Document:

Exhibit 10.5

 

NON-QUALIFIED STOCK OPTION AGREEMENT

OF

MARQUEE HOLDINGS INC.

 

THIS AGREEMENT
(the “Agreement”) is entered into and effective as of January 26th,
2006 (the “Grant Date”) by and between Marquee Holdings Inc., a Delaware
corporation (the “Company”) and Travis Reid, a Non-Employee Director and
Consultant of the Company (or one of its Plan Subsidiaries), hereinafter
referred to as the “Optionee.”

 

WHEREAS, the
Company wishes to afford the Optionee the opportunity to purchase shares of its
Class N common stock, par value $0.01 per share (the “Class N Common
Stock”); and

 

WHEREAS, the
Company wishes to carry out the 2004 Stock Option Plan of Marquee Holdings Inc.
(as it may be amended from time to time, the “Plan”), the terms of which
are hereby incorporated by reference and made a part of this Agreement; and

 

WHEREAS, the Board
has determined that it would be to the advantage and best interest of the
Company and its shareholders to grant the Non-Qualified Stock Option provided
for herein to the Optionee as an inducement to enter into or remain in the
service of the Company (or one of its Plan Subsidiaries) and as an incentive
for increased efforts during such service, and has advised the Company thereof
and instructed the undersigned officers to issue said Option;

 

NOW,
THEREFORE, in consideration of the mutual covenants herein contained and other
good and valuable consideration, receipt of which is hereby acknowledged, the
parties hereto do hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

Whenever the
following terms are used in this Agreement, they shall have the meaning
specified below unless the context clearly indicates to the contrary.  Capitalized terms used in this Agreement and
not defined below shall have the meaning given such terms in the Plan.  The singular pronoun shall include the
plural, where the context so indicates.

 

Section 1.1                                      “Cause” shall have the
meaning given such term in the service agreement between the Company (or a Plan
Subsidiary) and the Optionee, if any, and in the event there is no such
agreement in effect shall mean the Optionee’s (i) willful or negligent
failure to substantially perform his duties with the Company or any Plan Subsidiary;
(ii) willful or negligent failure to carry out, or comply with, in any
material respect, any lawful and reasonable directive of the Company or any
Plan Subsidiary; (iii) commission at any time of any act or omission that
results in, or that may reasonably be expected to result in, a conviction, plea
of no contest or imposition of unadjudicated probation for any felony or crime
involving moral turpitude; (iv) unlawful use (including being under the
influence) or possession of illegal drugs on the Company’s or any Plan Subsidiary’s
premises or while performing any duties or responsibilities with the Company or
any Plan Subsidiary; or (v) commission at any time of any act of fraud,
embezzlement, misappropriation, material misconduct, or breach of fiduciary
duty against the Company or any Plan Subsidiary (or any predecessor thereto or
successor thereof).

 

 

Section 1.2                                      “Change of Control” shall
have the meaning given such term in the Management Stockholders Agreement.

 

Section 1.3                                      “Grant Date” shall have the
meaning set forth in the Recitals hereto.

 

Section 1.4                                      “Management Stockholders Agreement”
shall mean that certain Amended and Restated Management Stockholders Agreement
dated January       , 2006 by and among the
Company and certain stockholders of the Company which contains terms applicable
to Options, the shares of Class N Common Stock acquired upon Option
exercise and other shares of Class N Common Stock, if any, held by the
Optionee during the term of such agreement, and attached hereto as Exhibit A,
as the same may be amended from time to time. As a condition to the grant of
the Option, the Optionee shall become a party to the Management Stockholders
Agreement.

 

Section 1.5                                      “Option” shall mean the
Non-Qualified Stock Option to purchase Class N Common Stock granted under
this Agreement.

 

Section 1.6                                      “Plan” shall have the meaning
set forth in the Recitals hereto.

 

Section 1.7                                      “Termination of Service”
shall have the meaning set forth in Section 3(b) of this Agreement.

 

ARTICLE II.

GRANT OF OPTION

 

Section 2.1                                      Grant of Option. 
In consideration of the Optionee’s agreement to enter into or remain in
the service of the Company or one of its Plan Subsidiaries, and for other good
and valuable consideration, as of the Grant Date, the Company irrevocably
grants to the Optionee the Option to purchase any part or all of an aggregate
of six hundred (600) shares of Class N Common Stock upon the terms and
conditions set forth in the Plan and this Agreement.

 

Section 2.2                                      Option Subject to Plan. 
The Option granted hereunder is subject to the terms and provisions of
the Plan, including without limitation, Article V and Sections 7.1, 7.2
and 7.3 thereof.

 

Section 2.3                                      Option Price. 
The purchase price of the shares of Class N Common Stock covered by
the Option shall be $1,000.00 per share (without commission or other charge),
which is the Fair Market Value as of the Grant Date.

