EXHIBIT 10.3
SUPPORT AGREEMENT
THIS SUPPORT AGREEMENT (as the same may be amended, modified or supplemented
from time to time, the "Agreement") is entered into as of December 6, 2001
by and between AMC Entertainment Inc., a Delaware corporation ("AMCE"), the
Official Committee of Unsecured Creditors in the Chapter 11 Cases of the GCC
Debtors as defined below (the "Committee"), General Electric Capital
Corporation ("GECC") and Harcourt General, Inc. ("Harcourt") (the Committee,
GECC, and Harcourt being hereinafter referred to collectively as "Creditor
Parties" and individually as a "Creditor Party," and AMCE and the Creditor
Parties being hereinafter referred to collectively as the "Parties" and
individually as a "Party"), with reference to the following facts and
recitals:
RECITALS
A. GC Companies, Inc. ("GCC") and various affiliated entities
(collectively, the "GCC Debtors") are the Debtors and Debtors in Possession
in cases under chapter 11 of the United States Bankruptcy Code which are
currently pending in the United States Bankruptcy Court for the District of
Delaware as case nos. 00-3897 (EIK) - 00-3927 (EIK), inclusive (the
"Chapter 11 Cases").
B. The Committee was appointed to act as the committee of
creditors holding unsecured claims in the Chapter 11 Cases pursuant to 11
U.S.C. Section 1102.
C. Harcourt and GECC are each creditors of GCC and/or one or
more of the other GCC Debtors and assert claims in the Chapter 11 Cases.
D. AMCE is formulating a bid to acquire GCC and its
subsidiaries (the "Bid") that would form the basis for a plan of
reorganization for the GCC Debtors, which plan would provide for the
ownership of 100% of the stock of reorganized GCC by AMCE following the
confirmation and effective date of a plan of reorganization.
E. AMCE presently contemplates including in the Bid the
proposed treatment of nonpriority, general unsecured claims against the GCC
Debtors which are not otherwise classified ("General Unsecured Claims"), the
claims of GECC and the claims of Harcourt set forth in the Term Sheet which
is attached as Exhibit "A" hereto (the "Proposed Treatment"). In order to
induce AMCE to continue to expend the effort and resources involved in
formulating and presenting the Bid, and to include the Proposed Treatment as
part of the Bid, the Creditor Parties have agreed to the terms of this
Agreement. The Creditor Parties understand that their agreement to the
terms of the Agreement is a material inducement to AMCE to continue to
devote its efforts with respect to a Bid that includes the Proposed
Treatment.
F. AMCE is or will be attempting to negotiate agreements
similar to this Agreement regarding its contemplated Bid with certain
claimants and equity holders in the Chapter 11 Cases, to wit: Fleet National
Bank, N.A. ("Fleet"), Bank of America, N.A. ("BofA") (Fleet and BofA
collectively, and each on behalf of itself and its affiliates, foreign and
domestic, in their respective capacities as administrative agent(s) and
lender(s) to GCC and its affiliates and joint ventures, foreign and
domestic, the "Banks"), Bank of Nova Scotia, the Fifth Third Leasing
Company, Bank Leumi Leasing Corporation, Fleet Capital Corporation, Imperial
Bank, ReliaStar Life Insurance Company, as successor by merger to ReliaStar,
Northern Life Insurance Company, ReliaStar Life Insurance Company of New
York, f/k/a ReliaStar Bankers Security Life Insurance Company, Simon
Property Group, Multifoods Distribution Group, Xxxxxxx Marketing Group,
Dandy Amusement, Pepsi-Cola North America and the Xxxxxxx X. Xxxxx family
(the foregoing being collectively referred to as the "Intended
Participants").
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged by the Parties, the Parties
hereby agree as follows:
1. Conditional Inclusion of Proposed Treatment in Bid.
Conditioned upon the timely satisfaction of each of the Conditions
Subsequent described in paragraph 5, AMCE agrees that: (i) Any Bid submitted
by AMCE to acquire GCC as part of a plan of reorganization for the GCC
Debtors will include the Proposed Treatment; and (ii) AMCE will not support
or propose a plan of reorganization in the Chapter 11 Cases for the
acquisition of GCC by AMCE that does not include the Proposed Treatment,
unless the Committee (in the case of General Unsecured Claims), GECC (in the
case of the claims of GECC) or Harcourt (in the case of the claims of
Harcourt) agrees otherwise.
2. Support by the Creditor Parties for AMCE Bid that Includes
the Proposed Treatment. Subject to the provision of paragraph 5 regarding
the Conditions Subsequent, each of the Creditor Parties agrees that it:
(a) will support a Bid by AMCE for the acquisition of all of the stock of
GCC by AMCE which includes the Proposed Treatment (a "Qualified Bid") and a
plan of reorganization for the GCC Debtors that provides for such
acquisition and the Proposed Treatment pursuant to a Qualified Letter of
Intent (as defined below) (a "Qualified Plan"); (b) will not support or
solicit any bid for GCC or any other GCC Debtor or for any assets thereof,
other than a Qualified Bid by AMCE; (c) will not vote for, consent to,
support, or participate in the negotiation or formulation of (i) any plan of
reorganization or liquidation for GCC or any other GCC Debtor filed or to be
proposed or filed in any or all of the Chapter 11 Cases with respect to any
or all of the GCC Debtors, other than a Qualified Plan, or which provides
for the disposition of any substantial portion of the assets of GCC or any
other GCC Debtor to any party other than AMCE, or (ii) any disposition
outside of a plan of reorganization of any substantial portion of the assets
of GCC or any other GCC Debtor to any party other than AMCE; (d) will use
commercially reasonable efforts (which will not be interpreted to require a
Party to pay any amount other than its own attorneys' fees) to obtain
confirmation of a Qualified Plan; (e) will not object to confirmation of a
Qualified Plan or otherwise commence any proceeding to oppose or alter a
Qualified Plan or any other reorganization documents containing terms and
conditions consistent with a Qualified Plan; (f) will not directly or
indirectly seek, solicit, support or encourage any plan, proposal or offer
of dissolution, winding up, liquidation, reorganization, merger or
restructuring of GCC or any other GCC Debtor other than a Qualified Plan;
(g) will support a motion by GCC seeking court approval of an amendment to
each of those certain Amended and Restated Termination Change of Control
Agreements dated September 15, 2000, as modified by a Modification thereto
dated March 16, 2001, between GCC and each of G. Xxxx Xxxxxxx and Xxxxxxx X.
Xxxxxx, which amendment shall provide that the confirmation of a Qualified
Plan that contains the treatment under Option B of the Bank Support
Agreement Condition set forth on Exhibit "A" will not, solely because of
such treatment, be deemed to invoke section 1129(b)(2)(B) of the Bankruptcy
Code such that a Qualified Plan containing such treatment would not
constitute a "Plan" within the meaning of such agreements; and (h) will not
take any other action that is inconsistent with, or that would obstruct or
hinder confirmation of, a Qualified Plan.
3. No Solicitation. Notwithstanding any other provision of
this Agreement, nothing in this Agreement is intended to be or constitute,
and shall not be deemed to be or constitute, a solicitation of any vote or
any agreement to vote for any plan of reorganization, and nothing in this
Agreement shall be deemed to require any Party or any other person or entity
to vote for any plan of reorganization. Accordingly, and without limiting
the foregoing, this Agreement is not and shall not be deemed to be a
solicitation of acceptances of any Qualified Plan or any other plan, and
nothing contained herein shall be construed to require any holder of a
General Unsecured Claim, GECC or Harcourt to vote to accept any plan. The
acceptance by any General Unsecured Claim holder, Harcourt or GECC of a
Qualified Plan will not be solicited until it has received a disclosure
statement approved by the Bankruptcy Court.
4. Specific Performance. Each Creditor Party agrees and
acknowledges that upon the breach of this Agreement by such Creditor Party,
AMCE would not have an adequate remedy at law, and that money damages would
both be inadequate and difficult to calculate. Therefore, each Creditor
Party hereby agrees that upon the breach by such Creditor Party of this
Agreement, the Bankruptcy Court in the Chapter 11 Cases (or, if such court
does not have jurisdiction, a court of competent jurisdiction) may direct
such Creditor Party to specifically perform its obligations hereunder and
may enjoin such Creditor Party from violating its obligations hereunder,
without the posting of any bond or other security by AMCE. Nothing in this
paragraph 4 shall impair any right or remedy of any Creditor Party upon
breach of this Agreement by AMCE.
5. Conditions Subsequent.
(a) Subject to the rights of AMCE under subparagraph (b)
of this paragraph 5, and subject to the rights of any non-breaching
Party under subparagraph (c) of this paragraph 5, this Agreement, and
the obligations of the Parties thereunder, shall terminate and be of
no further force or effect if any of the following conditions
("Conditions Subsequent") shall not have been satisfied by the
indicated date:
(i) GCC and the Parties shall have entered into
and executed a Qualified Letter of Intent on or before December
6, 2001. For purposes of this paragraph 5, a letter of intent
shall be deemed a Qualified Letter of Intent if: (w) it
provides for the proposed treatment of General Unsecured Claims
and of the claims of Harcourt and GECC set forth in Exhibit "A"
or, if it proposes different treatment for any such claims, such
treatment is acceptable to the Committee (in the case of General
Unsecured Claims), GECC (in the case of the claims of GECC) or
Harcourt (in the case of claims of Harcourt), as applicable;
(x) it does not provide for the treatment of any class of claims
against or equity interests in GCC in a manner which is
materially better than the treatment of such class set forth in
Exhibit "A"; (y) it requires AMCE to pursue the acquisition of
GCC pursuant to, and support, a plan of reorganization for GCC
that is a Qualified Plan (subject to the conditions outlined in
Exhibit "A" and other customary conditions for a transaction of
this type); and (z) the terms of such letter of intent do not
materially and adversely affect General Unsecured Claims or the
claims of Harcourt or GECC other than as provided in
Exhibit "A." If any Creditor Party refuses to execute a
Qualified Letter of Intent that is executed by GCC and AMCE,
this condition shall nevertheless be deemed to have been
satisfied, and such letter of intent executed by GCC and AMCE
shall be deemed a Qualified Letter of Intent for all purposes
under this paragraph 5.
(ii) A support agreement in form and substance
satisfactory to AMCE shall have been executed by each of the
Banks and AMCE (or AMCE shall have either waived this condition
or terminated this Agreement and the Qualified Letter of Intent)
at least one day prior to the Bankruptcy Court hearing to
approve the Qualified Letter of Intent.
