EXHIBIT 10.36
EXECUTION COPY
INTERIM OPERATING AGREEMENT
THIS INTERIM OPERATING AGREEMENT (the "AGREEMENT"), dated as
of December 6, 2001, is entered into by and between AMC ENTERTAINMENT INC., a
Delaware corporation ("AMCE"), and GC COMPANIES, INC., a Delaware corporation
("GCX").
Recitals
WHEREAS, GCX and certain of its subsidiaries (collectively,
the "GC DEBTORS") are the debtors and debtors-in-possession in proceedings
pending in the United States Bankruptcy Court for the District of Delaware (the
"BANKRUPTCY COURT") as case numbers 00-3897 through 00-3927 (as administratively
consolidated, the "GC CHAPTER 11 CASES"); and
WHEREAS, GCX is a holding company engaged in three primary
lines of business (collectively, the "GC BUSINESS") through its subsidiaries and
Affiliates: (i) a wholly-owned domestic movie theatre exhibition business (the
"DOMESTIC THEATRE BUSINESS") conducted through General Cinema Theatres, Inc. and
its subsidiaries, (ii) a South American movie theatre exhibition business (the
"SA THEATRE BUSINESS") conducted through Hoyts General Cinema South America,
Inc. and its Affiliates (the "SA JOINT VENTURE"), and (iii) a private investment
business (the "INVESTMENT PORTFOLIO") conducted through GCC Investments, Inc.
and its Affiliates; and
WHEREAS, AMCE has entered into a letter of intent dated this
date (the "LOI") with GCX whereby AMCE would acquire the GC Business (the
"TRANSACTION") through the acquisition of 100% of the stock of reorganized GCX
under a plan of reorganization for the GC Debtors in the GC Chapter 11 Cases
(the "REORGANIZATION PLAN"), following the confirmation and the effective date
of the Reorganization Plan; and
WHEREAS, AMCE is requiring as a condition precedent to
executing the LOI and proceeding with the Transaction, that GCX enter into this
Agreement;
Agreements
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements contained in this Agreement and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement agree as follows:
1. DEFINITIONS. For purposes of this Agreement (including the
Schedules hereto), the terms defined in this Agreement shall have the respective
meanings specified herein, and, in addition, the following terms shall have the
following meanings:
"AFFILIATE" or "AFFILIATE" means, as to any Person, any other
Person that directly or indirectly, owns or controls, is owned or
controlled by, or is under common ownership or control with, such
Person. The term "CONTROL" (including, with correlative meanings, the
terms "CONTROLLED BY" and "UNDER COMMON CONTROL WITH"), as applied to
any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities or other
ownership interest, by contract or otherwise.
"AGREEMENT" is defined in the Preamble.
"AMCE" is defined in the Preamble.
"BANKRUPTCY COURT" is defined in the Recitals.
"BENEFIT PLAN" has the meaning given in ERISA Section 3(3).
"BENEFIT PLAN SPONSOR" has the meaning given in ERISA
Section 3(16)(B).
"BUSINESS DAY" means any day other than a Saturday, a Sunday,
a day on which banks in the City of New York are authorized or required
to close, or the day after Thanksgiving Day.
"CASH FLOW PROJECTION" means the Closing Budget (as defined in
the DIP Facility) dated November 5, 2001, a copy of which has been
previously provided to AMCE, as modified in accordance with Section
7.01(f) of the DIP Facility or as updated in the Ordinary Course of
Business.
"COMMERCIALLY REASONABLE EFFORTS" means the use of efforts
that a commercially reasonable Person desirous of achieving a result
would use in similar circumstances.
"COMPANY OTHER BENEFIT OBLIGATION" means an Other Benefit
Obligation owed, adopted, or followed by GCX or an ERISA Affiliate of
an Acquired Company.
"COMPANY PLAN" means all Plans of which GCX or an ERISA
Affiliate of GCX is or was a Plan Sponsor, or to which GCX or an ERISA
Affiliate of GCX otherwise participates or has participated. All
references to Plans are to Company Plans unless the context requires
otherwise.
"COMPANY VEBA" means a VEBA whose members include employees of
GCX or any ERISA Affiliate of GCX.
