Exhibit 4.7
INVESTMENT AGREEMENT
This INVESTMENT AGREEMENT (this "Agreement") is made and
entered into this 19th day of April 2001 by and among (i) AMC ENTERTAINMENT
INC., a Delaware corporation (the "Company"), (ii) APOLLO INVESTMENT FUND
IV, L.P., a Delaware limited partnership ("AIF IV") and APOLLO OVERSEAS
PARTNERS IV, L.P., a Cayman Islands exempted limited partnership ("AOP IV")
and any other partnership or entity affiliated with and managed by Apollo
over which Apollo exercises investment authority, including voting and
dispositive rights; and to which either AIF IV or AOP IV assigns any of
their respective interests hereunder (collectively, the "Apollo IV
Purchasers"), (iii) APOLLO INVESTMENT FUND V, L.P., a Delaware limited
partnership ("AIF V") and APOLLO OVERSEAS PARTNERS V, L.P., a Cayman
Islands exempted limited partnership ("AOP V") and any other partnership or
entity affiliated with and managed by Apollo over which Apollo exercises
investment authority, including voting and dispositive rights; and to which
either AIF V or AOP V assigns any of their respective interests hereunder
(collectively, the "Apollo V Purchasers", and together with the Apollo IV
Purchasers the "Apollo Purchasers" and/or sometimes referred to herein
collectively as the "Purchasers" and individually, a "Purchaser"), (iv)
APOLLO MANAGEMENT IV, L.P., a Delaware limited partnership, in its capacity
as investment manager to the Apollo IV Purchasers ("Apollo IV Management")
and (v) APOLLO MANAGEMENT V, L.P., a Delaware limited partnership, in its
capacity as investment manager to the Apollo V Purchasers ("Apollo V
Management" and together with Apollo IV Management and their Affiliates,
"Apollo"). Certain terms used and not otherwise defined in the text of this
Agreement are defined in Section 10 of this Agreement.
W I T N E S S E T H
WHEREAS, the Company desires to issue and to sell to the
Purchasers, shares of Series A Convertible Preferred Stock of the Company,
par value $0.66 2/3 per share (the "Series A Preferred Stock"), and shares
of Series B Exchangeable Preferred Stock, par value $0.66 2/3 per share
(the "Series B Preferred Stock") (the Series A Preferred Stock and the
Series B Preferred Stock shall be referred to collectively as the
"Preferred Stock"); and
WHEREAS, the Purchasers, severally, desire to purchase
shares of the Company's Preferred Stock on the terms and conditions set
forth in 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:
1. Sale and Purchase of the Preferred Stock. Subject to
the terms and subject to the conditions of this Agreement, the Company
agrees to issue, sell and deliver to each Purchaser, and each Purchaser,
severally and not jointly, agrees to purchase from the Company, at the
Closing, on the Closing Date (as hereinafter defined), (i) 92,000 shares of
Series A Preferred Stock for an aggregate purchase price of Ninety-Two
Million Dollars ($92,000,000.00) and (ii) 158,000 shares of Series B
Preferred Stock for an aggregate purchase price of One Hundred Fifty-Eight
Million Dollars ($158,000,000.00) for an aggregate purchase price of Two
Hundred Fifty Million Dollars ($250,000,000.00) (the "Purchase Price").
Each Purchaser shall pay its respective portion of the Purchase Price and
shall receive such number of shares of Preferred Stock as set forth in
Schedule 1 hereto.
2. Closing. 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., 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 9:00
a.m., New York time, on or before the next business day after the
satisfaction or waiver of all of the conditions to the Closing set forth in
Section 5 hereof or such other location, date and time as agreed upon by
the Purchasers and the Company (the "Closing Date"). At the Closing, the
Company shall issue and deliver to each Purchaser certificates evidencing
the Preferred Stock (in such denominations as shall be specified in writing
by each Purchaser), each of which shall be registered in each Purchaser's
name, against delivery to the Company by each Purchaser of the Purchase
Price payable by (i) wire transfer, in immediately available funds to an
account that the Company shall designate in writing to the Purchaser at
least two business days prior to the Closing Date, (ii) certified or
cashier's check payable to the order of the Company or (iii) such other
form of payment as may be acceptable to the Company. In addition, the
parties shall execute and deliver the documents referred to in Section 5
hereof.
3. Representations and Warranties of the Purchasers.
Each Apollo Purchaser severally, and not jointly, represents and
warrants to the Company as follows:
3.1 Organization. It (a) is a partnership duly organized,
validly existing and in good standing in the jurisdiction of its
organization, (b) is duly qualified or licensed to do business and is in
good standing in each jurisdiction where the nature of the property owned
or leased by it or the nature of the business conducted by it makes such
qualification or license necessary, except where the failure to be so
qualified or licensed (individually or in the aggregate) would either
prevent or materially delay its ability to consummate the transactions
contemplated by the Transaction Documents, and (c) has all power and
authority to carry on its operations and to consummate the transactions
contemplated by the Transaction Documents.