(iii) The Bankruptcy Court in the Chapter 11 Cases
shall have entered an order approving the Qualified Letter of
Intent (including without limitation the breakup fee provided
therein) on or before January 15, 2002.
(iv) A plan of reorganization which is a Qualified
Plan and a disclosure statement for such plan shall have been
filed with the Bankruptcy Court in the Chapter 11 Cases on or
before December 21, 2001.
(v) An order of the Bankruptcy Court approving the
adequacy of the disclosure statement for a Qualified Plan shall
have been entered on or before February 25, 2002.
(vi) An order of the Bankruptcy Court confirming a
Qualified Plan, the terms of which are materially consistent
with Exhibit "A" (a "Confirmation Order"), shall have been
entered on or before March 20, 2002.
(vii) The Confirmation Order shall have become a
final, nonappealable order on or before April 1, 2002.
(b) If AMCE has not breached its obligations under this
Agreement, it may extend the date set forth in clause (i) of
subparagraph (a) for a period of up to fifteen (15) days by giving
written notice of its election to extend such date to the other
Parties on or before such date. If AMCE is not in breach of its
obligations under this Agreement or under a Qualified Letter of
Intent, AMCE may extend any of the dates set forth in any or all of
clauses (iii)-(vii), inclusive, of subparagraph (a) for a period of up
to thirty days, by giving written notice of such election to the other
Parties on or before the applicable date which is being extended.
(c) In the event that the failure to occur of any of the
Conditions Subsequent set forth above is the result of a breach of
this Agreement or of a Qualified Letter of Intent by any Party, the
non-breaching Parties may, by the written agreement of such non-
breaching Parties, extend the time for satisfying such Conditions
Subsequent to any date on which they may mutually agree, without the
agreement of the breaching Party. This provision shall in no way
limit any right or remedy which any Party may otherwise have for the
breach of this Agreement, a Qualified Letter of Intent or a Qualified
Plan.
(d) Each Party agrees (i) to use commercially reasonable
efforts, which shall not be construed to require the payment of money
by any Party, other than to its own attorneys, to cause each of the
foregoing Conditions Subsequent to be satisfied on a timely basis and
(ii) to cooperate with the other Parties in achieving the Conditions
Subsequent as expeditiously as reasonably possible (and prior to the
dates set forth above).
(e) Notwithstanding anything to the contrary in this
Agreement, in the event that the Confirmation Order has not been
entered on or before February 25, 2002, AMCE shall, if it has not
breached this Agreement, have the right to terminate this Agreement by
giving written notice of such termination to the other Parties on or
before February 25, 2002, and, upon AMCE's exercise of this right,
this Agreement, and the obligations of the Parties thereunder shall
terminate and be of no further force or effect, unless at least two of
the Creditor Parties notify AMCE that such Party elects to continue to
be bound by this Agreement, and elects to have each of the other
Parties continue to be bound by this Agreement, on or before March 2,
2002.
(f) In the event that the Confirmation Order shall not
have been entered on or before March 31, 2002, then either the
Committee or AMCE may, if such Party has not breached this Agreement,
elect to terminate its obligations under this Agreement by giving
notice of such election to the other Parties on or before March 31,
2002; provided, however, that AMCE may extend the foregoing date to
April 30, 2002 by giving written notice of such extension to the other
Parties on or before March 31, 2002, in which event the reference to
"$20 million" as the threshold for determining "Excess Deduction
Claims" under the description of the treatment of Class 6 in the Term
Sheet attached as Exhibit "A" shall be changed to "$20,500,000." In
the event that the Committee elects to terminate its obligations under
this Agreement under this subparagraph 5(f), but AMCE does not do so,
then AMCE, Harcourt and GECC shall continue to be bound in all
respects by the terms of this Agreement, and the Committee shall no
longer be treated as a Party. In the event that AMCE elects to
terminate its obligations under this Agreement under this subparagraph
5(f), then this Agreement, and the obligations of the Parties
thereunder, shall terminate and be of no further force or effect.
6. Governing Law. Except to the extent that the Bankruptcy
Code or Bankruptcy Rules are applicable, the rights and obligations arising
under this Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York, without giving effect to
the principles of conflicts of law thereof.
7. Notices. All notices, requests, or demands to a Party
under or in connection with this Agreement shall be in writing and shall be
delivered by hand, sent by recognized overnight courier or sent by
telecopier, telex or similar electronic means to the Party (followed by
overnight delivery transmitted the same day) properly addressed to such
Party as set forth below, or to such other address or telecopier number as
such Party shall provide to each other Party hereto in writing, and shall be
deemed sent or given hereunder, in the case of delivery by recognized
overnight courier, on the date of actual delivery, in the cases of
transmission by telecopier, telex or similar electronic means (followed by
overnight delivery transmitted the same day) on the date of actual
transmission, and in the case of personal delivery, on the date of actual
delivery:
To AMCE:
Xxxxx X. Xxxxx
Chairman, Chief Executive Officer and President
AMC Entertainment Inc.
000 X. 00xx Xxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxxx X. Xxxxxx Xx., Esq.
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxx X. Xxxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxx & Xxxxx PC
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
To the Committee:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxx Xxxxx Xxxxx Xxxxx & Xxxxx
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax: (000) 000-0000
To Harcourt:
Xxxx Elsevier, Inc.
Attention: Xxxxxxx Xxxxxx
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
Fax: (000) 000-0000
-and-
Xxxx Elsevier, Inc.
Attention: Xxxxx X. Xxxxxxxxxxxx
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxxxx X. Xxxxxxx, Esq.
Xxxx, Xxxxxxx, Xxxxxxxx & Richmond
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Fax: (000) 000-0000
To GECC:
Xxxxxxx Xxxxx, Senior Risk Manager
General Electric Capital Corporation
000 Xxxxxxx Xxxxx, 0x Xxxxx
Xxxxxxx, XX 00000
Fax: (000) 000-0000
-and-
Xxxxxxx X. Xxxxx, Esq.
Ober, Kaler, Xxxxxx & Xxxxxxx
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
8. Entire Agreement; Modification; Waiver. This Agreement
(including the Exhibits hereto which are incorporated by reference)
constitutes the entire agreement between the Parties as to the subject
matter hereof and supersedes all prior and contemporaneous agreements,
representations, warranties, and understandings of the Parties, whether
oral, written or implied, as to the subject matter hereof. No supplement,
modification, or amendment of this Agreement shall be binding unless
executed in writing by all Parties affected thereby. No waiver of any of
the provisions of this Agreement shall be deemed or constitute a waiver of
any other provision, whether or not similar, nor shall any waiver constitute
a continuing waiver. No waiver shall be binding unless executed in writing
by the Party making the waiver. Notwithstanding anything in this paragraph
8 to the contrary, the provisions of clause (g) of paragraph 2 shall not be
amended, modified or waived without GCC's written consent.
9. No Third-Party Beneficiaries. Nothing contained in this
Agreement is intended to confer any rights or remedies under or by reason of
this Agreement on any person or entity other than the Parties hereto, nor is
anything in this Agreement intended to relieve or discharge the obligation
or liability of any third party to any Party to this Agreement, nor shall
any provision give any third party any right of subrogation or action over
or against any Party to this Agreement.
10. Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of, the Parties and their respective
legal representatives, successors, and assigns.
11. Further Documents. Each Party hereto agrees to execute
any and all documents and to do and perform any and all acts and things
necessary or proper to effectuate or further evidence the terms and
provisions of this Agreement.
12. No Representations or Warranties. Except as expressly set
forth in this Agreement, none of the Parties hereto makes any representation
or warranty, written or oral express or implied.
13. Severability. If any nonmaterial portion of this
Agreement shall be held to be invalid or unenforceable, then that portion
shall be deemed to have been severed out of this Agreement and the Parties
acknowledge that the balance of this Agreement shall be valid and
enforceable.
14. Headings. The descriptive headings of the several
sections of this Agreement are inserted for convenience of reference only
and do not constitute a part of this Agreement.
15. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
16. Due Authorization. Each Party to this Agreement hereby
represents and warrants that (i) such Party is duly-authorized to enter into
this Agreement; and (ii) the person purporting to execute this Agreement on
behalf of such Party has been duly-authorized to execute this Agreement on
behalf of and bind such Party.
17. Attorneys' Fees. In any action or proceeding brought by a
Party hereto against any other Party hereto to enforce any provision of this
Agreement, or to seek damages for a breach of any provision hereof, or where
any provision hereof is validly asserted as a defense, the prevailing Party
shall be entitled to recover reasonable attorneys' fees and costs from the
other Party in addition to any other available remedy; provided, however,
that nothing contained herein shall be deemed to entitle the Committee to
recover any attorneys' fees from any other Party, or to pay any attorneys'
fees to any other Party.
18. Limitation of Disclosure. The Creditor Parties agree
that, prior to the filing of a plan of reorganization and disclosure
statement for GCC which is predicated on a Qualified Bid, the Creditor
Parties will not disclose the terms of this Agreement, of the Bid or of
Exhibit "A" to any person or entity other than an Intended Participant, its
counsel or its financial advisors; without the prior written approval of
AMCE, except as otherwise required by applicable law, rule or governmental
regulation.
[Remainder of this page intentionally
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IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as
of the date and year first above written.
AMC ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxx
Name: Xxxxx X. Xxxxx
Title: Chairman, Chief
Executive Officer and
President
THE COMMITTEE OF UNSECURED CREDITORS
IN THE CHAPTER 11 CASES OF THE
GCC DEBTORS
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chairman
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Xxxx Xxxxx
Name: Xxxx Xxxxx
Title: Senior Risk Manager
HARCOURT GENERAL, INC.
By: /s/ Xxxx Xxxxxxxxxx
Name: Xxxx Xxxxxxxxxx
Title: Vice President
December 6, 2001
Term Sheet for the Acquisition of GC Companies, Inc. ("GCC") by AMC
Entertainment Inc. ("AMCE")
A. Classification and Treatment of Claims and Interests
(a) Unclassified Claims (not entitled to vote)
Administrative Claims: On the Effective Date, or as soon thereafter as
practicable, each holder of an Allowed Administrative Claim will
receive payment in full in cash of the unpaid portion of such Allowed
Administrative Claim.
DIP Financing Claims: On the Effective Date, or as soon thereafter as
practicable, the holders thereof will receive payment in full in cash
of the Allowed DIP Financing Claims.