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"DESIGNATED AMCE REPRESENTATIVE" means Xxxxx X. Xxxxxx, Chief
Financial Officer of AMCE, or any other officer of AMCE designated by
AMCE in writing to GCX.
"DIP FACILITY" means that certain Debtor in Possession
Agreement dated October 11, 2000, by and between GCX, General Electric
Capital Corporation, Fleet National Bank, and the Bank of Nova Scotia,
as amended.
"DOMESTIC THEATRE BUSINESS" is defined in the Recitals.
"EFFECTIVE DATE" means the date this Agreement was executed by
authorized representatives of AMCE and GCX, subject to the Bankruptcy
Court entering an order approving this Agreement.
"ERISA AFFILIATE" means, with respect to GCX, any other Person
that, together with GCX, would treated as a single employer under IRC
Section 414.
"FANDANGO ARRANGEMENT" means that certain Exclusive Ticketing
Distribution Agreement between GCX and Fandango, Inc., dated March 3,
2000, as amended, and all other agreements related thereto.
"GC CHAPTER 11 CASES" is defined in the Recitals.
"GC BUSINESS" is defined in the Recitals.
"GCX" is defined in the Recitals.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof or any entity (including,
without limitation, a court) exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government.
"INVESTMENT PORTFOLIO" is defined in the Recitals.
"IRS" means the United States Internal Revenue Service.
"LEGAL REQUIREMENT" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of common
law, regulation, statute, or treaty.
"LOI" is defined in the Recitals.
"MATERIAL ADVERSE EFFECT" means that the action or event,
taken alone or in the aggregate, has a material adverse effect on the
GC Business, the assets used in the GC Business, the Transaction or the
Reorganization Plan.
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"MULTI-EMPLOYER PLAN" has the meaning given in ERISA
Section 3(37)(A).
"OPERATING HOURS" shall mean the hours each theatre complex
within the Domestic Theatre Business and SA Theatre Business are open
for purposes of presenting movie presentations to the public, including
the preparation and closing thereof, during each day of each calendar
week.
"ORDINARY COURSE OF BUSINESS" means a reasonable action taken
by a Person only if (taking into account the seasonality of the GC
Business and the GC Chapter 11 Cases) (a) such action is consistent
with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person; and (b) such
action is not required to be authorized by the board of directors of
such Person (or by any Person or group of Persons exercising similar
authority) and such Person is not otherwise required to obtain the
approval of AMCE or any other person as may be required by this
Agreement; except to the extent such action is provided for or
contemplated by the Reorganization Plan or the LOI.
"ORGANIZATIONAL DOCUMENTS" means (a) the articles or
certificates of incorporation and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate
of limited partnership of a limited partnership; (d) any charter or
similar document adopted or filed in connection with the creation,
formation, or organization of a Person; (e) the certificate of
formation and limited liability company agreement of a limited
liability company; and (f) any amendment to any of the foregoing.
"OTHER BENEFIT OBLIGATIONS" means all obligations,
arrangement, or customary practices, whether or not legally
enforceable, to provide benefits, other than salary, as compensation
for services rendered, to present or former directors, employees, or
agents, other than obligations, arrangements, and practices that are
Pension Plans. Other Benefit Obligations include consulting agreement
under which the compensation does not depend upon the amount of service
rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC Section 132.
"PBGC" means the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PENSION PLAN" has the meaning given in ERISA Section 3(2)(A).
"PERSON" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association,
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joint venture, Governmental Authority or other entity or enterprise of
whatever nature.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Government Authority or arbitrator.
"QUALIFIED PLAN" means any Plan that meets or purports to meet
the requirements of IRC Section 401(a).
"REORGANIZATION PLAN" is defined in the Recitals.
"SA THEATRE BUSINESS" is defined in the Recitals.
"SA JOINT VENTURE" is defined in the Recitals.
"TERM" is defined in Section 3.
"TITLE IV PLANS" means all Pension Plans that are subject to
Title IV of ERISA, 29 U.S.C. Section 1301 et seq., other than
Multi-Employer Plans.
"TRANSACTION" is defined in the Recitals.
"VEBA" means voluntary employees' beneficiary association
under IRC Section 501(c)(9).
"WELFARE PLAN" has the meaning given in ERISA Section 3(1).
