "Closing Date" shall have the meaning assigned it in Section 2 hereof. "Code" shall mean the Internal Revenue Code of 1986, as amended. References to "Code" made herein shall include, where applicable, references to the Treasury Regulations promulgated thereunder. "Common Stock" shall have the meaning assigned it in Section 4.1(a) hereof. "Company" shall have the meaning assigned it in the introductory paragraph. "Company 10-K" shall have the meaning assigned it in Section 4.8 hereof. "Company 10-Q" shall have the meaning assigned it in Section 4.8 hereof. "Company Balance Sheet" shall have the meaning assigned it in Section 4.8 hereof. "Company Balance Sheet Date" shall have the meaning assigned it in Section 4.8 hereof. "Company SEC Documents" shall have the meaning assigned in Section 4.7 hereof. "Conversion Shares" shall mean the shares of Common Stock issued upon conversion of any shares of Series A Preferred Stock (including shares of Series A Preferred Stock issued upon conversion of any shares of Series B Preferred Stock). "Disposition" shall mean a sale, assignment, transfer, pledge, hypothecation, grant of any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding with respect to the foregoing) of any shares of Series A Preferred Stock. "Disposition Notice" shall have the meaning assigned it in Section 9.5(b) hereof. 30 "Employee Benefit Plans" shall have the meaning assigned it in Section 4.21(c) hereof. "Encumbrances" shall have the meaning assigned it in Section 4.2(a). "Environmental Laws" shall mean any and all applicable foreign, federal, state, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any Governmental Entity or other Requirement of Law (including common law) regulating, relating to or imposing liability or standards of conduct concerning protection of human health or the environment, as are now or may at any time be in effect during the term of this Agreement. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. "Executive Officer" shall have the meaning assigned it in Section 4.21(a). "Existing High Yield Indebtedness" means the currently existing indebtedness of the Company pursuant to (i) the Indenture dated March 19, 1997 by and between the Company and Bank of New York, as Trustee, in respect of AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2009 and as supplemented by the First Supplemental Indenture dated June 9, 1997 and (ii) the Indenture dated January 27, 1999 by and between the Company and Bank of New York, as Trustee, in respect of AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2011. "Foundation" shall mean The Stanley H. Durwood Foundation. "GAAP" shall mean generally accepted accounting principles in effect in the United States of America applied on a consistent basis. "Governmental Entity" shall mean any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof; or any court, judicial, administrative or arbitral body or public or private tribunal exercising executive, legislative, judicial, regulatory or administrative functions pertaining to government. "Hazardous Substances" shall mean any waste or other substance that is listed, defined, designated, or classified as, or otherwise determined to be, hazardous, toxic, or a pollutant or a contaminant under or pursuant to any Environmental Law. "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. "HSR Conversion" shall have the meaning assigned thereto in Section 12.13. 31 "Independent Director" shall mean a member of the Board of Directors (i) who is not and has never been an officer or employee of the Company, Apollo or the Apollo Purchasers or any of their respective Affiliates, or of an entity that derived more than 5% of its revenues or earnings in its most recent fiscal year from transactions involving the Company, Apollo or any of Apollo Purchasers or any of their respective Affiliates, (ii) who has no relationship or affiliation or compensation, consulting or contracting arrangement with the Company, the B Trustees, the Foundation, Apollo or the Apollo Purchasers or any other entity such that a reasonable person could regard such director as likely to be unduly influenced by the Company, the B Trustees, the Foundation, Apollo or any of Apollo Purchasers and (iii) who is nominated by the Nominating Committee in accordance with the procedures set forth thereby, it being understood that the Company's existing directors elected by the common stockholders will be deemed independent for purposes of this provision through at least the remainder of their current terms. "Initial Issuance Date" shall mean the first date of issuance of the Preferred Stock pursuant to the closing of this Agreement. "Initial Solicitation" shall have the meaning assigned it in Section 6.9 hereof. "Material Adverse Effect" shall mean a material adverse change (or effect) in the condition (financial or otherwise), assets, properties, operations, business or results of operations (but not prospects) of the Company and its Subsidiaries, taken as a whole (excluding the effect of any events affecting the domestic theatrical exhibition industry as a whole); provided that a decline in the Company's stock price in and of itself shall not be deemed to be a Material Adverse Effect. "Material Contract" shall mean any contract, commitment, undertaking or agreement to which the Company or any Subsidiary is a party or by which any of them are bound as of the date of this Agreement (i) involving annual expenditures or liabilities in excess of $10.0 million in any fiscal year; (ii) providing for the lending of money (whether as borrower, lender or guarantor) in excess of $10.0 million; (iii) creating or governing a joint venture or partnership material to the Company and its Subsidiaries, taken as a whole; and (iv) that would otherwise constitute a "material contract" within the meaning of Item 601(b)(10) of Regulation S-K promulgated by the SEC. "Nominating Committee" shall mean the committee established by the Board of Directors pursuant to the Company's Bylaws as of the Closing Date, which committee shall be charged with the task of nominating for election by the holders of the Common Stock qualified candidates to serve as directors on the Board of Directors. "Other Investor Affiliates" shall have the meaning assigned it in Section 4.1 of the Standstill Agreement. "Permitted Acquisition" shall mean any acquisition by the Company or any Subsidiary of (i) any business or assets with a purchase price of $25,000,000 or less (including all assumed debt, all cash payments, and the fair market value of all securities or other property issued as consideration) or (ii) any business or assets for which the consent or approval of the Purchaser has been given. 32 "Permitted Debt Repayments" shall mean scheduled or ordinary course repayments of indebtedness of the Company or any Subsidiary, including without limitation ordinary course payments with respect to Capitalized Lease Obligations. "Permitted Encumbrances" shall mean (i) Encumbrances upon any property presently owned or hereafter acquired, created at the time of acquisition to secure a portion of the purchase price thereof, or existing thereon at the date of acquisition and assumed by the Company or one of its Subsidiaries, provided that such Encumbrance shall apply only to the property so acquired and fixed improvements thereon; (ii) any pledge of current assets in the ordinary course of business made to secure current liabilities; (iii) Encumbrances for Taxes not yet delinquent; (iv) Encumbrances on the property of the Company and its Subsidiaries in the ordinary course of business which do not materially affect the value of the property of the Company and do not materially interfere with the use made and proposed to be made of such property; (v) landlords' liens on fixtures and movable property located on premises leased by the Company or a Subsidiary in the ordinary course of business; (vi) zoning and planning restrictions, easements, permits and other restrictions or limitations of public record affecting the use of such properties; provided that such restrictions, easements, permits or other restrictions do not impair the use of such properties as exhibition theaters or for such other purposes as such properties are currently being used; (vii) imperfections of title, if any, not material in nature or amount and not materially detracting from the value or impairing the use of the property subject thereto or impairing the operations or proposed operations of the Company and its Subsidiaries, including, without limitation, the ability of the Company and its Subsidiaries to secure financing using such properties and assets as collateral; and (viii) other Encumbrances that would not be reasonably expected to have a Material Adverse Effect. "Permitted Indebtedness" shall mean (i) indebtedness of the Company or any of its Subsidiaries owing one to the other; (ii) any indebtedness incurred to renew, extend, refinance or refund (each, a "refinancing") any indebtedness outstanding on the Initial Issuance Date (or with respect to the Senior Facility, an aggregate principal amount at any one time outstanding not to exceed $425.0 million) in an aggregate principal amount not exceeding 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, plus the expenses of the Company incurred in connection with such refinancing); (iii) indebtedness related to interest rate protection or currency hedging obligations entered into solely to protect the Company or its Subsidiaries from fluctuations in interest or currency exchange rates; (iv) Capitalized Lease Obligations; (v) indebtedness of the Company or any of its Subsidiaries in connection with standby letters of credit or performance bonds issued in the ordinary course of business; (vi) indebtedness of any Subsidiary incurred in connection with the guaranty of indebtedness of the Company or any other Subsidiary of the Company; (vii) indebtedness represented by property, liability and workers' compensation insurance; and (viii) other indebtedness in an aggregate principal amount at any time outstanding not in excess of $30 million. 33 "Person" shall include all natural persons, corporations, business trusts, associations, companies, partnerships, joint ventures and other entities and governments and agencies and political subdivisions. "Preferred Stock" shall mean the Series A Preferred Stock and the Series B Preferred Stock. "Preferred Stock Approval Rights" shall have the meaning assigned it in Section 8.1 hereof. "Purchase Price" shall have the meaning assigned it in Section 1 hereof. "Purchaser" shall have the meaning assigned it in the introductory paragraph of this Agreement. "Real Property Lease Recap Book" shall mean the compilation of summaries and abstracts of the key terms of the Company's Real Property Leases prepared by the Company. "Real Property Leases" shall have the meaning assigned it in Section 4.6(c) hereof. "Redeemable Capital Stock" shall mean any capital stock that, either by its terms, by the terms of any security into which it is convertible or exchangeable or otherwise, is or upon the happening of an event or passage of time would be required to be redeemed in cash prior to the tenth anniversary of the Initial Issuance Date or is redeemable at the option of the holder thereof in cash at any time prior to such date, or is convertible into or exchangeable for debt securities at any time prior to such date at the option of the holder thereof (other than redemptions payable in the capital stock of the Company). "Registration Rights Agreement" shall mean the registration rights agreement, substantially in the form attached hereto as Annex 5.1(h), to be entered into on or prior to the Closing Date by and between the Company and the Purchasers. "Representatives" shall have the meaning assigned it in Section 6.3(a) hereof. "Requirement of Law" shall mean, as to any Person, the Certificate of Incorporation and Bylaws or other organizational or governing documents of such Person, and each law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Entity, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "SEC" shall mean the Securities and Exchange Commission. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Facility" shall mean The U.S. $ 425,000,000 Amended and Restated Credit Agreement, dated as of April 10, 1997, among AMC Entertainment Inc, as the Borrower; and 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, as amended by the Second Amendment, dated as of January 16, 1998, as further amended by the Third Amendment, dated as of March 15, 1999 and as further amended by the Fourth Amendment, dated as of March 29, 2000. 34 "Senior Indebtedness" shall mean the Company's current existing indebtedness pursuant to the Senior Facility. "Senior Lenders" shall mean the lenders of the Company pursuant to the Company's Senior Facility. "Series A Preferred Stock" shall mean the Series A Convertible Preferred Stock of the Company, par value $0.66 2/3 per share. "Series B Preferred Stock" shall mean the Series B Exchangeable Preferred Stock of the Company, par value $0.66 2/3 per share. "Shareholder Approval" shall mean approval by (i) the holders of a majority of the Common Stock, voting separately as a class and (ii) a majority of the votes cast by the Company's stockholders voting together as a single class, of an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of Common Stock (so as to permit the issuance of additional shares of Series A Preferred Stock and the underlying Common Stock and until there are enough shares that would allow all shares of Series A Preferred Stock to convert into Common Stock and all shares of Series B Preferred Stock to convert into Series A Preferred Stock, as contemplated by this Agreement and the Transaction Documents). "Standstill Agreement" shall mean the standstill agreement, substantially in the form attached hereto as Annex 5.1(h), to be entered into on or prior to the Closing Date by and between the Company and the Purchasers. "Subsidiary" shall mean any corporation, association or other business entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company; or (ii) with respect to which the Company possesses, directly or indirectly, the power to elect more than 50% of the board of directors or others performing similar functions for such entity. "Taxes" shall mean any federal, state, local or foreign income, gross receipts, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, environmental (including taxes under Section 59A of the Code), customs duties, capital stock, franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales, use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including any interest, penalty, or addition thereto, whether disputed or not. "Tax Return" means all returns and reports (including elections, claims, declarations, disclosures, schedules, estimates, computations and information returns) required to be supplied to a tax authority in any jurisdiction relating to Taxes. 35 "Transaction Documents" shall mean this Agreement, the Certificate of Designations, the Registration Rights Agreement and the Standstill Agreement. "Treasury Regulation" means a regulation promulgated under the Code, as amended from time to time. "Wholly-Owned Subsidiary" shall mean a Subsidiary of the Company, all of the capital stock (other than directors' qualifying shares) or other ownership or economic interests of which shall at the time be owned by the Company or by one or more Wholly-Owned Subsidiaries of the Company or by the Company and one or more Wholly-Owned Subsidiaries of the Company. 11. Remedies. -------- 11.1 Remedies at Law or in Equity. If any representation or warranty ---------------------------- made by or on behalf of the Company, on the one hand, or the Purchaser, on the other hand, in this Agreement or in any certificate, report or other instrument delivered under or pursuant to any term hereof or in any of the Transaction Documents shall be untrue or misleading (including by omission) in any material respect as of the date of this Agreement (and not subsequently cured by Closing) or as of the Closing Date or as of the date it was made, furnished or delivered, or any covenant (whether under Section 6 or not) made by either party hereto shall be breached by such party, a Purchaser, on the one hand, or the Company, on the other hand, may proceed to protect and enforce its rights by suit in equity or action at law, whether for the specific performance of any term contained in this Agreement, or in any certificate, report or other instrument delivered under or pursuant to any of the terms hereof or any of the Transaction Documents or for an injunction against the breach of any such term or in aid of the exercise of any power granted in this Agreement, or in any certificate, report or other instrument delivered under or pursuant to any of the terms hereof or any of the Transaction Documents, or to enforce any other legal or equitable right of a Purchaser, on the one hand, or the Company, on the other hand, or to take any one or more of such actions. In the event a Purchaser brings such an action against the Company or the Company brings such an action against the Purchaser arising under this Agreement, or under any certificate, report or other instrument delivered under or pursuant to any of the terms hereof or any of the Transaction Documents, the prevailing party in such dispute shall be entitled to recover from the losing party all fees, costs and expenses of enforcing any right of such prevailing party under or with respect to this Agreement or the Certificate of Designations, including, without limitation, such reasonable fees and expenses of attorneys and accountants. 11.2 Cumulative Remedies. None of the rights, powers or remedies -------------------- conferred upon a Purchaser on the one hand, or the Company on the other hand, shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in addition to every other right, power or remedy, whether conferred hereby or by the Certificate of Designations or now or hereafter available at law, in equity, by statute or otherwise. 11.3 No Implied Waiver. Except as expressly provided in this ------------------- Agreement, no course of dealing between the Company and a Purchaser and no delay in exercising any such right, power or remedy conferred hereby or by the Certificate of Designations or now or hereafter existing at law or in equity, by statute or otherwise, shall operate as a waiver of, or otherwise prejudice, any such right, power or remedy. 36 12. Miscellaneous. ------------- 12.1 Waivers and Amendments. Upon the approval of the Company and the ---------------------- written consent of the Apollo Purchasers (a) the obligations of the Company and the rights of a Purchaser under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and (b) the Company may enter into a supplementary agreement for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement, or of any supplemental agreement or modifying in any manner the rights and obligations hereunder or thereunder of a Purchaser and the Company. The foregoing notwithstanding, no such waiver or supplemental agreement shall affect any of the rights of any holder of a Security created by the Certificate of Designations or by the Delaware General Corporation Law without compliance with all applicable provisions of the Certificate of Designations and the Delaware General Corporation Law. Upon the effectuation of each such waiver or supplemental agreement, the Company shall promptly give written notice thereof to the Purchasers who have not previously consented thereto in writing. Neither this Agreement, nor any provision hereof may be changed, waived, discharged or terminated orally or by course of dealing, but only by a statement in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought, except to the extent provided in this Section 12.1. 12.2 Notices. All notices, requests, consents and other communications ------- required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail, (a) If to the Apollo Purchasers: c/o Apollo Management IV, L.P. and Apollo Management V, L.P. 1301 Avenue of the Americas 38th Floor New York, NY 10019 Attention: Marc Rowan Fax: (212) 515-3262 with a copy to: Akin, Gump, Strauss, Hauer & Feld, L.L.P. 1333 New Hampshire Ave., N.W. Washington, D.C. 20036 Attention: Bruce S. Mendelsohn Fax: (202) 887-4288 37 or (b) If to the Company: AMC Entertainment Inc. 106 West 14th Street P.O. Box 419615 Kansas City, MO Attention: Peter Brown Fax: (816) 480-2517 with a copy to: Lathrop & Gage L.C. 2345 Grand Boulevard Suite 2800 Kansas City, MO 64108 Attention: Raymond F. Beagle, Jr. Fax: (816) 292-2001 and a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, NY 10036 Attention: Eileen T. Nugent Fax: (212) 735-2000 or at such other address as the Company or the Purchaser each may specify by written notice to the other, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered if delivered personally, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid. 12.3 Termination of Agreement. This Agreement may be terminated prior ------------------------ to the Closing as follows: (a) by mutual consent of the Purchaser and the Company; (b) at the election of the Company, if any one or more of the conditions to its obligations has not been fulfilled as of 120 days following the date hereof; (c) at the election of the Purchaser, if any one or more of the conditions to its obligations has not been fulfilled as of 120 days following the date hereof; (d) at the election of the Company, if the Purchaser has breached any material representation, warranty, covenant or agreement contained in this Agreement and such breach is incapable of cure or is not cured within 30 days of notice of such breach is received by the breaching party; 38 (e) at the election of the Purchaser, if the Company has breached any material representation, warranty, covenant or agreement contained in this Agreement and such breach is incapable of cure or is not cured within 30 days of notice of such breach is received by the breaching party; or (f) at the election of the Company pursuant to the terms of Section 7.1. If the Closing shall occur, this Agreement shall remain in effect until the date upon which no Series A Preferred Stock or Series B Preferred Stock shall remain outstanding. In the event that the Company or the Purchaser, as the case may be, elects to terminate this Agreement, it shall deliver an irrevocable notice to the other party to this Agreement declaring its election to so terminate this Agreement in accordance with the provisions of this Section 12.3, and setting forth therein the basis for such termination. 12.4 Indemnification. The Company shall indemnify, save and hold --------------- harmless the Purchaser, its directors, officers, employees, partners, representatives and Agents from and against any and all liability, loss, cost, damage, reasonable attorneys' and accountants' fees and expenses, court costs and all other out-of-pocket expenses incurred by the Purchaser in connection with or arising from the execution, delivery and performance by the Company of this Agreement and each of the other Transaction Documents and the transactions contemplated thereby, except to the extent of any willful misconduct or gross negligence of Apollo or the indemnified party. This indemnification provision shall be in addition to the rights of the Purchaser to bring an action against the Company for breach of any term of this Agreement and any of the other Transaction Documents. 