3.2 Authorization; Enforcement. It has the requisite
corporate or partnership power and has taken all necessary corporate or
partnership action required for the due authorization, execution, delivery
and performance by it of this Agreement, each of the Transaction Documents
and other documents and instruments referred to herein and to consummate
the transactions contemplated hereby (including, without limitation, the
purchase of the shares of Preferred Stock). The execution, delivery and
performance by it of this Agreement, each of the other Transaction
Documents and consummation by it of the transactions contemplated hereby
and thereby, have been duly authorized by all necessary action on the part
of it. This Agreement and each of the other Transaction Documents have been
duly and validly executed and delivered by it and constitute a valid and
binding obligation of it, enforceable against it in accordance with their
respective terms except as such enforcement may be limited by bankruptcy or
similar laws affecting the rights of creditors generally or by general
equitable principles.
3.3 Consents. Except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of the Exchange Act, the Delaware Revised Uniform
Limited Partnership Act, state anti-takeover laws or under relevant state
blue sky laws, neither the execution, delivery or performance of this
Agreement or of any other Transaction Document by such Apollo Purchaser,
nor the consummation by it of the obligations and transactions contemplated
hereby or thereby requires any consent of, authorization by, exemption
from, filing with, or notice to any Governmental Entity or any other
Person.
3.4 No Conflicts. The execution, delivery and performance
of this Agreement and each of the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby will not
(a) conflict with or result in any breach of any provision of its agreement
of limited partnership, operating agreement or other organizational
documents, (b) 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, instrument or
other contract to which it is a party or by which any of its properties or
assets are bound, or (c) result in a violation of any law, rule,
regulation, order, judgment or decree (including, without limitation, U.S.
federal and state securities laws and regulations) applicable to it or by
which any of its properties or assets are bound or affected, except in the
case of clauses (b) or (c), where such conflicts or violations would not
prevent or materially delay its ability to consummate the transactions
contemplated by the Transaction Documents.
3.5 Investment Representations and Warranties.
(a) The shares of Preferred Stock being purchased by it
hereunder are being acquired for its own account, for the purpose of
investment and not with a view to or for sale in connection with any public
resale or distribution thereof in violation of applicable securities laws.
(b) It is an "accredited investor" within the meaning of
Rule 501(a) promulgated under the Securities Act.
(c) It (i) 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 that it has requested from the Company, (ii) has had an
opportunity to discuss with management of the Company the intended business
and financial affairs of the Company and to obtain information (to the
extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify, any information
furnished to it or to which it had access, and (iii) 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.
(d) It 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.
(e) It 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.
(f) It 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.
It 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.
3.6 Information Supplied. None of the written information
supplied by it specifically for inclusion or incorporation by reference in
any documents to be filed by the Company with the SEC or any Governmental
Entity in connection with the transactions contemplated hereby (including
in connection with the Company's solicitation of shareholder approval of an
amendment to the Company's Certificate of Incorporation increasing the
number of authorized shares of the Common Stock) will, on the date of its
filing and on the date any such materials are mailed to stockholders,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading.
3.7 Ownership of Capital Stock of the Company. As of the
date hereof and prior to giving effect to the transactions contemplated
under this Agreement, the Purchasers do not in the aggregate, own of record
or beneficially including by virtue of membership in a "group" for purposes
of Section 13(d) of the Exchange Act (i) a number of shares of Common Stock
which exceeds 1% of the outstanding shares of Common Stock on the date
hereof; (ii) any shares of the Company's Class B Stock; or (iii) any debt
securities issued by the Company. The Purchasers shall not acquire or
dispose of any shares of Common Stock or Class B Stock or any debt
securities issued by the Company (i) before the Closing and (ii)
thereafter, except in the case of clause (ii), in compliance with the terms
of the Standstill Agreement.
3.8 Financing. On the Closing Date, it will have adequate
funds available to pay its portion of the Purchase Price.
3.9 Brokers. Except as set forth in Schedule 3.9 hereof,
it has not engaged a broker, investment banker, financial advisor, finder
or other person entitled to any brokerage, investment banker's, financial
advisor's, finder's or other fee or commission for which the Company will
be liable in connection with the execution of this Agreement or the
performance by the parties hereto of their respective obligations
hereunder.
3.10 Xxxx-Xxxxx-Xxxxxx. Each Purchaser is a separate
"person" within the meaning of the XXX Xxx.
0X. Representations and Warranties of Apollo.
3A.1 Control of Apollo Purchasers. Apollo is the
investment manager of, and possesses the ability to direct the investments
of, each Purchaser. Apollo controls the Purchasers and has the authority to
cause the Purchasers to perform their respective obligations under the
Transaction Documents. Apollo, in its capacity as investment manager,
general partner or manager of the Apollo Purchasers, has the requisite
power and has taken all necessary corporate or partnership action required
to cause the Apollo Purchasers to execute and deliver this Agreement and
the other Transaction Documents and perform their respective obligations
hereunder and thereunder. The execution and delivery by Apollo of this
Agreement and each of the other Transaction Documents to which it is a
party has been duly authorized by all requisite action on the part of
Apollo.