 

ARTICLE III.

EXERCISABILITY

 

Section 3.1                                      Commencement of Exercisability

 

(a)          Subject
to subsections (b) and (c) and Section 3.3, the Option shall
become exercisable in three equal and cumulative installments provided that the
Optionee remains continuously in active service with the Company and its Plan
Subsidiaries from the Grant Date through such date as follows:

 

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(i)                                     The first installment shall consist
of two hundred (200) of the shares covered by the Option and shall become
exercisable on December 23, 2006;

 

(ii)                                  The second installment shall consist
of two hundred (200) of the shares covered by the Option and shall become
exercisable on December 23, 2007; and

 

(iii)                               The
third installment shall consist of two hundred (200) of the shares covered by
the Option and shall become exercisable on December 23, 2008.

 

(b)         No
portion of the Option which is unexercisable at Termination of Service shall
thereafter become exercisable.

 

(c)          All
unexercised and outstanding Options shall accelerate and become exercisable
immediately prior to a Change of Control.

 

Section 3.2                                      Duration of Exercisability. 
The installments provided for in Section 3.1 are cumulative.  Each such installment which becomes exercisable
pursuant to Section 3.1 shall remain exercisable until it becomes
unexercisable.

 

Section 3.3                                      Expiration of Option. 
The Option may not be exercised to any extent by anyone after the first
to occur of the following events:

 

(a)          The tenth anniversary
of the Grant Date; or

 

(b)         Except
as the Board may otherwise approve, the date that is ninety (90) days following
the date of the later of the Optionee’s Termination of Consultancy Termination
of Directorship (such later event, his “Termination of Service”) for any
reason other than (i) termination by the Company (or a Plan Subsidiary) for
Cause; or (ii) the Optionee’s death or disability (as defined in Section 22(e)(3) of
the Code); or

 

(c)          Except
as the Board may otherwise approve, the date of the Optionee’s Termination of Service
by reason of termination by the Company (or a Plan Subsidiary) for Cause; or

 

(d)         In
the case of the Optionee’s Termination of Service by reason of his death or
disability (within the meaning of Section 22(e)(3) of the Code), the
expiration of 12 months from the date of the Optionee’s Termination of Service.

 

Section 3.4                                      Partial Exercise. 
Any exercisable portion of the Option or the entire Option, if then
wholly exercisable, may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable; provided,
however, that each partial exercise shall be for not less than one (1) share.

 

Section 3.5                                      Exercise of Option. 
The exercise of the Option shall be governed by the terms of this
Agreement and the terms of the Plan, including, without limitation, the
provisions of Article V of the Plan.

 

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ARTICLE IV.

OTHER PROVISIONS

 

Section 4.1                                      Not a Contract of Employment or
other Service.  Nothing in this Agreement or in the Plan
shall confer upon the Optionee any right to continue in the service of the
Company or any of its Subsidiaries or shall interfere with or restrict in any
way the rights of the Company or its Subsidiaries, which are hereby expressly
reserved, to discharge the Optionee at any time for any reason whatsoever, with
or without Cause, except as may otherwise be provided by any written agreement
entered into by and between the Company and its Subsidiaries and the Optionee.

 

Section 4.2                                      Shares Subject to Plan and Management
Stockholders Agreement.  The Optionee
acknowledges that any shares acquired upon exercise of the Option are subject
to the terms of the Plan and the Management Stockholders Agreement including,
without limitation, the restrictions set forth in Section 5.6 of the
Plan.  The Optionee further acknowledges
that the Option is subject to the terms of the Management Stockholders
Agreement including, without limitation, the “Call Rights” and the “Drag-Along”
contained in Sections 2 and 3 of the Management Stockholders Agreement.

 

Section 4.3                                      Construction. 
This Agreement shall be administered, interpreted and enforced under the
laws of the state of Delaware.

 

Section 4.4                                      Conformity to Securities Laws. 
The Optionee acknowledges that the Plan is intended to conform to the
extent necessary with all provisions of the Securities Act and the Exchange Act
and any and all regulations and rules promulgated thereunder by the
Securities and Exchange Commission, including without limitation Rule 16b-3.  Notwithstanding anything herein to the
contrary, the Plan shall be administered, and the Option is granted and may be
exercised, only in such a manner as to conform to such laws, rules and
regulations.  To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

 

Section 4.5                                      Amendment, Suspension and
Termination.  The Option may be wholly or partially amended
or otherwise modified, suspended or terminated at any time or from time to time
by the Committee or the Board, provided that, except as provided by Section 7.1
of the Plan, neither the amendment, suspension nor termination of this
Agreement shall, without the consent of the Optionee, materially and adversely
alter or impair any rights or obligations under the Option.

