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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 PART NERS IV, L.P., a Cayman
Islands exempted limited partnership ("AOP IV") and any other partnership or
entity affiliated with and managed by Apollo over which Apollo exercises
investment authority, including voting and dispositive rights, and to which
either AIF IV or AOP IV assigns their interests under the Investment Agreement
(as hereinafter defined)(collectively, the "Apollo IV Investors"), (iii) APOLLO
IN VESTMENT FUND V, L.P., a Delaware limited partnership ("AIF V") and APOLLO
OVERSEAS PARTNERS V, L.P., a Cayman Islands exempted limited partnership ("AOP
V") and any other partnership or entity affiliated with and managed by Apollo
over which Apollo exercises investment authority, including voting and
dispositive rights, and to which either AIF V or AOP V assigns any of their
respective interests under the Investment Agreement (collectively, the "Apollo V
Investors" and together with the Apollo IV Investors the "Apollo Investors"),
(iv) APOLLO MANAGEMENT IV, L.P., a Delaware limited partnership, in its capacity
as investment manager to the Apollo IV Investors ("Apollo IV Management") and
(v) APOLLO MANAGEMENT V, L.P., a Delaware limited partnership, in its capacity
as investment manager to the Apollo V Investors ("Apollo V Management" and
together with Apollo IV Management and any other Person under common control
with Apollo IV Management or Apollo V Management, "Apollo").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Apollo Investors are concurrently with the execution hereof
purchasing from the Company, and the Company is hereby issuing, selling, and
delivering to the Apollo Investors, 92,000 shares of Series A Convertible
Preferred Stock, par value 66 2/3(cent) per share (the "Series A Preferred"),
and 158,000 shares of Series B Exchangeable Preferred Stock, par value 66
2/3(cent) per share (the "Series B Preferred" and, together with the Series A
Preferred, the "Preferred Stock") pursuant to that certain Investment Agreement,
dated as of April 19, 2001, by and among the Company, the Apollo Investors and
Apollo (the "Investment Agreement");
WHEREAS, as a condition to the consummation of the transactions
contemplated by the Investment Agreement, the parties have agreed to restrict
the
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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.
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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.
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1.1.13 "Board" shall mean the Board of Directors of the Company.
1.1.14 "B Trustees" shall mean Xxxxxxx X. Xxxxxx, Xx. and Xxxxxxx X. Xxxx,
Xx., as (1) successor trustees of the 1992 Xxxxxxx, 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 Xxxxxxx X. Xxxxxxx, as amended and restated on May 12, 1999, and (3)
surviving trustees of the Xxxxxxx X. Xxxxxxx Foundation, or any successor
trustees of any of the trusts referred to in clauses (1), (2) or (3) above.
1.1.15 "Certificate of Designations" shall mean the Certificate of Designa
tions for the Series A Preferred and the Series B Preferred, setting forth the
relative rights, preferences and terms of the Preferred Stock, as filed with the
Secretary of State of the State of Delaware.
1.1.16 "Class B Shares" shall mean the Class B Stock, par value 662/3(cent)
per share, of the Company.
1.1.17 "Common Stock" means the Company's Common Stock, par value
662/3(cent) per share, and any other class of common stock of the Company that
may be created from time to time.
1.1.18 "Company" shall have the meaning set forth in the recitals to this
Agreement.
1.1.19 "Derivative Security" shall mean any subscription, option,
conversion right, warrant, phantom stock right or other agreement, security or
commitment of any kind obligating the Company or any of its Subsidiaries to
issue, grant, deliver or sell, or cause to be issued, granted, delivered or
sold, (i) any Voting Securities or any other equity security of the Company,
(ii) any securities convertible into, or ex changeable for, any Voting
Securities or other equity security of the Company or (iii) any obligations
measured by the price or value of any shares of capital stock of the Company.
1.1.20 "Disposition" shall have the meaning assigned thereto in Section
5.1.
1.1.21 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
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1.1.22 "15% Acquisition" shall have the meaning assigned thereto in Section
4.2.
1.1.23 "Foundation" shall mean The Xxxxxxx X. Xxxxxxx Foundation.