4. Representations and Warranties by the Company. The
Company (which term as used in this Section 4 shall, unless the context
otherwise requires, be deemed to include any Subsidiary of the Company)
represents and warrants to each Purchaser and Apollo as follows:
4.1 Capitalization. (a) Immediately before the Closing,
the authorized capital stock of the Company shall consist of (i) 45,000,000
shares of common stock (the "Common Stock"), par value $0.66 2/3 per share;
(ii) 30,000,000 shares of class B stock (the "Class B Stock"), par value
$0.66 2/3 per share; and (iii) 10,000,000 shares of preferred stock, par
value $0.66 2/3 per share, which are undesignated as to series. The Company
has no other class of capital stock authorized, issued or outstanding. The
capitalization of the Company as of the date hereof, including, without
limitation, the number of shares issued and outstanding, the number of
shares issuable and reserved for issuance pursuant to the Company's stock
option plans, the number of shares issuable and reserved for issuance
pursuant to securities (other than the Preferred Stock) exercisable for, or
convertible into or exchangeable for any shares of capital stock is set
forth on Schedule 4.1(a).
(b) Except as set forth on Schedule 4.1(b), as of the
date of this Agreement, (i) there are no outstanding options, warrants,
scrip, dividends, rights to subscribe to, calls or commitments of any
character whatsoever to which the Company is a party relating to, or
securities or rights convertible into or exercisable or exchangeable for,
any shares of capital stock of the Company, or arrangements by which the
Company is or may become bound to issue additional shares of capital stock,
(ii) there are no agreements or arrangements under which the Company is
obligated to register the sale of any of its securities under the
Securities Act of 1933, as amended (the "Securities Act")(except as
provided hereunder), and (iii) the Company has no obligation (contingent or
otherwise) to purchase, redeem or otherwise acquire any of its equity
securities or any interests therein or to pay any dividend or make any
distribution in respect thereof. Except as set forth on Schedule 4.1(b),
there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the issuance of the shares of
Preferred Stock in accordance with the terms of this Agreement or any of
the other Transaction Documents. Except as set forth on Schedule 4.1(b) and
other than this Agreement, the Company is not a party to, and has no
knowledge of the existence of, any voting trust or other voting agreement
with respect to any of the securities of the Company or to any agreement
relating to the issuance, sale, redemption, transfer or other disposition
of the capital stock of the Company. To the best of the Company's
knowledge, no stockholder of the Company has any agreement obligating such
stockholder to transfer shares of the Company.
(c) The Company has furnished or made available to the
Purchaser true and correct copies of the Company's and each Subsidiary's
articles or certificate of incorporation or other governing document (the
"Certificate of Incorporation") as in effect on the date hereof, and the
Company's and each Subsidiary's bylaws or other governing document (the
"Bylaws") as in effect on the date hereof.
4.2 Issuance; Authorization.
(a) All of the issued and outstanding shares of capital
stock of the Company have been duly authorized and are validly issued,
fully paid and nonassessable. The issuance, sale and delivery of the shares
of Preferred Stock to be purchased hereunder have been duly authorized by
all requisite action of the Company, and when issued, sold and delivered in
accordance with this Agreement, such shares of Preferred Stock will be
validly issued and outstanding, fully paid and non-assessable with no
personal liability attaching to the ownership thereof and will not be
subject to any lien, claim, judgment, charge, mortgage, security interest,
pledge, other encumbrance or preemptive or any other similar right of the
shareholders of the Company or others (collectively, "Encumbrances").
(b) Except with respect to the Common Stock to be issued
upon conversion of Series A Preferred Stock that, in turn, would have been
issued upon the exchange of Series B Preferred Stock, the issuance, sale,
and delivery of the shares of Common Stock to be issued upon conversion of
the Preferred Stock in accordance with the terms of the Certificate of
Designations have been duly authorized by all requisite action of the
Company, and when issued upon conversion of the Preferred Stock in
accordance with the Certificate of Designations, the Conversion Shares will
be validly issued and outstanding, fully paid, and non-assessable with no
personal liability attaching to the ownership thereof and not subject to
any Encumbrance or preemptive or any other similar rights of the
shareholders of the Company or others.
(c) The Company has all requisite corporate power and has
taken all necessary corporate action required for the due authorization,
execution, delivery and performance by the Company of this Agreement, each
of the other Transaction Documents and the other documents and instruments
referred to herein and to consummate the transactions contemplated hereby
(including, without limitation, the issuance of the shares of Preferred
Stock (but excluding the issuance of any shares of Common Stock issuable
upon conversion of the Series A Preferred Stock that, in turn, would have
been issued upon exchange of Series B Preferred Stock)). The execution,
delivery and performance by the Company of this Agreement and each of the
other Transaction Documents and the consummation by the Company of the
transactions contemplated hereby and thereby, have been duly authorized by
all necessary corporate action on the part of the Company except for
Shareholder Approval. At the Closing, except for Shareholder Approval, the
Company will have taken all actions under its Certificate of Incorporation
and its Bylaws as may be necessary or advisable to provide the Purchaser
with the rights hereby contemplated.
(d) This Agreement and each of the other Transaction
Documents have been duly and validly executed and delivered by the Company
and constitute a valid and binding obligation of the Company, enforceable
against the Company in accordance with their respective terms except as
such enforcement may be limited by bankruptcy or similar laws affecting the
rights of creditors generally or by general equitable principles.
4.3 Organization. The Company (a) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, (b) is duly qualified or licensed to do business as a
foreign corporation and is in good standing in each jurisdiction where the
nature of the property owned or leased by it or the nature of the business
conducted by it makes such qualification or license necessary, except where
the failure to be so qualified or licensed would not reasonably be expected
to have a Material Adverse Effect, (c) has its principal place of business
and chief executive office at 000 Xxxx 00xx Xxxxxx, P.O. Box 419615, Kansas
City, Missouri and (d) has all corporate power and authority to own or
lease and operate its assets and carry on its business as presently being
conducted and to consummate the transactions contemplated by the
Transaction Documents.