 

 

[signature page follows]

 

4

 

IN WITNESS
WHEREOF, the parties hereto have executed this Non-Qualified Stock Option
Agreement as of the date first written above.

 

	
   

  	
   

  
	
   

  	
  MARQUEE HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Craig R. Ramsey

  
	
   

  	
   

  	
  Name: Craig R. Ramsey

  
	
   

  	
   

  	
  Title: Executive Vice President and Chief

  
	
   

  	
   

  	
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Travis Reid

  
	
   

  	
  Travis Reid

  

 

 

EXHIBIT A

 

MANAGEMENT STOCKHOLDERS AGREEMENTgExhibit 10.6

 

THIS
AMENDED AND RESTATED FEE AGREEMENT, dated as of January 26th,
2006 (this “Agreement”),
amends and restates that certain Fee Agreement, dated as of December 23,
2004 (the “Original Agreement”), by and
among Marquee Holdings Inc., a Delaware corporation (“Holdings”), AMC Entertainment Inc., a Delaware corporation and wholly-owned
subsidiary of Holdings (the “Company”),
J.P. Morgan Partners (BHCA), L.P., a Delaware limited partnership (“JPMP”), Apollo Management V, L.P.,
a Delaware limited partnership (“Apollo”
and together with JPMP, the “Original Sponsor Management Entities”)
and the affiliates of Apollo listed on Schedule 1 hereto (the “Coinvestors”), and is made by and
among Holdings, the Company, the Original Sponsor Management Entities, the
Coinvestors, Bain Capital Partners, LLC, a Delaware limited liability company (“Bain”), TC Group, L.L.C., a
Delaware limited liability company (“Carlyle”)
and Applegate and Collatos, Inc., a Delaware corporation (“Spectrum” and, together with Bain
and Carlyle, the “Other Sponsor Management
Entities”, and the Other Sponsor Management Entities together
with the Original Sponsor Management Entities, the “Sponsor
Management Entities”).  

 

BACKGROUND

 

1.                                       Holdings
and LCE Holdings, Inc., a Delaware corporation (“LCE”),
are parties to that certain Agreement and Plan of Merger, dated as of June 20,
2005 (the “Merger Agreement”), pursuant
to which LCE will be merged with and into Holdings with Holdings remaining as
the surviving entity (the “Merger”).

 

2.                                       In
connection with the consummation of the Merger, the Other Sponsor Management
Entities have agreed to terminate that certain Management Agreement, dated as
of July 30, 2004, by and among the Other Sponsor Management Entities, LCE
and certain of its subsidiaries named therein at or prior to the Effective Time
(as defined in Section 7).

 

3.                                       In
connection with the consummation of the Merger, the Original Sponsor Management
Entities and Coinvestors have agreed to amend and restate the Original
Agreement and enter into this Agreement with the Other Sponsor Management
Entities.

 

4.                                       The
Sponsor Management Entities have entered into a Second Amended and Restated
Stockholders Agreement, dated as of the date of this Agreement, with Holdings
and the other Investors (as defined therein) (as the same may be amended from
time to time hereafter, the “Stockholders Agreement”),
relating to the ownership of the common stock of Holdings by the Investors.

 

3.                                       The
parties hereto desire that the Company avail itself, for the term of this
Agreement, of the Sponsor Management Entities’ expertise in providing financial
and structural analysis, due diligence investigations, corporate strategy,
other advice and negotiation assistance, which the parties believe will be
beneficial to the Company, and the Sponsor Management Entities wish to provide
the services to the Company as set forth in this Agreement in consideration of
the payment of a Management Fee (as defined below).

 

In
consideration of the premises and agreements contained herein and of other good
and valuable consideration, the sufficiency of which are hereby acknowledged,
the parties agree as follows:

 

 

AGREEMENT

 

SECTION 1.   Appointment.  The Company hereby
engages the Sponsor Management Entities to provide the management services to the
Company described in Section 2 (the “Management Services”)
for the term of this Agreement on the terms and subject to the conditions of
this Agreement.

 

SECTION 2.   Management
Services.  The
Sponsor Management Entities agree that during the term of this Agreement, they
will provide to the Company, by and through themselves, their affiliates and
such respective officers, employees, representatives and third parties as the
Sponsor Management Entities in their sole discretion may designate from time to
time, management, advisory and consulting services in relation to the affairs
of the Company and its subsidiaries, including, without limitation, (a) advice
regarding the structure, terms, conditions and other provisions, distribution
and timing of debt and equity offerings and advice regarding relationships with
the lenders and bankers of the Company and its subsidiaries, (b) advice
regarding the strategy of the Company, (c) advice regarding dispositions
and/or acquisitions and (d) such other advice directly related or
ancillary to the above financial advisory services as may be reasonably
requested by the Company; provided that the responsibilities of one
Sponsor Management Entity shall not be substantially disproportionate to the
responsibilities of the other Sponsor Management Entities.  It is expressly agreed that the services to
be performed hereunder will not include investment banking or other financial
advisory services which may be provided by the Sponsor Management Entities or
any of their affiliates to the Company or Holdings in connection with any
specific acquisition, divestiture, refinancing or recapitalization of the
Company or any of its subsidiaries or by Holdings.  The Sponsor Management Entities may be
entitled to receive additional compensation for providing services of the type
specified in the preceding sentence by mutual agreement of the Company or such
subsidiary or Holdings, on the one hand, and one or more of the Sponsor
Management Entities or their relevant affiliates, on the other hand.  The obligation of the Sponsor Management
Entities to provide Management Services shall terminate on the Termination Date
(as defined below).