1.1.24 "Group" shall mean any group of Persons who, with respect to those
acquiring, holding, voting or disposing of Voting Securities would, assuming
ownership of the requisite percentage thereof, be required under Section 13(d)
of the Exchange Act and the rules and regulations thereunder to file a statement
on Sched ule 13D with the SEC as a "person" within the meaning of Section
13(d)(3) of the Exchange Act, or who would be considered a "person" for purposes
of Section 13(g)(3) of the Exchange Act. "Group" when used with reference to
standards or tests that are based on securities other than Voting Securities
shall have the foregoing meaning except that the words "Voting Securities" in
the second line of the definition of "Group" shall be replaced with the words
"securities of the Company."
1.1.25 "Independent Director" shall means a member of the Board (i) who is
not and has never been an officer or employee of the Company, Apollo, the Apollo
Investors or of their respective Affiliates, or of an entity that derived more
than 5% of its revenues or earnings in its most recent fiscal year from
transactions involving the Company, Apollo, the Apollo Investors or any of their
respective Affiliates, (ii) who has no relationship or affiliation or
compensation, consulting or contracting arrangement with the Company, the B
Trustees, the Foundation, Apollo, any of the Apollo Investors or any other
entity such that a reasonable person could regard such director as likely to be
unduly influenced by the Company, the B Trustees, the Foundation, Apollo or the
Apollo Investors and (iii) who is nominated by the Nominating Committee of the
Board in accordance with the procedures set forth in its charter, it being
understood that the Company's existing directors elected by the holders of
Common Stock will be deemed independent for purposes of this provision through
at least the remainder of their current terms, provided, however, if the
provisions set forth in the charter of the Nominating Committee are not then in
effect, then it shall mean a member of the Board considered "independent"
pursuant to the rules of the American Stock Exchange or other exchange on which
the Company's securities are then traded or listed.
1.1.26 "Investment Agreement" shall have the meaning set forth in the
recitals to this Agreement.
1.1.27 "Nominating Committee" shall have the meaning set forth in the
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Investment Agreement.
1.1.28 "Other Investor Affiliates" shall have the meaning set forth in
Section 4.1.
1.1.29 "Permitted Underwriter" shall mean any underwriter who is in the
business of underwriting securities and who, in the ordinary course of its
business as an underwriter, acquires Voting Securities in connection with a
public offering with the bona fide intention of reselling all of the Voting
Securities so acquired pursuant to such public offering.
1.1.30 "Person" means any natural person, corporation, partnership, limited
liability company, firm, association, trust, government, governmental agency or
any other entity, whether acting as an individual, fiduciary or other capacity.
1.1.31 "Preferred Stock" shall mean, collectively, the Series A Preferred
and the Series B Preferred.
1.1.32 "Purchaser Standstill Agreement" shall have the meaning assigned
thereto in Section 5.1(b)(II).
1.1.33 "Purchasing Person" shall have the meaning assigned thereto in
Section 5.1(b)(I).
1.1.34 "Qualifying Tender Offer" shall mean shall mean a tender offer or
similar transaction for all of the outstanding Common Stock of the Company that
is made to all holders of Common Stock and is accepted by holders of a majority
of the Company's outstanding shares of Common Stock not owned by Apollo or its
Affiliates.
1.1.35 "Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated of even date herewith, by and among the Company and the Apollo
Investors.
1.1.36 "Requisite Independent Directors" shall mean, at any time of
determination, a majority of the Independent Directors who were elected by the
holders of the Company's Common Stock voting as a class.
1.1.37 "Securities Act" shall mean the Securities Act of 1933, as amended.
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1.1.38 "Series A Preferred" shall have the meaning set forth in the
recitals to this Agreement.
1.1.39 "Series B Preferred" shall have the meaning set forth in the
recitals to this Agreement.
1.1.40 "Standstill Period" shall mean the period commencing on the date
hereof and ending on the fifth anniversary hereof.
1.1.41 "Total Voting Power" shall mean, calculated at a particular point in
time, the aggregate votes represented by all then outstanding Voting Securities
including, with respect to shares of Preferred Stock outstanding, the number of
votes accorded to the underlying Common Stock into which such Preferred Stock is
convertible (including the Common Stock which would be issued upon conversion of
any shares of Series A Preferred which were, in turn, issued upon conversion of
shares of Series B Preferred).