4.4 Subsidiaries. (a) Schedule 4.4(a) lists the name of
each Subsidiary in which the Company has a direct or indirect equity
interest. All of the outstanding shares of capital stock or the ownership
interests of each Subsidiary are, except as set forth on Schedule 4.4(a),
owned directly or indirectly by the Company free and clear of any
Encumbrances. Each Subsidiary is (i) duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization; (ii)
duly qualified or licensed to do business as a foreign corporation and is
in good standing in each jurisdiction where the nature of the property
owned or leased by it or the nature of the business conducted by it makes
such qualification necessary, except where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect and
(iii) has all requisite corporate power and authority to own or lease and
operate its assets and carry on its business as presently being conducted.
(b) Except as provided on Schedule 4.4(b), there are (i)
no outstanding securities convertible into, exchangeable for or carrying
the right to acquire any class of securities of the Subsidiaries (whether
from the Company, the Subsidiaries or otherwise), or subscriptions,
warrants, options, rights or other arrangements or commitments of any kind
that relate to or require the issuance, sale or other disposition or
transfer of any of the Subsidiaries' respective equity securities (whether
or not presently issued) or any interest therein, (ii) no arrangements by
which the Company or any Subsidiary is or may become bound to issue
additional shares of capital stock of any Subsidiary, nor are any such
issuances or arrangements contemplated, and (iii) no obligations
(contingent or otherwise) of any Subsidiary to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or
to pay any dividend or make any distribution in respect thereof. There are
no outstanding options, warrants or other rights to acquire shares of any
Subsidiary's stock.
4.5 Absence of Certain Changes. Except as set forth on
Schedule 4.5 or as disclosed in the Company SEC Documents, since March 30,
2000, neither the Company nor any of the Subsidiaries has suffered any
change or development in its assets, business, operations, condition
(financial or otherwise), or results of operations (but not prospects)
which has had a Material Adverse Effect. Except as set forth on Schedule
4.5 or as disclosed in the Company SEC Documents, since March 30, 2000, the
Company and the Subsidiaries have conducted their business in the ordinary
and usual course consistent with past practices and have not (a) sold,
leased, mortgaged, pledged, transferred or otherwise disposed of any
material assets (other than dispositions in the ordinary course of business
consistent with past practices), (b) terminated or amended in any material
respect any Material Contract or Real Property Lease (or any series of
related contracts or series of related leases that are, in either such
case, in the aggregate, material) to which the Company or the Subsidiaries
is a party or to which it is bound or to which its properties are subject,
(c) made any change in the accounting methods or practices it follows,
whether for general financial or tax purposes, (d) incurred, created or
suffered to exist any Encumbrances (other than Permitted Encumbrances) on
its assets, (e) increased the compensation payable or to become payable to
any of its Executive Officers or increased any bonus, severance, accrued
vacation, insurance, pension or other employee benefit plan, payment or
arrangement made by the Company or any of the Subsidiaries for or with any
such Executive Officers, in each case outside of the ordinary course of
business, (f) suffered any labor dispute, strike, or other work stoppage
with respect to their respective employees, (g) except as may be provided
in the Real Property Leases, made or obligated itself to make (in one
transaction or in a series of related transactions) any capital
expenditures, capital additions or betterments in excess of $5 million
outside the ordinary course of business, (h) except as may be provided in
the Real Property Leases, entered into any contract or other agreement (or
series of related contracts or agreements) requiring the Company or a
Subsidiary to make payments in excess of $5 million other than in the
ordinary course of business, (i) declared, set a record date, set aside,
authorized the payment of, or paid any dividends or other distribution,
whether in cash or property, on account of, or repurchased any of the
outstanding shares of capital stock or other securities of, or other
ownership interest in, the Company, (j) suffered or experienced any change
in the relationship or course of dealings between the Company and any of
its suppliers which supply goods or services to the Company which has had a
Material Adverse Effect on the Company, (k) paid to, or received any
payment from, or made or received any investment in, or entered into any
transaction or series of transactions (including without limitation, the
purchase, sale, exchange or lease of assets, property or services, or the
making of a loan or guarantee) with any Affiliate in excess of $5 million
(other than transactions involving Entertainment Properties Trust, a real
estate investment trust), or (l) entered into any agreement or commitment
(contingent or otherwise) to do any of the foregoing.
4.6 Assets and Property.
(a) Except as set forth on Schedule 4.6(a), the Company
and each Subsidiary has good, legal and marketable title to all of the
personal property and non-real property assets owned by it, in each case
free and clear of all Encumbrances except Permitted Encumbrances. With
respect to the personal property and non-real property assets that the
Company and its Subsidiaries leases, the Company and its Subsidiaries are
in compliance with all material provisions of such leases and the Company
and its Subsidiaries hold a valid leasehold interest free and clear of any
Encumbrances except for Permitted Encumbrances. All material non-real
property facilities, machinery, equipment, fixtures, vehicles and other
assets owned, leased or used by the Company and its Subsidiaries are in
good operating condition and repair, are reasonably fit and usable for the
purposes for which they are being used, are adequate and sufficient for the
Company's business and conform in all respects with all applicable laws
except as would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth on Schedule 4.6(b), neither the
Company nor any Subsidiary owns any real property.