 

SECTION 3.   Management Fee.

 

(a)                                  In consideration of
the Management Services being provided by the Sponsor Management Entities, the
Company will pay, to the Sponsor Management Entities a management fee in
respect of each fiscal year from and including fiscal 2006 in the aggregate
amount of $5,000,000 annually (such management fees in the aggregate are collectively
referred to as the “Management Fee”), which shall be paid quarterly and in advance on the first
day of each fiscal quarter of the Company. 
The first payment to the Sponsor Management Entities in the aggregate amount
of $1,250,000 (with such payment to be paid to each Sponsor Management Entity
in accordance with Schedule 1 hereto) shall be paid on April 1, 2006.  On each subsequent payment date the Company
shall pay to the Sponsor Management Entities the aggregate amount of $1,250,000
in respect of the fiscal quarter then beginning.  The Management Fee will accrue and be payable
through the first day of the fiscal quarter in which the Termination Date (as
defined below) occurs.  Any amounts
payable by the Company to the Sponsor Management Entities pursuant to this Section 3(a) shall
be paid to each Sponsor Management Entity pro rata based on the relative
percentage ownership of voting stock in Holdings held by such Sponsor
Management Entity and its affiliates as compared to the other Sponsor Management
Entities and their respective affiliates (it being understood that no person

 

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will be
considered an affiliate of any Sponsorship Management Entity solely by reason
of ownership of capital stock of Holdings), in each case calculated as of the last
day of the quarterly period preceding the payment date.  All amounts paid by the Company or Holdings
to the Sponsor Management Entities pursuant to this Section 3 shall be
made by wire transfer in same-day funds to the respective bank accounts
designated by the Sponsor Management Entities, and shall not be refundable
under any circumstances.  For purposes of
this Agreement, “Termination Date” means the earliest of (i) the
twelfth anniversary of the date of the Original Agreement, (ii) such time
as the Sponsor Management Entities and their affiliates (it being understood
that no person will be considered an affiliate of any Sponsorship Management
Entity solely by reason of ownership of capital stock of Holdings) then owning
beneficial economic interests Holdings own less in the aggregate than 20% of
the beneficial economic interests in Holdings initially owned by the Sponsor
Management Entities and (iii) such earlier date as Holdings, the Company
and a Requisite Stockholder Majority (as defined in the Stockholders Agreement)
may mutually agree upon.

 

(b)                                 To the extent the
Company does not pay the Management Fee for any reason, including if prohibited
by any agreement or indenture governing indebtedness of Holdings or its
subsidiaries (including the Company), the payment by the Company to the Sponsor
Management Entities of the Management Fee will be payable immediately on the
earlier of (i) the first date on which the payment of such deferred
Management Fee, as the case may be, is no longer prohibited under any contract
applicable to Holdings or its subsidiaries (including the Company) and the
Company is otherwise able to make such payment, and (ii) total or partial
liquidation, dissolution or winding up of Holdings or the Company.   Any quarterly payment of the Management Fee
that is not paid on the scheduled due date will bear interest, payable in cash
on each scheduled due date, at an annual rate of 10%, compounded quarterly,
from the date due until paid.

 

(c)                                  The parties
acknowledge and agree that an objective of the Company is to maximize value for
Holdings and its shareholders which may include consummating (or participating
in the consummation of) (i) a Change of Control (as defined below) or (ii) an
Initial Public Offering (as defined in the Stockholders Agreement).  The term “Change of
Control” means a transaction (including, without limitation, any
merger, consolidation or sale of assets or equity interests) the result of
which is that any Person (as defined in the Stockholders Agreement) other than
an Investor (as defined in the Stockholders Agreement) or a Permitted
Transferee (as defined in the Stockholders Agreement) of an Investor (as
defined in the Stockholders Agreement) becomes the beneficial owner, directly
or indirectly, of more than 50% of the voting stock of, or all or substantially
all of the assets of, the Company or Holdings. 
The Management Services provided to the Company by the Sponsor
Management Entities will help to facilitate the consummation of a Change of
Control or Initial Public Offering, should the Company or Holdings decide to
pursue such a transaction.  In the event
of a Change of Control or Initial Public Offering, each of the Sponsorship
Management Entities shall receive its pro rata portion of the Lump Sum Payment
(as defined below) in lieu of quarterly payments of the Management Fee, such
amount to be paid, unless prohibited by and subject to the terms of any
agreement or indenture governing indebtedness of Holdings or any of its subsidiaries
(including the Company), on the date on which the Change of Control or Initial
Public Offering is consummated.  The “Lump Sum Payment” shall be a single
lump sum cash payment equal to the then present value of all then current and
future Management Fees payable under this