1.1.42 "Transaction Documents" shall mean this Agreement, the Investment
Agreement, the Certificate of Designations and the Registration Rights
Agreement.
1.1.43 "Trust" shall mean, collectively, (i) the 1992 Xxxxxxx, 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
Xxxxxxx X. Xxxxxxx, as amended and restated on May 12, 1999, and (3) the
Foundation.
1.1.44 "Voting Securities" means the shares of the Company's Common Stock,
the Class B Shares, any other securities of the Company having the general
voting power under ordinary circumstances to elect members of the Board of the
Company, the Preferred Stock, and any other securities which are convertible
into, or exchangeable for, Voting Securities.
1.1.45 "Voting Power" shall mean, calculated at a particular point in time,
the aggregate votes represented by all the then outstanding Common Stock, the
Class B Shares and any other securities of the Company then entitled to vote
generally in the election of directors of the Company.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF APOLLO AND THE APOLLO INVESTORS
Each of Apollo and the Apollo Investors, severally and not jointly, hereby
represents and warrants to the Company as follows:
Section 2.1 Authority. Each of Apollo and the Apollo Investors has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement. The execution, delivery and performance of this Agreement,
and the consummation by Apollo and the Apollo Investors of the transactions
contemplated hereby, have been duly authorized by all necessary action on the
part of Apollo and the Apollo Investors.
Section 2.2 Enforceability. This Agreement has been duly executed and
delivered by Apollo and the Apollo Investors and constitutes its legal, valid
and binding obligation enforceable against each of them in accordance with its
terms, except as the same may be limited by the terms of this Agreement or by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and general equitable
principles regardless of whether such enforceability is considered in a
proceeding at law or in equity.
Section 2.3 No Conflicts. The execution and delivery of this Agreement by
the Apollo and the Apollo Investors, and the performance by each of them of
their respective obligations hereunder, will not (a) contravene any provision of
the organizational documents of Apollo or the Apollo Investor, (b) violate or
conflict with any material law, statute, ordinance, rule, regulation, decree,
writ, injunction, judgment, ruling or order of any governmental authority or of
any arbitration award which is either applicable to, binding upon, or
enforceable against Apollo or the Apollo Investors; (c) conflict with, result in
any breach of, or constitute a default under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any material agreement which is
applicable to, binding upon or enforceable against Apollo or the Apollo
Investors, except for such violations or breaches which would not, in the
aggregate, inhibit the ability of Apollo or the Apollo Investors to perform
their respective obligations hereunder; or (d) require the consent, approval,
authoriza tion or permit of, or filing with or notification to, any governmental
authority, any court or tribunal or any other person, except for such approvals,
registrations, declarations, notices and filings, the failures of which to be
made or obtained, would not in the aggregate inhibit the ability of Apollo or
the Apollo Investors to perform
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their respective obligations hereunder.
Section 2.4 Investment Experience. Apollo and each Apollo Investor
understands that the purchase of the Preferred Stock made pursuant to the
Investment Agreement and the agreement to be bound by the provisions hereof
involves risk. Each of Apollo and the Apollo Investors acknowledges that it is
able to fend for itself, can bear the economic risk of its investment in the
Voting Securities owned by it and has such knowledge and experience in financial
or business matters that it is capable of evaluating the merits and risks of its
investment in Voting Securities of the Company and its agreement to be bound
hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF APOLLO
Apollo hereby represents and warrants to the Company as follows:
Section 3.1 Control by Apollo. Apollo is the investment manager of, and
possesses the ability to direct the investments of, each Apollo Investor. Apollo
controls the Apollo Investors and has the authority to cause the Apollo
Investors to perform their respective obligations under this Agreement and the
other Transaction Documents. Apollo, in its capacity as investment manager,
general partner or manager of the Apollo Investors, has the requisite power and
has taken all necessary corporate or partnership action required to cause the
Apollo Investors to execute and deliver this Agreement and perform their
respective obligations hereunder.