Priority Tax Claims: At the option of AMCE, each holder of an Allowed
Priority Tax Claim will receive either (i) payment in full in cash on
the Effective Date or as soon thereafter as practicable, or
(ii) payment over a six year period from the date of assessment as
provided in section 1129(a)(9)(C) of the Bankruptcy Code with interest
payable at 7% annually or at such other rate agreed to by AMCE and the
holder of such claim or determined by the Bankruptcy Court; provided,
however, that any Allowed Priority Tax Claim for which any member of
the GECC Group is liable, the payment of which is demanded from such
member by the applicable taxing authority, shall be payable upon the
later of the date of such demand or the Effective Date.
(b) Unimpaired Claims (deemed to accept)
Class 1?Other Priority Claims: On the Effective Date, or as soon
thereafter as practicable, each holder of a Class 1 Claim will receive
payment in full in cash of such Allowed Other Priority Claim.
Class 2?Secured Claims other than Banks, Xxxxxx and GECC Group: As to
each Class 2 Claim, at the option of AMCE, AMCE will either
(i) reinstate such Class 2 Claim by curing all outstanding defaults
with all legal, equitable, and contractual rights remaining unaltered,
except as permitted by 11 U.S.C. Section 1124(2), (ii) pay in full the
allowed amount of such Class 2 Claim in cash on the Effective Date or
as soon thereafter as practicable or (iii) satisfy such Class 2 Claim
by delivering to the claimant the collateral securing such claim.
Class 3?Claims of Xxxxxx: As to each Class 3 Claim, AMCE will reinstate
such Class 3 Claim by curing all outstanding defaults and leaving all
legal, equitable, and contractual rights unaltered, except as permitted
by 11 U.S.C. Section 1124(2); provided, that, AMCE shall have the right
to pay such Allowed Class 3 Claim in full in cash on the Effective
Date, or as soon thereafter as practicable, in full satisfaction of
such Allowed Class 3 Claim. For purposes of the foregoing, Xxxxxx
shall be deemed to have an allowed Class 3 Claim in the amount of
$28,408,027 as of December 4, 2001, which amount shall be reduced by
the principal portion of any payments made by GCC through the Effective
Date.
(c) Impaired Claims (entitled to vote)
Class 4?Claims of Banks: For purposes of the Plan, Fleet National Bank,
N.A. ("Fleet") and The Bank of Nova Scotia (collectively, the "Domestic
Banks") shall be deemed to have Allowed Class 4 Claims of
$44.6 million. On the Effective Date, or as soon thereafter as
practicable, each holder of an Allowed Class 4 Claim will receive New
AMCE Notes with a face amount equal to 100% of its Allowed Class 4
Claim ; provided, however, that each holder of a Class 4 Claim may elect
to receive, in lieu of its New AMCE Notes, cash in an amount equal to
87.5% of the New AMCE Notes to which it would otherwise be entitled
(such option being hereinafter referred to as the "New AMCE Notes
Exchange Option"). Whether or not the New AMCE Notes Exchange Option
is exercised, the consideration provided for herein shall be in full
satisfaction of the Allowed Class 4 Claims for all purposes, and
without limiting the foregoing, will be deemed to fully satisfy all
claims and rights of the holders of such claims against Harcourt
General, Inc. ("Harcourt") under that certain Intercreditor Agreement
dated January 26, 1999 (the "Intercreditor Agreement") between Harcourt
and Bank Boston, N.A. (n/k/a Fleet National Bank, N.A.), as
administrative agent for the Domestic Banks.
GCC's Guaranty of Hoyts General Cinemas South America's Credit
Facilities: As a condition of the treatment of the Class 4 Claims as
described above (the "JV Loan Purchase Condition"), prior to the
Effective Date, the lenders (the "SA Lenders") to Hoyts General Cinemas
South America (the "JV") shall have sold, and GCC shall have purchased,
one half of the SA Lenders' loans to the JV (the "GCC JV Loan Portion")
for no more than 87.5% of the face amount of that portion of such JV
loans (the "JV Loan Purchase"), and the SA Lenders shall have released
GCC from any liability by reason of GCC's several guaranties
(collectively, the "GCC Guaranty") of the JV's credit facilities.
Notwithstanding the foregoing, GCC may, at its option, purchase the GCC
JV Loan Portion of less than all of the SA Lenders; in such event, any
claim against GCC under the GCC Guaranty shall be released with respect
to such GCC JV Loan Portion, and in no event shall the JV Loan Purchase
Condition be satisfied for purposes of this Term Sheet unless the
entire JV Loan Purchase with respect to the GCC JV Loan Portion has
occurred. Any JV Loan Purchase shall be financed by borrowings under
the DIP facility or a successor DIP facility.
Bank Support Agreement Condition If Fleet and Bank of America, N.A.
("BofA"), each on behalf of itself and its affiliates, foreign and
domestic, in their respective capacities as administrative agent(s) and
lender(s) to GCC and its affiliates and joint ventures, foreign and
domestic) (collectively, the "Banks") have not entered into a Support
Agreement similar to the Support Agreement described in Section B.i
below agreeing to the treatment of Class 4 Claims and the satisfaction
of the JV Loan Purchase Condition described above by a date selected by
AMCE (but in any event not later than at least one day prior to the
Bankruptcy Court hearing for the LOI described in Section B.iii below)
(the "Bank Support Agreement Condition"), then the treatment of Class 4
Claims under this Term Sheet (and, in the event that AMCE selects
Option B below, Class 8 Claims {as defined in Option B} that would
otherwise be classified in Class 6) shall be modified, at AMCE's
option, to consist of the treatment described under Option A, Option B
or Option C below, and the terms of the selected option shall become
part of this Term Sheet, unless otherwise agreed by AMCE and the Banks,
so long as such alternative agreed upon treatment of Class 4 Claims and
claims arising under or relating to the GCC Guaranty under this Term
Sheet does not have a material adverse effect on the treatment of any
other class of claims under this Term Sheet:
Option A:
? The JV Loan Purchase Condition shall be waived. In lieu thereof,
GCC shall reject the GCC Guaranty (to the extent, if any, that it is
an executory contract), and the SA Lenders may assert a general
unsecured Class 6 claim against GCC therefor (the "GCC Guaranty
Claim"). To the extent that the GCC Guaranty Claim is allowed by
the bankruptcy court, it shall be the "Allowed GCC Guaranty Claim."
AMCE will make available for distribution on account of the Allowed
GCC Guaranty Claim New AMCE Stock with a Plan Value equal to that
fraction of the Allowed GCC Guaranty Claim, the numerator of which
is the total Plan Value of the New AMCE Stock (plus, if applicable
under clause (b) of the Conditional Class 6 Recovery, the Plan Value
of the Top-Up AMCE Stock and any cash substituted by Harcourt
therefor) that would have been distributed to the holders of Allowed
Class 6 Claims had the Bank Support Agreement Condition not been
waived and this provision had not become effective, and the
denominator of which is the total amount of the Allowed Class 6
Claims other than the Allowed GCC Guaranty Claim. The Plan Value of
such New AMCE Stock with respect to each Allowed GCC Guaranty Claim
shall be applied to reduce the amount of debt outstanding under the
JV credit facility to which each Allowed GCC Guaranty Claim relates.
? If the fair market value of the New AMCE Notes (based on the average
of the bid and ask prices on the trading date immediately prior the
date of distribution) to be distributed to holders of Allowed Class
4 Claims is less than the Allowed Class 4 Claims, then such holders
shall be entitled to receive additional New AMCE Notes with a fair
market value equal to the deficiency.
Option B:
? All nonpriority, unsecured claims against GCC that (i) are not also
claims against any direct or indirect subsidiary of GCC that is a
chapter 11 debtor and (ii) would otherwise have been classified in
Class 6, including without limitation any claim arising under or
relating to the GCC Guaranty, shall be separately classified in a
new Class 8. The holders of allowed unsecured claims in Class 8,
including without limitation claims arising under or relating to the
GCC Guaranty, shall receive New AMCE Stock with a Plan Value (as
defined in footnote 9 below) or, at AMCE's option, cash, equal to 5%
of each holder's Allowed Class 8 Claim.
? If the fair market value of the New AMCE Notes (based on the average
of the bid and ask prices on the trading date immediately prior to
the date of distribution) to be distributed to holders of Allowed
Class 4 Claims is less than the Allowed Class 4 Claims, then such
holders shall be entitled to receive additional New AMCE Notes with
a fair market value equal to the deficiency.
Option C:
? The Class 4 Claims and any claims arising under or relating to the
GCC Guaranty shall be treated in such manner as AMCE designates, so
long as such treatment does not require any reduction in the amount
of the consideration that would have been received by the holders of
allowed claims in any other class absent such treatment of Class 4
claims or claims arising under or relating to the GCC Guaranty.
Class 5?Claims of the GECC Group: For purposes of the Plan, the GECC
Group shall be deemed to have Allowed Class 5 Claims in the aggregate
amount of $78.3 million .
On the Effective Date, or as soon thereafter as practicable, each
holder of an Allowed Class 5 Claim secured by identifiable equipment or
leaseholds (i.e., all members excluding Fifth Third and Bank Leumi),
whose Allowed Class 5 Claims are estimated to be $71.1 million in the
aggregate, will receive the following consideration (i) New AMCE Notes
with a face amount equal to 90% of its Allowed Class 5 Claim (i.e., $64
million in the aggregate) ; provided, however, that each Allowed Class 5
Claim holder shall have the right to exercise the New AMCE Notes
Exchange Option for the New AMCE Notes to which it would otherwise be
entitled (i.e., for $56 million in cash in the aggregate); and (ii) New
AMCE Stock (as defined below) with an aggregate Plan Value (as defined
below) equal to 4.5% of its Allowed Class 5 Claim (i.e., $3.2 million
Plan Value).
On the Effective Date, or as soon thereafter as practicable, each
holder of an Allowed Class 5 Claim secured by unidentifiable equipment
(i.e., Fifth Third and Bank Leumi), whose Allowed Class 5 Claims are
estimated to be $7.2 million in the aggregate, will receive the
following consideration (i) New AMCE Notes with a face amount equal to
50% of its Allowed Class 5 Claim (i.e., $3.6 million in the aggregate);
provided, however, that each Allowed Class 5 Claim holder shall have
the right to exercise the New AMCE Notes Exchange Option for the New
AMCE Notes to which it would otherwise be entitled (i.e., for $3.15
million in cash in the aggregate); and (ii) New AMCE Stock (as defined
below) with an aggregate Plan Value (as defined below) equal to 22.5%
of its Allowed Class 5 Claim (i.e., $1.62 million Plan Value).