 

3

 

Agreement,
assuming the Termination Date to be the twelfth anniversary of the date of the
Original Agreement (using a discount rate equal to the yield to maturity on the
date of the consummation of the Change of Control or Initial Public Offering of
the class of outstanding U.S. government bonds having a final maturity closest
to the twelfth anniversary of the date of the Original Agreement (the “Discount Rate”)); provided, that
no portion of the Lump Sum Payment shall be payable to a Sponsor Management
Entity if on the date of the consummation of the Change of Control or Initial
Public Offering such Sponsor Management Entity does not own any beneficial
economic interest in Holdings or the Company. 
A pro rata portion of the Lump Sum Payment will be paid to each Sponsor
Management Entity upon a Change of Control or Initial Public Offering based on
the relative percentage interests in Holdings held by such Sponsor Management
Entity and its affiliates (it being understood that no person will be
considered an affiliate of any Sponsorship Management Entity solely by reason
of ownership of capital stock of Holdings) as compared to the other Sponsor
Management Entities and their respective affiliates (it being understood that
no person will be considered an affiliate of any Sponsorship Management Entity
solely by reason of ownership of capital stock of Holdings), in each case, at
the time of such Change of Control or Initial Public Offering.  The Lump Sum Payment will be payable to the
Sponsor Management Entities by wire transfer in same-day funds to the
respective bank accounts designated by the applicable Sponsor Management
Entities.

 

(d)                                 To the extent the
Company does not pay any portion of the Lump Sum Payment by reason of any
prohibition on such payment pursuant to the terms of any agreement or indenture
governing indebtedness of Holdings or its subsidiaries (including the Company),
any unpaid portion of the Lump Sum Payment shall be paid to the Sponsor
Management Entities on the first date on which the payment of such unpaid
amount is permitted under such agreement or indenture, to the extent permitted
by such agreement or indenture.  Any
portion of the Lump Sum Payment not paid on the scheduled due date shall bear
interest at an annual rate equal to the Discount Rate, compounded quarterly,
from the date due until paid.

 

SECTION 4.   Reimbursements.

 

(a)                                  In addition to the
fees payable pursuant to this Agreement, the Company will pay directly or
reimburse the Sponsor Management Entities and each of their respective
affiliates for their respective Out-of-Pocket Expenses (as defined below), and for
any Other Expenses (as defined below) for which payment or reimbursement by the
Company is provided pursuant to Section 4(b).  For the purposes of this Agreement, the term “Out-of-Pocket Expenses” means the reasonable routine out-of-pocket
costs and expenses incurred by a Sponsor Management Entity and their respective
affiliates in connection with the Management Services provided under this
Agreement (including prior to the Effective Time), including, without
limitation, (a) costs of any outside services or independent contractors (other
than the fees and disbursements of any independent accountants, outside legal
counsel, consultants or similar independent professionals and organizations), such
as couriers, business publications, on-line financial services or similar
services, retained or used by such Sponsor Management Entity or any of its
affiliates and (b) transportation, per diem costs, word processing
expenses or any similar expense not associated with its or its affiliates’
ordinary operations.

 

(b)                                 Notwithstanding the
foregoing, except as provided in this Section 4(b), neither the Company nor
Holdings shall pay directly or reimburse any Sponsor Management

 

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Entity or its
affiliates for costs and expenses incurred by such Sponsorship Management
Entity or its affiliates that are not Out-of-Pocket Expenses (“Other Expenses”); provided,
that the Company or Holdings shall pay directly or reimburse a Sponsor
Management Entity and its affiliates for any of such Sponsor Management Entity’s
and its affiliates’ Other Expenses that are (A) less than $10,000 in the
aggregate in any calendar year or (B) approved by the Requisite
Stockholder Majority (as defined in the Stockholders Agreement) for payment or
reimbursement by the Company or Holdings. 
If any Sponsor Management Entity or any of its affiliates requests
payment or reimbursement for Out-of-Pocket Expenses in excess of $100,000 in
the aggregate in any calendar year, such Sponsor Management Entity or its
relevant affiliate shall provide notice of such request(s) to each other
Sponsor Management Entity in accordance with Section 9(b).  All payments or reimbursements for
Out-of-Pocket Expenses and approved or permitted Other Expenses will be made by
wire transfer in same-day funds to the bank account designated by such Sponsor
Management Entity or its relevant affiliate (other than any such affiliate that
would not be an affiliate of such Sponsor Management Entity, but for such
Sponsor Management Entity’s ownership of capital stock of Holdings) (if such
expenses were incurred by such Sponsor Management Entity or its affiliates)
promptly upon or as soon as practicable following request for reimbursement, to
the account indicated to the Company by the relevant payee.