12.5 Survival of Representations and Warranties etc. All ----------------------------------------------------------- representations and warranties made in, pursuant to or in connection with this Agreement shall survive until sixty (60) days following the delivery to Apollo of the final audited consolidated financial statements of the Company for the year ended March 30, 2001 (provided, however, that the provisions of Sections 4.2, 4.18, 4.19, and 4.26 shall survive until the conversion or redemption of all of the outstanding shares of Preferred Stock), notwithstanding any investigation at any time made by or on behalf of the Purchaser, and the sale and purchase of the shares of Preferred Stock and payment therefor; and all statements contained in any certificate, instrument or other writing delivered by or on behalf of the Company pursuant hereto or in connection with or in contemplation of the transactions herein contemplated shall constitute representations and warranties by the Company hereunder. If this Agreement is terminated and the transactions contemplated hereby are not consummated as described above, this Agreement shall become void and of no further force and effect. None of the parties hereto shall have any liability in respect of a termination of this Agreement, except to the extent that failure to satisfy the conditions set forth in Sections 5.1, 5.2 and 5.3 results from the intentional or willful violation of the representations, warranties, covenants or agreements of such party under this Agreement. 39 12.6 Severability. Should any one or more of the provisions of this ------------ Agreement or of any agreement entered into pursuant to this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement and of each other agreement entered into pursuant to this Agreement shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be affected thereby. 12.7 Parties in Interest. All the terms and provisions of this --------------------- Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the successors and assigns of the Purchasers and the Company, whether so expressed or not. This Agreement shall not run to the benefit of or be enforceable by any other Person. 12.8 Successors and Assigns. Except as otherwise expressly provided ---------------------- herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of shares of the Preferred Stock and/or the Conversion Shares. 12.9 Assignment and Transfers. This Agreement can be assigned by the ------------------------- Apollo Purchasers to any Affiliate of Apollo over which Apollo exercises investment authority, including with respect to voting and dispositive rights; provided, any such assignee assumes the obligations of the assignor hereunder and agrees in writing to be bound by the terms of the Transaction Documents in the same manner as the assignor. In addition, without limiting any other provisions of this Agreement, the shares of Preferred Stock or Common Stock issued pursuant to this Agreement shall be freely transferable to any Affiliate of Apollo, subject to the terms of the Standstill Agreement. 12.10Headings. The headings of the Sections and paragraphs of this -------- Agreement have been inserted for convenience of reference only and do not constitute a part of this Agreement. 12.10Governing Law; Jurisdiction; Venue; Process. THIS AGREEMENT ----------------------------------------------- SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. Any legal or equitable action or proceeding arising out of or in connection with this Agreement or in any certificate, report or other instrument delivered under or pursuant to any term hereof or any of the Transaction Documents shall be brought in the courts of the State of New York, in the county and city of New York or of the United States District Court for the Southern District of New York, and by execution and delivery of this Agreement, the parties hereby irrevocably accept for themselves and in respect of their property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. The parties hereby irrevocably waive any objection which they may now or hereafter have to laying of jurisdiction or venue of any actions or proceedings arising out of or in connection with this Agreement or in any certificate, report or other instrument delivered under or pursuant to any term hereof or any 40 of the Transaction Documents brought in the courts referred to above and hereby further irrevocably waive and agree, not to plead or claim in any such court that any such action or proceeding has been brought in an inconvenient forum. The parties further agree that thc mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of court. 12.12 Fees and Expenses. ----------------- (a) The Company agrees, subject to the consummation of the transactions contemplated hereby to pay, and hold the Purchasers harmless from liability for the payment of, all reasonable expenses, including all out-of-pocket expenses, incurred by the Purchasers in connection with the preparation and negotiation of this Agreement, and the other Transaction Documents, the other supporting documents referred to in Section 5 of this Agreement, and the consummation of the transactions contemplated hereby and thereby. Notwithstanding the foregoing or anything else in this Agreement to the contrary, the Company shall not be required to reimburse the Purchasers for more than $125,000 in filing fees (plus reasonable legal expenses incurred in connection with the preparation of one filing) for all filings under the HSR Act. (b) Upon Closing, the Company agrees to pay Apollo or their designees a fee equal to three and one half percent (3.50%) of the Purchase Price. 12.13HSR Act. The Company and each Purchaser required to file -------- notification under the HSR Act with respect to the acquisition by holders of Series B Preferred Stock of a present right to vote in the election of directors of the Company, whether pursuant to the terms of Section 9(a) of the Certificate of Designations or prior to exchange of Series B Preferred Stock for Series A Preferred Stock pursuant to Section 7 of the Certificate of Designations (an "HSR Conversion"), shall file notification under the HSR Act within 30 days after the Initial Issuance and the waiting period shall have expired or been terminated prior to any HSR Conversion being consummated, notwithstanding any provision of this Agreement or the Certificate of Designations to the contrary. 12.14Counterparts. This Agreement may be executed in any number of ------------ counterparts and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. 12.15Entire Agreement. This Agreement and the other Transaction ----------------- Documents contain the entire agreement among the parties hereto with respect to the subject matter hereof and such Agreement supersedes and replaces all other prior agreements, written or oral among the parties hereto with respect to the subject matter hereof. 41 IN WITNESS WHEREOF, the parties hereto have caused this Investment Agreement to be duly executed as of the day and year first above written. AMC ENTERTAINMENT INC. By: /S/ PETER C. BROWN ----------------------------------------------------- Name: Peter C. Brown Title: Chairman of the Board, President and Chief Executive Officer 42 APOLLO INVESTMENT FUND IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO OVERSEAS PARTNERS IV, L.P. By: APOLLO ADVISORS IV, L.P. its managing general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO MANAGEMENT IV, L.P. in its capacity as investment manager to Apollo Investment Fund IV, L.P. By: AIF IV Management, Inc. By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President 43 APOLLO INVESTMENT FUND V, L.P. By: APOLLO ADVISORS V, L.P. its general partner By: Apollo Capital Management V, Inc. its general partner By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO OVERSEAS PARTNERS V, L.P. By: APOLLO ADVISORS V, L.P. its managing general partner By: Apollo Capital Management V, Inc. its general partner By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO MANAGEMENT V, L.P. in its capacity as investment manager to Apollo Investment Fund V, L.P. By: AIF V Management, Inc. By: /S/ MARC ROWAN ----------------------------------------------------- Name: Marc Rowan Title: Vice President 44 EX-99.3 3 d25605_ex99-3.txt EXHIBIT 99.3 CERTIFICATE OF DESIGNATIONS OF SERIES A CONVERTIBLE PREFERRED STOCK AND SERIES B EXCHANGEABLE PREFERRED STOCK OF AMC ENTERTAINMENT INC. (Pursuant to Section 151(g) of the General Corporation Law of the State of Delaware) AMC ENTERTAINMENT INC., a Delaware corporation (hereinafter, the "Company"), pursuant to Section 151 of the General Corporation Law of the State ------- of Delaware (the "GCL") does hereby make this Certificate of Designations and --- does hereby state and certify that, pursuant to the authority expressly vested in the Board of Directors of the Company (the "Board of Directors") by the ------------------- Certificate of Incorporation, and pursuant to Section 141(c) of the GCL the following resolutions have been duly adopted: RESOLVED, that pursuant to Article Fourth of the Certificate of Incorporation (which authorizes 10,000,000 shares of preferred stock, $0.66 2/3 par value), the designations, powers and preferences, and the relative participating, optional and other special rights, and the qualifications, limitations and restrictions thereof, of a series of Series A Convertible Preferred Stock and a series of Series B Exchangeable Preferred Stock are fixed as stated herein. RESOLVED, that each share of the Series A Convertible Preferred Stock and each share of Series B Exchangeable Preferred Stock shall rank equally in all respects and that each series shall be subject to the following provisions: Section 1. Designation; Rank. The first series of preferred stock ------------------ shall be designated Series A Convertible Preferred Stock, par value $0.66 2/3 per share (the "Series A Preferred Stock") and shall consist of 2,000,000 -------------------------- shares. The second series of preferred stock shall be designated Series B Exchangeable Preferred Stock, par value $0.66 2/3 per share (the "Series B -------- Preferred Stock" and, together with the Series A Preferred Stock, the "Preferred - --------------- --------- Stock") and shall consist of 2,000,000 shares. The Preferred Stock will rank, - ----- with respect to dividend rights and rights upon liquidation, winding up and dissolution (a "Liquidation"): (a) senior to all classes of common stock of the ----------- Company (including, without limitation, the Common Stock and the Class B Stock) and each other class of capital stock or series of preferred stock hereafter established after the offering of the Preferred Stock by the Board of Directors that does not expressly provide that it ranks senior to or on parity with the Preferred Stock as to dividend rights and rights on Liquidation (collectively referred to with the Common Stock of the Company as "Junior Stock"); (b) on ------------- parity with any class of capital stock of the Company or series of preferred stock of the Company hereafter established, the terms of which expressly provide that such class or series will rank on parity with the Preferred Stock as to dividends and other distributions, including distributions upon a Liquidation ("Parity Stock"); and (c) junior to any class of capital stock of the Company or ------------ any series of preferred stock of the Company hereafter established, the terms of which expressly provide that such class or series will rank senior to the Preferred Stock as to dividends and other distributions, including distributions upon a Liquidation ("Senior Stock"). Section 2. Dividends. --------- (a) Series A Preferred Stock. ------------------------ (1) The holders of the then outstanding shares of Series A Preferred Stock (including any Additional Series A Securities (as hereinafter defined)) will be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Company legally available therefor, cumulative dividends, from the Original Issuance Date through and including the date on which such dividends are paid at the annual rate of 6.75% (the "Series A -------- Applicable Rate") of the Series A Liquidation Preference (as hereinafter - ---------------- defined) per share of the Series A Preferred Stock, payable in arrears on the last day of each of June, September, December and March (the "Dividend Payment ---------------- Date"), commencing on June 30, 2001; provided that: (i) if any such Dividend - ---- Payment Date is not a Business Day then such dividend shall be payable on the next Business Day, and (ii) accumulated and unpaid dividends for any prior quarterly period may be paid at any time. Such dividends shall be deemed to accrue on the Series A Preferred Stock from the Original Issuance Date and be cumulative whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. The term "Business Day" means any day other than a Saturday, ------------- Sunday or day on which banking institutions in New York are authorized or required to remain closed. The term "Original Issuance Date" means, with respect ---------------------- to the Preferred Stock, the Initial Issuance Date, and, with respect to the Additional Securities (as hereinafter defined), the date upon which they are issued or, if not issued, the applicable dividend payment date on which the Additional Securities were to have been issued. (2) During the PIK Period, dividends on such Series A Preferred Stock shall be paid through the issuance of additional shares of Series A Preferred Stock to holders of Series A Preferred Stock ("Additional ---------- Series A Securities"). The number of Additional Series A Securities that are - -------------------- issued to the holders of the Series A Preferred Stock under paragraphs 2(a)(2) and 2(a)(3) hereof on any Dividend Payment Date will be the number obtained by dividing (i) the total dollar amount of cumulative dividends due and payable on - -------- the applicable Dividend Payment Date by (ii) the Series A Liquidation Preference (which, for the purposes of this calculation, shall not include any accrued and unpaid dividends), provided, that the Company shall not be required to issue fractional shares of Series A Preferred Stock, but in lieu thereof may elect to pay in cash the portion of any dividend payable in shares of Series A Preferred Stock that would otherwise require the issuance of a fractional share. (3) After the PIK Period and until the seventh anniversary of the Initial Issuance Date, dividends on the Series A Preferred Stock shall be payable in cash or in Additional Series A Securities, at the Company's option. After the seventh anniversary of the Initial Issuance Date, dividends on the Series A Preferred Stock shall be payable in cash, unless such cash payment is prohibited by the terms of the indentures for the Company's Existing High Yield Indebtedness, in which case such dividends shall be payable in Additional Series A Securities. 2 (4) If at any time when the Company is unable to pay cash dividends on the Series A Preferred Stock (whether by the terms of the Series A Preferred Stock, by the terms of the Company's indebtedness or by law) and the accrual, declaration or payment of Additional Series A Securities would either (i) result in a "change of control" (as defined pursuant to the terms of the indentures governing the Company's Existing High Yield Indebtedness) or (ii) require the Company to reserve for issuance underlying shares of Common Stock in excess of the number of authorized shares available for issuance under the Company's Certificate of Incorporation, then the Additional Series A Securities shall instead be accrued, declared or paid in Additional Series B Securities (as hereinafter defined). If for any reason, the holders of Preferred Stock receive Additional Series B Securities pursuant to this paragraph 2(a)(4), as soon as, and to the extent that, additional shares of Series A Preferred Stock can be issued at any time in the future without resulting in a "change of control" (as defined pursuant to the terms of indenture governing the terms of the Company's Existing High Yield Indebtedness), the Additional Series B Securities issued pursuant to this paragraph 2(a)(4) (including any Additional Series B Securities issued as a dividend thereon) shall be automatically and immediately exchanged for an equal number of shares of Series A Preferred Stock. The number of shares of Additional Series B Securities that are issued to the holders of the Series A Preferred Stock pursuant to this paragraph shall equal the amount of such dividend as calculated pursuant to paragraph 2(a)(2) or 2(a)(3), as applicable, divided by the Series B Liquidation Preference (which, for purposes of this - ---------- calculation, shall not include any accrued and unpaid dividends). (5) Upon the occurrence of a Change of Control on or before the fifth anniversary of the Initial Issuance Date (or, in the event of such a Change of Control which has been approved by the Board of Directors, on the Business Day immediately preceding the date of consummation of the Change of Control), the holders of Series A Preferred Stock shall receive a one-time dividend of Additional Series A Securities on each share of Series A Preferred Stock. The amount of such dividend of Additional Series A Securities pursuant to this paragraph 2(a)(5) shall equal (x) the total value of the dividends that would have been payable on such share of Series A Preferred Stock between the Initial Issuance Date and the fifth anniversary thereof (assuming compounding) less (y) the sum of (I) the Additional Series A Securities paid pursuant to paragraphs 2(a)(2) and 2(a)(3) on such share of Series A Preferred Stock through such date and (II) any cash dividends paid on such Series A Preferred Stock through such date (the "Series A No-Call Period Dividend"). The number of shares -------------------------------- of Additional Series A Securities constituting the Series A No-Call Period Dividend shall equal the amount of such dividend as calculated pursuant to the previous sentence divided by the Series A Liquidation Preference (which, for the ------- -- purposes of this calculation, shall not include any accrued and unpaid dividends). To the extent that shares of Series A Preferred Stock remain outstanding subsequent to a Change of Control, no dividends will be paid under paragraphs 2(a)(2) or 2(a)(3) during the period commencing on the closing date of the transaction giving rise to the Change of Control and ending on the fifth anniversary of the Initial Issuance Date, if the Series A No-Call Period Dividend has been paid under this paragraph 2(a)(5) with respect to such shares of Series A Preferred Stock. 3 (b) Series B Preferred Stock. ------------------------ (1) The holders of the then outstanding shares of Series B Preferred Stock (including any Additional Series B Securities (as hereinafter defined)) will be entitled to receive, when, as and if declared by the Board of Directors out of funds of the Company legally available therefor, cumulative dividends, from the Original Issuance Date through and including the date on which such dividends are paid at the annual rate of 12.00%, subject to retroactive adjustment as set forth below (the "Series B Applicable Rate" and ------------------------- together with the Series A Applicable Rate, the "Applicable Rate") of the Series --------------- B Liquidation Preference per share of the Series B Preferred Stock, payable in arrears on the Dividend Payment Date, commencing on June 30, 2001; provided that: (i) if any such Dividend Payment Date is not a Business Day then such dividend shall be payable on the next Business Day, and (ii) accumulated and unpaid dividends for any prior quarterly period may be paid at any time. Such dividends shall be deemed to accrue on the Series B Preferred Stock from the Original Issuance Date and be cumulative whether or not earned or declared and whether or not there are profits, surplus or other funds of the Company legally available for the payment of dividends. If the Company obtains Shareholder Approval as a result of the Initial Solicitation and all of the then outstanding shares of Series B Preferred Stock are exchangeable immediately following such Shareholder Approval (or would otherwise be eligible for exchange into Series A Preferred Stock except for the failure to obtain HSR Approval, to the extent such HSR Approval is required) for Series A Preferred Stock pursuant to section 7 hereof (the "Initial Solicitation Conversion"), the Series B Applicable Rate, ------------------------------- as to the then outstanding shares of Series B Preferred Stock only (or, in the case of the failure to obtain HSR Approval, to the extent such HSR Approval is required, as to the then outstanding shares of Series B Preferred Stock at the time Shareholder Approval is obtained, plus any shares of Series B Preferred Stock issued between the time Shareholder Approval is obtained and the time HSR Approval is obtained), shall be reduced, retroactively to the Initial Issuance Date, from 12.00% to 6.75%. To the extent necessary to effect such retroactive adjustment of the Series B Applicable Rate, the Company may cancel (without consideration paid to the holder thereof) any Additional Series B Securities (including dividends paid thereon) that have been issued between the Initial Issuance Date and the date of the Initial Solicitation Conversation. (2) During the PIK Period, dividends on such Series B Preferred Stock shall be paid through the issuance of additional shares of Series B Preferred Stock to holders of Series B Preferred Stock ("Additional ---------- Series B Securities" and together with the Additional Series A Securities, the - ------------------- "Additional Securities"). The number of Additional Series B Securities that are -------------------- issued to the holders of the Series B Preferred Stock under paragraphs 2(b)(2) and 2(b)(3) hereof or to holders of Series A Preferred Stock under paragraph 2(a)(4) hereof on any Dividend Payment Date will be the number obtained by dividing (i) the total dollar amount of cumulative dividends due and payable on - -------- the applicable Dividend Payment Date by (ii) the Series B Liquidation Preference (which, for the purposes of this calculation, shall not include accrued and unpaid dividends), provided, that the Company shall not be required to issue fractional shares of Series B Preferred Stock, but in lieu thereof may elect to pay in cash the portion of any dividend payable in shares of Series B Preferred Stock that would otherwise require the issuance of a fractional share. 