ARTICLE 4
ACQUISITIONS OF SECURITIES
AND OTHER RESTRICTED ACTIVITIES
Section 4.1 Restrictions During the Standstill Period. During the Stand
still Period, unless requested by the Requisite Independent Directors, each of
Apollo and the Apollo Investors shall not, and Apollo shall cause each other
member of the Apollo Group not to, and shall use its reasonable best efforts to
cause any controlling person or general partner of Apollo (the "Other Investor
Affiliates") not to, directly or indirectly, alone or in concert with others:
(a) acquire, offer or propose to acquire or agree to acquire,
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whether by purchase, tender or exchange offer, through the acquisition of
control of another Person, by joining a partnership, limited partnership,
syndicate or other Group or otherwise, Beneficial Ownership of any Voting
Securities, Derivative Securities or any other securities of the Company or
any rights to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Voting Securities, other than:
(i) the acquisition by Apollo or a member of the Apollo Group of not
more than 500,000 Class B Shares or shares of Common Stock from
the Trust;
(ii) the acquisition by Apollo or a member of the Apollo Group of debt
securities of the Company;
(iii) the acquisition of Voting Securities as a result of any stock
split, stock dividend (including dividends paid in Additional
Securities (as such term is defined in the Certificate of Desig
nations) on the Preferred Stock) or other distributions,
recapitalizations or offerings made available by the Company to
holders of a class or series of Voting Securities generally;
(iv) the acquisition of Preferred Stock pursuant to the Investment
Agreement (including the Series A Preferred and Common Stock
issuable upon conversion or exchange of the Preferred Stock, as
the case may be);
(v) the repurchase by any Apollo Investor of any shares of Pre ferred
Stock from any transferee thereof;
(vi) the acquisition by Apollo or a member of the Apollo Group of
Class B Shares or shares of Common Stock owned by the Trust which
the Trust has determined to sell in circumstances where the
effect of such sale would be to cause this Agreement to terminate
pursuant to Section 6.1 of this Agreement; pro vided such
acquisition is approved by the Requisite Independ ent Directors;
and
(vii) subject to the provisions of Section 4.2, the acquisition of
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Voting Securities by Apollo or a member of the Apollo Group
following a 15% Acquisition.
(b) propose or take substantial steps to effect (in either case, on
behalf of itself or to or with a third party) any merger, business
combination, restructuring, recapitalization or similar transaction
involving the Company or any of its Subsidiaries or the sale or other
disposition outside the ordinary course of business of any material portion
of the assets of the Company or any of its Subsidiaries; provided, however,
that nothing set forth in this clause (b) will prohibit Apollo's activities
acting together with the Chief Executive Officer of the Company in
connection with possible acquisitions and disposi tions within parameters
previously discussed with, and approved by, the Company's Board from time
to time;
(c) seek election to, seek to place a representative on, or seek the
removal of any member of, the Board, except pursuant to the rights granted
to the holders of Preferred Stock in the Certificates of Designations
therefor;
(d) engage in any "solicitation" (within the meaning of Rule 14a-1
under the Exchange Act) of proxies or consents (whether or not relating to
the election or removal of directors) with respect to the Company, or
become a participant in any election contest or, unless first approved by
the Requisite Independent Directors, execute any written consent in lieu of
a meeting of the holders of any class of Voting Securities that is
solicited by or on behalf of any shareholder of the Company;
(e) unless first approved by the Requisite Independent Directors,
initiate, propose or otherwise solicit shareholders for the approval of any
shareholder proposal (as described in Rule 14a-8 under the Exchange Act or
otherwise) with respect to the Company;
(f) form, join or in any way participate in or assist in the forma
tion of a Group with respect to any Voting Securities (other than, with
respect to Apollo, any such "group" consisting exclusively of Apollo and
its con trolled Affiliates) or, in the case of Apollo or any member of the
Apollo Group, enter into any agreement with any Person limiting Apollo's
discretion with respect to the exercise of the Preferred Stock Approval
Rights granted under the Investment Agreement;
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(g) deposit any Voting Securities in a voting trust or subject any
Voting Securities to any arrangement or agreement with respect to the
voting of such Voting Securities, except for any voting trust or
arrangement or agreement with respect to the voting of such Voting
Securities with an Affiliate of Apollo or the Apollo Investors;
(h) otherwise act, alone or in concert with others, in a manner
designed or having the deliberate effect of circumventing the restrictions
otherwise imposed hereunder;
(j) disclose or publicly announce any intention, plan or arrange ment
inconsistent with the foregoing; or
(k) except as otherwise permitted by this Agreement, finance any other
Persons in connection with any of the activities prohibited by the
foregoing clauses (a) through (j);
provided that nothing in this Section 4.1 shall (I) prohibit any individual who
is serving as a Director of the Company, solely in his or her capacity as such
Director, from taking any action or making any statement which, in such
Director's best judgment, is in the best interests of the Company's
stockholders, or (II) restrict any disclosure or statements required to be made
by Apollo or any Apollo Investor under applicable law to the extent any such
requirement does not arise from actions by Apollo or such Apollo Investor
inconsistent with this Agreement.