Class 6?Unsecured Claims Other Than Any Unsecured Claims of the Banks,
Heller, the GECC Group, or Harcourt: On the Effective Date, or as soon
thereafter as practicable, each holder of an Allowed Class 6 Claim will
receive New AMCE Stock with an aggregate Plan Value equal to such
holder's pro rata share of the sum of (a) Base Class 6 Recovery plus
(b) the Conditional Class 6 Recovery (if any), each as defined below;
provided, that in no event shall holders of Allowed Class 6 Claims
receive New AMCE Stock with a Plan Value in excess of 100% of their
Allowed Claims.
The "Base Class 6 Recovery" shall be equal to:
(v) $36 million (plus, if and only if (A) AMCE exercises its rights to
require GCC to reject any real estate lease under 11 U.S.C. Section 365
which GCC has not already rejected , other than the Bay Plaza Expansion
{which does not include the existing Bay Plaza location}, Erie Commons,
Summit Park and Midway Mall leases, (any such newly rejected lease
other than the Bay Plaza Expansion, Erie Commons, Summit Park and
Midway Mall leases being a "Newly Rejected Lease") and (B) AMCE has
been afforded the reasonable opportunity to renegotiate the terms of
such Newly Rejected Lease prior to such rejection, 32/45's (or 71.1%)
of the allowed unsecured claim of the lessor arising as a result of
such rejection of the Newly Rejected Leases); plus
(w) to the extent that any Class 6 Claims are allowed on account of the
rejection of the theatre leases known as Rancho (Xxxx 000), Xxxxxxxx
(Xxxx 000), Xxxxxxx Mall (Unit 870) or Deerfield 8 (Unit 922) (such
Allowed Class 6 Claims being hereinafter referred to in the aggregate
as the "Allowed Designated Lease Claims"), the positive amount (if any)
that results from multiplying (i) the lesser of $1.4 million or the
Allowed Designated Lease Claims, minus (in either case) the amount, if
any, which results from subtracting the aggregate Allowed Claims of
Xxxx Xxxxxxxx and Xxxxxxx Xxxxxxx from $4 million and (ii) that
fraction, the numerator of which fraction is the total Plan Value of
the New AMCE Stock (plus, if applicable under clause (b) of the
Conditional Class 6 Recovery, the Plan Value of the Top-Up AMCE Stock
and any cash substituted by Harcourt therefor) that would have been
distributed to the holders of Allowed Class 6 Claims had the Allowed
Designated Lease Claims been zero, and the denominator of which is the
total amount of the Allowed Class 6 Claims other than the Allowed
Designated Lease Claims; plus
(x) the sum of the following: (i) the amount by which 87.5% of the
face amount of the GCC JV Loan Portion exceeds the amount which GCC
pays to purchase the GCC JV Loan Portion from the SA Lenders if the
Bank Support Agreement Condition is satisfied (and not waived), and GCC
purchases the GCC JV Loan Portion from the SA Lenders (the amount so
paid for such purchase being the "Actual JV Loan Purchase Price"); plus
(ii) 50% of the amount by which the Actual JV Loan Purchase Price
exceeds 73.55% of the face amount of the GCC JV Loan Portion. For
purposes of applying the foregoing formulas, the Actual JV Loan
Purchase Price shall be deemed to be 87.5% of the face amount of the
GCC JV Loan Portion; provided, however, that if the Bank Support
Agreement Condition is satisfied (and not waived), and GCC purchases
the GCC JV Loan Portion from the SA Lenders, the Actual JV Loan
Purchase Price shall be deemed to be the greater of (a) the amount
which GCC actually pays to purchase the GCC JV Loan Portion, and (b)
73.55% of the face amount of the GCC JV Loan Portion (so that the Plan
Value of the New AMCE Stock to be distributed to the holders of Allowed
Class 6 Claims pursuant to this clause (x) shall (i) be $1.5 million if
the Bank Support Agreement Condition is not satisfied and GCC does not
purchase the GCC JV Loan Portion from the SA Lenders, and (ii) in no
event be less than $1.5 million and in no event be more than $3 million
if the Bank Support Agreement Condition is satisfied (and not waived)
and GCC purchases the GCC JV Loan Portion from the SA Lenders); minus
(y) the amount (if any) by which the aggregate amount of the "Deduction
Claims" exceeds $20 million; plus
(z) the amount (if any) by which the aggregate amount of the "Deduction
Claims" is less than $20 million.
As used herein, the term "Deduction Claims" shall be defined as the
aggregate sum of the Administrative Claims (exclusive of operating
expenses incurred or accrued and paid in the ordinary course of
business for goods and services), plus retention, severance and bonus
payments (including bonuses paid in the normal course) (without
duplication), plus the Priority Tax Claims, plus the Class 1 Claims,
plus the Class 2 Claims, plus the Cure Claims, plus the adequate
protection payments, less the GECC Excess Payments and any adequate
protection payments made to Xxxxxx subsequent to August 1, 2001 and
applied to the reduction of the pre-petition principal amount of
Xxxxxx'x Class 3 Claim, in all instances whether payments on behalf of
such Deduction Claims were made from August 1, 2001 through the
Effective Date or whether such Deduction Claims are outstanding on the
Effective Date; provided, however, that the component of Deduction
Claims that relates to severance and retention payments, including
amounts paid under the Amended and Restated Termination and Change of
Control Agreements approved by the Bankruptcy Court's Order dated March
16, 2001 but not including any bonuses paid in the normal course, shall
be deemed to equal $5 million regardless of the actual amounts that are
paid through the Effective Date or outstanding on the Effective Date;
bonuses paid in the normal course shall constitute a Deduction Claim
based on the actual amount of such bonuses paid. All fees and expenses
incurred by the post-confirmation Committee, the Unsecured Stock Trust,
the Class 6 distribution agent and any and all sub-agents,
professionals and others employed by any or all of them (including,
without limitation, the debtors-in-possession's present or former
employees and counsel), shall be satisfied exclusively from assets or
cash otherwise distributable to the holders of Allowed Class 6 Claims
pursuant to this Term Sheet. Additionally: (i) any fees due and
payable to the Office of the United States Trustee pursuant to section
1930(a)(6) of title 28 of the United States Code with respect to any
chapter 11 cases that remain open from and after the Effective Date of
the Plan shall be paid and satisfied exclusively from the assets or
cash otherwise distributable to the holders of Allowed Class 6 Claims;
provided that, except as set forth below with respect to General Cinema
Theatres, Inc. ("GCT") and, under certain circumstances, GCC, all of
the GCC debtors' cases will be closed as of the Effective Date, or as
soon thereafter as reasonably practicable; provided further, that GCT
will move to close its case promptly when requested to do so by the
post-confirmation Committee after resolution of all disputed Class 6
Claims and (but only if Option B under the "Bank Support Agreement
Condition" is chosen) the GCC case will be closed promptly after
resolution of all disputed Class 8 Claims. Any fees and expenses
(including, without limitation, professional fees and expenses)
incurred by the post-confirmation Committee in objecting to or
otherwise resolving Administrative Claims and Priority Tax Claims shall
be satisfied exclusively from the assets or cash otherwise
distributable to the holders of Allowed Class 6 Claim, it being
understood that the reorganized debtors shall have no obligation to
object to or otherwise resolve Administrative Claims and Priority Tax
Claims, that any such objection or resolution shall be at the option,
risk and expense of the post-confirmation Committee and that the
reorganized debtors will be reimbursed for any out-of-pocket expenses
incurred as a result of any such objection or resolution.
The "Conditional Class 6 Recovery" shall be equal to the sum of the
following, which shall be conditioned upon occurrence of the conditions
described in clauses (a) and (b) and may therefore be zero: (a) If the
JV Loan Purchase Condition is waived and AMCE selects Option A
described above under the heading "Bank Support Agreement Condition,"
the Plan Value of New AMCE Stock to be made available by AMCE to the
holders of the Allowed GCC Guaranty Claim, plus (b) to the extent any
pre-petition claims are allowed on account of the rejection of any of
the Identified Leases (any such allowed claims being "Allowed
Identified Lease Claims"), Harcourt shall, at its own expense, purchase
AMCE Stock in the open market (or New AMCE Stock if agreed by AMCE) for
distribution to the holders of Allowed Class 6 Claims such that, when
added to the New AMCE Stock made available by AMCE under the Base Class
6 Recovery and any New AMCE Stock to be distributed under clause (a)
above, the AMCE Stock made available by Harcourt is sufficient to
enable holders of Allowed Class 6 Claims other than the holders of
Allowed Identified Lease Claims to receive the same amount of AMCE
Stock per dollar amount of their Allowed Class 6 Claims as they would
have received if the Allowed Identified Lease Claims had not been
allowed (the "Top-Up AMCE Stock"); provided, that Harcourt may satisfy
this obligation by delivering, in its discretion, either a number of
shares of AMCE Stock equal to the Top-Up AMCE Stock or cash in an
amount equal to the market value of the Top-Up AMCE Stock as of the
Effective Date. Except as provided in the preceding clause (b),
Harcourt shall have no responsibility with respect to any distributions
to third party holders of any Allowed Class 6 Claim. The Conditional
Class 6 Recovery is intended to provide for the same treatment to the
holders of Allowed Class 6 Claims that are determined to be such under
the conditions described in clauses (a) and (b) of this paragraph (in
terms of the number of shares of AMCE Stock per dollar of Allowed Class
6 Claims) as other holders of Allowed Class 6 Claims would receive if
the claims described in clauses (a) and (b) had not become Allowed
Class 6 Claims), and the Conditional Class 6 Recovery shall be
interpreted accordingly.
Notwithstanding anything to the contrary contained herein, the
treatment of Allowed Class 6 Claims under this Term Sheet is predicated
upon the assumption that all of the Identified Leases (other than the
Erie Commons, Summit Park and Midway Mall leases, which shall be
rejected) and all other leases that were assigned by any of the GCC
Debtors to any party other than one of the GCC Debtors (the "Assigned
Leases") have been rejected or have deemed rejected under section
365(d) of the Bankruptcy Code. Accordingly, notwithstanding anything
to the contrary contained herein, the GCC Debtors shall reject all
Identified Leases that have not been previously rejected, and all
Assigned Leases that have not been previously rejected, without any
additional obligation on the part of AMCE.
Notwithstanding anything to the contrary contained herein, in the event
that AMCE elects to treat claims arising under or relating to the GCC
Guaranty and other nonpriority unsecured claims that are solely claims
against GCC (but not against any subsidiary chapter 11 debtor) that
would otherwise be classified in Class 6 in accordance with Option B
under the "Bank Support Agreement Condition" above, then such claims
shall not be included in Class 6 and shall not be entitled to treatment
in accordance with the provisions regarding Class 6 claims. Instead,
all such claims shall be treated as Class 8 claims in accordance with
Option B.
