Page 22 of 38 Pages
Exhibit 7
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of the ____ day of __________, 2001 by and among APOLLO
INVESTMENT FUND IV, L.P., a Delaware limited partnership ("AIF IV"), APOLLO
OVERSEAS PARTNERS IV, L.P., a Cayman Islands exempted limited partnership ("AOP
IV"), APOLLO INVESTMENT FUND V, L.P., a Delaware limited partnership ("AIF V"),
APOLLO OVERSEAS PARTNERS V, L.P., a Cayman Islands exempted limited partnership
("AOP V") (each of AIF IV, AOP IV, AIF V and AOP V being sometimes referred to
herein individually as a "Seller" and collectively as the "Sellers"), APOLLO
MANAGEMENT IV, L.P., a Delaware limited partnership, in its capacity as
investment manager to AIF IV and AOP IV ("Apollo IV Management"), APOLLO
MANAGEMENT V, L.P., a Delaware limited partnership, in its capacity as
investment manager to AIF V and AOP V ("Apollo V Management" and collectively
with Apollo IV Management and their affiliates, "Apollo"), AMC ENTERTAINMENT
INC., a Delaware corporation (the "Company"), and [________] (the "Purchasers").
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to such terms in the Purchase Agreement (as defined below) in
the form previously filed by the Company with the SEC.
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Sellers previously acquired shares of Series A
Convertible Preferred Stock of the Company, par value $0.662/3 per share (the
"Series A Preferred Stock"), and shares of Series B Exchangeable Preferred
Stock, par value $0.662/3 per share (the "Series B Preferred Stock," and
together with the Series A Preferred Stock, the "Preferred Stock"), pursuant to
that certain Investment Agreement dated as of April 19, 2001 by and among the
Company, the Sellers, Apollo Management IV and Apollo Management V (the
"Purchase Agreement");
WHEREAS, concurrently with the closing of the Purchase
Agreement, the Sellers also entered into that certain Registration Rights
Agreement dated as of April 19, 2001 by and among the Company and the Sellers
(the "Registration Rights Agreement");
WHEREAS, the Sellers desire to sell to the Purchasers certain
of their respective shares of Preferred Stock acquired pursuant to the Purchase
Agreement and the Purchasers desire to purchase such shares of Preferred Stock
on the terms and conditions set forth in this Agreement; and
WHEREAS, the Company desires to consent to the purchase and
sale of the shares of Preferred Stock between the Sellers and the Purchasers
provided for hereunder and to the other transactions contemplated under this
Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties and covenants herein contained, the parties
hereto hereby agree as follows:
Page 23 of 38 Pages
1. Sale and Purchase of the Preferred Stock. Subject to the terms
-----------------------------------------
and conditions of this Agreement, each of the Sellers severally agrees to sell
and deliver to each of the Purchasers, and each of the Purchasers severally
agrees to purchase from each of the Sellers, the number of shares of Preferred
Stock described on Schedule 1 attached hereto with respect to such respective
Seller and Purchaser, consisting in the aggregate of (i) [_____]shares of Series
A Preferred Stock at a purchase price of $1,000 per share, for an aggregate
purchase price of $[_________], and (ii) [_____] shares of Series B Preferred
Stock at a purchase price of $1,000 per share, for an aggregate purchase price
of $[_________], representing an aggregate purchase price of $[________] (the
"Purchase Price") for all of the shares of Preferred Stock to be sold hereunder
by the Sellers to the Purchasers.
2. Payment and Delivery.
--------------------
(a) The closing of the sale to, and purchase by, the
Purchasers of the shares of Preferred Stock referred to in Section 1 hereof (the
"Closing") shall occur at the offices of Akin, Gump, Strauss, Xxxxx & Xxxx,
L.L.P., 0000 Xxx Xxxxxxxxx Xxx. XX, Xxxxxxxxxx, XX 00000, at 10:00 a.m., on July
3, 2001 or such other location, date and time as agreed upon by the Purchasers
and the Sellers (the "Closing Date").
(b) At the Closing, each Purchaser is paying to each Seller
the portion of the Purchase Price set forth on Schedule 1 with respect to such
respective Seller and Purchaser in U.S. dollars in immediately available funds
by wire or other transfer to an account designated by the Sellers and each
Seller is delivering to each Purchaser a certificate or certificates evidencing
the number of shares of Preferred Stock to be sold by such Seller to such
Purchaser in the amount set forth on Schedule 1, duly endorsed in blank, or
accompanied by a stock power or stock powers duly executed in blank, in proper
form for transfer. The Company shall, and shall cause its transfer agent to,
take all such actions and execute, issue and deliver to the Purchasers such new
stock certificates as may be necessary to give effect to the purchase and sale
of the shares of Preferred Stock by the Sellers to the Purchasers as
contemplated hereunder.