(c) The Company has delivered or otherwise made available
to the Purchasers true, correct and complete copies of all material Real
Property Leases (together with all amendments, modifications, supplements
or side letters affecting the obligations of any party thereunder)
affecting all material real property and interests in real property leased
by the Company and its Subsidiaries (each a "Real Property Lease," and
collectively, the "Real Property Leases") as lessee or lessor. Schedule
4.6(c) sets forth a complete list of all Real Property Leases. The
information contained in the Real Property Lease Recap Book delivered to
the Purchasers by the Company on April 13, 2001 is true, correct and
complete in all material respects. Except as set forth on Schedule 4.6(c),
the Company and its Subsidiaries have good, legal and marketable title to
the leasehold estates in all Real Property Leases in each case free and
clear of all Encumbrances (except for Permitted Encumbrances). The Company
has no reason to believe that such title would not be insurable subject to
customary exceptions.
(d) To the knowledge of the Company, each of the Real
Property Leases is valid and enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, receivership,
moratorium, fraudulent transfer and other laws of general application
relating to and affecting the enforceability of creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at
law or in equity), and, except as set forth on Schedule 4.6(d), there is no
material default under any Real Property Lease by the Company and its
Subsidiaries or, to the knowledge of the Company, by any other party
thereto, and, to the knowledge of the Company, no event has occurred that
with the lapse of time or the giving of notice or both would constitute a
material default by the Company or its Subsidiaries thereunder.
(e) To the Company's knowledge, no previous or current
party to any Real Property Lease has given notice of or made a claim with
respect to any material breach or material default by the Company or any
Subsidiary thereunder. With respect to those Real Property Leases that were
assigned or subleased to the Company or its Subsidiaries by a third party,
all necessary consents to such assignments or subleases have been obtained
except as would not reasonably be expected to have a Material Adverse
Effect.
4.7 Company SEC Documents. Since March 31, 1997, the
Company has timely filed all reports, schedules, forms, statements and
other documents required to be filed by it with the SEC pursuant to the
reporting requirements of the Exchange Act (all of the foregoing filed
prior to the date hereof and after March 31, 1997, and all exhibits
included therein and financial statements and schedules thereto and
documents incorporated by reference therein, being hereinafter referred to
herein as the "Company SEC Documents"). As of their respective dates or as
heretofore amended, the Company SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to the Company SEC Documents, and none of the Company
SEC Documents, at the time they were filed with the SEC, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the written information supplied by the Company
specifically for inclusion or incorporation by reference in any documents
to be filed jointly by the Company and the Purchasers with the SEC or any
Governmental Entity in connection with the transactions contemplated hereby
(including in connection with the Company's solicitation of shareholder
approval of an amendment to the Company's Certificate of Incorporation
increasing the number of authorized shares of the Common Stock) will, on
the date of its filing and on the date any such materials are mailed to
stockholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which
they are made, not misleading.
4.8 Financial Statements. The audited consolidated
financial statements and unaudited consolidated interim financial
statements of the Company included in the Company's Annual Report on Form
10-K for the fiscal year ended March 30, 2000 (the "Company 10-K") and its
Quarterly Report on Form 10-Q for the fiscal quarters ended June 29, 2000,
September 28, 2000 and December 28, 2000 (the "Company 10-Q") have been
prepared in accordance with GAAP and the published rules and regulations of
the SEC applicable thereto (except, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of the unaudited interim financial
statements). For the purposes of this Agreement, "Company Balance Sheet"
means the consolidated balance sheet of the Company as of December 28, 2000
set forth in the Company 10-Q and "Company Balance Sheet Date" means
December 28, 2000.
4.9 No Undisclosed Liabilities. Neither the Company nor
any of its Subsidiaries has any liabilities (whether accrued, absolute,
contingent or otherwise, and whether due or to become due or asserted or
unasserted) not quantified on the face of the Company Balance Sheet (other
than the notes thereto) which are of the type required to be reflected as
liabilities on a balance sheet, except liabilities incurred since the date
of the Company Balance Sheet in the ordinary course of business consistent
with past practice which are not material and liabilities which
individually, or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect.
4.10 Litigation. Except as disclosed in the Company SEC
Documents or listed on Schedule 4.10, there is no claim, action,
proceeding, lawsuit, inquiry, arbitration or investigation before or by any
court, governmental agency, public board, self-regulatory organization or
body, pending or, to the knowledge of the Company or any Subsidiary,
threatened against or affecting (a) the Company, any Subsidiary, or their
respective directors or officers in their capacities as such, (b) the
Company's or any Subsidiary's properties or assets or (c) the validity of
this Agreement or any of the other Transaction Documents or any action
taken or to be taken by the Company in connection with such agreements or
the consummation of the transactions contemplated hereby or thereby which
if decided adversely to the Company or such person would reasonably be
expected to have a Material Adverse Effect. Except as listed on Schedule
4.10, neither the Company nor any Subsidiary is subject to any outstanding
order, ruling, judgment or decree that would reasonably be expected to have
a Material Adverse Effect.