Section 4.2 Restrictions After the Standstill Period. After the earlier to
occur of (i) expiration of the Standstill Period and (ii) the date on which any
Person (other than the Trust, the Apollo Investors or their respective
Affiliates) acquires shares of Common Stock or Class B Shares and, after giving
effect to such acquisi tion, such Person Beneficially Owns Voting Securities
representing more than 15% of the Voting Power (any such event, a "15%
Acquisition"), and continuing until the date of termination of this Agreement,
each of Apollo and the Apollo Investors shall not, and Apollo shall cause each
other member of the Apollo Group not to, and shall use its reasonable best
efforts to cause Other Investor Affiliates not to, directly or indirectly, alone
or in concert with others, take any action of the type described in clause (a)
of Section 4.1, except that:
(a) Apollo or a member of the Apollo Group may purchase, or offer to
purchase, additional Voting Securities pursuant to a Qualifying
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Tender Offer; and
(b) Apollo or a member of the Apollo Group may propose a merger,
business combination, restructuring, recapitalization or similar
transaction involving the Company if such transaction is contingent upon
approval of the holders of a majority of the Company's outstanding shares
of Common Stock not owned by Apollo or its Affiliates (or, if such
transaction is effected pursuant to a tender offer, such transaction is
effected in a Qualify ing Tender Offer).
ARTICLE 5
DISPOSITIONS OF VOTING SECURITIES
Section 5.1 Restrictions on Disposition. Each of Apollo and the Apollo
Investors shall not, and Apollo shall cause each other member of the Apollo
Group not to, and shall use its reasonable best efforts to cause Other Investor
Affiliates not to, directly or indirectly (including, without limitation,
through the disposition or transfer of any equity interest in another Person),
alone or in concert with others, sell, assign, transfer, pledge, hypothecate,
grant any option with respect to or otherwise dispose of any interest in (or
enter into an agreement or understanding with respect to the foregoing) any
Voting Securities (a "Disposition"), except as set forth below in this Section
5.1.
(a) Dispositions may be made by Apollo or any Apollo Investor to any
Affiliate satisfying the qualifications of clause (c) in the definition of
"Apollo Group", provided, that any such Affiliate at all times continues to
meet the qualifications of such clause (c), and provided further that any
such Affiliate shall agree in writing to be bound by this Agreement.
(b) Dispositions of Voting Securities may be made by an Apollo
Investor to Persons other than members of the Apollo Group and Other
Investor Affiliates pursuant to (i) a public offering effected in
accordance with the Registration Rights Agreement and effecting a broad
distribution of such Voting Securities offered, (ii) sales permitted by the
provisions of Rule 144 or Section 4(1) of the Securities Act, each as
currently in effect, or (iii) in privately-negotiated transactions;
provided, however, that
(I) Dispositions shall not be made pursuant to clauses (i),
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(ii), or (iii) of this Section 5.1(b) if any Person (other than a
Permitted Underwriter) to whom the Disposition in question is made
would, after giving effect to such Disposition, together with such
Person's Affiliates and Associates and the members of any Group
existing with respect to Voting Securities of which such Person is a
part (any such Person and its Affiliates, Associates and Group members
being collectively referred to herein as a "Purchasing Person"),
Benefi cially Own Voting Securities representing more than 15% of the
Total Voting Power then outstanding.