2. MANAGEMENT OBLIGATIONS AND COVENANTS OF GCX. Subject to the
terms and conditions of this Agreement (and taking into account the seasonality
of the GC Business and the GC Chapter 11 Cases) and except as contemplated by
the Reorganization Plan, GCX will manage the GC Business during the Term of this
Agreement, and will do so, unless as otherwise provided herein, in all material
respects only in the Ordinary Course of Business and in accordance with all
Legal Requirements. Except as contemplated by the Reorganization Plan, GCX and
its Affiliates will use Commercially Reasonable Efforts to preserve intact the
GC Business and keeping available the services of the current officers,
employees, and agents, and maintaining the relations and goodwill with
suppliers, customers, landlords, creditors, employees, agents and others having
business relationships with GCX and its Affiliates. Without limiting the
generality of the foregoing, GCX will manage the GC Business in accordance with
the lettered paragraphs of this Section 2:
(a) Implementing Transaction. GCX and its Affiliates will use
their
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Commercially Reasonable Efforts to implement the Transaction in
accordance with the LOI and the Reorganization Plan.
(b) Contracts and Undertakings. Except as contemplated by the
Reorganization Plan, GCX and its Affiliates will not enter into,
extend, renew, reject, terminate, assume, or materially modify or amend
any material contract without the prior written approval of the
Designated AMCE Representative, including:
(i) any contract or series of related contracts that
involves receipts, expenditures, performance of services or
delivery of goods or material by GCX or its Affiliates of an
amount or value in excess of $20,000, except for film
licensing contracts and orders for trade goods, services and
supplies that are under substantially the same terms as past
practice and in accordance with the Ordinary Course of
Business;
(ii) any contract or series of related contracts
involving expenditures in excess of $10,000 that obligates GCX
or its Affiliates in any capacity whatsoever for performance
for a term longer than six months from the Effective Date of
this Agreement that cannot be terminated upon GCX or its
Affiliates giving more than thirty (30) days notice without
penalty.
(iii) any lease, rental or occupancy agreement,
license, installment or conditional sale agreement affecting
the ownership of, leasing of, title of, use of, or any
leasehold or other interest in, any real property having a
value of more than $10,000, including any theatre lease;
(iv) any material licensing agreement or other
contract with respect to patents, trademarks, copyrights or
other intellectual property of GCX and its Affiliates,
including any of the foregoing agreements with current or
former employees, consultants or contractors regarding the
appropriation or non-disclosure of any intellectual property
of GCX and its Affiliates;
(v) any collective bargaining agreement or other
contract with any labor union or other employee representative
of a group of employees; provided, that GCX may on notice to
AMCE provide notices of intent to negotiate and other notices
required by law; provided further, that GCX will provide a
list of pending and anticipated negotiations during the next
six (6) months within five (5) days of the Effective Date;
(vi) any contract that creates a joint venture,
partnership or other relationship involving a sharing of
profits, losses, costs or liabilities
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by GCX or any of its Affiliates with any other Person;
(vii) any contract that purports to restrict the
business activity of GCX or any of its Affiliates or limit the
freedom of GCX or its Affiliates to engage in any line of
business or to compete with any Person;
(viii) any contract providing for payments to or by
any Person based on sales, purchases, or profits, other than
direct payment for goods, services or film supply in the
Ordinary Course of Business;
(ix) any power of attorney, other than those relating
to Governmental Authorities in the Ordinary Course of
Business;
(x) any material contract that contains or provides
for an express undertaking by GCX or its Affiliates to be
responsible for consequential damages;
(xi) any material contracts with third party
administrators, actuaries, investment managers, consultants
and other independent contractors that relate to any Company
Plan, Company Other Benefit Obligation, or Company VEBA,
except as required by a Legal Requirement;
(xii) any contract for capital expenditures in excess
of $25,000; provided, that GCX may make emergency life safety
capital expenditures up to $100,000 or make capital
expenditures to satisfy Legal Requirements without AMCE's
approval; and
(xiii) any written warranty, guaranty, and or other
similar undertaking with respect to contractual performance
extended by GCX or any of its Affiliates (except for contracts
permitted by the foregoing subsections).
(c) No Default. Other than any breach arising as a result of
the filing of the GC Chapter 11 Cases, GCX is not in and will not
during the Term breach any existing contract that is described in
paragraph (b), except where such breach does not have a Material
Adverse Effect. GCX will provide notice to the Designated AMCE
Representative of any written claim of such breach or default by any
Person or Government Authority.