4.11 Compliance with Laws; Permits. Except as set forth
on Schedule 4.11, the Company and each Subsidiary has complied, in all
respects, with all laws, rules, regulations and orders applicable to its
business, operations, properties, assets, products and services, except
where the failure to do so would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as set
forth in Schedule 4.11, the Company and each Subsidiary has all necessary
permits, licenses and other authorizations required to conduct its business
as conducted and as proposed to be conducted and the Company and each
Subsidiary has been operating its business pursuant to and in compliance
with the terms of all such permits, licenses and other authorizations
except where the failure to do so would not reasonably be expected to have
a Material Adverse Effect. Except as disclosed in the Company SEC Documents
or on Schedule 4.11, neither the Company nor any Subsidiary has received
notification from any Governmental Entity (a) asserting a violation of any
law applicable to the conduct of its business, (b) threatening to revoke
any license, franchise, permit or government authorization, or (c)
restricting or in any way limiting its operations as currently conducted or
proposed to be conducted, in each case which has not heretofore been
remedied or resolved or which would not reasonably be expected to have a
Material Adverse Effect.
4.12 Taxes. Except as set forth on Schedule 4.12, the
Company and each Subsidiary has filed, or caused to be filed, all federal
and all material state, local and foreign income Tax Returns required to be
filed with respect to the Company and each Subsidiary in a timely manner
(taking into account all extensions of due dates) and all such material Tax
Returns were true, correct and complete in all material respects. The
Company and each Subsidiary has paid all material Taxes and other
governmental assessments and charges, shown or determined to be due on such
Tax Returns, except those not yet due and payable or those being contested
in good faith and for which adequate reserves have been made, and has set
aside on its books provisions reasonably adequate for the payment of all
Taxes for periods subsequent to the periods to which such Tax Returns
apply. Except as set forth on Schedule 4.5(d), there are no material unpaid
Taxes claimed to be due by the taxing authority of any jurisdiction, and
the officers of the Company know of no basis for any such claim which could
reasonably be expected to have a Material Adverse Effect. Neither the
Company or any Subsidiary has executed a waiver with respect to any statute
of limitations relating to the assessment or collection of any material
federal, state or local Tax. Except as set forth on Schedule 4.12, none of
the Company or any Subsidiary (a) has been a member of an Affiliated Group
filing a consolidated federal income Tax Return (other than a group the
common parent of which is the Company) or (b) has any liability for the
Taxes of any Person (other than the Company and each Subsidiary) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local or foreign law), as transferee or successor, by contract or
otherwise. Except as provided on Schedule 4.12, none of the Company or any
Subsidiary is a party to any Tax allocation or sharing agreement. The net
operating losses and built-in losses of the Company and each Subsidiary are
not, prior to the sale and purchase of the Preferred Stock pursuant to this
Agreement, subject to limitation pursuant to Section 382 of the Code (or
any similar provision of federal, state, local or foreign law).
4.13 Consents. Except as set forth on Schedule 4.13,
neither the execution, delivery or performance of this Agreement or any of
the other Transaction Documents by the Company, nor the consummation by it
of the obligations and transactions contemplated hereby or thereby
(including, without limitation, the issuance, the reservation for issuance
and the delivery of the shares of Preferred Stock) requires any consent of,
authorization by, exemption from, filing with or notice to any Governmental
Entity or any other Person, other than (i) the approvals or filings
required under the Exchange Act or under relevant state blue sky laws, (ii)
approval for listing on the American Stock Exchange of the shares of Common
Stock issuable upon conversion of the Preferred Stock and (iii) Shareholder
Approval.
4.14 No Conflicts. The execution, delivery and
performance of this Agreement and each of the other Transaction Documents,
the execution and filing of the Certificate of Designations and the
consummation of the transactions contemplated hereby and thereby
(including, without limitation, the issuance and reservation for issuance,
as applicable, of the Preferred Stock and the Conversion Shares) will not
(a) except for the requirement for Shareholder Approval, result in a
violation of the Certificate of Incorporation or Bylaws of the Company or
any Subsidiary, (b) 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, instrument or
other contract to which the Company or any Subsidiary is a party (or any
series of related agreements, leases, mortgages, licenses, indentures,
instruments or other contracts that are, in the aggregate, material), (c)
result in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, U.S. federal and state securities
laws and regulations) applicable to the Company or any Subsidiary or by
which any property or asset of the Company or any Subsidiary is bound or
affected, or (d) result in the creation of any Encumbrance upon any of
their assets except for such conflicts or violations referred to in clause
(c) or such Encumbrances that would not reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is in
violation of its respective Certificate of Incorporation, Bylaws or other
organizational documents, and neither the Company nor any Subsidiary is in
default (and no event has occurred which, with notice or lapse of time or
both, would cause the Company or any Subsidiary to be in default) under,
nor has there occurred any event giving others (with notice or lapse of
time or both) any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which
the Company or any Subsidiary is a party except for such violations,
defaults, terminations, accelerations or cancellations as would not
reasonably be expected to have a Material Adverse Effect.
4.15 Intellectual Property. The Company and each of its
Subsidiaries owns or possesses rights to use all franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses,
patent applications, trademarks, trademark rights, trade names, trade name
rights, copyrights and rights with respect to the foregoing which are
required to conduct its business as currently conducted. To the knowledge
of the Company, no event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any
such rights, and neither the Company nor any Subsidiary thereof is liable
to any Person for infringement under applicable law with respect to any
such rights as a result of its business operations, except for such
infringements as would not reasonably be expected to have a Material
Adverse Effect.