(II) Notwithstanding the provisions of the immediately preceding
paragraph, a Disposition resulting in a Purchasing Person Beneficially
Owning Voting Securities representing more than 15% of the Total
Voting Power may be effected if (x) such Disposition has been approved
by the Requisite Independent Directors and (y) such Purchasing Person
(including each member of any Group, if such Purchasing Person is not
an individual shareholder) shall have exe cuted and delivered to the
Company a written agreement (in form and substance reasonably
satisfactory to the Company) pursuant to which such Purchasing Person
agrees to be bound by this Agreement to the same extent as Apollo as
if references to Apollo herein were to such Purchasing Person (any
such agreement, a "Purchaser Standstill Agreement").
(c) Dispositions may be made pursuant to a tender offer, exchange
offer, merger, business combination or similar transaction for at least 51%
of the outstanding Voting Securities if:
(I) in the case of any tender offer, exchange offer, merger,
business combination or similar transaction in which Apollo, any
member of the Apollo Group or any Apollo Investor (1) purchases or
acquires additional Voting Securities, (2) retains any Voting Securi
ties or (3) if any such party owns shares of Common Stock before such
transaction, receives additional or different consideration for any
such shares of Common Stock than the consideration received by the
other holders of the Company's Common Stock, such tender offer,
exchange offer, merger, business combination or similar transaction
has been approved by the holders of a majority of the Company's
outstanding shares of Common Stock and Class B Shares not owned
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by Apollo, any member of the Apollo Group or any Apollo Investor; or
(II) in the case of any tender offer, exchange offer, merger,
business combination or similar transaction not of the type described
in clause (I), such tender offer, exchange offer, merger, business
combination or similar transaction has been approved by the Requisite
Independent Directors.
(d) Each of Apollo and the Apollo Investors shall, and Apollo shall
cause each other member of the Apollo Group to, and shall use its
reasonable best efforts to cause Other Investor Affiliates to, give the Com
pany written notice after effecting a Disposition in accordance with this
Section 5.1.
Section 5.2 Restrictions on Conversion of Series A Preferred.
(a) During the Standstill Period, the Apollo Investors shall not, and
Apollo shall cause each member of the Apollo Group not to, and shall use
its reasonable best efforts to cause Other Investor Affiliates not to,
convert any shares of Series A Preferred into Common Stock, except in
connection with a Disposition effected pursuant to paragraph (b) below.
(b) If, at any time during the Standstill Period, any Apollo Inves
tor, any member of the Apollo Group or any Other Investor Affiliate desires
to effect a Disposition of any shares of Series A Preferred to any Person
other than members of the Apollo Group and Other Investor Affiliates, such
party may, as part of such Disposition, elect to convert such shares of
Series A Preferred into Common Stock prior to transfer to such purchasing
Person. In order to convert shares of Preferred Stock to effect any such
Disposition, the selling Apollo Investor, member of the Apollo Group or
Other Investor Affiliate shall deliver the Company, on or before the
proposed settlement date of such Disposition, written notice of its
intention to convert Series A Pre ferred as part of a Disposition (a
"Disposition Notice"). The Disposition Notice shall set forth the number of
shares of Series A Preferred that shall be converted into Common Stock, the
sale price for such shares and the purchas ing Person in whose name the
Common Stock shall be registered. Upon surrender by the selling Apollo
Investor, member of the Apollo Group or Other Investor Affiliate of
certificates representing the shares of Series A
16
Preferred that are being converted as part of such Disposition, the Company
shall issue to the purchasing Person certificates representing the
appropriate number of shares of Common Stock. Any Disposition pursuant to a
third party made under this Section 5.2(b) shall comply with the provisions
of Section 5.1 hereof, including Section 5.1 (b) (II).
Section 5.3 Disposition of Class B Shares. In the event Apollo, any Apollo
Investor or any other member of the Apollo Group acquires any Class B Shares,
Apollo shall not, and shall cause each Apollo Investor or member of the Apollo
Group not to, sell, assign, pledge or otherwise transfer such Class B Shares to
any third party (other than transfers by Apollo to an Affiliate satisfying the
qualifica tions of clause (c) in the definition of "Apollo Group") unless such
Class B Shares are first converted into Common Stock in accordance with the
provisions provided therefor in the Company's Certificate of Incorporation.