3. Conditions of Parties' Obligations.
----------------------------------
(a) Conditions of the Purchasers' Obligations. The
-------------------------------------------------
obligations of each Purchaser under Section 1 hereof are subject to the
fulfillment prior to or on the Closing Date of all of the following conditions,
any of which may be waived in whole or in part by the Purchasers.
(i) Representations and Warranties Correct. The
-----------------------------------------
representations and warranties of the Sellers under this Agreement shall be
true, complete and correct in all material respects on and as of the date hereof
and on the Closing Date with the same force and effect as if they had been made
on the Closing Date.
(ii) Compliance with Agreement. The Sellers shall
---------------------------
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them on or before the Closing
Date.
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Page 24 of 38 Pages
(b) Conditions of Sellers' Obligations. The Sellers'
---------------------------------------
obligations under Section 1 hereof are subject to the fulfillment prior to or on
the Closing Date of the following conditions, any of which may be waived in
whole or in part by the Sellers.
(i) Representations and Warranties Correct. The
-----------------------------------------
representations and warranties of the Purchasers under this Agreement shall be
true, correct and complete, in all material respects, on and as of the date
hereof and on the Closing Date with the same force and effect as if they had
been made on the Closing Date.
(ii) Compliance with Agreement. The Purchasers shall
-------------------------
have performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by them on or before the Closing
Date.
(iii) Payment of Purchase Price. The Sellers shall
have received from the Purchasers the Purchase Price as set forth on Schedule 1
hereto. ----------
4. Certain Restrictions on Conversion and Transfer; Assignment of
----------------------------------------------------------------
Certain Rights.
--------------
(a) Restrictions on Conversion of Series A Preferred Stock.
-------------------------------------------------------
During the period commencing on the date hereof and ending on April 19, 2006 (or
such earlier date as of which the Sellers are permanently released from the
conversion restrictions set forth in Section 9.5 of the Purchase Agreement) (the
"Conversion Restriction Period"), the Purchasers shall not, without the prior
written consent of the Company, convert any shares of Series A Preferred Stock
into shares of the Company's Common Stock, except in connection with a
Disposition effected pursuant to this Section 4(a). If at any time during the
Conversion Restriction Period, any Purchaser desires to effect a Disposition of
any shares of Series A Preferred Stock to any Person other than an Affiliate of
such Purchaser, such Purchaser may, as part of such Disposition, elect to
convert such shares of Series A Preferred Stock into Common Stock, prior to the
transfer to such purchasing Person. In order to convert shares of Preferred
Stock to effect any such Disposition, the selling Purchaser shall deliver to the
Company, on or before the proposed settlement date of such Disposition, written
notice of its intention to convert Series A Preferred Stock as part of a
Disposition (a "Disposition Notice"). The Disposition Notice shall set forth the
number of shares of Series A Preferred Stock that shall be converted into Common
Stock, the sale price for such shares and the purchasing Person in whose name
the Common Stock shall be registered. Upon surrender by the selling Purchaser of
certificates representing the shares of Series A Preferred Stock that are being
converted as part of such Disposition, the Company shall issue to the purchasing
Person certificates representing the appropriate number of shares of Common
Stock.
(b) Restrictions on Transfer of Series B Preferred Stock.
-------------------------------------------------------
The Purchasers shall not transfer to any Person (other than their respective
Affiliates) any shares of Series B Preferred Stock until October 19, 2002 (or
such earlier date as of which the Sellers are permanently released from the
transfer restrictions set forth in Section 9.6 of the Purchase Agreement),
without the prior written consent of the Company.
(c) Assignment of Certain Rights Under the Purchase
--------------------------------------------------------
Agreement.
---------
Each Seller hereby assigns to the respective Purchasers that are purchasing
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shares of Preferred Stock from such Seller all of such Seller's rights that are
applicable to such shares of Preferred Stock with respect to indemnification by
the Company under Section 12.4 of the Purchase Agreement and any other remedies
of such Seller under the Purchase Agreement or otherwise that are applicable to
such shares of Preferred Stock with respect to a breach of any of the
representations, warranties or covenants made by the Company pursuant to the
Purchase Agreement (subject to the provisions of Section 12.5 of the Purchase
Agreement).