Notwithstanding the foregoing, upon the agreement of AMCE and the
Committee, Class 6 may be divided into two or more sub-classes which
may each receive different treatment under the Plan, provided that the
aggregate consideration distributable to such sub-classes does not
exceed the total consideration otherwise distributable to Class 6
pursuant to this term sheet.
Class 7?Claims of Harcourt: On the Effective Date, or as soon
thereafter as practicable, in full satisfaction of Harcourt's Class 7
Claims (i) Harcourt will receive cash in an amount equal to $1 million;
and (ii) AMCE shall, as to each of the Harcourt Leases (as defined
below) either (a) agree to become a substitute guarantor of such
Harcourt Lease in exchange for the lessor under such Harcourt Lease
releasing Harcourt from all claims thereunder or (b) absent such a
release of Harcourt by the applicable lessor, provide an
indemnification to Harcourt against any further liability related to
such Harcourt Lease (which indemnification shall include any and all
costs and liabilities of Harcourt arising after the Effective Date in
connection with a default under such Harcourt Lease, including but not
limited to reasonable fees of counsel, but shall not include any
guarantee fee or other payment that is not based upon actual costs
incurred by Harcourt in satisfying or defending its obligations under
the applicable Harcourt Lease). For purposes hereof, "Harcourt Lease"
includes all leases (a) under which Harcourt was the original tenant,
is a guarantor or is otherwise liable for rent upon GCC's default in
payment thereof, (b) that have not been rejected by GCC as of the date
of this Term Sheet (other than the Erie Commons, Summit Park and Midway
Mall leases, which GCC shall reject and all three such leases shall not
be deemed to be Harcourt Leases), and (c) that have not previously been
assigned by any of the Debtors to any party other than an affiliate of
the Debtors. Without limiting the foregoing, none of the Identified
Leases shall be deemed to be a Harcourt Lease. The Harcourt Leases,
which include without limitation the Reserved Leases (as defined
below), shall be assumed as part of the plan of reorganization, without
any payment or subsidy from Harcourt. No Harcourt Lease shall be
rejected without Harcourt's consent, unless otherwise agreed by AMCE
and Harcourt in connection with the Harcourt Lease renegotiations
described below.
AMCE acknowledges that Harcourt has paid certain cure costs to the
lessors under the Plaza at Chapel (Unit 496) and Centennial (Unit 942)
leases, and Harcourt will be reimbursed under the plan of
reorganization for such cure costs to the extent such cure costs would
otherwise be required to be paid to such lessors in connection with the
assumption of such leases, in lieu of any claim with respect to such
cure costs by such lessors.
Harcourt shall also be released from all claims of the Domestic Banks
under the Intercreditor Agreement, and the Reimbursement and Security
Agreement described therein shall terminate and be of no further force
or effect.
AMCE shall use reasonable commercial efforts (which shall not be
interpreted to require AMCE to pay any amount other than its own
attorneys' fees) to renegotiate the Harcourt Leases prior to the
Effective Date. Except as provided in the following sentence, Harcourt
shall be entitled to participate in such renegotiations until the
Effective Date, but direction and control of such renegotiations shall
be at AMCE's sole and absolute discretion. Harcourt shall not be
entitled to participate in renegotiation of the Springfield, Hollywood
Galaxy or Centennial Lakes leases (the "Reserved Leases"); provided,
that AMCE shall keep Harcourt reasonably informed with respect to the
status of such negotiations and provided, further, that AMCE shall not
seek or obtain lease concessions on other leases AMCE may have with the
lessors under the Reserved Leases in lieu of lease concessions under
the Reserved Leases without Harcourt's consent. If the renegotiation
of any Reserved Lease results in an agreement with the lessor for a
replacement lease or lease buyout within the time frames set forth
below, Harcourt will be entitled to the following: (i) with respect to
each Reserved Lease for which an agreement for a replacement lease or
lease buyout is executed prior to the Effective Date, Harcourt will be
entitled to receive New AMCE Stock with a Plan Value of $250,000 on the
Effective Date; and (ii) with respect to each Reserved Lease for which
AMCE received a written proposal from the lessor for a replacement
lease or lease buyout prior to the Effective Date and for which AMCE
and such lessor execute an agreement for a replacement lease or lease
buyout within six (6) months after the Effective Date on terms that are
at least as favorable to the lessee (after taking into account any
payment to Harcourt pursuant to this Term Sheet) as those contained in
such proposal, Harcourt will be entitled to receive New AMCE Stock with
a Plan Value of $250,000 within ten (10) business days following
execution of such post-Effective Date agreement.
Harcourt agrees that it will work cooperatively with AMCE with respect
to the renegotiation of the Harcourt Leases. Regardless of whether
Harcourt participates in a renegotiation, Harcourt shall receive the
net present value, using a 10% discount rate, of 50% of any rent
reductions (net of inducement payments, if any, paid by AMCE) that are
renegotiated prior to the Effective Date for any of the Harcourt Leases
(excluding any rent reductions that may be part of a replacement lease
with respect to a Reserved Lease or a lease buyout of a Reserved
Leases, but otherwise including any rent reduction on a Reserved
Lease). For purposes of the foregoing, a rent reduction will be deemed
to have been renegotiated prior to the Effective Date if either (a) the
rent reduction is documented by an executed and fully effective lease
amendment (a "Harcourt Lease Amendment") prior to or on the Effective
Date, or (b) notwithstanding that a Harcourt Lease Amendment was not
obtained by the Effective Date, (1) the rent reduction was evidenced by
a written proposal from the lessor under the applicable Harcourt Lease
prior to the Effective Date and (2) a Harcourt Lease Amendment is
executed within six (6) months following the Effective Date that
includes terms that are at least as favorable to the lessee (after
taking into account any payment to Harcourt pursuant to this Term
Sheet) as those contained in such proposal. Amounts to which Harcourt
is entitled under this paragraph, if any, shall be payable in cash on
the later of (i) the Effective Date, or as soon thereafter as
practicable, or (ii) the date of execution of the applicable Harcourt
Lease Amendment.
Furthermore, except for Springfield Mall, Virginia (Unit 867);
Southlake, Indiana (Unit 875); Ford City, Illinois (Unit 940); and Bay
Plaza, New York (Unit 902), AMCE shall not extend the term of any of
the leases of which Harcourt is a guarantor beyond its current term,
unless Harcourt is provided evidence reasonably satisfactory to it that
it is not liable, or is removed, as guarantor of the applicable lease
for any such extension period.
GCC shall also assign to Harcourt, without representation or recourse,
all of GCC's right, title and interest in, to and under any collateral
or security, including without limitation any letters of credit,
guaranties and other security or documents supporting the non-GCC
assignee's or subtenant's liability under any Assigned Leases under
which Harcourt may have contingent liability, whether as a guarantor,
original tenant or otherwise.
Harcourt's (and its affiliates') recovery and distribution under the
Plan shall be exclusively as set forth in this treatment of Class 7
Allowed Claims, and Harcourt (and its affiliates) shall not be entitled
to assert any claim in Class 6, whether in its own name, in the name of
a third party landlord, as subrogee, as assignee or otherwise. As of
the Effective Date of the Plan, Harcourt (and its affiliates) shall be
deemed to have withdrawn any and all proofs of claim asserted against
the GCC Debtors in any and all such capacities, with prejudice.
Class 8 -- Nonpriority, unsecured claims against GCC that are not also
claims against any direct or indirect subsidiary of GCC that is a
chapter 11 debtor and that would otherwise have been classified in
Class 6 As provided under Option B of the heading "Bank Support
Agreement Condition" above.
Class 9?Common Stock Interests (including any Allowed Claims
subordinated to the level of common stock under section 510(b) of the
Bankruptcy Code): Subject to satisfaction of the Class 9 Participation
Conditions (as defined below), a new limited liability company ("New
Investments LLC") will be formed as a business development company
under the Investment Company Act of 1940 (the "1940 Act"), which will
acquire from GCC Investments Inc. ("Investments Inc.") its 99% interest
in GCC Investments LLC ("Investments LLC"). Immediately prior to such
acquisition any investment portfolio assets that are owned by
Investments Inc. will be transferred to Investments LLC.
If and only if the Class 9 Participation Conditions are satisfied, and
not otherwise, holders of Allowed Common Stock Interests shall receive
the following consideration on the Effective Date, or as soon
thereafter as practicable:
(i) Each such holder shall receive its Pro Rata Share of $100,000 cash
plus a percentage to be agreed of the limited liability interests (the
"LLC Interests") of New Investments LLC not exceeding 15% of the
equity of New Investments LLC (the "Class 9 Percentage"). As used
herein, "Pro Rata Share" means the percentage calculated by dividing
such holder's Allowed Common Stock Interest by the aggregate amount of
all Allowed Common Stock Interests;
(ii) Each such holder shall have the right, which shall be assignable
to other holders and affiliates, to pro rata participation (together
with oversubscription rights) in a rights offering conducted by and at
the expense of New Investments LLC pursuant to a registration statement
(the "Rights Offering") to raise an amount to be agreed of not less
than $12.5 million of additional equity financing for New Investments
LLC (the "Rights Offering Investment"), in consideration for which the
holders who participate in the Rights Offering shall receive an agreed
percentage based upon the amount raised in the Rights Offering of at
least 75% of the equity of New Investments LLC minus the Class 9
Percentage, allocated proportionately based upon their respective
participation in the Rights Offering. New Investments LLC will use
diligent efforts to make the Rights Offering available to the all
holders of Allowed Common Stock Interests pursuant to an effective
registration statement and will indemnify AMCE and GCC against all
loss, damage or expense related to the Rights Offering. If,
notwithstanding New Investment LLC's diligent efforts, such
registration statement is not or cannot reasonably be anticipated to be
made effective within thirty (30) days after the Effective Date, or the
Rights Offering cannot be practicably conducted in compliance with the
securities laws, then New Investments LLC at its option may raise at
least $12.5 million through a private placement offering conducted in
compliance with the securities laws (the "Substituted Private
Offering").
The remaining equity interests in New Investments LLC will be a special
class of equity interests (the "Preferred LLC Interests") which will be
owned by AMCE, or at AMCE's election, Reorganized GCC or another of
AMCE's designees. The Preferred LLC Interests will be entitled to
receive a $5.1 million distribution priority and will represent a
percentage to be agreed of not more than 25% of the equity of New
Investments LLC, and will further be subject to an option in favor of
New Investments LLC to purchase all, but not less than all, of such
Preferred LLC Interests for $5.1 million in cash within 30 days after
the Effective Date. In the event such option is not exercised, AMCE or
its designee shall have the right to put such Preferred LLC Interests
to New Investments LLC after 30 days for such $5.1 million amount. New
Investments LLC shall not incur debt or grant liens upon its assets
without the consent of the holders of the Preferred LLC Interests while
they remain outstanding.