(d) Chapter 11 Cases. GCX and its Affiliates will not assume,
assign or reject any contracts, including theatre leases and
guaranties, in the GC Chapter 11 Cases without the previous written
approval of the Designated AMCE Representative. GCX will immediately
provide AMCE copies of any material,
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non-privileged correspondence relating to claims made in the GC Chapter
11 Cases between GCX and any of its Affiliates and creditors of GCX or
any of its Affiliates, or any other material, non-privileged documents
or correspondence related to the GC Chapter 11 Cases. Any and all
motions prepared by GCX and its Affiliates relating to the GC Chapter
11 Cases must be submitted to the Designated AMCE Representative prior
to being filed with the Bankruptcy Court.
(e) Debtor in Possession Facility. GCX and its Affiliates will
not (i) amend or modify the DIP Facility or (ii) make any borrowings or
payments under the DIP Facility or otherwise, other than borrowings and
payments in the Ordinary Course of Business consistent with the Cash
Flow Projection. GCX will provide notice to the Designated AMCE
Representative of all DIP Facility borrowings and payments.
(f) Investments. GCX and its Affiliates will not make any
additional investments, payment, or other transfer of property in any
form, regardless of monetary amount or value, in or to the Investment
Portfolio, the SA Joint Venture, or the Fandango Arrangement without
the previous written approval of the Designated AMCE Representative. In
addition, no advisory committee of the Investment Portfolio will take
any action except for actions required by a Legal Requirement related
to the Investment Portfolio without the prior written approval of the
Designated AMCE Representative; provided however that the foregoing
does not prevent persons serving as directors of the portfolio
companies to take any actions in good faith in exercising their
fiduciary duties.
(g) Corporate Matters. At all times during the Term of this
Agreement, GCX will provide copies of all minutes of meetings of the
GCX Board of Directors and its various committees to the Designated
AMCE Representative, redacted for privilege and for any discussion of
AMCE. Furthermore, any and all proposed changes to the Organizational
Documents of GCX or its Affiliates will require the written approval of
an authorized representative of AMCE. GCX and its Affiliates will not
issue any equity or debt securities without the prior written approval
of an authorized AMCE representative.
(h) Legal Proceedings. GCX will not, without the previous
written approval of the Designated AMCE Representative, cause GCX or
any of its Affiliates to confess a judgment or settle a dispute with
any Person or Government Authority which requires the payment by GCX or
any Affiliate or the allowance of a claim against GCX or any Affiliate
in excess of $10,000, except for settlement of non-priority unsecured
prepetition bankruptcy claims in the GC Chapter 11 Cases or as provided
in Section 2(p) hereof. GCX will immediately provide AMCE notice of any
Proceeding (i) that has been commenced by or
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against GCX or any of its Affiliates or that otherwise relates to or
may affect the business of, or any of the assets owned or used by GCX
or any of its Affiliates; or (ii) that challenges, or that may have the
effect of preventing, delaying, making illegal, or otherwise
interfering with the Transaction.
(i) Labor Relations. GCX will immediately provide AMCE notice
of (i) any threatened or existing strike, slowdown, picketing, work
stoppage, or employee grievance process, (ii) any Proceeding against or
affecting GCX or any of its Affiliates relating to the alleged
violation of any Legal Requirement pertaining to labor relations or
employment matters, including any charge or complaint filed by an
employee or union with the National Relations Board, the Equal
Employment Opportunity Commission, or any comparable Government
Authority, organizational activity, or other labor or employment
dispute against or affecting GCX or its Affiliates or their premises,
or (iii) any applications of a collective bargaining agent.
(j) Title to Properties. GCX will not, without previous
written approval of the Designated AMCE Representative, cause GCX or
any of its Affiliates to encumber or pledge any of the assets of GCX or
any of its Affiliates or, in the case or real property, otherwise cause
such property to become subject to any rights of way, building use
restrictions, exceptions, variances, reservations, or limitations of
any nature, except as provided in the DIP Facility.