(d) Registration Rights Agreement. Each Seller hereby
--------------------------------
assigns, subject to the conditions set forth herein, to each Purchaser its
respective rights and obligations under the Registration Rights Agreement with
respect to the shares of Preferred Stock it is selling pursuant to this
Agreement, and the parties hereto agree that each Purchaser shall be deemed to
have been added as a party to the Registration Rights Agreement as if it had
been an original signatory thereto. As such, each Purchaser shall be deemed to
be an "Investor" under the Registration Rights Agreement with respect to the
shares of Preferred Stock it is acquiring from the Sellers hereunder (the
"Transfer Shares"), and each Purchaser hereby agrees, effective as of the
Closing, to assume all the rights, liabilities and obligations of Sellers under
the Registration Rights Agreement with respect to the Transfer Shares and agrees
to be subject to the terms thereof with respect to the Transfer Shares.
Notwithstanding the foregoing, no Purchaser shall be deemed to be an "Investor"
with respect to Section 13(i) of the Registration Rights Agreement. The parties
hereto acknowledge and agree that the Transfer Shares (and the underlying shares
of Common Stock issuable upon conversion of the Transfer Shares) shall be deemed
to be "Registrable Shares" within the meaning of the Registration Rights
Agreement.
(i) In the event that the Sellers and/or their
Affiliates exercise their demand registration rights pursuant to the
Registration Rights Agreement, the Purchasers shall be entitled to participate
in such demand registration on a Pro Rata Basis (as defined below). The
Purchasers shall also be permitted to participate in any piggyback registration
on a Pro Rata Basis.
(ii) The Sellers will provide the Purchasers with
prior written notice of any demand or piggyback registration that the Sellers
and/or their Affiliates are participating in pursuant to the terms of the
Registration Rights Agreement.
(iii) "Pro Rata Basis" means that right of the
Purchasers to participate pro rata with the Sellers and their Affiliates based
on a percentage that is determined by dividing the aggregate number of shares of
Preferred Stock (on an as converted basis) and Conversion Shares (as defined
below) owned by the Purchasers as of the date of determination and the aggregate
number of shares of Preferred Stock (on an as converted basis) and Conversion
Shares owned by the Sellers and their Affiliates as of the date of
determination.
(e) Legend. Each Purchaser understands and agrees that the
------
certificates evidencing the shares of Preferred Stock to be purchased hereunder
will bear the following legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR
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Page 26 of 38 Pages
TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER
SUCH ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND
TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON
TRANSFER SET FORTH IN A SECURITIES PURCHASE AGREEMENT DATED AS OF JUNE
29, 2001 AMONG AMC ENTERTAINMENT INC. AND CERTAIN OTHER PARTIES NAMED
THEREIN, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF AMC
ENTERTAINMENT INC.
(f) Removal of Legend. The Securities Act legend endorsed on
-----------------
the certificates pursuant to Section 4(e) hereof shall be removed and the
Company shall issue a certificate without such legend to the holder thereof at
such time as the securities evidenced thereby cease to be restricted securities
upon the earliest to occur of (i) a registration statement with respect to the
sale of such securities shall have become effective under the Securities Act of
1933, as amended (the "Securities Act") and such securities shall have been
disposed of in accordance with such registration statement, (ii) the securities
shall have been sold to the public pursuant to Rule 144 (or any successor
provision) under the Securities Act, or (iii) such securities may be sold by the
holder without restriction or registration under Rule 144(k) under the
Securities Act (or any successor provision).
5. Representations and Agreements of the Sellers. Each Seller
-------------------------------------------------
severally, and not jointly, represents and warrants to each Purchaser as
follows:
(a) Organization and Power. The Seller is duly organized,
-----------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Seller has all requisite legal and partnership power to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.
(b) Authorization. All partnership action on the part of the
-------------
Seller necessary for the authorization, execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the sale and delivery of the shares of Preferred
Stock) has been taken. This Agreement has been duly and validly executed and
delivered by the Seller, and constitutes a valid and binding agreement of the
Seller, enforceable against the Seller in accordance with its terms, except to
the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and (ii) is subject to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in equity.
(c) Consents. Except for filings, permits, authorizations,
--------
consents and approvals as may be required under, and other applicable
requirements of, state blue sky laws and except for such reports with respect to
the transactions contemplated under this Agreement as may be required to be
filed by the Seller with the SEC under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations of the SEC
thereunder, neither the execution, delivery or performance of this Agreement nor
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Page 27 of 38 Pages
the consummation by the Seller of the obligations and transactions contemplated
hereby requires any consent of, authorization by, exemption from, filing with,
or notice to any Governmental Entity or any other Person.