4 (3) After the PIK Period and until the fifth anniversary of the Initial Issuance Date, dividends on the Series B Preferred Stock shall be payable in cash or in Additional Series B Securities, at the Company's option. After the fifth anniversary of the Initial Issuance Date, dividends on the Series B Preferred Stock shall be payable in cash, unless such payment is prohibited by the terms of the indentures for the Company's Existing High Yield Indebtedness in which case dividends shall be paid in Additional Series B Securities. (4) Upon the occurrence of a Change of Control on or before the fifth anniversary of the Initial Issuance Date (or, in the event of such a Change of Control which has been approved by the Board of Directors, on the Business Day immediately preceding the date of consummation of the Change of Control), the holders of Series B Preferred Stock shall receive a one-time dividend of Additional Series B Securities on each share of Series B Preferred Stock. The amount of such dividend of Additional Series B Securities pursuant to this paragraph 2(b)(4) shall equal (x) the total value of the dividends that would have been payable on such share of Series B Preferred Stock between the Initial Issuance Date and the fifth anniversary thereof (assuming compounding) minus (y) the sum of (I) the Additional Series B Securities paid pursuant to - ----- paragraphs 2(b)(2) and 2(b)(3) on such share of Series B Preferred Stock through such date and (II) any cash dividends paid pursuant to paragraph 2(b)(3) on such share of Series B Preferred Stock through such date (the "Series B No-Call ---------------- Period Dividend"). The number of shares of Additional Series B Securities - ---------------- constituting the Series B No-Call Period Dividend shall equal the amount of such dividend as calculated pursuant to the previous sentence divided by the Series B ---------- Liquidation Preference (which, for the purposes of this calculation, shall not include accrued and unpaid dividends). To the extent that shares of Series B Preferred Stock remain outstanding subsequent to a Change of Control, no dividends will be paid under paragraphs 2(b)(2) or 2(b)(3) during the period commencing on the closing date of the transaction giving rise to the Change of Control and ending on the fifth anniversary of the Initial Issuance Date, if the Series B No-Call Period Dividend has been paid under this paragraph 2(b)(4) with respect to such shares of Series B Preferred Stock. (5) Upon the occurrence of: (A) the Company delivering to the holders of Preferred Stock a notice of redemption pursuant to section 4(b) hereof, each outstanding share of Series B Preferred Stock shall receive a one-time dividend of Additional Series B Securities, the number of shares of which shall be equal to (i) the quotient of (x) the difference (if positive) between the average of the closing price of the Company's Common Stock on the American Stock Exchange or other principal national securities exchange on which the Common Stock is listed or to which the shares are admitted for trading for the 20 trading days prior to determination and the Conversion Price divided ------- by (y) the Conversion Price, minus (ii) any dividend paid on such -- ----- share of Series B Preferred Stock to date pursuant to subparagraphs 2(b)(5)(C) or 2(b)(5)(D) hereof. (B) the tenth anniversary of the Initial Issuance Date, each outstanding share of Series B Preferred Stock shall receive a one-time dividend of Additional Series B Securities, the number of shares of which shall be equal to the quotient of (i) the difference (if positive) between the average of the closing price of the Company's Common Stock on the American Stock Exchange or other principal national securities exchange on which the Common Stock is listed or to which the shares are admitted for trading for the 20 trading days prior to determination and the Conversion Price divided ------- by (ii) the Conversion Price. -- 5 (C) a Change of Control (or, in the event of such a Change of Control which has been approved by the Board of Directors, on the Business Day immediately preceding the date of consummation of the Change of Control), each outstanding share of Series B Preferred Stock shall receive a one-time dividend of Additional Series B Securities, the number of shares of which shall be equal to (i) the quotient of (x) the difference (if positive) between the value per share of the consideration received by the holders of Common Stock as a result of the Change of Control and the Conversion Price divided by (y) the Conversion Price, minus (ii) any dividend ---------- paid on such share of Series B Preferred Stock to date pursuant to subparagraph 2(b)(5)(D) hereof. (D) at any time after 18 months after the Initial Issuance Date, a sale of any shares of Series A Preferred Stock or the Conversion Shares, each outstanding share of Series B Preferred Stock shall receive a dividend of Additional Series B Securities, the amount of which shall be equal to the product of (i) the percentage of the Series A Preferred Stock and/or Conversion Shares sold in such transaction (which shall be the quotient of (x) the Underlying Sold Shares plus the number of Conversion Shares sold in such transaction divided by (y) the Total Unconverted Shares plus ---------- the number of Conversion Shares issued to date) multiplied by (ii) the ------------- quotient of (x) the difference, if positive, between the Effective Sale Price (in the case of a sale of Series A Preferred Stock) or the sale price per share (in the case of a sale of Conversion Shares) and the Conversion Price divided by (y) the Conversion Price. ----------- Notwithstanding the foregoing, no dividend shall be payable pursuant to this subparagraph 2(b)(5)(D) unless (I) the transaction giving rise to the right to receive such dividend shall have been the initial sale of the Series A Preferred Stock or Conversion Shares to a Person that is not an Affiliate of Apollo, an Apollo Purchaser or any other Purchaser; (II) the holder of Series A Preferred Stock sold in the transaction giving rise to the right to receive such dividend also owned Series B Preferred Stock at the time of such transaction; and (III) the holder of the Series B Preferred Stock receiving such dividend also owned Series A Preferred Stock at the time of the transaction giving rise to the right to receive such dividend. Notwithstanding the foregoing, the Company shall not be required to deliver stock certificates representing any dividend payable pursuant to this subparagraph 2(b)(5)(D) until the percentage of Series A Preferred Stock (including the Conversion Shares) sold, in a single transaction or in any number of transactions over time, aggregated together for all selling holders who would have otherwise been eligible for the dividend provided in this subparagraph 2(b)(5)(D), shall be at least equal to 10% of the total number of shares of Series A Preferred Stock issued to date (for purposes of the calculation in this sentence, with respect to the Conversion Shares, the number of shares of Series A Preferred Stock from which the Conversion Shares were converted shall be used (the "Threshold Amount")). To the extent ---------------- that such dividends are not made solely because the sales of Series A Preferred Stock did not meet the Threshold Amount, such unpaid dividends shall accrue. Any Additional Series B Securities received as dividends on the Series B Preferred Stock pursuant to subparagraphs 2(b)(5)(A), 2(b)(5)(B) and 2(b)(5)(C) shall not be eligible to receive any of the dividends described in subparagraph 2(b)(5)(D) hereof. Any Additional Series B Securities received as dividends on the Series B Preferred Stock to this subparagraph 2(b)(5)(D) shall not be eligible to receive any of the dividends described in section 2(b)(5) hereof. 6 (c) In the event that, in any fiscal period, the Company shall declare and pay, out of funds legally available therefor, cash dividends (or dividends payable in evidences of indebtedness issued by the Company) on shares of the Common Stock, holders of Series A Preferred Stock and Series B Preferred Stock shall be entitled to receive, in addition to dividends received pursuant to Sections 2(a) and 2(b) hereof, a cash dividend (or, if the dividend on the Common Stock was paid in the form of an instrument of indebtedness, a dividend paid in such instrument) equal to the excess, if any, of: (i) the amount of dividends that such holder of Preferred Stock would have received had such share of Preferred Stock been converted into Common Stock (or, in the case of Series B Preferred Stock, had such Series B Preferred Stock first been exchanged for Series A Preferred Stock and then converted into Common Stock) immediately before payment of such dividend; minus (ii) the face amount of any dividend payable in such fiscal period in Additional Securities (or the cash amount of any cash dividend payable) on such share of Preferred Stock (pursuant to paragraphs 2(a)(2), 2(a)(3), 2(b)(2) or 2(b)(3) hereof). (d) Holders of shares of the Preferred Stock shall be entitled to full cumulative dividends, as herein provided, on the Preferred Stock and no additional amounts. Except as set forth in section 2(e) below, no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Preferred Stock that may be in arrears. (e) If dividends are not paid in full, or declared in full and sums set apart for the payment thereof, upon the shares of Preferred Stock and the shares of Parity Stock, all dividends declared upon shares of Preferred Stock and upon all Parity Stock shall be paid or declared pro rata so that in all cases the amount of dividends paid or declared per share on the Preferred Stock and such Parity Stock shall bear to each other the same ratio that unpaid accumulated dividends per share, including dividends accrued or in arrears, if any, on the shares of Preferred Stock and such other shares of Parity Stock, bear to each other. Unless and until full cumulative dividends on the shares of Preferred Stock in respect of all past quarterly dividend periods have been paid, and the full amount of dividends on the shares of Preferred Stock in respect of the then current quarterly dividend period shall have been or are contemporaneously declared in full and sums set aside for the payment thereof, no shares of Junior Stock or Parity Stock shall be redeemed, retired, purchased or otherwise acquired for any consideration (or any payment made to or available for a sinking fund for the redemption of any such shares) by the Company or any Subsidiary of the Company (except by conversion into or exchange for shares of Junior Stock). Unless and until full cumulative dividends on the shares of Preferred Stock in respect of all past quarterly dividend periods have been paid or are contemporaneously declared in full and sums set aside for payment thereof, no dividends shall be paid or declared or set aside for payment or other distribution upon the Junior Stock, other than in shares of, or warrants or rights to acquire, Junior Stock. For the purposes hereof, a "Subsidiary" shall mean any corporation, association or other business entity ---------- (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled by the Company; or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such person. 7 The terms "accrued dividends," "dividends accrued" and "dividends in ------------------ ----------------- ------------ arrears," whenever used herein with reference to shares of Preferred Stock shall - ------- be deemed to mean an amount which shall be equal to dividends thereon at the Applicable Rate per share for the respective series from the date or dates on which such dividends commence to accrue to the end of the then current quarterly dividend period for such Preferred Stock (or, in the case of redemption, to the date of redemption), whether or not earned or declared and whether or not assets for the Company are legally available therefor, and if full dividends are not declared or paid (whether in cash or in Additional Securities), then such dividends shall cumulate, with additional dividends thereon, compounded quarterly, at the Applicable Rate, for each quarterly period during which such dividends remain unpaid, less the amount of all such dividends paid, or declared in full and sums set aside for the payment thereof, upon such shares of Preferred Stock. (f) The amount of any dividends per share of Preferred Stock for any full quarterly period shall be computed by multiplying the Applicable Rate for such quarterly dividend period by the Liquidation Preference per share and dividing the result by four. Dividends payable on the shares of Preferred Stock for any period less than a full quarterly dividend period shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed for any period less than one month. Section 3. Liquidation Preference. ---------------------- (a) Series A Preferred Stock. ------------------------ (1) In the event of a Liquidation, whether voluntary or involuntary, the holders of Series A Preferred Stock then outstanding shall be entitled to receive out of the available assets of the Company, whether such assets are stated capital or surplus of any nature, an amount on such date equal to the greater of (i) $1000.00 (the "Issue Price") per ----------- share of Series A Preferred Stock plus all accrued and unpaid dividends (including any dividends payable in respect of the elapsed portion of the then current quarter in accordance with section 2(f)) per share of Series A Preferred Stock as of such date, calculated pursuant to section 2(a) hereinabove (the "Series A Liquidation Preference") and (ii) such amount per share of Series A --------------------------------- Preferred Stock, as would have been payable had each share been converted into Common Stock immediately prior to such Liquidation (with respect to the calculations set forth above, the "Series A Liquidation Payment"). The Series A ---------------------------- Liquidation Payment shall be made before any payment shall be made or any assets distributed to the holders of any class or series of the Common Stock or any other class or series of the Company's capital stock ranking junior as to liquidation rights to the Preferred Stock. Following payment to the holders of the Series A Preferred Stock and Series B Preferred Stock (as set forth in section 3(b) below) of the full preferential amounts described in the first sentence of this section 3, the remaining assets (if any) of the Company available for distribution to stockholders of the Company shall be distributed, subject to the rights of the holders of shares of any other series of preferred stock ranking senior to the Common Stock as to distributions, upon Liquidation pro rata among the holders of the Common Stock and any other shares of capital stock of the Company ranking on a parity with the Common Stock as to distributions upon Liquidation. If upon any such Liquidation the assets available for payment of the Series A Liquidation Payment are insufficient to permit the payment to the holders of the Preferred Stock of the full preferential amounts described in this paragraph, then all the remaining available assets shall be distributed among the holders of the then outstanding Preferred Stock and any other then outstanding Parity Stock pro rata according to the number of then outstanding shares of Preferred Stock and Parity Stock held by each holder thereof. 8 (2) The Series A Liquidation Preference shall be proportionately adjusted in the event of any stock split, reverse stock split, stock combination, reclassification or pursuant to any other adjustment with respect to the Series A Preferred Stock. (b) Series B Preferred Stock. ------------------------ (1) In the event of a Liquidation, whether voluntary or involuntary, the holders of Series B Preferred Stock then outstanding shall be entitled to receive out of the available assets of the Company, whether such assets are stated capital or surplus of any nature, an amount on such date equal to the greater of (i) the Issue Price plus all accrued and unpaid dividends (including any dividends payable in respect of the elapsed portion of the then current quarter in accordance with section 2(f)) per share of Series B Preferred Stock as of such date, calculated pursuant to section 2(b) hereinabove (with respect to the calculation set forth above, the "Series B -------- Liquidation Preference" and together with the Series A Liquidation Preference - ----------------------- the "Liquidation Preference") and (ii) such amount per share of Series B ----------------------- Preferred Stock, as would have been payable had each share first been exchanged for Series A Preferred Stock (assuming for this provision that all conditions to conversion had occurred) and then such shares of Series A Preferred Stock were converted into Common Stock pursuant to section 6 immediately prior to such Liquidation (the "Series B Liquidation Payment" and together with the Series A ----------------------------- Liquidation Payment, the "Liquidation Payment"). The Series B Liquidation -------------------- Payment shall be made before any payment shall be made or any assets distributed to the holders of any class or series of the Common Stock or any other class or series of the Company's capital stock ranking junior as to liquidation rights to the Preferred Stock. Following payment to the holders of the Series A Preferred Stock (as set forth in section 3(a) above) and Series B Preferred Stock of the full preferential amounts described in this section 3(b)(1), the remaining assets (if any) of the Company available for distribution to stockholders of the Company shall be distributed, subject to the rights of the holders of shares of any other series of preferred stock ranking senior to the Common Stock as to distributions, upon Liquidation pro rata among the holders of the Common Stock and any other shares of capital stock of the Company ranking on a parity with the Common Stock as to distributions upon Liquidation. If upon any such Liquidation the assets available for payment of the Liquidation Payment are insufficient to permit the payment to the holders of the Preferred Stock of the full preferential amounts described in this paragraph, then all the remaining available assets shall be distributed among the holders of the then outstanding Preferred Stock and any other then outstanding Parity Stock pro rata according to the number of then outstanding shares of Preferred Stock and Parity Stock held by each holder thereof. 9 (2) The Series B Liquidation Preference shall be proportionately adjusted in the event of any stock split, reverse stock split, stock combination, reclassification or pursuant to any other adjustment with respect to the Series B Preferred Stock. Section 4. Optional Redemption. ------------------- (a) Optional Redemption by Holders of Preferred Stock. ------------------------------------------------- At any time after the tenth anniversary of the Initial Issuance Date, a holder of Series A Preferred Stock may, upon 15 Business Days written notice to the Company, require the Company to redeem in whole or in part, the shares of Series A Preferred Stock (including shares issuable in respect of accrued but unpaid dividends)(the "Holder Optional Redemption") for either (x) cash or (y) Common --------------------------- Stock (which may be unregistered), at the Company's option, at a total redemption price equal to the Series A Liquidation Preference, subject to a maximum redemption price of $130,035,684.35 in the event that Shareholder Approval is not obtained. If the Company elects to settle such maximum redemption price in Common Stock rather than in cash then the number of shares of Common Stock shall be determined as set forth below, subject to a maximum number of shares of Common Stock of 18,186,809 in the event that Shareholder Approval is not obtained (the "Holder Redemption Price"). Such notice shall ------------------------- specify the date of the Holder Optional Redemption (which date shall be at least 15 Business Days after such notice (the "Holder Redemption Date")). Common Stock ---------------------- used as consideration for the redemption price pursuant to clause (y) shall be valued at its market value (based on the average of the closing price of the Company's Common Stock on the American Stock Exchange or other principal national securities exchange on which the Common Stock is listed or to which the shares are admitted for trading for the 20 trading days prior to determination or, if no such trading market exists, as determined by a nationally recognized investment bank (which shall consider the liquidity of the Common Stock in making its valuation)); provided, that in no event shall the value attributed to the Common Stock pursuant to clause (y) be less than the then Conversion Price and in the event that Shareholder Approval is not obtained be less than $7.15 per share of Common Stock (the price determined pursuant to clause (y) being the "Common Stock Redemption Value"). ----------------------------- (b) Optional Redemption by Company. ------------------------------ (1) At any time after April 19, 2006, the Company may, upon 45 days written notice to the holders of the Preferred Stock, redeem all, but not less than all, of the then outstanding shares of Preferred Stock (including shares issuable in respect of accrued but unpaid dividends)(the "Company Optional Redemption") for cash at a redemption price per share equal to --------------------------- the Liquidation Preference (the "Company Redemption Price"); provided, however, ------------------------ -------- ------- that the average of the closing price of the Common Stock on the American Stock Exchange or other national securities exchange where the Common Stock is listed or to which the shares are admitted for trading for the 20 trading days prior to the delivery by the Company of the notice of redemption exceeds 150% of the Conversion Price. Such notice shall specify the date of the Company Optional Redemption (which shall be at least 45 days after such notice (the "Company ------- Redemption Date")). The shares of Preferred Stock will remain convertible or - ---------------- exchangeable until the redemption price is paid. 10 (2) Upon the occurrence of a Change of Control, the Company may, upon 10 days notice to the holders of the Preferred Stock, redeem all, but not less than all, of the then outstanding shares of Preferred Stock (the "Change of Control Redemption") for cash at the Company Redemption ----------------------------- Price; provided, however, that if such Change of Control occurs before the fifth -------- ------- anniversary of the Initial Issuance Date, the Company shall pay to the holder of each share of Preferred Stock the Series A No-Call Period Dividend or the Series B No-Call Period Dividend, as the case may be, at least five days before the Change of Control Redemption. The shares of Preferred Stock, including the shares issued pursuant to the Series A No-Call Period Dividend or the Series B No-Call Period Dividend, will remain convertible or exchangeable, as the case may be, until the redemption price is paid. Notwithstanding the foregoing, the Company may not redeem the Series B Preferred Stock pursuant to this paragraph 4(b)(2) unless the Change of Control giving rise to such right of redemption is also a Reorganization Event, subject to section 5 below. (c) Payment of Redemption Price. All accrued and ---------------------------- unpaid dividends on Preferred Stock through the date of the Holder Redemption Date or Company Redemption Date, as the case may be, shall be payable in full at the time of redemption. Payment of the Holder Redemption Price and payment of accrued and unpaid dividends in connection with a Holder Optional Redemption may be made in cash or, to the extent that a sufficient number of authorized but unissued shares of Common Stock (which may be unregistered) are available, Common Stock at the Common Stock Redemption Value, or any combination thereof. Payment of accrued and unpaid dividends in connection with a Company Optional Redemption shall be made in cash. (d) Status of Redeemed Shares. Any shares of ---------------------------- Preferred Stock that