(k) Domestic Theatre Business Operations. GCX and its
Affiliates will not, without the prior written approval of a Designated
AMCE Representative, materially diminish the Operating Hours of the
Domestic Theatre Business on a system-wide basis. On four (4) calendar
days notice, GCX and its Affiliates will provide AMCE personnel
reasonable access to management personnel of the Domestic Theatre
Business during normal business hours for the purposes of conducting
interviews with the same, investigating and auditing operations of the
Domestic Theatre Businesses. GCX and its Affiliates will provide AMCE
quarterly reports describing staffing levels of the Domestic Theatre
Business, and will keep AMCE advised of any changes in numbers or
positions of the same.
(l) SA Theatre Business. GCX will provide AMCE with copies of
all written reports, financial statements or notices it receives in its
capacity as a shareholder of the SA Joint Venture or that its
representative on the Board of the SA Joint Venture receives, including
any weekly, monthly, quarterly or annual financial statements relating
to the SA Theatre Business. In addition, GCX shall not vote on any
matter as a shareholder of the SA Joint Venture without the previous
written approval of the Designated AMCE Representative. During the Term
of this Agreement, GCX will grant AMCE representatives the right and
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access to tour the operations of the SA Theatre Business and meet with
management thereof upon five (5) days' prior notice. AMCE acknowledges
that the SA Theatre Business is not a debtor in the GC Chapter 11 Cases
and that it is not controlled by GCX; accordingly, nothing in this
Agreement will be deemed to (i) limit or restrict the exercise of the
fiduciary obligations of GCX's appointed Board representatives on the
SA Joint Venture or (ii) constitute a transfer of GCX's interest in the
SA Joint Venture.
(m) Film Licensing. GCX and its Affiliates will retain full
control and authority with respect to film licensing and in no event
will AMCE be entitled to determine film booking for individual theatres
of GCX and its Affiliates. GCX and its Affiliates will not implement
any changes to film licensing terms with studios not otherwise in the
Ordinary Course of Business, including initiation by GCX and its
Affiliates of changes in position from "settlement" licensing
agreements with the studios to "firm-term" licensing agreements or
arrangements, without providing prior written notice to the Designated
AMCE Representative. In addition, GCX and its Affiliates will provide
AMCE with prior notice of any change to any clearance policies with
studios or implementation of a policy which is likely to result in a
Significant Reduction in the number of runs offered to studios or by
studios to. For purposes of this subparagraph, "Significant Reduction"
means a reduction in runs equal to 50% or greater from the standard
coverage of runs for any particular movie based on normal industry wide
projections of that particular movie, and under no circumstances, a
reduction of greater than 25 runs for any particular movie release
regardless of percentage decrease. In addition to all other obligations
under this subparagraph, GCX and its Affiliates will provide the
Designated AMCE Representative notice of any change or event not in the
Ordinary Course of Business that could adversely effect film exhibition
costs.
(n) Financial Statements. To the extent available to GCX, GCX
shall provide AMCE copies of all financial statements and reports
prepared by GCX pursuant to Article VII of the DIP Facility. GCX will
further provide AMCE with monthly P&L statements by theatre with
comparisons to budget and periodic payroll and concession analyses to
be agreed upon by GCX and the Designated AMCE Representative.
(o) Bank and Credit Accounts. GCX and its Affiliates will not
(i) open or close any bank accounts, (ii) change authorized signatures
on any existing bank account, except for replacements of former
officers in the Ordinary Course of Business, (iii) implement any new
cash management services, or (iv) enter into or change any credit card
processing agreements, without the prior written approval of a
designated representative of AMCE. GCX and its Affiliates further agree
to provide AMCE copies of all monthly bank reconciliation reports and
all
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correspondence with cash management banks.
(p) Insurance. GCX and its Affiliates will not (i) settle any
insurance claim in excess of $10,000 (except as provided for in the
Debtors' Motion for Authority to Implement Claims Resolution Procedures
[Insurance Related Claims] approved by the Bankruptcy Court on November
13, 2001), or (ii) make any changes in coverage for general liability,
workers compensation, automobile liability, umbrella and excess general
liability, crime and fiduciary, property, directors and officer or
excess director and officer insurance without the written approval of
the Designated AMCE Representative. GCX and its Affiliates will provide
AMCE copies of (i) all policy summaries confirming renewal of all
current insurance policies and (ii) copies of any internal or external
weekly, monthly, quarterly or annual insurance reserve analysis or loss
reports.