ARTICLE 6
TERMINATION
Section 6.1 Termination. This Agreement shall terminate on earliest to
occur of:
(a) the tenth anniversary hereof;
(b) the date that any Person (other than Apollo or any member of the
Apollo Group or any of their respective Affiliates or any Person approved
by a majority of the Company's Board (including at least one designee of
the Series A Preferred)) acquires or enters into an agreement to acquire
Class B Shares or shares of Common Stock if, after giving effect to such
acquisition, such Person Beneficially Owns Voting Securities representing
more than 20% of the Voting Power of the Company, unless such Person has
entered into a Purchaser Standstill Agreement in connection with such
acquisition.
(c) the termination of this Agreement in writing by the Company with
the approval of the Requisite Independent Directors.
If the potential acquisition of shares by a Person which caused the termination
of this Agreement pursuant to Section 6.1 (b) is not consummated for any reason
within 60 days of such agreement to acquire having been entered into (or until
the date such
17
Person ceases to actively attempt to acquire such shares pursuant to such
agreement), Apollo and the Apollo Investors agree that (i) all of the provisions
of this Agreement will be binding upon each of them from and after such date
with full force and effect as if such termination had never occurred and (ii)
each of them will vote all of the shares of capital stock of the Company
acquired by them during such 60 day period pro rata in accordance with the votes
(other than Apollo, the members of the Apollo Group, and their respective
Affiliates) of the holders of securities of the same class on all matters
submitted for the vote of such holders until any subsequent termination of this
Agreement in accordance with Section 6.1 hereof.
Section 6.2 Effect of Termination.
(a) If this Agreement is terminated in accordance with Section 6.1,
hereof, this Agreement shall become null and void and of no further force
and effect, except that (i) the terms and provisions of this Section 6.2
and Sections 7.4, 7.5, 7.6, 7.7, 7.10 and 7.11 shall remain in full force
and effect, (ii) if this Agreement is terminated in accordance with Section
6.1(b) hereof, Article V and Section 7.8 shall remain in full force and
effect, and (iii) any termination of this Agreement shall not relieve any
party hereto from any liability for any breach of its obligations
hereunder, regardless of whether such party terminated this Agreement.
(b) The Company agrees to notify Apollo promptly upon it having
knowledge that the Trust has made a determination to sell, and has
identified a potential purchaser to buy, Class B Shares or shares of Common
Stock.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Survival. The representations, warranties, covenants and
agreements contained in or made pursuant to this Agreement shall survive the
execution of this Agreement.
Section 7.2 Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereby agrees to use all reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws, rules and
regulations to consummate and
18
make effective the transactions contemplated by this Agreement, including using
its best efforts to obtain all necessary waivers, consents and approvals. In
case at any time after the execution of this Agreement, further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
shall cause their proper officers or directors to take all such necessary
action.
Section 7.3 Legend. Each of the parties hereto acknowledges that the
certificates representing shares of Preferred Stock purchased by pursuant to the
Investment Agreement shall be subject to stop transfer restrictions, and shall
contain a legend substantially as set forth below (except that the first
sentence of such legend shall not be placed on any shares of Common Stock
issuable upon conversion of Series A Preferred that have been registered under
the Securities Act or if, in the opinion of counsel, such sentence is not
required under the Securities Act):
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND TRANSFERRED IN
A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH IN A STANDSTILL
AGREEMENT DATED AS OF APRIL 19, 2001 BETWEEN AMC ENTERTAINMENT INC. AND
CERTAIN OTHER INVESTORS NAMED THEREIN, COPIES OF WHICH ARE ON FILE WITH THE
SECRETARY OF AMC ENTERTAINMENT INC."
Section 7.4 Notices. All notices, requests, consents and other communica
tions hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person, by telecopy, by nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address set forth below or such other address as may hereafter be designated
in writing by the addressee to the addressor.
(a) If to the Company, to:
19
AMC Entertainment Inc.
000 Xxxx 00xx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Facsimile: 000-000-0000
With a copy to:
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxx.
Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Facsimile: 000-000-0000
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
Facsimile: 000-000-0000
(b) If to Apollo or to any Apollo Investor, to:
c/o Apollo Management, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Facsimile: 000-000-0000
With a copy to:
Akin, Gump, Straus, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxx
Facsimile: 000-000-0000
20
(c) If to any other Investor or to any other holder of capital stock
of the Company, addressed to such holder at the address of such holder in
the record books of the Company; or to such other address or addresses as
shall be desig nated in writing. All notices shall be effective when
received.
Section 7.5 Specific Performance. Each party hereto acknowledges that, in
view of the uniqueness of the transactions contemplated by this Agreement, the
other party would not have an adequate remedy at law for money damages in the
event that this Agreement has not been performed in accordance with its terms.
Each party therefore agrees that the other party shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which it may
be entitled, at law or in equity.
Section 7.6 Severability. If any provision of this Agreement is determined
to be invalid, illegal, or unenforceable, the remaining provisions of this
Agreement shall remain in full force and effect. To the extent permitted by law,
the parties hereby to the same extent waive any provision of law that renders
any provision hereof prohibited or unenforceable in any respect.
Section 7.7 Entire Agreement; Amendment. This Agreement and the Investment
Agreement (together with all the annexes or exhibits thereto) set forth the
entire agreement between the parties hereto with respect to the matters provided
herein and therein. The provisions of this Agreement govern the subject matter
set forth herein and, except as set forth herein, no provision in this Agreement
shall prevent the exercise of the rights, privileges and preferences of or the
performance of the obligations of Apollo or the Apollo Investors provided under
the Certificate of Designations, Registration Rights Agreement and the
Investment Agreement. Any provision of this Agreement may be amended, modified
or waived in whole or in part at any time by an agreement in writing among the
parties hereto executed in the same manner as this Agreement. With respect to
the Company, approval of any amendment, modification or waiver will be given and
effective only upon approval by the Requisite Independent Directors. No failure
on the part of any party to exercise, and no delay in exercising, any right
shall operate as waiver thereof, nor shall any single or partial exercise by
either party of any right preclude any other or future exercise thereof or the
exercise of any other right.
Section 7.8 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors and assigns of each of the parties hereto.
21
Section 7.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to constitute an original, but all
of which together shall constitute one and the same document.
Section 7.10 Governing Law; Submission to Jurisdiction. This Agreement
shall be governed by, and interpreted, in accordance with, the laws of the State
of New York, without regard to conflicts of laws. The parties hereto irrevocably
(a) submit to the exclusive personal jurisdiction of any state or federal court
located in the City of New York in the State of New York in any suit, action or
other legal proceeding relating to this Agreement; (b) agree that all claims in
respect of any such suit, action or other legal proceeding may be heard and
determined in, and enforced in and by, any such court; and (c) waive any
objection that they may now or hereafter have to venue in any such court or that
such court is an inconvenient forum.
Section 7.11 Remedies; Waiver. To the extent permitted by applicable law,
all rights and remedies existing under this Agreement and any related agreements
or documents are cumulative to, and are exclusive of, any rights or remedies
otherwise available under applicable law. No failure on the part of any party to
exercise, or delay in exercising, any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.
22
IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties hereto by their respective duly authorized officers, all as of the date
first above written.
AMC ENTERTAINMENT INC.
By: /S/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chief Executive Officer
APOLLO MANAGEMENT IV, L.P.
By: AIF Management, Inc.,
its General Partner
By: /S/ XXXX XXXXX
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
APOLLO MANAGEMENT V, L.P.
By: AIF Management, Inc.,
its General Partner
By: /S/ XXXX XXXXX
---------------------------------------
Name: Xxxx Xxxxx
Title: Vice President
23
APOLLO INVESTMENT FUND IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /S/ XXXX XXXXX
----------------------------------
Name: Xxxx Xxxxx
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/ XXXX XXXXX
----------------------------------
Name: Xxxx Xxxxx
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/ XXXX XXXXX
----------------------------------
Name: Xxxx Xxxxx
Title: Vice President
24
APOLLO OVERSEAS PARTNERS V, L.P.
By: APOLLO ADVISORS IV, L.P.
its general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /S/ XXXX XXXXX
----------------------------------
Name: Xxxx Xxxxx
Title: Vice President
25