(d) Ownership of Shares of Preferred Stock; Title and
--------------------------------------------------------
Related Matters. The Seller owns and has valid, marketable and unencumbered
----------------
title to the Transfer Shares that such Seller is selling to the Purchasers under
this Agreement, free and clear of any security interest, mortgage, pledge, lien,
charge, restriction or encumbrance of any nature whatsoever (collectively,
"Liens"), other than the restrictions set forth in the Transaction Documents.
Except for this Agreement, the Seller is not a party to any option, warrant,
right, contract, call, put or other agreement or commitment providing for the
disposition or acquisition of any of such Transfer Shares. Upon delivery by the
Seller of such Transfer Shares to the Purchasers at the Closing, valid,
marketable and unencumbered title to such Transfer Shares, free and clear of any
Lien (other than the restrictions set forth in Sections 4(a) and 4(b) of this
Agreement), will pass to the respective Purchasers of such Transfer Shares.
(e) No Conflict With Other Agreements, Etc. The execution,
----------------------------------------
delivery and performance of this Agreement and any other related documents and
instruments contemplated herein by the Seller will not (i) conflict with or
result in a breach of any provision of such Seller's agreement of limited
partnership or other organizational documents, (ii) conflict with or result in
the breach of the terms, conditions or provisions of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give rise to any right of termination, acceleration or cancellation
under, any material agreement, lease, mortgage, license, indenture or other
contract to which such Seller is a party or by which any of its properties or
assets are bound or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including, without limitation, U.S. federal and state
laws and regulations) applicable to such Seller or by which any of its
properties or assets are bound or affected, except in the case of clauses (ii)
or (iii), where such conflicts or violations would not prevent or materially
delay its ability to consummate the transactions contemplated herein.
6. Representations and Agreements of the Purchasers. Each Purchaser
------------------------------------------------
severally, and not jointly, represents and warrants to each Seller as follows:
(a) Organization and Power. The Purchaser is duly organized,
----------------------
validly existing and in good standing under the laws of the jurisdiction of its
organization. The Purchaser has all requisite legal and partnership power to
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.
(b) Authorization. All partnership action on the part of the
-------------
Purchaser necessary for the authorization, execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
(including, without limitation, the purchase of the shares of Preferred Stock)
has been taken. This Agreement has been duly and validly executed and delivered
by the Purchaser, and constitutes a valid and binding agreement of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
except to the extent that such enforceability (i) may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditors' rights generally and (ii) is subject to general principles of equity,
regardless of whether enforcement is sought in a proceeding at law or in equity.
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Page 28 of 38 Pages
(c) Consents. Except for filings, permits, authorizations,
--------
consents and approvals as may be required under, and other applicable
requirements of, state blue sky laws and except for such reports with respect to
the transactions contemplated under this Agreement as may be required to be
filed by the Purchaser with the SEC under the Exchange Act and the rules and
regulations of the SEC thereunder, neither the execution, delivery or
performance of this Agreement nor the consummation by the Purchaser of the
obligations and transactions contemplated hereby requires any consent of,
authorization by, exemption from, filing with, or notice to any Governmental
Entity or any other Person.
(d) Investment Representations of the Purchasers.
--------------------------------------------
(i) The shares of Preferred Stock being purchased by
the Purchaser hereunder are being acquired for its own account as principal and
not directly or indirectly for or on behalf of any other party and for the
purpose of investment and not with a view to or for sale in connection with any
distribution thereof.
(ii) The Purchaser is an "accredited investor" within
the meaning of Rule 501(a) promulgated under the Securities Act.
(iii) The Purchaser (A) has been furnished with or has
had full access to all of the information that it considers necessary or
appropriate to make an informed investment decision with respect to the shares
of Preferred Stock and (B) can bear the economic risk of such investment in the
Preferred Stock, has such knowledge and experience in business and financial
matters so as to enable it to understand and evaluate the risks of and form an
investment decision with respect to its investment in the Preferred Stock and to
protect its own interests in connection with such investment.
(iv) The Purchaser has no need for liquidity in its
investment in the shares of Preferred Stock and is able to bear the economic
risk of its investment in the shares of Preferred Stock and the complete loss of
all of such investment.
(v) The Purchaser understands that the
transferability of the shares of Preferred Stock is restricted, and that such
restrictions will be reflected in an appropriate legend on the instruments
representing the shares of Preferred Stock.