(q) Employee Benefits and Related Matters.
(i) GCX will not make any changes to any Company Plan
or Company Other Benefit Obligation without the written
approval of the Designated AMCE Representative.
(ii) GCX will not make any grant, enter into or
modify any (A) employment contracts with GCX management
personnel, (B) employee incentive payout programs, (C)
employee compensation raises (other than annual raises in the
Ordinary Course of Business not exceeding 2%, or as required
by a Legal Requirement, collective bargaining agreement or
existing employment agreement), or (D) severance and retention
plans or packages, without the prior written approval of the
Designated AMCE Representative.
(iii) GCX will not relocate management personnel
without the prior written approval of the Designated AMCE
Representative if such relocation is not in the Ordinary
Course of Business and the costs of such relocation exceeds
$5,000 per employee.
(iv) GCX will provide AMCE copies of all registration
statements filed with respect to any Company Plan.
(v) GCX will provide AMCE copies of all reports
submitted by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with
respect to any Company Plan, Company Other Benefit
Obligations, or Company VEBA.
(vi) GCX will provide AMCE a copy of any Form 5500
filed with respect to each Company Plan during the Term of
this Agreement,
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including all schedules and the opinions of independent
accountants.
(vii) GCX will provide AMCE a copy of all notices
that were given by the IRS, the PBGC, or the Department of
Labor to GCX or any of its ERISA Affiliates during the Term of
this Agreement.
(viii) GCX will provide AMCE a copy of any Form
PBGC-1 filed in connection with any Title IV Plans during the
Term of this Agreement.
(ix) GCX will provide AMCE a copy of all
notifications provided to employees of their rights under
ERISA Section 601 et sq. and IRC Section 4980B during the Term
of this Agreement.
(r) Employee Retention. From time to time during this
Agreement, AMCE may require GCX or its Affiliates to offer and pay
certain retention incentives to employees selected by AMCE. AMCE will
fund any amounts paid to and accepted by the selected employees and any
related amounts that GCX may owe under applicable Legal Requirements,
such as withholding. Any retention incentive referenced in this
paragraph is separate from GCX's existing severance, enhanced severance
and retention programs and contractual obligations, all of which are at
the sole cost and expense of GCX and its Affiliates and are the sole
obligations of GCX and its Affiliates.
(s) Capital Expenditures. GCX will make necessary capital
expenditures in the Ordinary Course of Business but not in excess of
the amounts provided for in the Cash Flow Projection; provided, that
GCX and its Affiliates will not make any material changes to concession
stands, equipment or point of sale systems without the prior written
approval of the Designated AMCE Representative (other than normal
replacements and repairs in the Ordinary Course of Business).
3. TERM AND TERMINATION.
(a) The term of this Agreement (the "TERM") will commence on
the Effective Date and end on the effective date of the Reorganization
Plan, subject to earlier termination pursuant to paragraph (b).
(b) This Agreement may be terminated (i) by the mutual consent
of both parties, (ii) by AMCE, if GCX breaches this Agreement, the LOI,
the Reorganization Plan or any other document, instrument or Bankruptcy
Court order executed and or entered, as applicable, in connection with
the Transaction and fails to cure such breach within thirty (30) days
after AMCE gives GCX written notice of such breach, (iii) by GCX, if
AMCE breaches this Agreement, the LOI,
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the Reorganization Plan or any other document, instrument or Bankruptcy
Court order executed and or entered, as applicable, in connection with
the Transaction and fails to cure such breach within thirty (30) days
after GCX gives AMCE written notice of such breach, (iv) by either
party upon the termination of the LOI or the definitive agreement for
the Transaction. The sole and exclusive remedy for monetary damages due
to termination or breach of this Agreement shall be as provided for in
the LOI, but nothing in this sentence shall limit the availability of
equitable remedies, including specific performance under Section 15,
for breach of this Agreement.
4. DESIGNATED AMC REPRESENTATIVE APPROVAL. Pursuant to any
provision within this Agreement requiring the prior written approval of a
Designated AMCE Representative, such Designated AMCE Representative will provide
GCX with written notice of its approval or rejection, or request for additional
information, within four (4) Business Days of receipt of such request made by
GCX or its Affiliates. If AMCE does not provide GCX with a written response of
any kind within four (4) Business Days, AMCE will be deemed to have approved
such action. Any consent or approval of AMCE required under this Agreement may
be given or withheld in AMCE's sole discretion.