 

(c)                                  Apart from the
Out-of-Pocket Expenses and such other reasonable out-of-pocket expenses as are
approved pursuant to Section 4(b) of the Sponsor Management Entities,
Holdings will also incur reimbursable expenses from time to time.  For each fiscal year, the Company shall make
cash payments to Holdings in an amount equal to the sum of (x) any fees payable
by Holdings in order to maintain its corporate existence and (y) any amounts
attributable to (i) corporate overhead expenses of Holdings incurred in
the ordinary course of business and (ii) salaries or other compensation of
employees who perform services for both Holdings and the Company (collectively,
the “Holdings Expenses”); provided,
that reimbursements for Holdings Expenses made pursuant to this clause (i) shall
not exceed, in the aggregate, $3,500,000 in any fiscal year and (ii) shall
not be deemed as part of the Management Fee. 
Any payments of Holdings Expenses made pursuant to this Section 4(b) shall
be made as requested by Holdings in its sole discretion, exercised in good
faith.

 

SECTION 5.   Indemnification.  The Company will
indemnify and hold harmless each of the Sponsor Management Entities, their
respective affiliates and partners (both general and limited), members (both
managing and otherwise), officers, directors, employees, agents and
representatives (each such person being an “Indemnified Party”)
from and against any and all losses, claims, damages and liabilities, including
in connection with seeking indemnification, whether joint or several (the “Liabilities”),
related to, arising out of or in connection with the Management Services
contemplated by this Agreement or the engagement of the Sponsor Management
Entities pursuant to, and the performance by the Sponsor Management Entities or
their affiliates of the Management Services contemplated by, this Agreement,
whether or not pending or threatened, whether or not an Indemnified Party is a
party, whether or not resulting in any liability and whether or not such
action, claim, suit, investigation or proceeding is initiated or brought by the
Company.  The Company will reimburse any
Indemnified Party for all reasonable costs and expenses (including reasonable
attorneys’ fees and expenses) as they are incurred in connection with
investigating, preparing, pursuing, defending or assisting in the defense of
any action, claim, suit, investigation or proceeding for which the Indemnified
Party would be entitled to indemnification under the terms of the previous
sentence, or any action or

 

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proceeding
arising therefrom, whether or not such Indemnified Party is a party
thereto.  The Company will not be liable
under the foregoing indemnification provision with respect to any particular
loss, claim, damage, liability, cost or expense of an Indemnified Party that is
determined by a court, in a final judgment from which no further appeal may be
taken, to have resulted primarily from the gross negligence or willful
misconduct of such Indemnified Party. 
The attorneys’ fees and other expenses of an Indemnified Party shall be
paid by the Company as they are incurred upon receipt, in each case, of an
undertaking by or on behalf of the Indemnified Party to repay such amounts if
it is finally judicially determined that the Liabilities in question resulted
primarily from the gross negligence or willful misconduct of such Indemnified
Party.

 

SECTION 6.   Accuracy of
Information.  The
Company shall furnish or cause to be furnished to the Sponsor Management
Entities such information as the Sponsor Management Entities believe reasonably
appropriate to their Management Services hereunder and to comply with
Securities and Exchange Commission or other legal requirements relating to the
beneficial ownership by the Investors (as defined in the Stockholders
Agreement) of equity securities of the Company (all such information so
furnished, the “Information”).  The Company recognizes and confirms that the
Sponsor Management Entities (a) will use and rely primarily on the
Information and on information available from generally recognized public
sources in performing the Management Services contemplated by this Agreement
without having independently verified the same, (b) do not assume
responsibility for the accuracy or completeness of the Information and such
other information and (c) are entitled to rely upon the Information
without independent verification.

 

SECTION 7.   Effective Time.  This Agreement will
become effective at the “Effective Time”, as defined in
the Merger Agreement.

 

SECTION 8.   Permissible
Activities.  Subject
to applicable law and the provisions of Section 13(b) of the
Stockholders Agreement, nothing herein will in any way preclude the Sponsor
Management Entities or their respective affiliates (other than the Company or
its subsidiaries and their respective employees) or their respective partners
(both general and limited), members (both managing and otherwise), officers,
directors, employees, agents or representatives from engaging in any business
activities or from performing services for its or their own account or for the
account of others, including for companies that may be in competition with the
business conducted by Holdings and its subsidiaries (including the Company).