(vi) The Purchaser recognizes that an investment in
the Company involves certain risks and has taken full cognizance of, and
understands all of, the risks related to the purchase of the shares of Preferred
Stock. The Purchaser further acknowledges and understands that no federal or
state agency has made any recommendation or endorsement of the Preferred Stock
or any finding or determination as to the fairness of the investment therein.
(e) No Conflict With Other Agreements, Etc. The execution,
----------------------------------------
delivery and performance of this Agreement and any other related documents and
instruments contemplated herein by the Purchaser will not (i) conflict with or
result in a breach of any provision of such Purchaser's agreement of limited
partnership or other organizational documents, (ii) conflict with or result in
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the breach of the terms, conditions or provisions of or constitute a default (or
an event which with notice or lapse of time or both would become a default)
under, or give rise to any right of termination, acceleration or cancellation
under, any material agreement, lease, mortgage, license, indenture or other
contract to which such Purchaser is a party or by which any of its properties or
assets are bound or (iii) result in a violation of any law, rule, regulation,
order, judgment or decree (including, without limitation, U.S. federal and state
laws and regulations) applicable to such Purchaser or by which any of its
properties or assets are bound or affected, except in the case of clauses (ii)
or (iii), where such conflicts or violations would not prevent or materially
delay its ability to consummate the transactions contemplated herein.
7. Participation Rights.
--------------------
(a) Each time the Sellers or their Affiliates propose to
purchase any additional shares of equity securities (the "Additional Equity
Securities") (which shall include securities convertible into or exercisable for
any shares of, any class of the Company's capital stock), such Sellers shall,
and the Sellers shall use their reasonable efforts to cause their respective
Affiliates (as applicable) and the Company to, prior to selling or issuing any
such Additional Equity Securities to the Sellers, make an offering of such
Additional Equity Securities to each of the Purchasers in accordance with the
following provisions:
(i) The Sellers shall deliver a written notice (the
"Notice") by certified mail to each of the Purchasers stating (i) the bona fide
intention of the Sellers and/or their Affiliates to purchase such Additional
Equity Securities, (ii) the number of such Additional Equity Securities to be
purchased, and (iii) the price and terms, if any, upon which the Sellers and/or
their Affiliates propose to purchase such Additional Equity Securities.
(ii) Within five business days after giving of the
Notice, each Purchaser may elect to purchase or obtain, at the price and on the
terms specified in the Notice (which price shall be no greater than the price to
be paid by, and the terms no less favorable than those offered to, any other
party to purchase Additional Equity Securities of such issuance), up to that
portion of such Additional Equity Securities which equals the proportion that
the number of shares of Preferred Stock (on an as converted basis) and
Conversion Shares held by such Purchaser bears to the total number of shares of
Preferred Stock (on an as converted basis) and Conversion Shares then held by of
all of the Sellers and/or their Affiliates participating in such issuance of
Additional Equity Securities by giving written notice thereof to the Sellers
(the "Subscription Notice").
(iii) In the event that no Subscription Notices are
received by the Sellers within the foregoing time period, the Sellers and/or
their Affiliates, as the case may be, shall be entitled to freely purchase any
such Additional Equity Securities, provided, however, that the price for such
transaction shall not be lower than the price contained in the Notice and that
the terms and conditions of the transaction are not, in the reasonable opinion
of the Sellers, more favorable than those described in the Notice.
(iv) In the event that none of the Sellers and/or
their Affiliates, as the case may be, purchase the Additional Equity Securities
as described in the Notice, the Purchasers shall have no right to purchase
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Additional Equity Securities pursuant to the participation rights granted in
this Section 7.
(b) The participation rights set forth in this Section 7
shall not be applicable to the issuance of: (i) equity securities pursuant to
the conversion or exercise of convertible or exercisable securities, (ii) any
stock, stock options, stock appreciation rights or similar rights issued or
granted pursuant to a compensatory option plan, agreement or arrangement, and
any shares of capital stock issued upon the exercise thereof; (iii) equity
securities pursuant to any stock split or stock dividend, (iv) equity securities
upon the subdivision, split-up, combination or reclassification of the
outstanding equity securities of the Company or (ii) equity securities in
connection with a bona fide business acquisition of or by the Company, whether
by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise.