5. RELATIONSHIPS AMONG THE PARTIES. Nothing in this Agreement
will cause the relationship between GCX (its Affiliates or third party
providers) on the one hand and AMCE and its Affiliates on the other hand to be
deemed to constitute an agency, partnership or joint venture. The terms of this
Agreement are not intended to cause any of the parties and their Affiliates to
become a joint employer for any purpose. Each of the parties agrees that the
provisions of this Agreement as a whole are not intended to, and do not,
constitute control of the other party (or any Affiliates of the other party) or
provide it with the ability to control such other party or such other party's
employees, agents and representatives under this Agreement (or any Affiliates of
the other party), and each party to this Agreement expressly disclaims any right
or power under this Agreement to exercise any power whatsoever over the
management or policies of the other party (or any Affiliates of the other
party). Nothing in this Agreement obligates either party to act in breach of the
requirements of any Legal Requirements.
6. GOVERNING LAW. Except to the extent that the Bankruptcy
Code or Bankruptcy Rules are applicable, this Agreement will be governed by, and
construed in accordance with, the laws of the State of New York, without regard
to its conflict of laws principles.
7. ASSIGNMENT. Neither party may assign, transfer or convey
any right, obligation or duty, in whole or in part, or any other interest under
this Agreement, without the prior written consent of the other party, except
that AMCE has the right to assign, transfer, or convey its rights, obligations
and duties to any Affiliate. Any such
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assignment, transfer, or conveyance permitted hereunder will not relieve such
transferring or assigning party of liability for its responsibilities and
obligations hereunder. All obligations and duties of a party under this
Agreement will be binding on all successors in interest and permitted assigns of
such party.
8. FORCE MAJEURE/DELAY. No party will be responsible for
delays in or suspension of performance caused by acts of God or a Governmental
Authority or acts of war or terrorism unless such delays or suspensions (or
parts of such delays or suspensions) could have been prevented upon the exercise
of reasonable diligence in accordance with industry standards; provided, that
such party has a duty reasonably to mitigate, or cause to be mitigated, any such
delays or suspensions (or parts of such delays or suspensions).
9. ENTIRE AGREEMENT. This Agreement (together with the
schedules to this Agreement, which are incorporated into this Agreement by this
reference) and that certain letter agreement respecting confidentiality and
nondisclosure dated June 29, 2001 between GCX and AMCE contains the entire
agreement between the parties to this Agreement with respect to the subject
matter of this Agreement and supersedes all prior agreements and understandings,
oral or written, with respect to such matters.
10. THIRD-PARTY RIGHTS. Nothing contained in this Agreement,
express or implied, establishes or creates, or is intended or will be construed
to establish or create, any right in or remedy of, or any duty or obligation to,
any third party.
11. NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication that is required or permitted under this
Agreement must be in writing and will be deemed given only if delivered
personally or sent by registered or certified mail or by Federal Express or
other reputable overnight mail service, postage prepaid, or by telefacsimile,
with written confirmation to follow, as follows:
(a) If to GCX, to:
GC Companies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
Attention: G. Xxxx Xxxxxxx
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
With a required copy to (which will not itself
constitute notice):
Xxxxxxx Xxxxxxx XXX
Xxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
14
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to AMCE, to:
AMC Entertainment Inc.
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a required copy to (which will not itself
constitute notice):
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Xx., Esq.
Facsimile: (000) 000-0000
or to such other address or facsimile numbers as the addressee may have
specified in a notice duly given to the sender as provided in this Agreement.
Such notice, request, demand, waiver, consent, approval or other communication
will be deemed to have been given as of the date so delivered or, if such date
is not a Business Day, on the next Business Day.
12. COUNTERPARTS. This Agreement and any amendments to this
Agreement may be executed in one or more counterparts, each of which will be
deemed to be an original by the parties executing such counterpart, but all of
which will be considered one and the same instrument.