4.16 Foreign Corrupt Practices Act. Neither the Company,
any Subsidiary, nor any director, officer, Agent, employee or other Person
acting on behalf of the Company or any Subsidiary has, in the course of
his, her or its actions for, or on behalf of, the Company or any Subsidiary
violated any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended, or the regulations thereunder.
4.17 Material Contracts. Except as set forth in Schedule
4.17, each Material Contract of the Company is the legal, valid and binding
obligation of the Company or its Subsidiary, enforceable against the
Company or such Subsidiary in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance or other similar laws affecting creditors' rights
generally or by general equitable principles, regardless of whether
enforcement is sought in a proceeding at law or in equity. Except as set
forth on Schedule 4.17, there has not occurred any breach, violation or
default or any event that, with the lapse of time, the giving of notice or
the election of any Person, or any combination thereof, would constitute a
breach, violation or default by the Company or a Subsidiary under any such
Material Contract or, to the knowledge of the Company, by any other Person
to any such contract, in any such case as would reasonably be expected to
have a Material Adverse Effect. Neither the Company nor any Subsidiary has
been notified that any party to any Material Contract intends to cancel,
terminate, not renew or exercise an option under any Material Contract,
whether in connection with the transactions contemplated hereby or
otherwise.
4.18 Right of First Refusal; Stockholders' Agreement;
Voting and Registration Rights. Except as set forth on Schedule 4.18, the
Company is not a party to any agreement containing any right of first
refusal, right of first offer, right of co-sale, preemptive right or other
similar right regarding the Company's securities. There are no provisions
of the Certificate of Incorporation or the Bylaws, and, except for this
Agreement and the other Transaction Documents, there are no agreements to
which the Company is a party by which the Company or any Subsidiary is
bound which (a) may affect or restrict the voting rights of any Purchaser
with respect to the Preferred Stock in its capacity as a stockholder of the
Company, (b) restrict the ability of any Purchaser, or any successor
thereto or assignee or transferee thereof, to transfer the Preferred Stock,
and (c) would adversely affect the Company's or a Purchaser's right or
ability to consummate this Agreement and the transactions contemplated
hereby or thereby. Except as set forth in the Certificate of Incorporation
as it exists as of the date hereof and except as contemplated by the
Transaction Documents, the Company is not a party to any agreement which
would (i) require the vote of more than a majority of the Company's issued
and outstanding Common Stock, voting together as a single class, to take or
prevent any corporate action, other than those matters requiring a class
vote under Delaware law or (ii) entitle any party to nominate or elect any
director of the Company or require any of the Company's stockholders to
vote for any such nominee or other Person as a director of the Company.
4.19 Insurance. (a) Each insurance policy, including
directors' and officers' liability insurance, maintained by the Company is
valid, enforceable, in full force and effect, and is of such type and
amount of insurance, with respect to the Company's business and properties,
on both a per occurrence and an aggregate basis, as customarily carried by
Persons engaged in the same or similar business as the Company and its
Subsidiaries.
(b) There is no pending material claim under any of the
Company's policies and, to the knowledge of the Company, no event has
occurred, and no condition or circumstance exists, that might (with or
without notice or lapse of time) directly or indirectly give rise to or
serve as a basis for any such claim which would reasonably be expected to
have a Material Adverse Effect.
(c) Except as set forth on Schedule 4.19(c), the Company
has not received: (i) any written notice or communication regarding the
actual or possible cancellation or invalidation of any of such policies or
regarding any actual or possible adjustment in the amount of premiums
payable with respect to any of said policies; (ii) any written notice or
communication regarding any actual or possible refusal of coverage under,
or any actual or possible rejection of any claim under, any of such
policies; or (iii) any written indication that the issuer of any such
policies may be unwilling or unable to perform any of its obligations
thereunder, except in each case which would not reasonably be expected to
have a Material Adverse Effect.
4.20 Environmental Matters. Except as would not
reasonably be expected to have a Material Adverse Effect, there is no
environmental litigation or other environmental proceeding pending or, to
the knowledge of the Company, threatened by any governmental regulatory
authority or others with respect to the current or any former business of
the Company or any Subsidiary or of any partnership or joint venture
currently or at any time affiliated with the Company or any Subsidiary. To
the knowledge of the Company, no state of facts exists as to environmental
matters or Hazardous Substances that involves the reasonable likelihood of
a material capital expenditure by the Company or any Subsidiary or that may
otherwise reasonably be expected to have a Material Adverse Effect. To the
knowledge of the Company, no Hazardous Substances have been treated, stored
or disposed of, or otherwise deposited, in or on the properties owned or
leased by the Company or any Subsidiary or by any partnership or joint
venture currently or at any time affiliated with the Company or any
Subsidiary in violation of any applicable Environmental Laws.
4.21 Employee Relations. (a) The Company and its
Subsidiaries have entered into individualized written employment agreements
with the executive officers (as such term is defined for purposes of Item
401 of Regulation S-K under the Securities Act) of the Company and its
Subsidiaries listed on Schedule 4.21(a) (the "Executive Officers"), true
and complete copies of which have been delivered to the Apollo Purchasers.