(c) The participation rights set forth in this Section 7
shall not be transferable to any Person who is not an Affiliate of the
Purchasers. Notwithstanding the foregoing, if the Purchasers sell Preferred
Stock or Conversion Shares to any Person, other than to Affiliates of the
Purchasers, in an amount in excess of 33% of the shares of Preferred Stock and
Conversion Shares owned by the Purchasers in the aggregate as of the date hereof
after giving effect to the transactions contemplated hereby, the Purchasers may
transfer or assign the participation rights set forth herein to such Person with
the prior written consent of the Sellers, which consent will not be unreasonably
withheld, and upon the agreement of such Person to be bound by all of the rights
and obligations of such Purchaser under this Agreement upon the consummation of
the proposed transfer. For purposes of this Section 7(c) only, the definition of
"Affiliate" shall include any entity in which the Purchasers or their affiliates
have exclusive management or investment control over.
8. Restrictions on Transfer.
------------------------
(a) During the period commencing on the date hereof and
ending on the second anniversary hereof, the Purchasers shall not, directly or
indirectly (including, without limitation, through the disposition or transfer
of any equity interest in another person), alone or in concert with others,
sell, assign, transfer, pledge, hypothecate, grant any option with respect to or
otherwise dispose of any interest in (or enter into an agreement or
understanding with respect to the foregoing) (a "Restricted Disposition") the
common stock of the Company to be issued upon conversion of any shares of Series
A Preferred Stock (including shares of Series A Preferred Stock issued upon the
exchange of any shares of Series B Preferred Stock) (the "Conversion Shares") in
any public sale or offering to a Person who is not an Affiliate of the
Purchasers in an amount that would exceed the volume limitations applicable to
the Purchasers under the provisions of Rule 144, as promulgated under the
Securities Act.
(b) During the period commencing on the second anniversary
of the date hereof and ending on the third anniversary hereof, the Purchasers
shall not effect a Restricted Disposition of Conversion Shares in any public
sale or offering to a Person who is not an Affiliate of the Purchasers in an
amount that would exceed two times the average daily trading volume of the
shares of the Common Stock, on the American Stock Exchange or other national
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securities exchange where the Common Stock is listed or to which the Common
Stock is admitted for trading for the 30 trading days immediately proceeding the
date of sale.
(c) The limitations set forth in Sections 8(a) and 8(b)
above shall terminate on the earlier to occur of:
(i) The third anniversary of the date hereof;
(ii) The date that the Sellers no longer own at least
90% of the shares of Preferred Stock owned by the Sellers on the date hereof,
after giving effect to the transactions contemplated hereby.
(d) During the period commencing on the date hereof and
ending on the third anniversary hereof, the Purchasers shall give the Sellers
five business days prior written notice of its intention to sell any shares of
Preferred Stock to any Person who is not an Affiliate of the Purchasers.
9. Tag-Along Rights. If the Sellers and/or any of their
----------------
Affiliates (each a "Selling Shareholder") propose to sell, in one transaction or
a series of related transactions (a "Tag-Along Sale"), any shares of Preferred
Stock or Conversion Shares to any Person, other than to Affiliates of the
Sellers, (the "Transferee"), in an amount in excess of 50% of the shares of
Preferred Stock and other equity securities of the Company owned by the Sellers
and their Affiliates in the aggregate immediately prior to such sale (the
"Tag-Along Shares"), the Purchasers (the "Non-Selling Shareholders") shall have
the right (the "Tag-Along Right"), but not the obligation, to participate in any
such Tag-Along Sale, on the same terms and conditions as the Selling
Shareholder(s) propose to sell their Tag-Along Shares, as set forth in the offer
from the Transferee (the "Offer"), pursuant to the procedure set forth herein.
(a) In the event any Selling Shareholder wishes to sell the
Tag-Along Shares, the Selling Shareholder shall first deliver written notice to
the Non-Selling Shareholders of its intention to transfer the Tag-Along Shares
to a non-Affiliate (the "Transfer Notice"). The Transfer Notice shall include
(i) a description of the Tag-Along Shares to be transferred, (ii) the identity
of the prospective transferee and (iii) the consideration and the material terms
and conditions upon which the proposed transfer is to be made. The Transfer
Notice shall also include a copy of any written proposal, term sheet, letter of
intent or other agreement relating to the proposed transfer. Each Non-Selling
Shareholder may exercise its Tag-Along Right by delivering to the nominated
Selling Shareholder in the Transfer Notice (the "Nominated Selling Shareholder")
within five business days after receipt of the Notice (the "Offer Period") a
notice stating that such Non-Selling Shareholder intends to exercise its
Tag-Along Rights and that it is willing to sell its own shares of Preferred
Stock or Conversion Shares in accordance with the terms of the Offer (the "Tag
Along Notice", and the Non-Selling Shareholder rendering such Tag-Along Notice,
the "Tagging Shareholder"). If no Tag-Along Notice is received by the Nominated
Selling Shareholder within the Offer Period, or if the notice received does not
fulfill all of the foregoing requirements, it shall be understood that the
Non-Selling Shareholders have waived their respective Tag-Along Rights hereunder
and the Selling Shareholders shall be free to transfer the Tag-Along Shares.
