Exhibit 4.8
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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
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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 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 their
interests under the Investment Agreement (as hereinafter
defined)(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
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 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. 1.1.1
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.
1.1.13 "Board" shall mean the Board of Directors of the Company.
"B Trustees" shall mean ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇, ▇▇., as (1) successor trustees of the 1992 ▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, 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.
1.1.14 "Certificate of Designations" shall mean the Certificate of
Designations 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.
1.1.15 "Class B Shares" shall mean the Class B Stock, par value 66
2/3(cent)per share, of the Company.
1.1.16 "Common Stock" means the Company's Common Stock, par value
66 2/3(cent) per share, and any other class of common stock of the Company
that may be created from time to time.
1.1.17 "Company" shall have the meaning set forth in the recitals
to this Agreement.
1.1.18 "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 exchangeable 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.
1.1.19 "Disposition" shall have the meaning assigned thereto in
Section 5.1.
1.1.20 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.1.21 "15% Acquisition" shall have the meaning assigned thereto
in Section 4.2.
1.1.22 "Foundation" shall mean The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Foundation.
1.1.23 "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 Schedule 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."
1.1.24 "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.
1.1.25 "Investment Agreement" shall have the meaning set forth in
the recitals to this Agreement.
1.1.26 "Nominating Committee" shall have the meaning set forth in
the Investment Agreement.
1.1.27 "Other Investor Affiliates" shall have the meaning set
forth in Section 4.1.
1.1.28 "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.
1.1.29 "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.
1.1.30 "Preferred Stock" shall mean, collectively, the Series A
Preferred and the Series B Preferred.
1.1.31 "Purchaser Standstill Agreement" shall have the meaning
assigned thereto in Section 5.1(b)(II).
1.1.32 "Purchasing Person" shall have the meaning assigned thereto
in Section 5.1(b)(I).
1.1.33 "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.
1.1.34 "Registration Rights Agreement" shall mean the Registration
Rights Agreement, dated of even date herewith, by and among the Company and
the Apollo Investors.
1.1.35 "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.
1.1.36 "Securities Act" shall mean the Securities Act of 1933, as
amended. 1.1.1
1.1.37 "Series A Preferred" shall have the meaning set forth in
the recitals to this Agreement.
1.1.38 "Series B Preferred" shall have the meaning set forth in
the recitals to this Agreement.
1.1.39 "Standstill Period" shall mean the period commencing on the
date hereof and ending on the fifth anniversary hereof.
1.1.40 "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).
1.1.41 "Transaction Documents" shall mean this Agreement, the
Investment Agreement, the Certificate of Designations and the Registration
Rights Agreement.
1.1.42 "Trust" shall mean, collectively, (i) the 1992 ▇▇▇▇▇▇▇,
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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, as amended and restated on May
12, 1999, and (3) the Foundation.
1.1.43 "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.
1.1.44 "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.
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, authorization
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 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
Standstill 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, 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
Designations) 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 Preferred 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; provided such acquisition is
approved by the Requisite Independent Directors;
and
(vii) subject to the provisions of Section 4.2, the
acquisition of 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 dispositions
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 formation of a Group with respect to any Voting Securities
(other than, with respect to Apollo, any such "group" consisting
exclusively of Apollo and its controlled 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;
(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
arrangement 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 acquisition, 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 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 Qualifying
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), (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"), Beneficially 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 executed 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
Securities 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 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 Company 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 Investor, 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
Preferred 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 purchasing 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
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 qualifications 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 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 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
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.
(a) If to the Company, to:
AMC Entertainment Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ & ▇▇▇▇ ▇.▇.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
and
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to Apollo or to any Apollo Investor, to:
c/o Apollo Management, L.P.
1301 Avenue of the ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
Akin, Gump, Straus, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
(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 designated 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.
Section 1.1
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.
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
APOLLO MANAGEMENT IV, L.P.
By: AIF Management, Inc.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
APOLLO MANAGEMENT V, L.P.
By: AIF Management, Inc.,
its General Partner
By: /s/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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/ ▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇▇
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/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
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/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
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/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President