shall at any time have been redeemed pursuant to section 4 hereof shall, after such redemption, have the status of authorized but unissued shares of Preferred Stock, without designation as to series. Section 5. Consideration Received upon a Reorganization, -------------------------------------------------- Merger, etc. In the event of any reorganization of the Company, any - ------------- reclassification of the stock of the Company, any consolidation or merger of the Company, any sale or conveyance of all or substantially all of the assets of the Company, or any other event that results in the Common Stock being changed into the same or a different number of other securities of another entity (other than events described in section 6(e) below) or exchanged for assets (including cash) from another entity (any such event, a "Reorganization Event") shall be effected -------------------- in such a way that the holders of Common Stock shall be entitled to receive stock, securities or assets (including cash) from another entity with respect to or in exchange for their shares of Common Stock, then, prior to and as a condition of such reorganization, reclassification, consolidation, merger, sale or conveyance, lawful and adequate provision shall be made whereby the holders of Series B Preferred Stock may thereafter elect to receive such shares of stock, securities or assets (including cash) as may be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock issuable upon conversion of such shares of Series B Preferred Stock (assuming such Series B Preferred Stock had been first exchanged for Series A Preferred Stock), had such Reorganization Event not taken place. In any such case, appropriate provision shall be made with respect to the rights and interests of the holders of Series B Preferred Stock to the end that the provisions hereof shall thereafter be applicable, as nearly as may be, in relation to any stock, securities or assets thereafter deliverable upon the exchange of the Series B Preferred Stock (assuming such 11 Series B Preferred Stock had been exchanged for Series A Preferred Stock and then the Series A Preferred Stock was converted to Common Stock). The Company shall not effect any such Reorganization Event (i) unless prior to or simultaneously with the consummation thereof the survivor or successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and sent to each holder of Series B Preferred Stock, the obligation to deliver to such holder of Series B Preferred Stock such shares of stock, securities or assets (including cash) as, in accordance with the foregoing provisions, such holder of Series B Preferred Stock may be entitled to receive, and containing the express assumption by such successor corporation of the due and punctual performance and observance of every provision herein to be performed and observed by the Company and of all liabilities and obligations of the Company hereunder, and (ii) in which the Company, as opposed to another party to the Reorganization Event, shall be required under any circumstances to make a cash payment at any time to the holders of the Series B Preferred Stock. Section 6. Conversion Rights. The holders of the Series A ------------------- Preferred Stock shall have conversion rights as follows: (a) Generally. At any time after the Conversion Shares ---------- issuable upon conversion of the shares of Series A Preferred Stock sold on the Initial Issuance Date are approved for listing on the American Stock Exchange, the shares of Series A Preferred Stock shall be convertible at any time, in whole or in part, into fully paid and non-assessable shares (calculated as to each conversion to the nearest 1/100 of a share) of Common Stock, at the conversion price, determined as hereinafter provided, in effect at the time of conversion, with each share of Series A Preferred Stock having a value equal to the Series A Liquidation Preference. The price at which shares of Common Stock shall be issued upon conversion (herein called the "Conversion Price") shall be ------------------ initially $7.15 per share of Common Stock. The Conversion Price and the number of shares of Common Stock into which the Series A Preferred Stock is convertible shall be adjusted in certain instances as provided below. (b) Mechanics of Conversion. All or any portion of the ----------------------- shares of Series A Preferred Stock held by any holder shall convert effective immediately prior to the close of business on the date that the Company has received from such holder of Series A Preferred Stock (i) a notice of conversion to the Company, setting forth the number of shares to be converted, (ii) an executed stock power assigning and transferring such shares of Series A Preferred Stock to the Company, (iii) certificates representing the shares of Series A Preferred Stock to be converted and (iv) a written notice to the Company stating therein its name or the name or names of its nominees in which it wishes the Common Stock to be issued. The shares of Common Stock shall be deemed issued upon compliance with the forgoing requirements and the holder of Series A Preferred Stock thereof shall be entitled to exercise and enjoy all rights with respect to such shares of Common Stock. The Company shall, as soon as practicable thereafter, but in any event, within 10 Business Days, issue and deliver certificates representing Common Stock at such office to such holder of Series A Preferred Stock, or to his or her nominee or nominees. If the conversion is in connection with an underwritten offering of securities registered pursuant to the Securities Act, the conversion shall be conditioned upon the closing with the underwriters of the sale of securities pursuant to such offering, in which event the person(s) entitled to receive the Common Stock upon conversion of the Series A Preferred Stock shall not be deemed to have converted such Series A Preferred Stock until immediately prior to the closing of such sale of securities. 12 (c) Reservation of Shares. The Company shall at all ---------------------- times reserve and keep available out of its authorized but unissued shares of Common Stock for the purpose of issuance upon conversion of shares of Series A Preferred Stock sufficient shares of Common Stock, and shall take all action necessary so that shares of Common Stock so issued will be validly issued, fully paid and nonassessable. (d) Adjustment to Conversion Price Upon -------------------------------------------------- Reclassifications, Reorganizations, Consolidations or Mergers. In the event of - --------------------------------------------------------------- any reorganization of the Company, any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value), any consolidation or merger of the Company or any other event that results in the Common Stock being changed into the same or a different number of other securities, each share of Series A Preferred Stock shall concurrently with the effectiveness of such reorganization, reclassification, consolidation, merger or other event be convertible into the kind and number of shares of stock or other securities or property of the Company or of the successor corporation resulting from such consolidation or surviving such merger, if any, to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation, merger or other event) upon conversion of such Series A Preferred Stock would have been entitled upon such reorganization, reclassification, consolidation, merger or other event. The provisions of this clause shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers or similar events. (e) Adjustment to Conversion Price Upon Stock -------------------------------------------------- Dividends, Splits and Reclassifications. In case the Company shall (i) pay a - ----------------------------------------- dividend in Common Stock or (ii) subdivide or split-up its outstanding Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the Conversion Price shall be appropriately decreased so that the number of shares of Common Stock issuable on conversion of Series A Preferred Stock shall be increased in proportion to such increase in outstanding shares. (f) Adjustment to Conversion Price Upon Combinations. ------------------------------------------------- If the number of shares of Common Stock outstanding is decreased by a combination of the outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, following the record date to determine shares affected by such combination, the Conversion Price shall be appropriately increased so that the number of shares of Common Stock issuable on conversion of each share of Series A Preferred Stock shall be decreased in proportion to such decrease in outstanding shares. (g) Conversion Price Adjustment. --------------------------- (1) Whenever the number of shares of Common Stock into which the Series A Preferred Stock is convertible is adjusted as provided under section 6, the Conversion Price shall be adjusted by multiplying such Conversion Price immediately prior to such adjustment by a fraction: 13 (A) the numerator of which shall be the number of shares of Common Stock into which the Series A Preferred Stock is convertible immediately prior to such adjustment; and (B) the denominator of which shall be the number of shares of Common Stock into which the Series A Preferred Stock is convertible immediately thereafter. (2) Notwithstanding the foregoing, no adjustment of the Conversion Price shall be made in an amount less than $0.01 per share, but any such lesser adjustment shall be carried forward and shall be made at the time of and together with the next subsequent adjustment which, together with any adjustments so carried forward, shall amount to $0.01 per share or more. (h) Notices. Whenever the number of shares of Common ------- Stock into which the Series A Preferred Stock is convertible is adjusted as herein provided, the Company shall cause to be promptly delivered to each holder of shares of Series A Preferred Stock at its last address as it shall appear on the books of the Company by telecopier transmission or by a nationally recognized overnight delivery service, notice of such adjustment or adjustments setting forth the number of shares of Common Stock into which the Series A Preferred Stock is convertible and the Conversion Price after such adjustment, a brief statement of the facts requiring such adjustment and the computation by which such adjustment was made. The Company shall give notice to each holder of shares of Series A Preferred Stock of any transaction contemplated by section 6(d) not later than 10 days following the consummation of such transaction, setting forth the estimated date of consummation. Any such notice shall be treated as effective or having been given (i) if transmitted by telecopier, on the Business Day of confirmed receipt by the addressee thereof, and (ii) if delivered by overnight courier, on the Business Day delivered. The failure to give the notice required in this paragraph or any defect therein shall not affect the legality or validity of the event causing the adjustment of the Conversion Price or any other action taken in connection therewith. In case: (1) the Company shall declare a dividend on its Common Stock Equivalents payable otherwise than in cash; (2) the Company shall authorize the granting to the holders of its Common Stock Equivalents of rights or warrants to subscribe for or purchase any shares of Common Stock Equivalents (or securities convertible into shares of Common Stock Equivalents); (3) of any reclassification of the capital stock of the Company (other than a subdivision or combination of outstanding shares of Common Stock), or of any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or 14 (4) the Company shall be (voluntarily or involuntarily) dissolved, liquidated or wound up; then the Company shall cause to be mailed to the holders of the Series A Preferred Stock, at least 10 days prior (or in the case of involuntary dissolution or liquidation as soon thereafter as is practicable) to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock Equivalents of record to be entitled to such dividend, rights or warrants are to be determined, or (y) the date on which such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock Equivalents of record shall be entitled to exchange their shares of Common Stock Equivalents for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding up. (i) Common Stock; Other Securities. For the purpose of ------------------------------ this section 6, the term "Common Stock" shall mean (i) the class of stock designated as the Common Stock of the Company at the date of this Certificate of Designations and (ii) any other class of stock resulting from successive changes or reclassification of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time, as a result of an adjustment made pursuant to this section 6, the holder of Series A Preferred Stock shall become entitled to convert its shares of Series A Preferred Stock into any shares of the Company other than Common Stock, thereafter the number of such other shares into which the Series A Preferred Stock is convertible and the Conversion Price of such shares shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the shares contained in this section 6. Section 7. Automatic Exchange of Series B Preferred Stock. ------------------------------------------------- Each share of Series B Preferred Stock shall automatically be exchanged for an equal number of shares of Series A Preferred Stock upon the receipt by the Company of Shareholder Approval and receipt of HSR Approval, to the extent such HSR Approval is required, so long as such exchange will not result in a "change of control" under the terms of the indentures governing the Existing High Yield Indebtedness. Immediately before the exchange of the Series B Preferred Stock, the Company shall pay to the holders of the Series B Preferred Stock, all accrued and unpaid dividends on the Series B Preferred Stock. If for any reason, the exchange of all outstanding shares of Series B Preferred Stock would result in a "change of control" under the terms of the indentures governing the Existing High Yield Indebtedness, only such number of shares of Series B Preferred Stock as would not cause such "change of control" shall be exchanged for shares of Series A Preferred Stock and the remaining shares of Series B Preferred Stock will be exchanged as soon as and to the extent that such exchange would not result in a "change of control" under the terms of indentures governing the Existing High Yield Indebtedness. 15 Section 8. Voting Rights. ------------- (a) Subject to section 8(b) below, upon the transfer of any shares of Series A Preferred Stock, other than a transfer to an Affiliate of an Apollo Purchaser, consistent with the Standstill Agreement, the transferee of such shares of Series A Preferred Stock shall be entitled to vote on an as-converted basis upon all matters to be voted upon by the stockholders of the Company, voting together with the holders of Common Stock and the Class B Stock as a single class; provided that such as-converted voting rights shall not extend (i) to the election of directors or (ii) any matter which is reserved for consideration (by law or by the Certificate of Incorporation) exclusively by the holders of Common Stock or the Class B Stock. (b) Except as otherwise provided by applicable law and in addition to any voting rights provided by section 9(a) below, the Apollo Purchasers (which term, for the purposes of this section 8(b), includes any Affiliates of the Apollo Purchasers) shall not have any voting rights with respect to any Preferred Stock held by such Apollo Purchasers; provided, however, if an Event of Default exists and such Event of Default is not cured or waived within 45 days, the holders of Preferred Stock shall have the right to elect that number of directors which, when added to any representatives of the holders of the Preferred Stock (including the Apollo Purchasers) then on the Board of Directors, will constitute a majority of the Board of Directors. The Board of Directors shall be expanded as necessary to accomplish the purposes of this section 8(b). Upon the cure of such Event of Default, the Board shall be reduced to the size immediately before such Event of Default took place and the holders of the Preferred Stock shall have such rights to elect such number of directors as before the Event of Default. Section 9. Protective and Other Provisions. -------------------------------- (a) So long as the Apollo Purchasers continue to have Preferred Stock Approval Rights as granted under the Investment Agreement, (i) the Apollo Purchasers that are holders of Series A Preferred Stock and the Apollo V Purchasers who hold Series B Preferred Stock, prior to receipt of HSR Approval, to the extent such HSR Approval is required, and (ii) the Apollo Purchasers that are holders of Series A Preferred Stock and Series B Preferred Stock, acting together as a single class, after HSR Approval, to the extent such HSR Approval is required, shall have the right to elect three directors to the Board of Directors. If for any reason, any director appointed by the Apollo Purchasers ceases to be a director before the expiration of his or her term and the Apollo Purchasers have Preferred Stock Approval Rights at such time, the Apollo Purchaser who elected such director shall have the right to appoint a director to fill such vacancy. (b) So long as any of the shares of Preferred Stock remain outstanding, the Company shall not enter into or incur any new indebtedness that would restrict the ability of the Company to pay dividends on the Preferred Stock in the manner required pursuant to section 2 hereof. Notwithstanding the foregoing, the Company may make amendments to the Company's Senior Facility which would restrict the ability of the Company to pay dividends on the Preferred Stock so long as such restriction does not extend beyond the PIK Period. 16 Section 10. Limitations. In addition to any other rights ----------- provided by applicable law, so long as any shares of Series A Preferred Stock are outstanding, the Company shall not, without the affirmative vote, or the written consent as provided by law, of the Requisite Holders, at a vote of the holders of Series A Preferred Stock, voting separately as a class, (a) create, authorize or issue any class, series or shares of (i) Senior Stock, (ii) Parity Stock, or (iii) Junior Stock, if such Junior Stock may be redeemed, at the option of the holder thereof, on or prior to the Holder Redemption Date; or (b) change the preferences, rights or powers with respect to the Preferred Stock so as to affect the Preferred Stock adversely. Section 11. Dividend Received Deduction. For federal income ----------------------------- tax purposes, the Company shall report distributions of cash and property (other than the Additional Securities) on the Series A Preferred Stock as dividends, to the extent of the Company's current and accumulated earnings and profits (as determined for federal income tax purposes). Section 12. Definitions. For purposes of this Certificate of ------------ Designations, the following definitions shall apply: "Additional Securities" has the meaning set forth in paragraph 2(b)(2) --------------------- hereof. "Additional Series A Securities" has the meaning set forth in --------------------------------- paragraph 2(a)(2) hereof. "Additional Series B Securities" has the meaning set forth in paragraph 2(b)(2) hereof. "Affiliate" means, with respect to any Person, (i) any other Person --------- directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person; (ii) any other Person that owns, directly or indirectly, ten percent or more of such Person's capital stock or other equity interests or any officer or director of any such Person or other Person; or (iii) 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; provided, however, that with respect to Apollo or the Apollo Purchasers, the term "Affiliate" shall not include any limited partner of the Apollo Purchasers or their Affiliates nor any portfolio or investee companies of the Apollo Purchasers or their Affiliates so long as, in either case, (x) Apollo does not control or have investment authority over such limited partner or portfolio or investee company; (y) such limited partner or portfolio or investee company does not operate in the domestic theatrical exhibition industry or otherwise compete with the Company; and (z) Apollo, the Apollo Purchaser or its Affiliates do not own, directly or indirectly, 33% or more of such portfolio or investee company's capital stock or other equity interests. For 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" shall have correlative meanings. 17 "AIF V" means the Apollo Investment Fund V, L.P. ----- "AOP V" means the Apollo Overseas Partners V, L.P. ----- "Apollo V Purchasers" means AIF V and AOP V, and any other partnership ------------------- or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, including voting and dispositive rights and to which either AIF V or AOP V assigns any of their respective interests hereunder. "Apollo" means Apollo Management IV, L.P., Apollo Management V, L.P. ------ and their Affiliates. "Apollo Purchasers" has the meaning set forth in the Investment ------------------ Agreement. "Applicable Rate" has the meaning set forth in section 2(b) hereof. --------------- "Board of Directors" means the Board of Directors of the Company. ------------------ "Business Day" has the meaning set forth in section 2(a) hereof. ------------ "Certificate of Incorporation" means the Certificate of Incorporation ---------------------------- of the Company, as amended from time to time, and as filed with the Secretary of State of the State of Delaware. "Change of Control" means (i) a merger, consolidation or similar -------------------- transaction involving the Company after which holders of the Company's stock before such transaction do not own at least 50% of the combined voting power of all shares generally entitled to vote in the election of the members of the Board of Directors of the surviving entity, (ii) the acquisition by any person or group (other than Apollo or the holders of Class B Stock (so long as each is not a part of a group (as such term is defined in Section 13(d) of the Securities Exchange Act of 1934, as amended and the regulations promulgated thereunder) on the Initial Issuance Date) of beneficial ownership of at least 50% of the combined voting power of all shares generally entitled to vote in the election of the members of the Board of Directors of the Company, or (iii) the sale of all or substantially all of the assets of the Company or similar transaction (the determination of aggregate voting power to recognize that the Company's Class B Stock has ten votes per share and the Company's Common Stock has one vote per share). "Class B Stock" means the Class B Stock, par value $0.66 2/3 per ------------ share, of the Company. "Common Stock" means the Common Stock, par value $0.66 2/3 per share, ------------ of the Company. "Common Stock Equivalents" means all Common Stock and any securities ------------------------- (whether voting common stock or nonvoting common stock) of any class of the Company which have no preference in respect of amounts payable in the event of any voluntary or involuntary liquidation dissolution or winding up of the Company. 