If (a) prior to the confirmation of the Plan, members of the Xxxxxxx X.
Xxxxx family (the "Xxxxx Family") and any other holder of Allowed
Common Stock Interest (collectively, the "Rights Offering Guarantors")
have not guaranteed that at least the minimum Rights Offering
Investment will be raised, (b) the minimum Rights Offering Investment
is not funded, or the Substituted Private Offering in the same amount
is not funded, at the Effective Date, or (c) the holders of Allowed
Common Stock Interests do not vote to accept the Plan (the "Class 9
Participation Conditions"), the holders of Allowed Common Stock
Interests shall receive no consideration under the Plan.
For purposes of the foregoing, all references above to amounts or
percentages that are to be "agreed" shall require the agreement of the
Rights Offering Guarantors.
Notwithstanding anything to the contrary contained herein, in the event
than any class of claims does not accept the Plan, and the Bankruptcy
Court determines that the proposed treatment of Class 8 as set forth
above violates the provisions of section 1129(b)(2) of the Bankruptcy
Code with respect to the treatment of such nonaccepting class, the
treatment of Class 9 shall be modified in any manner elected by AMCE
that will cause the Plan not to violate the provisions of section
1129(b)(2) of the Bankruptcy Code.
Class 10 ? Common Stock Options: The holders of Common Stock Options
shall receive no distribution. On the Effective Date all Common Stock
Options and any other equity interests will be canceled.
B. Conditions to Proceeding With Term Sheet
In order to proceed with the transaction contemplated by this
Term Sheet, AMCE will require:
i) Harcourt, GECC and the Creditors' Committee,
shall have executed by December 6, 2001, or such date
up to 15 days later as may be acceptable to AMCE, a
support agreement (the "Support Agreement"), which
will incorporate the terms of this Proposal and
include, among other provisions, support provisions
whereunder all of the signatories will agree, among
other things, that each of them: (I) will support a
bid by AMCE for the acquisition of all of the stock
of GCC by AMCE and a plan of reorganization for GCC
that provides for such acquisition incorporating the
terms of this Term Sheet (the "Plan") in accordance
with the Bankruptcy Code as soon as practicable;
(II) will use its commercially reasonable efforts
(which will not be interpreted to require a party to
pay any amount other than its own attorneys' fees) to
achieve confirmation of the Plan including, in the
case of the Creditors' Committee, recommending to
general unsecured creditors that the Plan be
confirmed; (III) will not support or solicit any bid
for GCC or any other GCC debtor or for any assets
thereof other than by AMCE; and (IV) will not vote
for, consent to, support, or participate in the
negotiation or formulation of any other plan other
than the Plan or any disposition of any substantial
portion of the assets of GCC to any party other than
AMCE.
ii) GCC shall have executed by December 6, 2001, or
such date up to 15 days later as may be acceptable to
AMCE, an interim operating agreement in form and
substance agreed to by AMCE as of this date that will
govern various aspects of the management of GCC
through and including the effective date of a plan of
reorganization for GCC, and an order of the
Bankruptcy Court authorizing and approving the
interim operating agreement shall have been entered
by January 15, 2002, or such later date as may be
acceptable to AMCE.
iii) GCC shall have executed by December 6, 2001, or
such date up to 15 days later as may be acceptable to
AMCE, a letter of intent (the "LOI") incorporating
this term sheet in substantially the form attached
hereto as Exhibit B, including without limitation the
nonsolicitation, termination fee and reimbursement of
expenses provided thereunder, and an order of the
Bankruptcy Court authorizing and approving the LOI
shall have been entered by January 15, 2002, or such
later date as may be acceptable to AMCE, which order
shall provide, among other things, that the
termination fee and expense reimbursement shall
constitute allowed administrative claims against GCC
under Sections 503 and 507(a) of the Bankruptcy Code.
C. Conditions to Closing shall be as set forth in the LOI, which
is incorporated herein by this reference
AMCE may, in its sole and absolute discretion, waive or modify any of
the foregoing conditions in Sections B and C, other than confirmation
of the Plan.
Existing Issue: $225 million principal amount of 9.5% Senior Subordinated
Notes due 2011 of AMC Entertainment Inc. (the "Notes").
Issuer: AMC Entertainment Inc. ("AMCE" or the "Company").
Coupon: 9.5%, payable twice annually on February 1st and August 1st.
Maturity Date: February 1, 2011.
Optional Redemption: The Company may redeem the notes at its option, in
whole or in part, at any time after February 1, 2004 at 104.75% of the
principal thereof, declining ratably to 100.00% of the principal amount
thereof on or after February 1, 2007, plus in each case interest accrued
to the redemption date.
Change of Control: Upon a Change of Control, the holders of the Notes
will have the right to require AMCE to repurchase the Notes at a price
equal to 101% of the principal amount thereof plus accrued and unpaid
interest to the date of repurchase.
Ranking: The Notes are unsecured senior subordinated indebtedness ranking
pari passu with all of AMCE's existing and future senior subordinated
indebtedness. The payment of all obligations in respect of the Notes
will be subordinated in right of payment to the prior payment in full in
cash or cash equivalents of all senior indebtedness. As of June 28,
2001, AMCE had approximately $73.2 million of net senior indebtedness and
$199 million of pari passu indebtedness outstanding. In addition, the
Notes are effectively subordinated to all liabilities of AMCE's
subsidiaries, including trade payables but excluding: (i) intercompany
obligations; (ii) liabilities under guarantees of AMCE's obligations; and
(iii) obligations under operating leases and other obligations not
reflecting in AMCE's consolidated financial statements.
Certain Covenants: The indenture contains certain covenants that, among
other things, restricts AMCE's ability and the ability of AMCE's
subsidiaries to: (i) incur additional indebtedness; (ii) pay dividends or
make distributions in respect of capital; (iii) purchase or redeem
capital stock; (iv) enter into transactions with certain affiliates; (v)
become liable for any indebtedness that is subordinate or junior in right
of payment to any senior indebtedness and senior in right of payment to
the Notes; or (vi) consolidate, merge or sell all or substantially all of
AMCE's assets, other than in certain transactions between one or more of
AMCE's wholly-owned subsidiaries and AMCE.
Unit # Theatre Name
410 Pga
000 Xxxxxxxx Xxxxx
000 Xxxxxxxx
449 Galleria
000 Xxxxxx Xxxxx
000 Xxxxx Xxxxxx
000 Xxxxxxx Xxxx
000 Xxxxxxxxx
000 Xxxxxxxxx
000 Xxxxxxxx Xxxxxx
484 Point Nasa
493 Regency
499 Lindbergh
507 Janaf
514 Lakeside (2 Units)
000 Xxxxxxx Xxxxxx
000 Xxxxxxxx City
000 Xxxxxxxxx
000 Xxxxxxx
000 Xxxxxxxxx
000 Xxxxxxxxxx Xxxx
000 Xxxx Xxxxxxx
000 Xxxxxxx Xxxx
000 Xxxxxx Xxxx
000 Xxxxxxxx (2 Units)
000 Xxxxx Xxxx
000 Xxxxxxx Xxxxxx
000 Xxxxxxxxx Xx
000 Xxxxxxxxx Xxxx
861 San Mateo
000 Xxxxx Xxxxxxx 0
000 Xxxxxx Xxxx
000 Xxxxxxxx Xxxx
000 Xxxxxxxxxxx
000 Xxxxxxxx
887 Colonial
000 Xxxxxxxxx Xxxx
000 Xxxxxxx Xxxx Xx
000 Xxxxxxxx
000 Xxxx Xx Xxxxxxx
000 Xxxxxxxxxx Xxxx
000 Xxxxxxx Plaza 8
000 Xxxxxxxxx Xxxx
000 Xxxxxxxx 10
915 Pembroke
000 Xxxxxxx Xxxxxx
000 Xxxxxxx Xxx
923 Xxxxxxxx
925 Fountains 8
928 Xxxxxxxxxx
000 Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxx
000 Xxxxxxxxx 8
000 Xxxxxx Xxxx
947 Xxxx Xxxx
952 Canton Cinema
000 Xxxxxxx Xxxxxx
000 Xxxxxx 0
000 Xxxxxxxxx
AMC ENTERTAINMENT INC.
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
December 6, 2001
GC Companies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
Attn: G. Xxxx Xxxxxxx
President and Chief Operating Officer
Dear Xx. Xxxxxxx:
The purpose of this letter of intent ("Letter") is to set forth
certain non-binding understandings and certain binding agreements
between AMC Entertainment Inc., a Delaware corporation ("AMCE" or
"we"), and GC Companies, Inc., a Delaware corporation ("GCX" or "you"),
and its affiliated debtors and debtors in possession (collectively, the
"GCX Debtors") in cases under chapter 11 of the United States
Bankruptcy Code that are currently pending the United States Bankruptcy
Court for the District of Delaware (the "Court") as case nos. 00-3897
(EIK) to 00-3927 (EIK) (the "Chapter 11 Cases"), with respect to AMCE's
acquisition of newly issued shares of GCX common stock ("New GCX
Stock"), representing 100% of the outstanding capital stock of GCX as
reorganized pursuant to a plan of reorganization in form and substance
reasonably satisfactory to AMCE in the good faith exercise of its
discretion that (i) is in all respects consistent with this Letter and
the Term Sheet (as defined below), (ii) does not impose on AMCE any
liabilities or obligations in addition to or other than those provided
in this Letter and the Term Sheet and (iii) contains such other
provisions that AMCE reasonably deems necessary to protect AMCE (the
"Plan"), on the terms and conditions described in this Letter
(collectively, the "Proposed Transaction").
Sections 1 and 2 reflect our understanding with respect to the
matters described in them, but are not to constitute a complete
statement of, or a legally binding or enforceable agreement or
commitment on the part of, AMCE or the GCX Debtors with respect to the
matters described therein.