10
Page 32 of 38 Pages
(b) Each Tagging Shareholder may sell all or any part of
that number of shares of Preferred Stock or Conversion Shares equal to the
product obtained by multiplying (i) the aggregate number of shares of Preferred
Stock or Conversion Shares covered by the Transfer Notice by (ii) a fraction,
the numerator of which is the number of shares of Preferred Stock or Conversion
Shares owned by the Tagging Shareholder, determined on an "as converted" basis,
on the date of the Transfer Notice and the denominator of which is the total
number of shares of Preferred Stock or Conversion Shares owned by all of the
Non-Selling Shareholders and the Selling Shareholders, determined on an "as
converted" basis, on the date of the Transfer Notice.
(c) Each Tagging Shareholder shall effect its participation
in the sale by promptly delivering to the Nominated Selling Shareholder, at or
prior to the closing of such sale, for transfer to the prospective purchaser one
or more certificates, properly endorsed for transfer, which represent the
Tag-Along Shares. To the extent that any prospective Transferee refuses to
purchase any shares of Preferred Stock or Conversion Shares from a Tagging
Shareholder, the Selling Shareholders shall not sell to such prospective
Transferee any Tag-Along Shares unless and until, simultaneously with such sale,
the Selling Shareholders shall purchase from such Tagging Shareholder the shares
of Preferred Stock and Conversion Shares such Tagging Shareholder would
otherwise have been able to sell hereunder for the same consideration and on the
same terms and conditions as the proposed sale described in the Transfer Notice.
(d) In connection with any transfer by a Seller of shares of
Preferred Stock or Conversion Shares to an Affiliate, such Seller shall cause
such Affiliate to agree to be bound by the provisions of this Section 9 with
respect to such transferred shares.
10. Protective Provisions. The Sellers shall not, without the prior
---------------------
written consent of the Purchasers, effect any amendment to the Registration
Rights Agreement that would affect the Purchasers' rights pursuant to the
Registration Rights Agreement in a manner which is different from the effect on
the Sellers' rights pursuant to the Registration Rights Agreement.
11. Notices. All notices, requests, consents and other
-------
communications required or permitted hereunder shall be in writing and shall be
hand delivered or mailed postage prepaid by registered or certified mail,
(a) If to the Purchaser:
[ ]
(b) If to the Sellers or Apollo:
Apollo Investment Fund IV, L.P.
Apollo Overseas Partners IV, L.P.
c/o Apollo Management IV, L.P. and
Apollo Investment Fund V, L.P.
Apollo Overseas Partners V, L.P.
c/o Apollo Management V, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Fax: (000) 000-0000
11
Page 33 of 38 Pages
with copies to:
Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P.
0000 Xxx Xxxxxxxxx Xxx., X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxxxx
Fax: (000) 000-0000
or (c) If to the Company:
AMC Entertainment Inc.
000 Xxxx 00xx Xxxxxx
P.O. Box 419615
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx
Fax: (000) 000-0000
with a copy to:
Xxxxxxx & Xxxx X.X.
0000 Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx, Xx.
Fax: (000) 000-0000
or at such other address as the respective parties each may specify by written
notice to the other parties, and each such notice, request, consent and other
communication shall for all purposes of the Agreement be treated as being
effective or having been given when delivered if delivered personally, or, if
sent by mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of United States
mail, addressed and postage prepaid as aforesaid.
12. AMC Consent.
-----------
(a) The Company hereby consents to the sale of the Preferred
Stock, including the Series B Preferred Stock, by the Sellers to the Purchasers
and to the assignment of all of the rights and obligations set forth in Section
4 hereof. The Company hereby acknowledges and agrees that the shares of the
Preferred Stock which are owned by the Purchasers shall be freely transferable
by the Purchasers, subject to compliance with applicable securities laws and the
restrictions contained in Sections 4(a) and 4(b) of this Agreement.
12
Page 34 of 38 Pages
(b) The Company hereby consents to the assignment by the
Sellers of the rights and obligations pursuant to the Registration Rights
Agreement to the Purchasers as set forth in Section 4(d) hereof.