 

SECTION 9.   Miscellaneous.

 

(a)                                  No
amendment or waiver of any provision of this Agreement, or consent to any
departure by any party hereto from any such provision, will be effective unless
it is in writing and signed by the Company, Holdings and the Requisite
Stockholder Majority (as defined in the Stockholders Agreement).  Any amendment, waiver or consent will be
effective only in the specific instance and for the specific purpose for which
given.  The waiver by any party of any
breach of this Agreement will not operate as or be construed to be a waiver by
such party of any subsequent breach.

 

(b)                                 Any
notices or other communications required or permitted hereunder will be
sufficiently given if delivered personally or sent by facsimile with confirmed
receipt, or by

 

6

 

overnight courier, addressed as
follows or to such other address of which the parties may have given written
notice:

 

if to Holdings, addressed to it at:

 

Marquee Holdings Inc.

920 Main Street

Kansas City, MO  64105

Fax:                 (816) 480-4700

Attn:          Kevin M. Connor

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Fax: (212) 751-4864

Attn:  David S. Allinson

 

if to the Company, addressed to it at:

 

AMC Entertainment Inc.

920 Main Street

Kansas City, MO  64105

Fax:                 (816) 480-4700

Attn:          Kevin M. Connor

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Fax: (212) 751-4864

Attn:  David S. Allinson

 

if to JPMP, addressed as follows:

 

J.P. Morgan Partners (BHCA), L.P. and affiliated funds

1221 Avenue of the Americas

39th Floor

New York, New York 10020

Attn:          Michael
R. Hannon

Stephen P. Murray

 

7

 

with a copy to:

 

Latham & Watkins LLP

885 Third Avenue

New York, NY 10022

Fax: (212) 751-4864

Attn:  David S. Allinson

 

if to Apollo or the Coinvestors (as applicable), addressed as follows:

 

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Attn:          Marc Rowan

Aaron Stone

 

with a copy to:

 

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, New York 10019

Attn:          Daniel A. Neff

David C. Karp

 

if to Bain, addressed as follows:

 

c/o Bain Capital, LLC

111 Huntington Avenue

Boston, MA 02199

 

with a copy to:

Ropes & Gray LLP

One International Place

Boston, Massachusetts  02110

Fax:                 (617) 951-7050

Attn:          R. Newcomb Stillwell

Howard S. Glazer

 

if to Carlyle, addressed as follows:

 

c/o The Carlyle Group

520 Madison Avenue, 42nd Floor

New York, New York 10022

Fax:                 (212) 381-4901

Attn:          Michael Connelly

Eliot P. S. Merrill

 

8

 

with a copy
to:

 

Latham & Watkins LLP

885 Third Avenue

New York, New York 10022

Fax:                 (212) 751-4864

Attn:          R. Ronald Hopkinson

 

and

 

if to Spectrum, addressed as follows:

 

c/o Spectrum Equity Investors

333 Middlefield Road

Suite 200

Menlo Park, CA  94025

Fax:                 (415) 464-4601

Attn:          Brion Applegate

Benjamin Coughlin

 

with a copy to:

 

Latham & Watkins LLP

505 Montgomery Street, Suite 1900

San Francisco, California 94111

Fax:                 (415) 395-8095

Attn:          Scott R. Haber

Tad J. Freese

 

Unless
otherwise specified herein, such notices or other communications will be deemed
received (i) on the date delivered, if delivered personally or sent by
facsimile with confirmed receipt, and (ii) one business day after being
sent by overnight courier.

 

(c)                                  This
Agreement, the Stockholders Agreement and the Merger Agreement will constitute
the entire agreement between the parties with respect to the subject matter
hereof, and will supersede all previous oral and written (and all
contemporaneous oral) negotiations, commitments, agreements and understandings
relating hereto.

 

(d)                                 This
Agreement and any claims or controversies arising out of or relating to this
Agreement will be governed by, and construed in accordance with, the laws of
the State of New York (without regard to principles of conflicts of law that would
apply the law of another jurisdiction).

 

(e)                                  The
provisions of this Agreement will be binding upon and inure to the benefit of
the parties hereto and their respective successors.  Subject to the next sentence, no Person other
than the parties hereto and their respective successors is intended to be a
beneficiary of this Agreement.  The
parties acknowledge and agree that the affiliates of the Sponsor Management
Entities and their respective partners (both general and limited), members
(both

 

9

 

managing and otherwise),
officers, directors, employees, agents and representatives are intended to be
third-party beneficiaries under Section 5 of this Agreement.

 

(f)                                    This
Agreement may be executed by one or more parties to this Agreement on any number
of separate counterparts (including by facsimile), and all of said counterparts
taken together will be deemed to constitute one and the same instrument.