18 "Common Stock Redemption Value" has the meaning set forth in section ------------------------------- 4(a) hereof. "Company" means AMC Entertainment Inc., a Delaware corporation. ------- "Company Optional Redemption" has the meaning set forth in section ----------------------------- 4(b) hereof. "Company Redemption Date" has the meaning set forth in section 4(b) ------------------------- hereof. "Company Redemption Price" has the meaning set forth in section 4(b) -------------------------- hereof. "Conversion Factor" shall mean, on any date of determination, the ------------------ quotient of (x) the Liquidation Preference of the Series A Preferred divided by ---------- (y) the Conversion Price. "Conversion Price" has the meaning set forth in section 6(a) hereof. ---------------- "Conversion Shares" means the shares of Common Stock issued upon ------------------ conversion of the Series A Preferred Stock, including the shares of Series A Preferred Stock issued upon conversion of the Series B Preferred Stock. "Dividend Payment Date" has the meaning set forth in section 2(a) ----------------------- hereof. "Effective Sale Price" shall mean, in the case of a sale of Series A --------------------- Preferred Stock, the quotient of (x) the sale price per share of such Series A Preferred stock divided by (y) the Conversion Factor. ---------- "Event of Default" means (i) an event of default as set forth under ----------------- the Company's Senior Indebtedness, Existing High Yield Indebtedness or any other indebtedness of the Company in principal amount in excess of $10.0 million; or (ii) failure of the Company to pay cash dividends on the Preferred Stock when required pursuant to the terms of this Certificate of Designations, without regard to any prohibition by applicable law or otherwise against payment; and (iii) a violation by the Company of the terms of section 8 of the Investment Agreement, provided, however, that no Event of Default pursuant to (iii) above, ----------------- shall be deemed to have occurred unless Apollo, on behalf of the Apollo Purchasers, provides written notice in advance of such violation to the Company describing such violation and such notice is accompanied by an opinion of counsel confirming such violation. "Existing High Yield Indebtedness" means the currently existing ----------------------------------- indebtedness of the Company pursuant to (i) the Indenture dated March 19, 1997, by and between the Company and Bank of New York, as Trustee, in respect of AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2009 and as supplemented by the First Supplemental Indenture dated June 9, 1997 and as it may be amended or supplemented from time to time and (ii) the Indenture dated January 27, 1999, by and between the Company and Bank of New York, as Trustee, in respect of AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due 2011 and as it may be amended or supplemented from time to time. 19 "GCL" shall have the meaning set forth in the first paragraph of this --- Certificate of Designations. "Holder Optional Redemption" has the meaning set forth in section 4(a) hereof. "Holder Redemption Date" has the meaning set forth in section 4(a) ------------------------ hereof. "Holder Redemption Price" has the meaning set forth in section 4(a) ------------------------- hereof. "HSR Approval" means the expiration or early termination of any ------------- applicable waiting period after any filing required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the acquisition of the Series A Preferred Stock and Series B Preferred Stock and the exchange of Series B Preferred Stock for Series A Preferred Stock contemplated by this Certificate of Designations. "Initial Issuance Date" means April 19, 2001, the first date of ----------------------- issuance of the Preferred Stock pursuant to the closing of the Investment Agreement. "Initial Solicitation" means shall mean the solicitation of ---------------------- Shareholder Approval at the Company's next regularly scheduled annual meeting after the Closing Date, which shall take place no later than 270 days after the Initial Issuance Date. "Investment Agreement" means the Investment Agreement entered in as of -------------------- April 19, 2001 among the Company and certain investors named therein. "Issue Price" has the meaning set forth in section 3 hereof. ----------- "Junior Stock" has the meaning set forth in section 1 hereof. ------------ "Liquidation" has the meaning set forth in section 1 hereof. ----------- "Liquidation Payment" has the meaning set forth in section 3(b) -------------------- hereof. "Liquidation Preference" has the meaning set forth in section 3 (b) ----------------------- hereof. "Original Issuance Date" has the meaning set forth in section 2(a) ------------------------ hereof. "Parity Stock" has the meaning set forth in section 1 hereof. ------------ "Person" means all natural persons, corporations, business trusts, ------ associations, companies, partnerships, joint ventures, and other entities and governments and agencies or political subdivisions thereof. 20 "PIK Period" means the period between the Initial Issuance Date and ---------- the third anniversary thereof. "Preferred Stock" means the Series A Preferred Stock and the Series B ---------------- Preferred Stock. "Preferred Stock Approval Rights" has the meaning set forth in the ---------------------------------- Investment Agreement. "Purchasers" shall mean the Apollo Purchasers and any partnership or ---------- other entity to which any of the foregoing assigns any of its interests hereunder, consistent with the provisions of the Investment Agreement. "Reorganization Event" shall have the meaning set forth in section 5 --------------------- hereof. "Requisite Holders" means holders of a majority of Preferred Stock ------------------ currently outstanding. "Senior Facility" shall mean the U.S. $ 425,000,000 Amended and ---------------- Restated Credit Agreement, dated as of April 10, 1997, among AMC Entertainment Inc, as the Borrower; and 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, as amended by the Second Amendment, dated as of January 16, 1998, as further amended by the Third Amendment, dated as of March 15, 1999 and as further amended by the Fourth Amendment, dated as of March 29, 2000. "Senior Indebtedness" shall mean the Company's current existing -------------------- indebtedness pursuant to the Senior Facility. "Senior Stock" has the meaning set forth in section 1 hereof. ------------ "Series A Applicable Rate" has the meaning set forth in section 2(a) -------------------------- hereof. "Series A Liquidation Payment" has the meaning set forth in section ------------------------------ 3(a) hereof. "Series A Liquidation Preference" has the meaning set forth in section ------------------------------- 3(a) hereof. "Series A No-Call Period Dividend" has the meaning set forth in ------------------------------------ section 2(a)(5) hereof. "Series A Preferred Stock" has the meaning set forth in section 1 -------------------------- hereof. "Series B Applicable Rate" has the meaning set forth in section 2(b) -------------------------- hereof. "Series B Liquidation Payment" has the meaning set forth in section ------------------------------ 3(b) hereof. 21 "Series B Liquidation Preference" has the meaning set forth in section ------------------------------- 3(b) hereof. "Series B No-Call Period Dividend" has the meaning set forth in ------------------------------------- section 2(b)(4) hereof. "Series B Preferred Stock" has the meaning set forth in section 1 -------------------------- hereof. "Shareholder Approval" shall mean approval by (i) the holders of a --------------------- majority of the Common Stock, voting separately as a class and (ii) a majority of the votes cast by the Company's stockholders voting together as a single class, of an amendment to the Company's Certificate of Incorporation increasing the number of authorized shares of Common Stock (so as to permit the issuance of additional shares of Series A Preferred Stock and the underlying Common Stock and until there are enough shares that would allow all shares of Series A Preferred Stock to convert into Common Stock and all shares of Series B Preferred Stock to be exchanged for Series A Preferred Stock, as contemplated by this Certificate of Designations). "Standstill Agreement" means the Standstill Agreement entered into as --------------------- of April 19, 2001 among the Company and certain investors named therein. "Subsidiary" has the meaning set forth in section 2(e) hereof. ---------- "Threshold Amount" has the meaning set forth in section 2(b)(5)(D) ----------------- hereof. "Total Unconverted Shares" shall mean, on any date of determination, -------------------------- the product of (x) the number of shares of Series A Preferred Stock issued to date multiplied by (y) the Conversion Factor. "Underlying Shares Sold" shall mean, in the case of a sale of Series A ---------------------- Preferred Stock, the product of (x) the number of shares of Series A Preferred Stock sold in such sale transaction multiplied by (y) the Conversion Factor. ------------- 22 IN WITNESS WHEREOF, the Company has caused this Certificate of Designation to be signed by __________________, its _________, and attested by ________________, its Secretary, this 19th day of April, 2001. By:_____________________________________ Name: Title: Attested: By:_________________________ Secretary 23 EX-99.4 4 d25605_ex99-4.txt EXHIBIT 99.4 =============================================================================== REGISTRATION RIGHTS AGREEMENT dated APRIL 19, 2001 by and among AMC ENTERTAINMENT INC. and APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P. APOLLO INVESTMENT FUND V, L.P. APOLLO OVERSEAS PARTNERS V, L.P. =============================================================================== TABLE OF CONTENTS Page SECTION 1. Definitions................................................1 SECTION 2 Demand Registration........................................4 SECTION 3. Piggyback Registration.....................................6 SECTION 4. "MARKET STAND-OFF" AGREEMENT...............................6 SECTION 5. Expenses...................................................7 SECTION 6. Preparation and Filing.....................................7 SECTION 7. Indemnification............................................9 SECTION 8. Underwriting Agreement....................................12 SECTION 9. Information by Holders....................................12 SECTION 10. Exchange Act Compliance...................................12 SECTION 11. No Conflict of Rights.....................................12 SECTION 12. TRANSFER OF REGISTRATION RIGHTS...........................12 SECTION 13. MISCELLANEOUS.............................................13 i This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made and --------- entered into this 19th day of April 2001 by and among (i) AMC ENTERTAINMENT INC., a Delaware corporation (the "Company"), (ii) APOLLO INVESTMENT FUND IV, L.P., a Delaware limited partnership ("AIF IV"), and APOLLO OVERSEAS PARTNERS IV, L.P., a Cayman Islands exempted limited partnership ("AOP IV"), and any other partnership or entity affiliated with and managed by Apollo and over which Apollo exercises investment authority, including voting and dispositive rights, and to which either AIF IV or AOP IV assigns any of their respective interests hereunder (collectively, the "Apollo IV Investors"), (iii) APOLLO INVESTMENT FUND V, L.P., a Delaware limited partnership ("AIF V") and APOLLO OVERSEAS PARTNERS V, L.P., a Cayman Islands exempted limited partnership ("AOP V"), and any other partnership or entity affiliated with and managed by Apollo and over which Apollo exercises investment authority, including voting and dispositive rights, and to which either AIF V or AOP V assigns any of their respective interests hereunder, consistent with the provisions hereof (collectively, the "Apollo V Investors", and together with the Apollo IV Investors, the "Investors" and individually, an "Investor"). Certain terms used and not otherwise defined in the text of this Agreement are defined in Section 1 of this Agreement. RECITALS WHEREAS, the parties to the Agreement are simultaneously entering into that certain Investment Agreement of even date herewith (the "Investment ---------- Agreement") pursuant to which the Investors have agreed to purchase shares of - --------- Preferred Stock (as defined below) from the Company, which are convertible into shares of the Company's Common Stock (as defined below). WHEREAS, the execution of this Agreement is an inducement and a condition precedent to the purchase by the Investors of the shares of Preferred Stock under the Investment Agreement. NOW THEREFORE, the Company and the Investors, each, intending to be legally bound hereto, agree as follows: Section 1 Definitions. As used in this Agreement, the following terms shall ----------- have the following meanings: "Affiliate" means, with respect to any Person, (i) any other Person --------- directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person; (ii) any other Person that owns, directly or indirectly, ten percent or more of such Person's capital stock or other equity interests or any officer or director of any such Person or other Person; or (iii) with respect to any natural Person, any person having a relationship with such Person by blood, marriage or adoption not more remote 2 than first cousin; provided, however, that with respect to Apollo or the Apollo -------- ------- Purchasers, the term "Affiliate" shall not include any limited partner of the Apollo Purchasers or their Affiliates nor any portfolio or investee companies of the Apollo Purchasers or their Affiliates so long as, in either case, (x) Apollo does not control or have investment authority over such limited partner or portfolio or investee company; (y) such limited partner or portfolio or investee company does not operate in the domestic theatrical exhibition industry or otherwise compete with the Company and (z) Apollo does not own, directly or indirectly, 33% or more of such portfolio or investee company's capital stock or other equity interests. For 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" shall have correlative meanings. "Apollo" means Apollo Management IV, L.P., Apollo Management V, L.P., ------ and their respective Affiliates. "Board" means the Board of Directors of the Company. ----- "Closing" has the meaning assigned to such term in the Investment ------- Agreement. "Closing Date" has the meaning assigned to such term in the Investment ------------ Agreement. "Commission" means the United States Securities and Exchange ---------- Commission or any other Federal agency at the time administering the Securities Act and Exchange Act. "Common Stock" means the Common Stock, par value $0.662/3 per share, ------------- of the Company. "Demand Registration" has the meaning assigned to such term in Section ------------------- 2(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended, ------------ or any similar successor federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time. "Indemnified Party" has the meaning assigned to such term in Section ------------------ 7(a). "Information" has the meaning assigned to such term in Section 6(i). ----------- "Inspectors" has the meaning assigned to such term in Section 6(i). ---------- "Investment Agreement" shall have the meaning assigned to such term in -------------------- the Recitals. "Investor" and "Investors" shall have the meaning assigned to such -------------------------- term in the Preamble. "Lock-up Period" shall have the meaning assigned to such term in --------------- Section 4. "Losses" shall have the meaning assigned to such term in Section 7(a). ------ "NASDAQ" means the automated quotation system of the NASD. ------ 2 "Other Shares" means the shares of Common Stock that are not ------------- Registrable Shares. "Person" shall be construed broadly and shall include, without ------ limitation, an individual, a partnership, an investment fund, a limited liability corporation, a corporation, an association, a joint stock corporation, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof. "Piggyback Registration" shall have the meaning assigned to such term ----------------------- in Section 3(a). "Preferred Stock" means the Series A Preferred Stock and the Series B ---------------- Preferred Stock. "Records" has the meaning assigned to such term in Section 6(i). ------- "Registrable Shares" means (i) any shares of Common Stock held by the ------------------- Investors or any permitted transferee at any time, (ii) any shares of Preferred Stock held by the Investors or any permitted transferee at any time, (iii) any shares of Common Stock and/or Preferred Stock issuable or issued upon conversion of the Preferred Stock held by the Investors or any permitted transferee at any time, and (iv) any Common Stock or Preferred Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in (i), (ii) and (iii) above; except, in each case, for shares of Common Stock and/or Preferred Stock (x) the sale of which is covered by a registration statement that has been declared effective under the Securities Act or (y) which are eligible to be resold under Rule 144(k). "Rule 144" means Rule 144 promulgated under the Securities Act or any -------- successor rule thereto or any complementary rule thereto. "Securities Act" means the Securities Act of 1933, as amended, or any -------------- similar successor federal statute, and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in effect from time to time. "Selling Holder" shall have the meaning assigned to such term in --------------- Section 6(b). "Selling Holders' Counsel" shall have the meaning assigned to such --------------------------- term in Section 6(b). "Series A Preferred Stock" means the Company's Series A Convertible -------------------------- Preferred Stock, par value $0.66 2/3 per share. "Series B Preferred Stock" means the Company's Series B Exchangeable ------------------------- Preferred Stock, par value $0.66 2/3 per share. 3 "Standstill Agreement" shall mean the Standstill Agreement entered --------------------- into on the date hereof by and between the Company, Apollo, and the Apollo Investors. Section 2.Demand Registration. ------------------- (a) Subject to subparagraphs (i), (ii) and (iii) below and at any time beginning 180 days after the date of execution of this Agreement, holders of at least 30% of the total number of outstanding Registrable Shares (assuming conversion of all shares of Preferred Stock into Common Stock) may make a written request to the Company to effect a registration under the Securities Act of all or a portion of the Registrable Shares held by such requesting holders in accordance with this Section 2 (a "Demand Registration"). The request shall -------------------- specify the number of Registrable Shares proposed to be included in such Demand Registration and the intended method of distribution, which may be pursuant to a shelf registration. The Company shall promptly use its best efforts to effect a Demand Registration, as expeditiously as possible, on an appropriate form under the Securities Act of the Registrable Shares which the Company has been so requested to register; provided, however, that the Company shall not be -------- ------- obligated to effect any Demand Registration under the Securities Act except in accordance with the following provisions: (i) the Company shall not be obligated to file more than five registration statements in total pursuant to this Section 2, subject to paragraph (c) below; (ii) the Company shall not be obligated to file any registration statement during any period in which (A) any other registration statement (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto) pursuant to which Registrable Shares are to be or were sold has been filed and not withdrawn or has been declared effective within the prior 90 days or (B) the Company has determined in good faith that the filing of a registration statement would require the disclosure of material information that the Company has a bona fide business purpose for preserving as confidential, such filing to be delayed until the date which is 90 days after such request for registration pursuant to this Section 2(a), provided, that the Company may only so delay the filing -------- or effectiveness of a registration statement pursuant to this Section 2(a)(ii)(B) on one occasion during any twelve-month period; and (iii) with respect to the Demand Registration pursuant to this Section 2, the Company may include in such Demand Registration securities that are not Registrable Shares if, in the view of the managing underwriter, the inclusion thereof will not adversely affect such offering. If such Demand Registration is an underwritten offering and the managing underwriter advises the Company in writing that the inclusion of all Registrable Shares and the Other Shares proposed to be included in such Demand Registration would interfere with the successful marketing (including pricing) of all such securities, then the number of Registrable Shares and Other Shares proposed to be included in such Demand Registration shall be included in the following order: 4 (A) First, up to the number of Registrable Shares requested to be ----- included which in the opinion of the managing underwriter can be sold without adversely affecting the marketability of the offering, pro rata among the respective holders thereof on the basis of the amount of Registrable Shares requested to be included in the offering by each such holder; (B) Second, any Other Shares the Company proposes to be included ------ in the Demand Registration; and (C) Third, any Other Shares requested to be included in the ----- Demand Registration by any holder having contractual registration rights. (b) The holders of Registrable Shares requesting a Demand Registration may, in the notice delivered pursuant to paragraph 2(a) above, elect that such Demand Registration be an underwritten offering. Upon such election, such holders shall select one or more nationally recognized investment banks to act as the managing underwriter and shall select any additional investment banks to be used in connection with such offering, provided that such managing underwriter and investment banks must be reasonably satisfactory to the Company. The Company shall, together with all holders proposing to sell Registrable Shares in such offering, enter into a customary underwriting agreement with such underwriters. (c) A request for a Demand Registration may be withdrawn by written notice to the Company by the holders a majority of the Registrable Shares to be included in such registration with the following consequences: (i) If such request for a Demand Registration is withdrawn prior to the filing date of the registration statement, such withdrawn registration shall not count as a Demand Registration for purposes of paragraph (a) above; (ii) If such request for a Demand Registration is withdrawn after the filing date of the registration statement but prior to its effective date, such withdrawn registration shall not count as a Demand Registration for purposes of paragraph (a) above if the participating holders (x) have reimbursed the Company for all out-of-pocket expenses incurred by the Company in connection with such withdrawn registration or (y) (1) reasonably believed that the registration statement contained an untrue statement of material fact or omitted to state a material fact required to be stated therein or necessary to make the statements made therein not misleading, (2) notified the Company of such fact and requested that the Company correct such alleged misstatement or omission and (3) the Company has refused to correct such alleged misstatement or omission; and (iii) A registration statement that becomes effective shall count as a Demand Registration for purposes of paragraph (a) above unless (x) the registration statement becomes subject to a stop order, injunction or other order of the Commission or any other governmental agency or court or (y) the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied, other than by some act or omission by the holders. 