(c) The Company and the Sellers hereby acknowledge and agree
that Section 8.1 (Preferred Stock Approval Rights) and 9.7(i) (Preferred Stock
Approval Rights) of the Purchase Agreement shall be amended to provide that the
Sellers shall have the Preferred Stock Approval Rights so long as the Sellers
continue to beneficially own shares of Preferred Stock representing more than
50% of the Preferred Stock owned by the Sellers immediately after the
consummation of the transactions contemplated hereby.
(d) The Company is executing this Agreement solely for
purposes of this Section 12, and, except as set forth in Section 2(b), shall
have no other obligations under this Agreement.
13. Fees and Expenses. Each party will bear its own fees and
-------------------
expenses incurred in connection with the proposed purchase and sale of the
Preferred Stock and the negotiation, execution and delivery of the Purchase
Agreement.
14. Receipt of Dividends. Notwithstanding anything herein to the
---------------------
contrary, the dividend on the Preferred Stock to be paid to the holders of
record on July 2, 2001 shall be paid, in its entirety, to the Sellers.
15. Termination of Agreement. This Agreement may be terminated prior
------------------------
to the Closing Date as follows:
(a) by mutual consent of the Purchasers and the Sellers;
(b) at the election of the Sellers, if any one or more of
the conditions to their obligations have not been fulfilled as of the Closing
Date;
(c) at the election of the Purchasers, if any one or more of
the conditions to their obligations have not been fulfilled as of the Closing
Date;
In the event that the Sellers or the Purchasers, as the case may be,
elect to terminate this Agreement, it shall deliver an irrevocable notice to the
other party to this Agreement declaring its election to so terminate this
Agreement in accordance with the provisions of this Section 15, and setting
forth therein the basis for such termination.
16. Severability. Should any one or more of the provisions of this
------------
Agreement or of any agreement entered into pursuant to this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement and of each other agreement entered into pursuant to this Agreement
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
17. Parties in Interest. All the terms and provisions of this
---------------------
Agreement shall be binding upon and inure to the benefit of and be enforceable
by the respective parties hereto, the successors and assigns of the Purchasers
13
Page 35 of 38 Pages
and the Sellers, whether so expressed or not. This Agreement shall not run to
the benefit of or be enforceable by any other Person.
18. Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of shares of the Preferred Stock and/or the
Conversion Shares. Notwithstanding the foregoing and in addition to the
restrictions set forth in Section 7(c), the rights and obligations granted to
the Purchasers pursuant to Sections 4(c), 4(d), 9 and 10 of this Agreement are
not transferable; provided, however, that such rights may be transferred to an
Affiliate of any Purchaser who agrees to be bound by all the rights and
obligations of such Purchaser under this Agreement upon the consummation of the
proposed transfer.
19. Headings. The headings of the sections and paragraphs of this
--------
Agreement have been inserted for convenience of reference only and do not
constitute a part of this Agreement.
20. Choice of Law. It is the intention of the parties that the
--------------
internal laws, and not the laws of conflicts, of the State of New York should
govern the enforceability and validity of this Agreement, the construction of
its terms and the interpretation of the rights and duties of the parties.
21. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such
counterparts shall be deemed an original, shall be construed together and shall
constitute one and the same instrument.
22. Further Assurances. Each of the undersigned, upon request of
-------------------
another party hereto, agrees to execute and deliver such further documents and
instruments, and to perform such further acts, as may be necessary to accomplish
and give full effect to this Agreement and sale of the Preferred Stock
contemplated hereby.
14
Page 36 of 38 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed as of the day and year first above
written.
Sellers:
July 3, 2001 APOLLO INVESTMENT FUND IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
July 3, 2001 APOLLO OVERSEAS PARTNERS IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its managing general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
July 3, 2001 APOLLO INVESTMENT FUND V, L.P.
By: APOLLO ADVISORS V, L.P.
its general partner
By: Apollo Capital Management V, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
15
Page 37 of 38 Pages
July 3, 2001 APOLLO OVERSEAS PARTNERS V, L.P.
By: APOLLO ADVISORS V, L.P.
its managing general partner
By: Apollo Capital Management V, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
July 3, 2001 APOLLO MANAGEMENT IV, L.P.
in its capacity as investment manager to
Apollo Investment Fund IV, L.P. and
Apollo Overseas Partners IV, L.P.
By: AIF IV Management, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
July 3, 2001 APOLLO MANAGEMENT V, L.P.
in its capacity as investment manager to
Apollo Investment Fund V, L.P.
and Apollo Overseas Partners V, L.P.
By: AIF V Management, Inc.
its general partner
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
The Company:
AMC ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman of the Board,
President and Chief Executive
Officer
16
Page 38 of 38 Pages
Purchasers:
[ ]