13. AMENDMENT; WAIVER. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by each of the parties, or in the case of a
waiver, by the party against whom the waiver is to be effective, subject in each
case to approval of the Bankruptcy Court where required. No failure or delay by
any party in exercising any right, power or privilege under this Agreement will
operate as a waiver of such right, power or privilege nor will any single or
partial exercise of such right, power or privilege preclude any other or further
exercise of such right, power or privilege or the exercise of any other right,
power or privilege.
14. SEVERABILITY. The provisions of this Agreement will be
deemed severable and the invalidity or unenforceability of any provision will
not affect the validity or enforceability of the other provisions of this
Agreement unless such invalidity
15
or unenforceability, after taking into account the mitigation contemplated by
the next sentence, deprives a party of a material benefit contemplated by this
Agreement. If any provision of this Agreement, or the application of such
provision to any Person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision will be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement and
the application of such provision to other persons, entities or circumstances
will not be affected by such invalidity or unenforceability, nor will such
invalidity or unenforceability affect the validity or enforceability of such
provision, or the application of such provision, in any other jurisdiction.
15. SPECIFIC PERFORMANCE. The parties hereto recognize that
any breach of the terms of this Agreement may give rise to irreparable harm for
which money damages would not be an adequate remedy, and accordingly agree,
that, in addition to other remedies, the nonbreaching party will be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of a remedy of money damages and without
the posting of any bond or other security.
16. INTERPRETATION OF AGREEMENT. The section headings
contained in this Agreement are for reference purposes only and do not in any
way affect the meaning or interpretation of this Agreement. The words "includes"
and "including" are not words of limitation and should be read to also add
"without limitation." References to the singular include the plural and vice
versa, and reference to one gender include all genders, unless the context
otherwise requires.
[The remainder of this page intentionally left blank.]
16
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date first
above written.
AMC ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Xxxxx X. Xxxxx
Chairman, Chief Executive Officer
and President
GC COMPANIES, INC.
By: /s/ G. Xxxx Xxxxxxx
-----------------------------------
G. Xxxx Xxxxxxx
President, Chief Operating Officer
and Chief Financial Officer
SIGNATURE PAGE TO INTERIM OPERATING AGREEMENT
EXECUTION COPY
--------------
AMC ENTERTAINMENT INC.
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
January 24, 2002
GC Companies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
Attn: G. Xxxx Xxxxxxx
President and Chief Operating Officer
Dear Xx. Xxxxxxx:
This letter of amendment ("AMENDMENT") amends and modifies that certain
Interim Operating Agreement dated December 6, 2001 (the "IOA") between AMC
Entertainment Inc., a Delaware corporation ("AMCE"), and GC Companies, Inc., a
Delaware corporation ("GCX"). Capitalized terms used and not defined have the
meaning ascribed thereto in the IOA.
The IOA shall be amended and modified as follows:
1. If GCX reasonably believes that complying with any of the provisions of the
IOA would result or would potentially result in a breach of its fiduciary
duties as debtor-in-possession, GCX may apply to the Bankruptcy Court to
seek a determination as to whether such compliance would constitute such a
breach. During the interim period before the Bankruptcy Court makes such
determination, GCX shall still comply with such provision so that it
maintains the status quo. In the event that the Bankruptcy Court determines
that complying with the provision in that instance would constitute a
breach of GCX's fiduciary duties, then GCX may decline to comply with such
provision as to that instance. However, if GCX does so decline, AMCE shall
have the right to terminate the IOA and any other agreement that may be
terminated upon termination of the IOA, including without limitation that
certain Letter of Intent amended and restated as of this date between AMCE
and GCX and that certain Stock Purchase Agreement dated as of January 15,
2002 among GCX, AMCE, American Multi-Cinema, Inc. and Centertainment
Development, Inc.
2. The last sentence of IOA Section 3(b) shall be deleted in its entirety.
EXECUTION COPY
--------------
Except as modified by this Amendment, the IOA remains unchanged and in full
force and effect.
Very truly yours,
AMC ENTERTAINMENT INC.
By:
-----------------------------------------
Xxxxx X. Xxxxxx
Senior Vice President -- Finance,
Chief Financial Officer and Chief
Accounting Officer
ACKNOWLEDGED AND AGREED TO:
CC COMPANIES, INC.
By:
------------------------------------
G. Xxxx Xxxxxxx
President and Chief Operating Officer