5 Section 3. Piggyback Registration. ---------------------- (a) If at any time the Company proposes for any reason to register Other Shares under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act or any successor forms thereto), it shall promptly give written notice to the holders of Registrable Shares of its intention to so register the Other Shares and, upon the written request, given within 15 days after delivery of any such notice by the Company, of any holders of Registrable Shares to include in such registration Registrable Shares held by such holders (which request shall specify the number of Registrable Shares proposed to be included in such registration) (a "Piggyback Registration"), the ---------------------- Company shall use its reasonable best efforts to cause all such Registrable Shares to be included in such Piggyback Registration on the same terms and conditions as the Other Shares (of similar type as the Registrable Securities) otherwise being sold in such Piggyback Registration; provided, however, that if -------- ------- the managing underwriter advises the Company that the inclusion of all Registrable Shares or Other Shares proposed to be included in such Piggyback Registration would interfere with the successful marketing (including pricing) of the Other Shares proposed to be registered by the Company, then the number of Registrable Shares and Other Shares proposed to be included in such Piggyback Registration shall be included in the following order: (i) First, the Other Shares to be registered by the Company; ----- (ii) Second, Registrable Shares, pro rata based upon the total ------ number of Registrable Shares sought to be included in the registration and shares having piggyback rights owned by each holder at the time of such registration; and (iii) Third, Other Shares (not included in clause (i) above) ----- having contractual or incidental piggyback rights, pro rata based upon the total number of such Other Shares owned by each holder at the time of such registration. (b) In connection with any offering under this Section 3 involving an underwriting, the Company shall not be required to include a holder's Registrable Shares in the underwritten offering unless such holder accepts the terms of the underwriting as agreed upon between the Company and the underwriters selected by the Company. Section 4."Market Stand-Off" Agreement. If requested by the Company ----------------------------- and an underwriter of any capital stock or other securities of the Company, a holder shall not sell or otherwise transfer or dispose of any Registrable Shares or any other shares of capital stock of the Company held by such holder (other than those included in the registration) during the 180 day period following the effective date of a registration statement of the Company filed under the Securities Act, or for such shorter period as the officers and directors of the Company shall agree (the "Lock-Up Period"). -------------- The obligations described in this Section 4 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of such Lock-Up Period. 6 Section 5. Expenses. The Company shall bear the expense of any -------- registrations effected pursuant to Sections 2 and 3 including, without limitation, all registration and filing fees (including all expenses incident to filing with the American Stock Exchange or any other national securities exchange where the Registrable Shares are listed or accepted for trading), fees and expenses of complying with securities and blue sky laws, printing expenses, and fees and expenses of the Company's counsel and accountants, and the fees and expenses of the Selling Holders' Counsel (as defined below) of up to $25,000 for each registration, but excluding any underwriters' or brokers' discounts or commissions, transfer taxes (to the extent that such taxes are required by law to be paid by the Selling Holders) and the fees of any counsel, accountants or advisors to any Selling Holder, other than the Selling Holders' Counsel. Section 6. Preparation and Filing. If and whenever the Company is ----------------------- under an obligation pursuant to the provisions of this Agreement to use its reasonable best efforts to effect the registration of any Registrable Shares, the Company shall, as expeditiously as practicable: (a) with respect to a registration under Sections 2 and 3, use its reasonable best efforts to cause a registration statement that proposes to register such Registrable Shares to become and remain effective for a period of 270 days or until all of such Registrable Shares have been disposed of (if earlier); (b) furnish, at least five business days before filing a registration statement that proposes to register such Registrable Shares, a prospectus relating thereto or any amendments or supplements relating to such registration statement or prospectus, to each holder of Registrable Shares (the "Selling Holder"), to any counsel to any Selling Holder and to one counsel --------------- selected by the holders of a majority of such Registrable Shares (the "Selling ------- Holders' Counsel"), copies of all such documents proposed to be filed; - ---------------- (c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus related thereto as may be necessary to keep such registration statement effective for at least the periods set forth in Section 6(a) or until all of such Registrable Shares have been disposed of (if earlier) and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Shares; (d) notify in writing any counsel to any Selling Holder and the Selling Holders' Counsel promptly (i) of the receipt by the Company of any notification with respect to any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto, (ii) of the receipt by the Company of any notification with respect to the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose and (iii) of the receipt by the Company of any notification with respect to the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes; 7 (e) use its best efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as any seller of Registrable Shares reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller of Registrable Shares to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller; provided, however, that the Company -------- ------- will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required so to do but for this paragraph (e); (f) furnish to each seller of such Registrable Shares such number of copies of a summary prospectus or other prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Selling Holder may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares; (g) use its best efforts to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Shares; (h) notify on a timely basis each Selling Holder at any time when a prospectus relating to such Registrable Shares is required to be delivered under the Securities Act within the appropriate period mentioned in paragraph (a) of this Section, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing and, at the request of such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (i) make available for inspection by any counsel to any Selling Holder and the Selling Holders' Counsel or any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such underwriter (collectively, the "Inspectors"), all pertinent financial and other records, pertinent corporate ---------- documents and properties of the Company (collectively, the "Records"), as shall ------- be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information (together with the Records, the "Information") reasonably ------------ requested by any such Inspector in connection with such registration statement. 8 Any of the Information which the Company determines in good faith to be confidential, and of which determination the Inspectors are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such Information is necessary to avoid or correct a material misstatement or omission in the registration statement, (ii) the release of such Information is ordered pursuant to a subpoena or other order from a court of competent jurisdiction or (iii) such Information has been made generally available to the public; the Selling Holder agrees that it will, upon learning that disclosure of such Information is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company's expense, to undertake appropriate action to prevent disclosure of the Information deemed confidential; (j) if the offering is to be underwritten, enter into any necessary agreement in connection therewith (including an underwriting agreement containing customary representations, warranties and agreements); (k) in the case of an underwritten offering, use its best efforts to obtain from its independent certified public accountants "comfort" letters in customary form and at customary times and covering matters of the type customarily covered by comfort letters; (l) in the case of an underwritten offering, use its best efforts to obtain from its outside counsel an opinion or opinions in customary form; (m) provide a transfer agent and registrar (which may be the same entity and which may not be the Company) for such Registrable Shares; (n) issue to any underwriter to which any Selling Holder may sell shares in such offering certificates evidencing such Registrable Shares; (o) list such Registrable Shares on the American Stock Exchange or any national securities exchange on which any shares of the Common Stock are listed, or if the Common Stock is not listed on a national securities exchange, use its best efforts to qualify such Registrable Shares for inclusion on such national securities exchange or NASDAQ as the holders of a majority of such Registrable Shares shall request; (p) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission and make available to its securityholders, as soon as reasonably practicable, earnings statements (which need not be audited) covering a period of 12 months beginning within three months after the effective date of the registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act; and (q) use its best efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby. Section 7. Indemnification. ---------------- (a) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless the seller of such Registrable Shares, its officers and directors, each underwriter, broker or any other person acting on behalf of such seller and each other person, if any, who controls any of the foregoing persons within the meaning of the Securities Act (the "Indemnified Party") against any ------------------ 9 losses, claims, damages or liabilities, joint or several (or actions in respect thereof), to which any Indemnified Party may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) ("Losses") arise out of or are based upon an untrue ------ statement or alleged untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, 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 shall reimburse such Indemnified Party for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any Losses; provided, -------- however, that the Company shall not be liable in any such case to the extent - ------- that any Losses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by such Selling Holder or underwriter specifically for use in the preparation thereof; provided, further, -------- ------- that with respect to any preliminary prospectus, the foregoing indemnity shall not inure to the benefit of (a) any underwriter or, in the case of a registration statement filed with respect to an offering which is not an underwritten offering, any Selling Holder, from whom the person asserting any Losses purchased Registrable Shares or (b) any Person controlling such underwriter or Selling Holder, if (i) a copy of the prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was required by law to have been delivered by such underwriter or Selling Holder (as applicable), (ii) the prospectus had not been sent or given by or on behalf of such underwriter or Selling Holder (as applicable) to such person with or prior to a written confirmation of the sale of the Registrable Shares to such person, (iii) the prospectus (as so amended and supplemented) would have cured the defect giving rise to the Losses and (iv) such failure to deliver the prospectus (as so amended and supplemented) was not the result of noncompliance by the Company with Section 6(f) hereof. (b) In connection with any registration of Registrable Shares under the Securities Act pursuant to this Agreement, each Selling Holder shall indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section) the Company, each director of the Company, each officer of the Company, each underwriter, broker or other person acting on behalf of such Selling Holder, each person who controls any of the foregoing persons within the meaning of the Securities Act and each other Selling Holder under such registration statement with respect to any statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument duly executed by such Selling Holder specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided, however, that the obligation to indemnify will -------- ------- be several, not joint and several, among such Selling Holder, and the maximum amount of liability in respect of such indemnification shall be in proportion to and limited to, in the case of each Selling Holder, an amount equal to the net proceeds actually received by such Selling Holder from the sale of Registrable Shares effected pursuant to such registration. 10 (c) The indemnification required by this Section 7 will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred, subject to prompt refund in the event any such payments are determined not to have been due and owing hereunder. (d) Promptly after receipt by an Indemnified Party of notice of the commencement of any action involving a claim referred to in the preceding paragraphs of this Section 7, such Indemnified Party will, if a claim in respect thereof is made against an indemnifying party, give written notice to the latter of the commencement of such action (it being understood that no delay in delivering or failure to deliver such notice shall relieve the indemnifying persons from any liability or obligation hereunder unless (and then solely to the extent that) the indemnifying person is prejudiced by such delay and/or failure). In case any such action is brought against an Indemnified Party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such Indemnified Party, and after notice from the indemnifying party to such Indemnified Party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided, however, that if any Indemnified Party shall have reasonably concluded - -------- ------- that there may be one or more legal or equitable defenses available to such Indemnified Party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section 7, the indemnifying party shall not have the right to assume the defense of such action on behalf of such Indemnified Party and such indemnifying party shall reimburse such Indemnified Party and any person controlling such Indemnified Party for that portion of the fees and expenses of any counsel retained by the Indemnified Party which is reasonably related to the matters covered by the indemnity agreement provided in this Section 7. (e) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the Indemnified Party or any officer, director or controlling person of such Indemnified Party and will survive the transfer of securities. (f) If the indemnification provided for in this Section 7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses then the indemnifying party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amounts paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the Indemnified Party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information 11 supplied by the indemnifying party or by the Indemnified Party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Selling Holders agree that it would not be just and equitable if contributions pursuant to this paragraph 7(f) were determined by pro rata allocation or by any other method of -------- allocation which did not take into account the equitable considerations referred to herein. The amount paid or payable to an Indemnified Party as a result of the Losses referred to above shall be deemed to include, subject to the limitation set forth in paragraph 7(d), any legal or other expenses reasonably incurred in connection with investigating or defending the same. Notwithstanding the foregoing, in no event shall the amount contributed by a seller of Registrable Shares exceed the aggregate net offering proceeds received by such seller from the sale of its Registrable Shares. Section 8. Underwriting Agreement. Notwithstanding the provisions of ----------------------- Sections 6 and 7, to the extent that the Company and the Selling Holders shall enter into an underwriting or similar agreement, which agreement contains provisions covering one or more issues addressed in such sections, the provisions contained in such sections addressing such issue or issues shall be superseded with respect to such registration by such other agreement. Section 9. Information by Holders. The Selling Holders shall furnish ---------------------- to the Company such written information regarding such Selling Holder and the distribution proposed by such Selling Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. Section 10. Exchange Act Compliance. The Company shall comply with all ----------------------- of the reporting requirements of the Exchange Act and with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of the Registrable Shares. The Company shall cooperate with the Investors in supplying such information as may be necessary for the Investors to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144. Section 11. No Conflict of Rights. The Company represents and warrants --------------------- to the Investors that the registration rights granted to the Investors hereby do not conflict with any other registration rights granted by the Company. The Company may grant, after the date hereof, registration rights to holders of capital stock of the Company to the extent that such registration rights do not conflict with the registration rights granted hereby. Section 12. Transfer of Registration Rights. The rights hereunder may -------------------------------- be transferred or assigned in connection with a transfer of Registrable Securities by any Investor to an Affiliate of an Investor. Additionally, the rights hereunder may be transferred or assigned in connection with a transfer of at least 10% of the then outstanding Registrable Shares by any Investor; provided, such transfer has been made in compliance with the terms of the - -------- Standstill Agreement. Notwithstanding the foregoing, such rights may only be 12 transferred or assigned provided that all of the following additional conditions are satisfied: (a) such transfer or assignment is effected in accordance with applicable securities laws; (b) such transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c) the Company is given written notice by such Investor of such transfer or assignment, stating the name and address of the transferee or assignee and identifying the Registrable Securities with respect to which such rights are being transferred or assigned. Section 13. Miscellaneous. ------------- (a) Severability. Whenever possible, each provision of this ------------ Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, and such invalid, void or otherwise unenforceable provisions shall be null and void. It is the intent of the parties, however, that any invalid, void or otherwise unenforceable provisions be automatically replaced by other provisions which are as similar as possible in terms to such invalid, void or otherwise unenforceable provisions but are valid and enforceable to the fullest extent permitted by law. (b) Entire Agreement. This Agreement, together with the ----------------- Investment Agreement, the Standstill Agreement and all schedules, exhibits, certificates and other documents delivered therewith, contains the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior arrangements or understandings with respect hereto. (c) Successors and Assigns. This Agreement shall bind and ---------------------- inure to the benefit of the Company and the Investors and their respective successors and permitted assigns. (d) Counterparts. This Agreement may be executed ------------ simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same agreement. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. The failure of any Investor to execute this Agreement does not make it invalid as against any other Investor. (e) Remedies. The Investors shall have all rights and -------- remedies reserved for the Investors pursuant to this Agreement and the Certificate of Incorporation and the Bylaws of the Company, as amended, and all rights and remedies which such Investor has been granted at any time under any other agreement or contract and all of the rights which such holder has under any law or equity. Any person having any rights under any provision of this Agreement will be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law or equity. 