 

(g)                                 Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.

 

(h)                                 At
the Effective Time, this Agreement shall amend and restate the Original
Agreement in its entirety.

 

10

 

IN WITNESS
WHEREOF, the undersigned have executed, or have caused to be executed, this
Agreement on the date first written above.

 

 

	
  MARQUEE HOLDINGS INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Craig R.
  Ramsey

  	
   

  
	
   

  	
  Name:  Craig
  R. Ramsey

  
	
   

  	
  Title:  Executive
  Vice President and Chief Financial Officer

  
	
   

  
	
   

  
	
  AMC ENTERTAINMENT INC.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Craig R.
  Ramsey

  	
   

  
	
   

  	
  Name:  Craig
  R. Ramsey

  
	
   

  	
  Title:  Executive
  Vice President and Chief Financial Officer

  

 

 

 

	
  J.P. MORGAN PARTNERS (BHCA), L.P.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Stephen
  P. Murray

  	
   

  
	
   

  	
  Name:  Stephen
  P. Murray

  
	
   

  	
  Title:  
  Managing Director

  

 

 

 

	
  APOLLO MANAGEMENT V, L.P.

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Patricia M. Navis

  	
   

  
	
   

  	
  Name:  Patricia M. Navis

  
	
   

  	
  Title:   Vice President

  
	
   

  
	
   

  
	
  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/ Patricia M. Navis

  	
   

  
	
   

  	
  Name:  Patricia M. Navis

  
	
   

  	
  Title:   Vice President

  
	
   

  
	
   

  
	
  APOLLO OVERSEAS PARTNERS V, L.P.

  
	
   

  
	
  By:

  	
  APOLLO ADVISORS V, L.P.,

  
	
   

  	
  ITS GENERAL PARTNER

  
	
  By:

  	
  APOLLO CAPITAL MANAGEMENT V, INC.

  
	
   

  	
  ITS GENERAL PARTNER

  
	
   

  
	
  By:

  	
  /s/ Patricia M. Navis

  	
   

  
	
   

  	
  Name:  Patricia M. Navis

  
	
   

  	
  Title:   Vice President

  
	
   

  
	
   

  
	
  APOLLO NETHERLANDS PARTNERS V(A), L.P.

  
	
   

  
	
  By:

  	
  APOLLO ADVISORS V, L.P.,

  
	
   

  	
  ITS GENERAL PARTNER

  
	
  By:

  	
  APOLLO CAPITAL MANAGEMENT V, INC.

  
	
   

  	
  ITS GENERAL PARTNER

  
	
   

  
	
  By:

  	
  /s/ Patricia M. Navis

  	
   

  
	
   

  	
  Name:  Patricia M. Navis

  
	
   

  	
  Title:   Vice President

  
					

 

 

 

	
  APOLLO NETHERLANDS PARTNERS V(B), L.P.

  
	
   

  
	
  By:

  	
  APOLLO ADVISORS V, L.P.,

  
	
   

  	
  ITS GENERAL PARTNER

  
	
  By:

  	
  APOLLO CAPITAL MANAGEMENT V, INC.

  
	
   

  	
  ITS GENERAL PARTNER

  
	
   

  
	
  By:

  	
  /s/ Patricia
  M. Navis

  	
   

  
	
   

  	
  Name:  Patricia
  M. Navis

  
	
   

  	
  Title:  
  Vice President

  
	
   

  
	
   

  
	
  APOLLO GERMAN PARTNERS V GMBH & CO KG

  
	
   

  	
   

  
	
  By:

  	
  APOLLO ADVISORS V, L.P.,

  
	
   

  	
  ITS GENERAL PARTNER

  
	
  By:

  	
  APOLLO CAPITAL MANAGEMENT V, INC.

  
	
   

  	
  ITS GENERAL PARTNER

  
	
   

  
	
  By:

  	
  /s/ Patricia
  M. Navis

  	
   

  
	
   

  	
  Name:  Patricia
  M. Navis

  
	
   

  	
  Title:  
  Vice President

  
					

 

 

 

	
  BAIN CAPITAL PARTNERS, LLC

  
	
   

  
	
   

  
	
  By:

  	
  /s/ John P.
  Connaughton

  	
   

  
	
   

  	
  Name:  John
  P. Connaughton

  
	
   

  	
  Title:  
  Managing Director

  

 

 

	
  TC GROUP, L.L.C.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Michael
  J. Connelly

  	
   

  
	
   

  	
  Name:  Michael
  J. Connelly

  
	
   

  	
  Title:  
  Managing Director

  

 

 

 

	
  APPLEGATE AND COLLATOS, INC.

  
	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Brion Applegate

  	
   

  
	
   

  	
  Name: Brion
  Applegate

  
	
   

  	
  Title:
  Co-Founder

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