1. Purchase of GCX and Subsidiaries.
(a) On the terms and subject to the conditions (which will be
substantially in accordance with this Letter and the Term
Sheet) to be set forth in a definitive, legally binding,
written agreement to be negotiated and entered into by AMCE
and GCX with the approval of AMCE's Board of Directors and
GCX's Board of Directors (the "Agreement") and the Plan
(collectively, the "Transaction Documents"), AMCE intends
to acquire substantially all of the assets, properties and
business (the "GCX Business and Assets") of GCX and its
subsidiaries through (i) AMCE's acquisition of the New GCX
Stock on the effective date of the Plan (the "Effective
Date"), (ii) acquisition by a designated AMCE subsidiary of
all of the stock of General Cinema International, Inc., and
(iii) acquisition by a designated AMCE subsidiary of all or
such portion of the stock of reorganized GCC Investments,
Inc. as is determined under the treatment of GCX common
stock holders as described in the Term Sheet.
(b) The Transaction Documents will provide that, at the
Effective Date, the consideration specified in the Term
Sheet for the acquisition of GCX by AMCE attached hereto as
Exhibit I (the "Term Sheet") will be issued to or for the
benefit of the claimants and equity holders in the Chapter
11 Cases as provided in the Plan.
(c) The Transaction Documents will provide that, at the
Effective Date, the lessee of each of the domestic theatre
leases that is assumed under the Plan shall be a single
domestic operating corporation named "General Cinema
Theatres, Inc." ("Reorganized GCT") that will be a wholly-
owned subsidiary of Reorganized GCX, except (i) as
otherwise determined by AMCE in its sole discretion or (ii)
to the extent any such lease is assigned to Reorganized
GCT, if the counterparty to such a contract or lease
objects to such assignment and the Court does not approve
such assignment (in which case the lessee will be the
existing GCX Debtor that is lessee under such lease).
(d) The Transaction Documents will provide that, to the extent
that on the Effective Date GCX has insufficient cash to
repay GCX's debtor-in possession credit facility in full
and to pay any unpaid "Deduction Claims" (as defined in the
Term Sheet), AMCE will fund the shortfall. AMCE also will
provide GCX, for presentation to the Court at the Plan
confirmation hearing, evidence to support a finding by the
Court that the working capital feasibility requirements for
the Plan under Section 1129(a)(11) of the Bankruptcy Code
are met.
2. Other Provisions.
The Agreement will contain usual and customary
representations, warranties, covenants and other agreements on behalf
of GCX. In addition, AMCE's obligation to consummate the Proposed
Transaction will be subject to satisfaction or waiver by AMCE of usual
and customary conditions (in any event, not to include due diligence)
prior to the Effective Date, including:
(a) Confirmation of the Plan by the Court (which condition may
not be waived by AMCE);
(b) The confirmed Plan and the confirmation order therefor
shall be satisfactory to AMCE in form and substance,
provided that the Plan includes terms that are
substantially the same as the terms set forth in the Term
Sheet;
(c) No material adverse change in the GCX Business and Assets
between August 1, 2001 and the Effective Date, except for
such changes that (i) are in the ordinary course of the
operation of the GCX Business and Assets (taking into
account the seasonality of GCX's business and the Chapter
11 reorganization), (ii) are contemplated by the Plan, or
(iii) occur as a result of the September 11, 2001 terrorist
attacks, general economic conditions in South America or
currency fluctuations with respect to South American
countries;
(d) The Transaction Documents and other definitive
documentation shall be in form and substance reasonably
satisfactory to AMCE;
(e) Each material executory contract and unexpired lease (which
includes all theatre leases) of any GCX Debtor not
previously assumed, rejected or deemed to have been
rejected shall have been assumed, rejected or assumed and
assigned to a GCX or AMCE subsidiary designated by AMCE, as
determined by AMCE in its sole discretion, except (i) as
otherwise provided in the Term Sheet or (ii) if the
counterparty to such a contract or lease objects to any
such assignment and the Court does not approve such
assignment. Each such executory contract and unexpired
lease shall have been assumed, rejected or assumed and
assigned, as the case may be, as designated by AMCE, by a
final Court order satisfactory to AMCE, which may be the
Court order confirming the Plan;
(f) Satisfaction of the JV Loan Purchase Condition described in
the Term Sheet; provided, that the JV Loan Purchase
Condition shall be deemed to be waived (unless otherwise
agreed by GCX and AMCE) if the SA Lenders (as defined in
the Term Sheet) have not entered into a binding agreement
satisfactory to AMCE regarding satisfaction of the JV Loan
Purchase Condition at least one day prior to the Court
hearing for the LOI Order (as defined below), and AMCE has
not terminated its obligations under this Letter as a
result of the absence of such agreement;
(g) Each of the lease amendments referenced in the table below
shall have become effective:
PROPERTY STATUS OF AMENDMENT
Irving Mall, Irving, Texas (Unit 984) Fully executed, but not effective
until Tenant assumes the Lease; but if the Lease is not assumed on or
before December 31, 2001, the Amendment is null and void.
Xxxxxx Creek, Austin, Texas (Unit 982) Fully executed, but not
effective until Tenant assumes the Lease; but if the Lease is not
assumed on or before December 31, 2001, the Amendment is null and
void.
Xxxxxxxx Xxxxx, Philadelphia, Pennsylvania (Unit 965) Amendment is
fully executed but not effective until Tenant assumes Lease in
bankruptcy.
(h) The GCX Business and Assets at the Effective Date shall be
substantially the same as the GC Business and Assets
reflected in GCX's consolidated financial statements at
July 31, 2001 (taking into account the seasonality of GCX's
business and the Chapter 11 reorganization), and GCX shall
have operated the GCX Business and Assets in the ordinary
course (taking into account the seasonality of GCX's
business and the Chapter 11 reorganization) and paid
ongoing ordinary course liabilities (including estimated
taxes and assessments) consistent with past practices and
GCX's Debtor in Possession Financing Budget and Cash Flow
Projection dated November 5, 2001, except for any agreed-
upon changes contemplated by the Transaction Documents or
that are authorized by AMCE in accordance with that certain
Interim Operating Agreement entered into by AMCE and GCX as
of this date (the "IOA").
(i) Obtaining all necessary material consents or approvals of
governmental bodies, lenders, lessors or other third
parties;
(j) There shall be no pending or threatened litigation
challenging or seeking to modify the Plan or any provision
thereof, or that is likely in AMCE's reasonable judgment to
have a material adverse effect upon the GC Business and
Assets;
(k) GCX's representations and warranties in the Agreement shall
be true in all material respects; and
(l) Issuance of the New GCX Stock, filing of an Amended and
Restated Certificate of Incorporation for Reorganized GCX,
adoption of Amended and Restated Bylaws of GCX,
consummation of the restructuring contemplated by Section
1(c) above, delivery of certified copies of the
Confirmation Order and the docket in the Chapter 11 Cases
demonstrating that the Confirmation Order has become a
final, non-appealable order of the Court and such other
documents of conveyance, closing certificates and other
documentation as AMCE may reasonably request.
3. Binding Agreements. Upon execution of counterparts of this
Letter by you, the following lettered paragraphs of this Section 3 will
constitute the legally binding and enforceable agreement of AMCE and
GCX (in recognition of the significant costs to be borne by AMCE and
GCX in pursuing this transaction and further in consideration of their
mutual undertakings as to the matters described herein).
(a) Access. Subject to the terms set forth in paragraph
(j) below respecting confidentiality and certain other matters, GCX, on
reasonable notice, will afford AMCE's employees, auditors, legal
counsel and other authorized representatives all reasonable opportunity
and access during normal business hours to inspect, investigate and
audit in a reasonable manner the GC Business and Assets and to meet
with GCX personnel before the Effective Date.
(b) Consents. AMCE and GCX will cooperate with one
another and proceed, as promptly as is reasonably practicable, to seek
to obtain all necessary material consents and approvals from
governmental bodies, lenders, landlords and third parties necessary to
consummate the Proposed Transaction, and to endeavor to comply with all
other legal or contractual requirements for or preconditions to the
execution and consummation of the Transaction Documents and the
Proposed Transaction. Without limiting the generality of the
foregoing, GCX and AMCE shall file premerger notification under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Filing"), as soon as reasonably practicable after execution of
this Letter, but in any event within twenty (20) days following the
earlier to occur of (i) Court approval of this Letter and the IOA, or
(ii) GCX filing the Plan with the Court.
(c) Definitive Agreement. AMCE and GCX will negotiate in
good faith to arrive at a mutually acceptable definitive Agreement for
approval, execution, and delivery on the earliest reasonably
practicable date, but not later than December 21, 2001, subject to
extension as provided in paragraph (d) below.
(d) Bankruptcy Process. GCX shall file a motion seeking
an order of the Court approving the binding agreements contained in
this Letter and the IOA (the "LOI Order") within three (3) business
days after execution thereof, which motion shall be reasonably
acceptable to AMCE in form and substance in the good faith exercise of
its discretion. The LOI Order shall specifically provide for the
Termination Payments provided for in paragraph (f)(ii) below and shall
otherwise be reasonably satisfactory to AMCE in the good faith exercise
of its discretion.
AMCE, GCX and the Committee of Unsecured Creditors in the
Chapter 11 Cases (the "Committee") will cooperate in the preparation of
the Plan, the disclosure statement therefor (the "Disclosure
Statement"), the forms of ballots, solicitation procedures and Plan
related procedures (collectively, the "Plan Procedures") and will use
commercially reasonable efforts (which shall not be interpreted to
require AMCE or GCX to pay any amount other its own attorneys' fees) to
obtain Court approval and confirmation of the Agreement, Plan,
Disclosure Statement and Plan Procedures and to implement the Plan in
accordance with the following schedule:
(i) The Court shall have entered the
LOI Order, in form and substance reasonably
satisfactory to AMCE in the good faith exercise of
its discretion, on or before January 15, 2002.
(ii) The Plan, Disclosure Statement and Plan Procedures
shall have been filed with the Court on or before
December 21, 2001.
(iii) The SA Lenders (as defined in the Term Sheet) shall
have entered into a binding agreement satisfactory to
AMCE regarding satisfaction of the JV Loan Purchase
Condition described in the Term Sheet at least one
day prior to the Court hearing for the LOI Order.
(iv) A Court order approving the adequacy of the
Disclosure Statement shall have been entered on or
before February 25, 2002.
(v) The applicable waiting period for the HSR Filing
shall have expired or been terminated early, without
the initiation of any enforcement action and without
the imposition of any conditions on the Proposed
Transaction by the Federal Trade Commission or the
Antitrust Division of the Department of Justice, not
less than five (5) days prior to the confirmation
hearing for the Plan.
(vi) A Court order confirming the Plan (the
"Confirmation Order") shall have been entered on or
before March 20, 2002.
(vii) The Confirmation Order shall have become a
final, nonappealable order on or before April 1,
2002.