13 It is acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved person will be irreparably damaged and will not have an adequate remedy at law. Any such person shall, therefore, be entitled to injunctive relief, including specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. (f) Notices. All notices, requests, consents and other communications ------- hereunder to any party shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor: (i) if to the Company, to: AMC Entertainment Inc. 106 West 14th Street P.O. Box 419615 Kansas City, MO Attention: Peter Brown Fax: (816) 480-2517 with a copy to: Lathrop & Gage L.C. 2345 Grand Boulevard Suite 2800 Kansas City, MO 64108 Attention: Raymond F. Beagle, Jr. Fax: (816) 292-2001 and a copy to: Skadden, Arps, Slate, Meagher & Flom LLP 4 Times Square New York, NY 10036 Attention: Eileen T. Nugent Fax: (212) 735-2000 14 (ii) and, if to the Investors, to: Apollo Investment Fund IV, L.P. Apollo Overseas Partners IV, L.P. c/o Apollo Management IV, L.P. and Apollo Investment Fund V, L.P. Apollo Overseas Partners V, L.P. c/o Apollo Management V, L.P. 1301 Avenue of the Americas, 38th Floor New York, NY 10019 Attention: Marc Rowan Fax: (212) 515-3262 with copies to: Akin, Gump, Strauss, Hauer & Feld, LLP 1333 New Hampshire Ave., NW Washington, D.C. 20036 Attention: Bruce S. Mendelsohn Fax: (202) 887-4288 All such notices, requests, consents and other communications shall be deemed to have been delivered when received, or if received after the close of business, on the next business day. (g) Governing Law; Jurisdiction; Venue; Process. This Agreement shall ------------------------------------------- be governed by and construed in accordance with the laws of the State of New York without regard to any choice of law or conflict of law provision or rule that would cause the application of the laws of any jurisdiction other than the State of New York. Any legal action in a proceeding arising out of or in connection with this Agreement shall be brought in the courts of the State of New York, of the County and City of New York or of the United States District Court for the Southern District of New York, and by execution and delivery of this Agreement, the parties hereby irrevocably accept for themselves and in respect of their property, generally and unconditionally, the exclusive jurisdiction of the aforesaid courts. The parties hereby irrevocably waive any objection which they may now or hereafter have to laying of jurisdiction or venue of any actions or proceedings arising out of or in connection with this Agreement brought in the courts referred to above and hereby further irrevocably waive and agree, not to plead or claim in any such court that any such action or proceeding has been brought in an inconvenient forum. The parties further agree that the mailing by certified or registered mail, return receipt requested, of any process required by any such court shall constitute valid and lawful service of process against them, without necessity for service by any other means provided by statute or rule of court. 15 (h) Further Assurances. Each party hereto shall do and perform or ------------------- cause to be done and performed all such further acts and things and shall execute and deliver all such other agreements, certificates, instruments, and documents as any other party hereto reasonably may request in order to carry out the provisions of this Agreement and the consummation of the transactions contemplated hereby. (i) Modifications; Amendments; Waivers. The terms and provisions of ----------------------------------- this Agreement may not be modified, amended or waived, except pursuant to a writing signed by the Company and the Investors provided, however, Sections 7 through 11 may be amended pursuant to a writing signed by the Company and the holders of a majority of the Registrable Shares. (j) Headings. The headings of the various Sections of this Agreement -------- have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. (k) Waiver. No course of dealing between the Company and the ------ Investors or any delay in exercising any rights hereunder will operate as a waiver of any rights of any party to this Agreement. The failure of any party to enforce any of the provisions of this Agreement will in no way be construed as a waiver of such provisions and will not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. 16 (l) Mutual Waiver of Jury Trial. BECAUSE DISPUTES ARISING IN ------------------------------- CONNECTION WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS AGREEMENT OR ANY DOCUMENTS RELATED HERETO. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first written above. AMC ENTERTAINMENT INC. By: /S/ PETER C. BROWN ---------------------------------------------- Name: Peter C. Brown Title: Chairman of the Board, President and Chief Executive Officer APOLLO INVESTMENT FUND IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO OVERSEAS PARTNERS IV, L.P. By: APOLLO ADVISORS IV, L.P. its managing general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------------------- Name: Marc Rowan Title: Vice President 2 APOLLO INVESTMENT FUND V, L.P. By: APOLLO ADVISORS V, L.P. its general partner By: Apollo Capital Management V, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------------------- Name: Marc Rowan Title: Vice President APOLLO OVERSEAS PARTNERS V, L.P. By: APOLLO ADVISORS V, L.P. its managing general partner By: Apollo Capital Management V, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------------------- Name: Marc Rowan Title: Vice President EX-99.5 5 d25605_ex99-5.txt EXHIBIT 99.5 ================================================================================ STANDSTILL AGREEMENT by and among AMC ENTERTAINMENT INC., and APOLLO INVESTMENT FUND IV, L.P. APOLLO OVERSEAS PARTNERS IV, L.P. APOLLO INVESTMENT FUND V, L.P. APOLLO OVERSEAS PARTNERS V, L.P. APOLLO MANAGEMENT IV, L.P. and APOLLO MANAGEMENT V, L.P. Dated as of April 19, 2001 ================================================================================ STANDSTILL AGREEMENT This STANDSTILL AGREEMENT (this "Agreement") is made and entered into this 19th day of April 2001 by and among (i) AMC ENTERTAINMENT INC., a Delaware corporation (the "Company"), (ii) APOLLO INVESTMENT FUND IV, L.P., a Delaware limited partnership ("AIF IV") and APOLLO OVERSEAS PART NERS IV, L.P., a Cayman Islands exempted limited partnership ("AOP IV") and any other partnership or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, including voting and dispositive rights, and to which either AIF IV or AOP IV assigns their interests under the Investment Agreement (as hereinafter defined)(collectively, the "Apollo IV Investors"), (iii) APOLLO IN VESTMENT FUND V, L.P., a Delaware limited partnership ("AIF V") and APOLLO OVERSEAS PARTNERS V, L.P., a Cayman Islands exempted limited partnership ("AOP V") and any other partnership or entity affiliated with and managed by Apollo over which Apollo exercises investment authority, including voting and dispositive rights, and to which either AIF V or AOP V assigns any of their respective interests under the Investment Agreement (collectively, the "Apollo V Investors" and together with the Apollo IV Investors the "Apollo Investors"), (iv) APOLLO MANAGEMENT IV, L.P., a Delaware limited partnership, in its capacity as investment manager to the Apollo IV Investors ("Apollo IV Management") and (v) APOLLO MANAGEMENT V, L.P., a Delaware limited partnership, in its capacity as investment manager to the Apollo V Investors ("Apollo V Management" and together with Apollo IV Management and any other Person under common control with Apollo IV Management or Apollo V Management, "Apollo"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Apollo Investors are concurrently with the execution hereof purchasing from the Company, and the Company is hereby issuing, selling, and delivering to the Apollo Investors, 92,000 shares of Series A Convertible Preferred Stock, par value 66 2/3(cent) per share (the "Series A Preferred"), and 158,000 shares of Series B Exchangeable Preferred Stock, par value 66 2/3(cent) per share (the "Series B Preferred" and, together with the Series A Preferred, the "Preferred Stock") pursuant to that certain Investment Agreement, dated as of April 19, 2001, by and among the Company, the Apollo Investors and Apollo (the "Investment Agreement"); WHEREAS, as a condition to the consummation of the transactions contemplated by the Investment Agreement, the parties have agreed to restrict the 2 ability of the Apollo Investors and certain of their transferees to acquire or dispose of securities of the Company as set forth herein; NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS Section 1.1 Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: 1.1.1 "AIF IV" shall have the meaning set forth in the recitals to this Agreement. 1.1.2 "AIF V" shall have the meaning set forth in the recitals to this Agreement. 1.1.3 "Affiliate" means, with respect to any Person, (i) any other Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, such specified Person; (ii) any other Person that owns, directly or indirectly, ten percent or more of such Person's capital stock or other equity interests or any officer or director of any such Person or other Person or, (iii) 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; provided, however, that with respect to Apollo or the Apollo Investors, the term "Affiliate" shall not include any limited partner of the Apollo Investors or their Affiliates nor any portfolio or investee companies of the Apollo Investors or their Affiliates so long as, in any case, (x) Apollo does not control or have investment authority over such limited partner or portfolio or investee company; (y) such limited partner or portfolio or investee company does not operate in the domestic theatrical exhibition industry or otherwise compete with the Company; and (z) Apollo or its Affiliates do not own, directly or indirectly, 33% or more of such portfolio or investee company's capital stock or other equity interests. For 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" shall have correlative meanings. 3 1.1.4 "AOP IV" shall have the meaning set forth in the recitals to this Agreement. 1.1.5 "AOP V" shall have the meaning set forth in the recitals to this Agreement. 1.1.6 "Apollo" shall have the meaning set forth in the recitals to this Agreement. 1.1.7 "Apollo Group" shall mean (a) Apollo, (b) the Apollo Investors, (c) any Affiliate of Apollo (including but not limited to the Apollo Investors) controlled by Apollo such that Apollo has the legal or contractual power (including, without limitation, through negative control or through Apollo's designees or representatives on the board of directors or other governing body of such Affiliate or under the articles of incorporation or other constituent documents of such Affiliate or as a result of the voting rights of any securities or other instruments issued by such Affiliate) to direct the investments of such Affiliate or to cause such Affiliate to comply with the terms of this Agreement, and (d) any Person with whom Apollo or any Person included in the foregoing clauses (b) or (c) is part of a Group. 1.1.8 "Apollo Investors" shall have the meaning set forth in the recitals to this Agreement. 1.1.9 "Apollo IV Investors" shall have the meaning set forth in the recitals to this Agreement. 1.1.10 "Apollo V Investors" shall have the meaning set forth in the recitals to this Agreement. 1.1.11 "Associate" shall have the meaning set forth in Rule 12b-2 under the Exchange Act. 1.1.12 "Beneficially Own" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act, as in effect on the date hereof). The terms "Beneficial Ownership" and "Beneficial Owner" have correlative meanings. 4 1.1.13 "Board" shall mean the Board of Directors of the Company. 1.1.14 "B Trustees" shall mean Raymond F. Beagle, Jr. and Charles J. Egan, Jr., as (1) successor trustees of the 1992 Durwood, Inc. Voting Trust dated December 12, 1992, as amended and restated on August 12, 1997, (2) successor trustees of the trust created under the Revocable Trust Agreement dated August 14, 1989 of Stanley H. Durwood, as amended and restated on May 12, 1999, and (3) surviving trustees of the Stanley H. Durwood Foundation, or any successor trustees of any of the trusts referred to in clauses (1), (2) or (3) above. 1.1.15 "Certificate of Designations" shall mean the Certificate of Designa tions for the Series A Preferred and the Series B Preferred, setting forth the relative rights, preferences and terms of the Preferred Stock, as filed with the Secretary of State of the State of Delaware. 1.1.16 "Class B Shares" shall mean the Class B Stock, par value 662/3(cent) per share, of the Company. 1.1.17 "Common Stock" means the Company's Common Stock, par value 662/3(cent) per share, and any other class of common stock of the Company that may be created from time to time. 1.1.18 "Company" shall have the meaning set forth in the recitals to this Agreement. 1.1.19 "Derivative Security" shall mean any subscription, option, conversion right, warrant, phantom stock right or other agreement, security or commitment of any kind obligating the Company or any of its Subsidiaries to issue, grant, deliver or sell, or cause to be issued, granted, delivered or sold, (i) any Voting Securities or any other equity security of the Company, (ii) any securities convertible into, or ex changeable for, any Voting Securities or other equity security of the Company or (iii) any obligations measured by the price or value of any shares of capital stock of the Company. 1.1.20 "Disposition" shall have the meaning assigned thereto in Section 5.1. 1.1.21 "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended. 5 1.1.22 "15% Acquisition" shall have the meaning assigned thereto in Section 4.2. 1.1.23 "Foundation" shall mean The Stanley H. Durwood Foundation. 1.1.24 "Group" shall mean any group of Persons who, with respect to those acquiring, holding, voting or disposing of Voting Securities would, assuming ownership of the requisite percentage thereof, be required under Section 13(d) of the Exchange Act and the rules and regulations thereunder to file a statement on Sched ule 13D with the SEC as a "person" within the meaning of Section 13(d)(3) of the Exchange Act, or who would be considered a "person" for purposes of Section 13(g)(3) of the Exchange Act. "Group" when used with reference to standards or tests that are based on securities other than Voting Securities shall have the foregoing meaning except that the words "Voting Securities" in the second line of the definition of "Group" shall be replaced with the words "securities of the Company." 1.1.25 "Independent Director" shall means a member of the Board (i) who is not and has never been an officer or employee of the Company, Apollo, the Apollo Investors or of their respective Affiliates, or of an entity that derived more than 5% of its revenues or earnings in its most recent fiscal year from transactions involving the Company, Apollo, the Apollo Investors or any of their respective Affiliates, (ii) who has no relationship or affiliation or compensation, consulting or contracting arrangement with the Company, the B Trustees, the Foundation, Apollo, any of the Apollo Investors or any other entity such that a reasonable person could regard such director as likely to be unduly influenced by the Company, the B Trustees, the Foundation, Apollo or the Apollo Investors and (iii) who is nominated by the Nominating Committee of the Board in accordance with the procedures set forth in its charter, it being understood that the Company's existing directors elected by the holders of Common Stock will be deemed independent for purposes of this provision through at least the remainder of their current terms, provided, however, if the provisions set forth in the charter of the Nominating Committee are not then in effect, then it shall mean a member of the Board considered "independent" pursuant to the rules of the American Stock Exchange or other exchange on which the Company's securities are then traded or listed. 1.1.26 "Investment Agreement" shall have the meaning set forth in the recitals to this Agreement. 1.1.27 "Nominating Committee" shall have the meaning set forth in the 6 Investment Agreement. 1.1.28 "Other Investor Affiliates" shall have the meaning set forth in Section 4.1. 1.1.29 "Permitted Underwriter" shall mean any underwriter who is in the business of underwriting securities and who, in the ordinary course of its business as an underwriter, acquires Voting Securities in connection with a public offering with the bona fide intention of reselling all of the Voting Securities so acquired pursuant to such public offering. 1.1.30 "Person" means any natural person, corporation, partnership, limited liability company, firm, association, trust, government, governmental agency or any other entity, whether acting as an individual, fiduciary or other capacity. 1.1.31 "Preferred Stock" shall mean, collectively, the Series A Preferred and the Series B Preferred. 1.1.32 "Purchaser Standstill Agreement" shall have the meaning assigned thereto in Section 5.1(b)(II). 1.1.33 "Purchasing Person" shall have the meaning assigned thereto in Section 5.1(b)(I). 1.1.34 "Qualifying Tender Offer" shall mean shall mean a tender offer or similar transaction for all of the outstanding Common Stock of the Company that is made to all holders of Common Stock and is accepted by holders of a majority of the Company's outstanding shares of Common Stock not owned by Apollo or its Affiliates. 1.1.35 "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated of even date herewith, by and among the Company and the Apollo Investors. 1.1.36 "Requisite Independent Directors" shall mean, at any time of determination, a majority of the Independent Directors who were elected by the holders of the Company's Common Stock voting as a class. 1.1.37 "Securities Act" shall mean the Securities Act of 1933, as amended. 7 1.1.38 "Series A Preferred" shall have the meaning set forth in the recitals to this Agreement. 1.1.39 "Series B Preferred" shall have the meaning set forth in the recitals to this Agreement. 1.1.40 "Standstill Period" shall mean the period commencing on the date hereof and ending on the fifth anniversary hereof. 1.1.41 "Total Voting Power" shall mean, calculated at a particular point in time, the aggregate votes represented by all then outstanding Voting Securities including, with respect to shares of Preferred Stock outstanding, the number of votes accorded to the underlying Common Stock into which such Preferred Stock is convertible (including the Common Stock which would be issued upon conversion of any shares of Series A Preferred which were, in turn, issued upon conversion of shares of Series B Preferred). 1.1.42 "Transaction Documents" shall mean this Agreement, the Investment Agreement, the Certificate of Designations and the Registration Rights Agreement. 1.1.43 "Trust" shall mean, collectively, (i) the 1992 Durwood, Inc. Voting Trust dated December 12, 1992, as amended and restated on August 12, 1997, (2) the trust created under the Revocable Trust Agreement dated August 14, 1989 of Stanley H. Durwood, as amended and restated on May 12, 1999, and (3) the Foundation. 1.1.44 "Voting Securities" means the shares of the Company's Common Stock, the Class B Shares, any other securities of the Company having the general voting power under ordinary circumstances to elect members of the Board of the Company, the Preferred Stock, and any other securities which are convertible into, or exchangeable for, Voting Securities. 1.1.45 "Voting Power" shall mean, calculated at a particular point in time, the aggregate votes represented by all the then outstanding Common Stock, the Class B Shares and any other securities of the Company then entitled to vote generally in the election of directors of the Company. 8 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF APOLLO AND THE APOLLO INVESTORS Each of Apollo and the Apollo Investors, severally and not jointly, hereby represents and warrants to the Company as follows: Section 2.1 Authority. Each of Apollo and the Apollo Investors has all requisite power and authority to execute, deliver and perform its obligations under this Agreement. The execution, delivery and performance of this Agreement, and the consummation by Apollo and the Apollo Investors of the transactions contemplated hereby, have been duly authorized by all necessary action on the part of Apollo and the Apollo Investors. Section 2.2 Enforceability. This Agreement has been duly executed and delivered by Apollo and the Apollo Investors and constitutes its legal, valid and binding obligation enforceable against each of them in accordance with its terms, except as the same may be limited by the terms of this Agreement or by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors' rights generally and general equitable principles regardless of whether such enforceability is considered in a proceeding at law or in equity. Section 2.3 No Conflicts. The execution and delivery of this Agreement by the Apollo and the Apollo Investors, and the performance by each of them of their respective obligations hereunder, will not (a) contravene any provision of the organizational documents of Apollo or the Apollo Investor, (b) violate or conflict with any material law, statute, ordinance, rule, regulation, decree, writ, injunction, judgment, ruling or order of any governmental authority or of any arbitration award which is either applicable to, binding upon, or enforceable against Apollo or the Apollo Investors; (c) conflict with, result in any breach of, or constitute a default under, or give rise to a right to terminate, amend, modify, abandon or accelerate, any material agreement which is applicable to, binding upon or enforceable against Apollo or the Apollo Investors, except for such violations or breaches which would not, in the aggregate, inhibit the ability of Apollo or the Apollo Investors to perform their respective obligations hereunder; or (d) require the consent, approval, authoriza tion or permit of, or filing with or notification to, any governmental authority, any court or tribunal or any other person, except for such approvals, registrations, declarations, notices and filings, the failures of which to be made or obtained, would not in the aggregate inhibit the ability of Apollo or the Apollo Investors to perform 9 their respective obligations hereunder. Section 2.4 Investment Experience. Apollo and each Apollo Investor understands that the purchase of the Preferred Stock made pursuant to the Investment Agreement and the agreement to be bound by the provisions hereof involves risk. Each of Apollo and the Apollo Investors acknowledges that it is able to fend for itself, can bear the economic risk of its investment in the Voting Securities owned by it and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of its investment in Voting Securities of the Company and its agreement to be bound hereby. ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF APOLLO Apollo hereby represents and warrants to the Company as follows: Section 3.1 Control by Apollo. Apollo is the investment manager of, and possesses the ability to direct the investments of, each Apollo Investor. Apollo controls the Apollo Investors and has the authority to cause the Apollo Investors to perform their respective obligations under this Agreement and the other Transaction Documents. Apollo, in its capacity as investment manager, general partner or manager of the Apollo Investors, has the requisite power and has taken all necessary corporate or partnership action required to cause the Apollo Investors to execute and deliver this Agreement and perform their respective obligations hereunder. ARTICLE 4 ACQUISITIONS OF SECURITIES AND OTHER RESTRICTED ACTIVITIES Section 4.1 Restrictions During the Standstill Period. During the Stand still Period, unless requested by the Requisite Independent Directors, each of Apollo and the Apollo Investors shall not, and Apollo shall cause each other member of the Apollo Group not to, and shall use its reasonable best efforts to cause any controlling person or general partner of Apollo (the "Other Investor Affiliates") not to, directly or indirectly, alone or in concert with others: (a) acquire, offer or propose to acquire or agree to acquire, 10 whether by purchase, tender or exchange offer, through the acquisition of control of another Person, by joining a partnership, limited partnership, syndicate or other Group or otherwise, Beneficial Ownership of any Voting Securities, Derivative Securities or any other securities of the Company or any rights to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) any Voting Securities, other than: (i) the acquisition by Apollo or a member of the Apollo Group of not more than 500,000 Class B Shares or shares of Common Stock from the Trust; (ii) the acquisition by Apollo or a member of the Apollo Group of debt securities of the Company; (iii) the acquisition of Voting Securities as a result of any stock split, stock dividend (including dividends paid in Additional Securities (as such term is defined in the Certificate of Desig nations) on the Preferred Stock) or other distributions, recapitalizations or offerings made available by the Company to holders of a class or series of Voting Securities generally; (iv) the acquisition of Preferred Stock pursuant to the Investment Agreement (including the Series A Preferred and Common Stock issuable upon conversion or exchange of the Preferred Stock, as the case may be); (v) the repurchase by any Apollo Investor of any shares of Pre ferred Stock from any transferee thereof; (vi) the acquisition by Apollo or a member of the Apollo Group of Class B Shares or shares of Common Stock owned by the Trust which the Trust has determined to sell in circumstances where the effect of such sale would be to cause this Agreement to terminate pursuant to Section 6.1 of this Agreement; pro vided such acquisition is approved by the Requisite Independ ent Directors; and (vii) subject to the provisions of Section 4.2, the acquisition of 11 Voting Securities by Apollo or a member of the Apollo Group following a 15% Acquisition. (b) propose or take substantial steps to effect (in either case, on behalf of itself or to or with a third party) any merger, business combination, restructuring, recapitalization or similar transaction involving the Company or any of its Subsidiaries or the sale or other disposition outside the ordinary course of business of any material portion of the assets of the Company or any of its Subsidiaries; provided, however, that nothing set forth in this clause (b) will prohibit Apollo's activities acting together with the Chief Executive Officer of the Company in connection with possible acquisitions and disposi tions within parameters previously discussed with, and approved by, the Company's Board from time to time; (c) seek election to, seek to place a representative on, or seek the removal of any member of, the Board, except pursuant to the rights granted to the holders of Preferred Stock in the Certificates of Designations therefor; (d) engage in any "solicitation" (within the meaning of Rule 14a-1 under the Exchange Act) of proxies or consents (whether or not relating to the election or removal of directors) with respect to the Company, or become a participant in any election contest or, unless first approved by the Requisite Independent Directors, execute any written consent in lieu of a meeting of the holders of any class of Voting Securities that is solicited by or on behalf of any shareholder of the Company; (e) unless first approved by the Requisite Independent Directors, initiate, propose or otherwise solicit shareholders for the approval of any shareholder proposal (as described in Rule 14a-8 under the Exchange Act or otherwise) with respect to the Company; (f) form, join or in any way participate in or assist in the forma tion of a Group with respect to any Voting Securities (other than, with respect to Apollo, any such "group" consisting exclusively of Apollo and its con trolled Affiliates) or, in the case of Apollo or any member of the Apollo Group, enter into any agreement with any Person limiting Apollo's discretion with respect to the exercise of the Preferred Stock Approval Rights granted under the Investment Agreement; 12 (g) deposit any Voting Securities in a voting trust or subject any Voting Securities to any arrangement or agreement with respect to the voting of such Voting Securities, except for any voting trust or arrangement or agreement with respect to the voting of such Voting Securities with an Affiliate of Apollo or the Apollo Investors; (h) otherwise act, alone or in concert with others, in a manner designed or having the deliberate effect of circumventing the restrictions otherwise imposed hereunder; (j) disclose or publicly announce any intention, plan or arrange ment inconsistent with the foregoing; or (k) except as otherwise permitted by this Agreement, finance any other Persons in connection with any of the activities prohibited by the foregoing clauses (a) through (j); provided that nothing in this Section 4.1 shall (I) prohibit any individual who is serving as a Director of the Company, solely in his or her capacity as such Director, from taking any action or making any statement which, in such Director's best judgment, is in the best interests of the Company's stockholders, or (II) restrict any disclosure or statements required to be made by Apollo or any Apollo Investor under applicable law to the extent any such requirement does not arise from actions by Apollo or such Apollo Investor inconsistent with this Agreement. Section 4.2 Restrictions After the Standstill Period. After the earlier to occur of (i) expiration of the Standstill Period and (ii) the date on which any Person (other than the Trust, the Apollo Investors or their respective Affiliates) acquires shares of Common Stock or Class B Shares and, after giving effect to such acquisi tion, such Person Beneficially Owns Voting Securities representing more than 15% of the Voting Power (any such event, a "15% Acquisition"), and continuing until the date of termination of this Agreement, each of Apollo and the Apollo Investors shall not, and Apollo shall cause each other member of the Apollo Group not to, and shall use its reasonable best efforts to cause Other Investor Affiliates not to, directly or indirectly, alone or in concert with others, take any action of the type described in clause (a) of Section 4.1, except that: (a) Apollo or a member of the Apollo Group may purchase, or offer to purchase, additional Voting Securities pursuant to a Qualifying 13 Tender Offer; and (b) Apollo or a member of the Apollo Group may propose a merger, business combination, restructuring, recapitalization or similar transaction involving the Company if such transaction is contingent upon approval of the holders of a majority of the Company's outstanding shares of Common Stock not owned by Apollo or its Affiliates (or, if such transaction is effected pursuant to a tender offer, such transaction is effected in a Qualify ing Tender Offer). ARTICLE 5 DISPOSITIONS OF VOTING SECURITIES Section 5.1 Restrictions on Disposition. Each of Apollo and the Apollo Investors shall not, and Apollo shall cause each other member of the Apollo Group not to, and shall use its reasonable best efforts to cause Other Investor Affiliates not to, directly or indirectly (including, without limitation, through the disposition or transfer of any equity interest in another Person), alone or in concert with others, sell, assign, transfer, pledge, hypothecate, grant any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding with respect to the foregoing) any Voting Securities (a "Disposition"), except as set forth below in this Section 5.1. (a) Dispositions may be made by Apollo or any Apollo Investor to any Affiliate satisfying the qualifications of clause (c) in the definition of "Apollo Group", provided, that any such Affiliate at all times continues to meet the qualifications of such clause (c), and provided further that any such Affiliate shall agree in writing to be bound by this Agreement. (b) Dispositions of Voting Securities may be made by an Apollo Investor to Persons other than members of the Apollo Group and Other Investor Affiliates pursuant to (i) a public offering effected in accordance with the Registration Rights Agreement and effecting a broad distribution of such Voting Securities offered, (ii) sales permitted by the provisions of Rule 144 or Section 4(1) of the Securities Act, each as currently in effect, or (iii) in privately-negotiated transactions; provided, however, that (I) Dispositions shall not be made pursuant to clauses (i), 14 (ii), or (iii) of this Section 5.1(b) if any Person (other than a Permitted Underwriter) to whom the Disposition in question is made would, after giving effect to such Disposition, together with such Person's Affiliates and Associates and the members of any Group existing with respect to Voting Securities of which such Person is a part (any such Person and its Affiliates, Associates and Group members being collectively referred to herein as a "Purchasing Person"), Benefi cially Own Voting Securities representing more than 15% of the Total Voting Power then outstanding. (II) Notwithstanding the provisions of the immediately preceding paragraph, a Disposition resulting in a Purchasing Person Beneficially Owning Voting Securities representing more than 15% of the Total Voting Power may be effected if (x) such Disposition has been approved by the Requisite Independent Directors and (y) such Purchasing Person (including each member of any Group, if such Purchasing Person is not an individual shareholder) shall have exe cuted and delivered to the Company a written agreement (in form and substance reasonably satisfactory to the Company) pursuant to which such Purchasing Person agrees to be bound by this Agreement to the same extent as Apollo as if references to Apollo herein were to such Purchasing Person (any such agreement, a "Purchaser Standstill Agreement"). (c) Dispositions may be made pursuant to a tender offer, exchange offer, merger, business combination or similar transaction for at least 51% of the outstanding Voting Securities if: (I) in the case of any tender offer, exchange offer, merger, business combination or similar transaction in which Apollo, any member of the Apollo Group or any Apollo Investor (1) purchases or acquires additional Voting Securities, (2) retains any Voting Securi ties or (3) if any such party owns shares of Common Stock before such transaction, receives additional or different consideration for any such shares of Common Stock than the consideration received by the other holders of the Company's Common Stock, such tender offer, exchange offer, merger, business combination or similar transaction has been approved by the holders of a majority of the Company's outstanding shares of Common Stock and Class B Shares not owned 15 by Apollo, any member of the Apollo Group or any Apollo Investor; or (II) in the case of any tender offer, exchange offer, merger, business combination or similar transaction not of the type described in clause (I), such tender offer, exchange offer, merger, business combination or similar transaction has been approved by the Requisite Independent Directors. (d) Each of Apollo and the Apollo Investors shall, and Apollo shall cause each other member of the Apollo Group to, and shall use its reasonable best efforts to cause Other Investor Affiliates to, give the Com pany written notice after effecting a Disposition in accordance with this Section 5.1. Section 5.2 Restrictions on Conversion of Series A Preferred. (a) During the Standstill Period, the Apollo Investors shall not, and Apollo shall cause each member of the Apollo Group not to, and shall use its reasonable best efforts to cause Other Investor Affiliates not to, convert any shares of Series A Preferred into Common Stock, except in connection with a Disposition effected pursuant to paragraph (b) below. (b) If, at any time during the Standstill Period, any Apollo Inves tor, any member of the Apollo Group or any Other Investor Affiliate desires to effect a Disposition of any shares of Series A Preferred to any Person other than members of the Apollo Group and Other Investor Affiliates, such party may, as part of such Disposition, elect to convert such shares of Series A Preferred into Common Stock prior to transfer to such purchasing Person. In order to convert shares of Preferred Stock to effect any such Disposition, the selling Apollo Investor, member of the Apollo Group or Other Investor Affiliate shall deliver the Company, on or before the proposed settlement date of such Disposition, written notice of its intention to convert Series A Pre ferred as part of a Disposition (a "Disposition Notice"). The Disposition Notice shall set forth the number of shares of Series A Preferred that shall be converted into Common Stock, the sale price for such shares and the purchas ing Person in whose name the Common Stock shall be registered. Upon surrender by the selling Apollo Investor, member of the Apollo Group or Other Investor Affiliate of certificates representing the shares of Series A 16 Preferred that are being converted as part of such Disposition, the Company shall issue to the purchasing Person certificates representing the appropriate number of shares of Common Stock. Any Disposition pursuant to a third party made under this Section 5.2(b) shall comply with the provisions of Section 5.1 hereof, including Section 5.1 (b) (II). Section 5.3 Disposition of Class B Shares. In the event Apollo, any Apollo Investor or any other member of the Apollo Group acquires any Class B Shares, Apollo shall not, and shall cause each Apollo Investor or member of the Apollo Group not to, sell, assign, pledge or otherwise transfer such Class B Shares to any third party (other than transfers by Apollo to an Affiliate satisfying the qualifica tions of clause (c) in the definition of "Apollo Group") unless such Class B Shares are first converted into Common Stock in accordance with the provisions provided therefor in the Company's Certificate of Incorporation. ARTICLE 6 TERMINATION Section 6.1 Termination. This Agreement shall terminate on earliest to occur of: (a) the tenth anniversary hereof; (b) the date that any Person (other than Apollo or any member of the Apollo Group or any of their respective Affiliates or any Person approved by a majority of the Company's Board (including at least one designee of the Series A Preferred)) acquires or enters into an agreement to acquire Class B Shares or shares of Common Stock if, after giving effect to such acquisition, such Person Beneficially Owns Voting Securities representing more than 20% of the Voting Power of the Company, unless such Person has entered into a Purchaser Standstill Agreement in connection with such acquisition. (c) the termination of this Agreement in writing by the Company with the approval of the Requisite Independent Directors. If the potential acquisition of shares by a Person which caused the termination of this Agreement pursuant to Section 6.1 (b) is not consummated for any reason within 60 days of such agreement to acquire having been entered into (or until the date such 17 Person ceases to actively attempt to acquire such shares pursuant to such agreement), Apollo and the Apollo Investors agree that (i) all of the provisions of this Agreement will be binding upon each of them from and after such date with full force and effect as if such termination had never occurred and (ii) each of them will vote all of the shares of capital stock of the Company acquired by them during such 60 day period pro rata in accordance with the votes (other than Apollo, the members of the Apollo Group, and their respective Affiliates) of the holders of securities of the same class on all matters submitted for the vote of such holders until any subsequent termination of this Agreement in accordance with Section 6.1 hereof. Section 6.2 Effect of Termination. (a) If this Agreement is terminated in accordance with Section 6.1, hereof, this Agreement shall become null and void and of no further force and effect, except that (i) the terms and provisions of this Section 6.2 and Sections 7.4, 7.5, 7.6, 7.7, 7.10 and 7.11 shall remain in full force and effect, (ii) if this Agreement is terminated in accordance with Section 6.1(b) hereof, Article V and Section 7.8 shall remain in full force and effect, and (iii) any termination of this Agreement shall not relieve any party hereto from any liability for any breach of its obligations hereunder, regardless of whether such party terminated this Agreement. (b) The Company agrees to notify Apollo promptly upon it having knowledge that the Trust has made a determination to sell, and has identified a potential purchaser to buy, Class B Shares or shares of Common Stock. ARTICLE 7 MISCELLANEOUS Section 7.1 Survival. The representations, warranties, covenants and agreements contained in or made pursuant to this Agreement shall survive the execution of this Agreement. Section 7.2 Best Efforts. Subject to the terms and conditions of this Agreement, each of the parties hereby agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, rules and regulations to consummate and 18 make effective the transactions contemplated by this Agreement, including using its best efforts to obtain all necessary waivers, consents and approvals. In case at any time after the execution of this Agreement, further action is necessary or desirable to carry out the purposes of this Agreement, the parties shall cause their proper officers or directors to take all such necessary action. Section 7.3 Legend. Each of the parties hereto acknowledges that the certificates representing shares of Preferred Stock purchased by pursuant to the Investment Agreement shall be subject to stop transfer restrictions, and shall contain a legend substantially as set forth below (except that the first sentence of such legend shall not be placed on any shares of Common Stock issuable upon conversion of Series A Preferred that have been registered under the Securities Act or if, in the opinion of counsel, such sentence is not required under the Securities Act): "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH IN A STANDSTILL AGREEMENT DATED AS OF APRIL 19, 2001 BETWEEN AMC ENTERTAINMENT INC. AND CERTAIN OTHER INVESTORS NAMED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF AMC ENTERTAINMENT INC." Section 7.4 Notices. All notices, requests, consents and other communica tions hereunder to any party shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth below or such other address as may hereafter be designated in writing by the addressee to the addressor. (a) If to the Company, to: 19 AMC Entertainment Inc. 106 West 14th Street Kansas City, Missouri 64105 Attention: Peter C. Brown Facsimile: 816-480-2517 With a copy to: Lathrop & Gage L.C. 2345 Grand Blvd. Suite 2800 Kansas City, Missouri 64108 Attention: Raymond F. Beagle, Jr. Facsimile: 816-292-2001 and Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, New York 10036 Attention: Eileen T. Nugent Facsimile: 212-735-2000 (b) If to Apollo or to any Apollo Investor, to: c/o Apollo Management, L.P. 1301 Avenue of the Americas 38th Floor New York, NY 10019 Attention: Marc Rowan Facsimile: 212-515-3262 With a copy to: Akin, Gump, Straus, Hauer & Feld, L.L.P. 1333 New Hampshire Avenue, N.W. Washington, D.C. 20036 Attention: Bruce S. Mendelsohn Facsimile: 202-887-4288 20 (c) If to any other Investor or to any other holder of capital stock of the Company, addressed to such holder at the address of such holder in the record books of the Company; or to such other address or addresses as shall be desig nated in writing. All notices shall be effective when received. Section 7.5 Specific Performance. Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this Agreement, the other party would not have an adequate remedy at law for money damages in the event that this Agreement has not been performed in accordance with its terms. Each party therefore agrees that the other party shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled, at law or in equity. Section 7.6 Severability. If any provision of this Agreement is determined to be invalid, illegal, or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect. To the extent permitted by law, the parties hereby to the same extent waive any provision of law that renders any provision hereof prohibited or unenforceable in any respect. Section 7.7 Entire Agreement; Amendment. This Agreement and the Investment Agreement (together with all the annexes or exhibits thereto) set forth the entire agreement between the parties hereto with respect to the matters provided herein and therein. The provisions of this Agreement govern the subject matter set forth herein and, except as set forth herein, no provision in this Agreement shall prevent the exercise of the rights, privileges and preferences of or the performance of the obligations of Apollo or the Apollo Investors provided under the Certificate of Designations, Registration Rights Agreement and the Investment Agreement. Any provision of this Agreement may be amended, modified or waived in whole or in part at any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. With respect to the Company, approval of any amendment, modification or waiver will be given and effective only upon approval by the Requisite Independent Directors. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 7.8 Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors and assigns of each of the parties hereto. 21 Section 7.9 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original, but all of which together shall constitute one and the same document. Section 7.10 Governing Law; Submission to Jurisdiction. This Agreement shall be governed by, and interpreted, in accordance with, the laws of the State of New York, without regard to conflicts of laws. The parties hereto irrevocably (a) submit to the exclusive personal jurisdiction of any state or federal court located in the City of New York in the State of New York in any suit, action or other legal proceeding relating to this Agreement; (b) agree that all claims in respect of any such suit, action or other legal proceeding may be heard and determined in, and enforced in and by, any such court; and (c) waive any objection that they may now or hereafter have to venue in any such court or that such court is an inconvenient forum. Section 7.11 Remedies; Waiver. To the extent permitted by applicable law, all rights and remedies existing under this Agreement and any related agreements or documents are cumulative to, and are exclusive of, any rights or remedies otherwise available under applicable law. No failure on the part of any party to exercise, or delay in exercising, any right hereunder shall be deemed a waiver thereof, nor shall any single or partial exercise preclude any further or other exercise of such or any other right. 22 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. AMC ENTERTAINMENT INC. By: /S/ PETER C. BROWN --------------------------------------- Name: Peter C. Brown Title: Chief Executive Officer APOLLO MANAGEMENT IV, L.P. By: AIF Management, Inc., its General Partner By: /S/ MARC ROWAN --------------------------------------- Name: Marc Rowan Title: Vice President APOLLO MANAGEMENT V, L.P. By: AIF Management, Inc., its General Partner By: /S/ MARC ROWAN --------------------------------------- Name: Marc Rowan Title: Vice President 23 APOLLO INVESTMENT FUND IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------- Name: Marc Rowan Title: Vice President APOLLO OVERSEAS PARTNERS IV, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------- Name: Marc Rowan Title: Vice President APOLLO INVESTMENT FUND V, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------- Name: Marc Rowan Title: Vice President 24 APOLLO OVERSEAS PARTNERS V, L.P. By: APOLLO ADVISORS IV, L.P. its general partner By: Apollo Capital Management IV, Inc. its general partner By: /S/ MARC ROWAN ---------------------------------- Name: Marc Rowan Title: Vice President 25 -----END PRIVACY-ENHANCED MESSAGE-----