If AMCE is not in breach of its obligations under this
Letter, AMCE may extend any of the dates set forth in any or all of
clauses (i)-(vii) above, inclusive, or paragraph (c) above, for a
period of up to thirty days, by giving written notice of such election
to GCX and the Principal Claimants (as defined below) on or before the
applicable date being extended. If GCX is not in breach of its
obligations under this Letter, GCX and the Committee may jointly extend
any of the dates set forth in any or all of clauses (i)-(vii) above,
inclusive, or paragraph (c) above, for a period of up to thirty days,
by giving written notice of such election to AMCE and the Principal
Claimants (as defined below) on or before the applicable date being
extended.
(e) Exclusivity. GCX acknowledges that AMCE has expended
and will continue to expend considerable time and money in developing
the Proposed Transaction, which it is not prepared to continue
expending, however, except upon the terms hereof, including the
provisions of this paragraph (e).
(i) Nonsolicitation. Neither GCX nor any of its
respective directors, employees, accountants or other
agents and representatives (collectively,
"Representatives") shall, directly or indirectly,
solicit a competitive bid or proposal from a third
party to purchase all or any portion of the GCX
Business and Assets or the New GCX Stock, whether in
a separate transaction or as part of a plan of
reorganization for GCX (a "Third Party Plan"), or
engage in or continue any discussions or negotiations
with any party that has made or who may make such a
competitive bid for such New GCX Stock or the Assets.
(ii) Unsolicited Proposals. Notwithstanding subparagraph
(i), GCX may consider an unsolicited Third Party Plan
if and only if the Court finds that (A) the Third
Party Plan would provide for a material increase in
the aggregate value of the consideration being paid
for all of the GCX Business and Assets compared to
the Plan, (B) the Third Party Plan is fully-financed
and the third party is otherwise capable of
performing its obligations thereunder, and (C) GCX
may consider the Third Party Plan.
(iii) Support Agreements. GCX acknowledges that certain
claimants and parties in interest in the Chapter 11
Cases, to wit: General Electric Capital Corporation,
Harcourt General, Inc. and the Committee
(collectively, the "Principal Claimants"), have
entered into support agreements with AMCE with
respect to the Plan (the "Support Agreements") that
obligate the Principal Claimants to support the Plan
and prevent the Principal Claimants from supporting a
Third Party Plan, subject to the terms and conditions
of the Support Agreements.
(f) Termination. GCX acknowledges that AMCE has expended
and will continue to expend considerable time and money in developing
the Proposed Transaction, which it is not prepared to continue
expending, however, except upon the terms hereof, including the
provisions of this paragraph (f).
(i) Grounds for Termination. This Letter may be
terminated (A) by AMCE, at AMCE's sole discretion,
promptly following the passing of the applicable
deadline upon written notice to GCX and the Principal
Claimants if, through no material fault of AMCE, any
event specified to occur as of a certain date in
paragraphs (c) or (d) above has not occurred as of
such date, including any extensions, or (B) by the
non-breaching party due to material breach of this
Letter by the other party if the breaching party does
not cure such breach within thirty (30) days after
written notice from the non-breaching party. Upon
any such termination, any obligations under this
Letter will terminate and no party shall have any
liability whatsoever to any other party; provided,
however, that notwithstanding any such termination,
GCX shall remain liable for payment of the
Termination Payments to the extent required under the
terms of subparagraph (ii) below. The Termination
Payments shall be the sole and exclusive remedy for
monetary damages upon the termination or breach of
this Letter, the IOA or the Agreement; provided, that
nothing in this Letter shall limit the availability
of any equitable remedies, including specific
performance, available to AMCE upon GCX's breach of
this Letter, the IOA or the Agreement, unless AMCE in
fact terminates this Letter, the IOA, the Agreement
and the Support Agreements due to such breach and
receives the Termination Payments provided in the
last sentence of paragraph (f)(ii) below.
(ii) Termination Payments. AMCE will be entitled to the
payment from the GCX Debtors' estates of a
termination fee of $2.5 million (the "Termination
Fee") and reimbursement of reasonable and documented
out-of-pocket expenses incurred in connection with
AMCE's efforts to acquire the GCX Assets and
Business, the Term Sheet, the Support Agreements, the
Plan and the Proposed Transaction, including the
reasonable fees and expenses of AMCE's professionals
(the "Expense Reimbursement"), such Expense
Reimbursement not to exceed $750,000 (the
Termination Fee and the Expense Reimbursement being
collectively the "Termination Payments"), if: (A)
GCX seeks approval of, or the Court approves, any
agreement with a third party for the sale of all or
any part of the business or assets of GCX; (B) the
Plan is not confirmed because GCX seeks confirmation
of, or the Court confirms, a chapter 11 plan other
than the Plan; (C) (1) AMCE does not terminate this
Letter pursuant to clauses (i)-(iv) inclusive of
Section 3(d), and (2) an order of the Court
confirming the Plan is not entered on or before May
1, 2002 or does not become a final, nonappealable
order on or before May 15, 2002, or if the Effective
Date does not occur on or before June 1, 2002; or (D)
AMCE terminates this Letter under subparagraph (i)
above (other than pursuant to clauses (i)-(iv)
inclusive of Section 3(d)); in each case other than
due to AMCE's breach of its obligations under this
Letter, the Agreement or the Support Agreements.
Notwithstanding anything in this Letter to the
contrary, AMCE shall not be entitled to (and shall
promptly return the Termination Payments if
previously received by AMCE) if the Plan is
consummated. Furthermore, notwithstanding anything
in this Letter to the contrary, if the event giving
rise to the Termination Payments is a result of GCX's
intentional and material breach of this Letter, the
IOA or the Agreement, the Termination Fee shall be $5
million instead of $2.5 million and the Expense
Reimbursement shall not be limited to $750,000, such
additional amounts representing the parties
reasonable and good faith estimate of the liquidated
damages accruing to AMCE as the result of such a
breach by GCX.
(iii) Status and Payment of Termination Payments. The
obligation of the GCX Debtors to pay the Termination
Payments shall constitute an allowed administrative
claim against GCX under sections 503 and 507(a) of
the Bankruptcy Code. The GCX Debtors shall pay the
Termination Payments within three (3) business days
of the occurrence of an event described in
subparagraph (ii) above.
(g) Costs. Except as otherwise provided in paragraph
(f)(ii), AMCE and GCX will each be solely responsible for and bear all
of its own respective expenses, including expenses of legal counsel,
accountants and other advisers, incurred at any time in connection with
pursuing or consummating the Proposed Transaction.
(h) Miscellaneous. The terms set forth in this Letter are
a part of a comprehensive agreement, each element of which is an
integral aspect of the Proposed Transaction and, as such, are non-
severable. Headings are for reference only and do not constitute part
of this Letter. The words "includes" and "including" shall not be
words of limitation and shall be read to also add "without limitation."
This Letter shall be governed by and construed in accordance with the
internal laws of the State of New York and any applicable provision of
the Bankruptcy Code, without regard to the principles of conflict of
laws that would provide for application of another law. Each of the
parties acknowledges and agrees that no failure or delay in exercising
any right, power or privilege hereunder will operate as a waiver
thereof, nor will any single or partial exercise thereof preclude any
other right, power or privilege hereunder. This Letter may be executed
in counterparts, each of which when taken together shall constitute an
original of this Letter. It is understood that this Letter does not
contain all matters upon which agreement must be reached in order for
the Proposed Transaction to be consummated; however, the provisions of
Section 3 of this Letter, are acknowledged and agreed to be fully
binding on the parties hereto.
(i) Public Disclosure. AMCE and GCX may provide copies of
this Letter and attachments to parties in interest in the Chapter 11
Cases and as otherwise necessary in connection with the Chapter 11
Cases. AMCE and GCX also shall be entitled to file copies of this
Letter with the Court, the Securities and Exchange Commission, the HSR
Filing and any exchange upon which AMCE's or GCX's securities are
traded, and as otherwise required by law. Subject to the foregoing,
neither AMCE nor GCX shall make any public release of information
regarding the matters contemplated herein except (i) that simultaneous
press releases in the form approved by AMCE and GCX in writing by fax
or by E-mail shall be issued by each of AMCE and GCX as promptly as is
practicable after the execution of this Letter and at such other times
as may be set forth in the Agreement, (ii) AMCE may issue one or more
press releases to the effect that it has entered into support
agreements with other creditors of the GCX Debtors, after consultation
with GCX, and (iii) that AMCE and GCX may each continue such
communications with employees, customers, suppliers, franchisees,
lenders, lessors, shareholders, and other particular groups as may be
legally required or necessary or appropriate and not inconsistent with
the best interests of the other party or the prompt consummation of the
transactions contemplated by this Letter, and (iii) as required by law,
the Court, with the Securities and Exchange Commission, the HSR Filing
and any exchange upon which AMCE's or GCX's securities are traded.
(j) Confidentiality. AMCE agrees that, except as
provided in this Letter, that certain letter agreement respecting
confidentiality and nondisclosure dated June 29, 2001 between GCX and
AMCE shall remain in effect. The provisions of this paragraph (j)
shall survive the termination of this Letter.
(k) Other Plan Provisions. The Plan shall contain
customary release provisions with respect to directors, officers and
employees of the GCX Debtors, preserve any pre-petition claims of
directors, officers and employees of the GCX Debtors to the extent of
coverage therefor under GCX's existing Directors and Officers Insurance
Policy ("D&O Policy") and preserve the rights of the current GCX
directors and officers consistent with the GCX bylaws against
reorganized GCX with respect to advancement of legal fees and expenses
up to an aggregate maximum of $250,000 for all individuals, claims and
occurrences (subject to replenishment by any reimbursement received by
reorganized GCX from any source). In addition, AMCE will fund the
procurement of "tail" coverage under the D&O Policy, up to a maximum
premium cost of $350,000, which amount will not be an Deduction Claim
within the meaning of the Term Sheet.
[Remainder of page intentionally blank]
We look forward to working with you on the Proposed Transaction.
Very truly yours,
AMC Entertainment Inc.
By:
Xxxxx X. Xxxxx
Chairman, Chief Executive
Officer
and President
ACKNOWLEDGED AND AGREED TO:
GC Companies, Inc.
By:
G. Xxxx Xxxxxxx
President and Chief Operating Officer
THE COMMITTEE OF UNSECURED CREDITORS
IN THE CHAPTER 11 CASES OF THE GCX DEBTORS
By:
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Name:
Title:
HARCOURT GENERAL, INC.
By:
Name:
Title:
Please see Term Sheet attached to Support Agreement as Exhibit "A"