To the knowledge of the Company, no Executive Officer of the Company or any
Subsidiary is in violation of any material term of any employment contract
or any other contract or agreement relating to the relationship of any such
Executive Officer with the Company or any Subsidiary. The Company and each
Subsidiary has operated and administered all plans, programs and
arrangements providing compensation and benefits to employees in accordance
with their terms and with all applicable laws except as would not
reasonably be expected to have a Material Adverse Effect. To the Company's
knowledge, no Executive Officer has any plans to terminate his or her
employment with the Company or any Subsidiary, nor does the Company or any
Subsidiary have any present intention to terminate the employment of any
Executive Officer.
(b) The Company and its Subsidiaries are not delinquent
in payments to any of their employees, for any wages, salaries,
commissions, bonuses or other direct compensation for any services
performed through the date hereof or amounts required to be reimbursed to
them to the date hereof except as would not reasonably be expected to have
a Material Adverse Effect. The Company and it Subsidiaries are in
compliance with all applicable federal, state and local laws, rules and
regulations respecting employment, employment practices, labor, terms and
conditions of employment and wages and hours, except as would not
reasonably be expected to have a Material Adverse Effect. Except as
provided on Schedule 4.21(b), neither the Company nor any Subsidiary is
bound by or subject to (and none of its assets or properties is bound by or
subject to) any written or oral commitment or arrangement with any labor
union, and, to the knowledge of the Company, no labor union has requested
or has sought to represent any of the employees, representatives or Agents
of the Company or any Subsidiary. There is no labor strike, dispute,
slowdown or stoppage actually pending or, to the knowledge of the Company,
threatened against or involving the employees of the Company or of any
Subsidiary.
(c) All material (which shall include all "Material
Contracts" involving the types of plans, contracts and arrangements set
forth in this Section 4.21(c)) bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock and stock option plans,
employment or severance contracts, health and medical insurance plans, life
insurance and disability insurance plans, other material employee benefit
plans, contracts or arrangements which cover employees or former employees
of the Company or the Subsidiaries including, but not limited to, "employee
benefit plans" within the meaning of Section 3(3) of ERISA (the "Employee
Benefit Plans"), are listed on Schedule 4.21(c). Except as set forth on
Schedule 4.21(c), no Employee Benefit Plan is or was collectively bargained
for or has terms requiring assumption or any guarantee by the Purchaser.
(d) There have been no violations of ERISA or the Code
relating to any Employee Benefit Plan that could reasonably be expected to
have a Material Adverse Effect. All Employee Benefit Plans, to the extent
subject to ERISA, are in substantial compliance with their terms and ERISA,
the Code, and all other applicable law except where the failure to be in
compliance would not reasonably be expected to have a Material Adverse
Effect. The Company has timely filed all required documents, notes and
reports (including IRS Form 5500) for each such Employee Benefit Plan with
all applicable Governmental Authorities and has timely furnished all
required documents to the participants or beneficiaries of each such
Employee Benefit Plan except where the failure to file or furnish such
reports or documents would not reasonably be expected to have a Material
Adverse Effect. The Company and the subsidiaries have not incurred and do
not expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E of Title IV of ERISA in an amount which
could reasonably be expected to have a Material Adverse Effect. Neither any
Employee Benefit Plan nor any single-employer plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or
Section 414 of the Code (an "ERISA Affiliate") has an "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of
the Code or Section 302 of ERISA and no ERISA Affiliate has an outstanding
funding waiver. Neither the Company nor any of its subsidiaries has
provided, or, to the knowledge of the Company, is required to provide,
security to any Employee Benefit Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code. All
contributions required to be made under the terms of any Employee Benefit
Plan have been timely made or have been reflected on the audited financial
statements of the Company, except where the failure to make such
contributions would not reasonably be expected to have a Material Adverse
Effect.
4.22 Related Party Transactions. Except as set forth in
Schedule 4.22 or in the Company's proxy statement relating to its 2000
Annual Meeting, no director, officer or Affiliate of the Company or any of
the Subsidiaries (including, without limitation, spouses, children and
relatives of any of the foregoing) is a party to any material transaction,
arrangement or agreement with the Company or any Subsidiary (other than
transactions, arrangements or agreements between or among the Company and
any of its Subsidiaries) providing for the furnishing of services by or to
or sale or rental of real or personal property from or to, or otherwise
requiring payments to or by any such Person.
4.23 Investment Company Act. Neither the Company nor any
of its Subsidiaries is an "investment company" or is directly or indirectly
controlled by or acting on behalf of, any Person that is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
4.24 Books and Records. The books of account, ledgers,
order books, records and documents of the Company and each Subsidiary
accurately and completely reflect all material information relating to the
business of the Company and each Subsidiary, the location and collection of
its assets, and the nature of all transactions giving rise to the
obligations or accounts receivable of the Company and each Subsidiary.
4.25 Disclosure. No event or circumstance has
occurred or exists with respect to the Company or any Subsidiary or their
respective businesses, properties, operations or financial conditions,
which has not been publicly disclosed or which has not been disclosed to
the Purchaser but, under applicable law, rule or regulation, would be
required to be disclosed by the Company in a registration statement filed
on the date hereof by the Company under the Securities Act with respect to
an issuance of the Company's securities.
4.26 Change of Control. Without giving effect to (x) any
dividends that may be paid or become payable on the Preferred Stock
pursuant to Section 2(b)(5) of the Certificate of Designations, (y) any
sale, transfer, pledge, conveyance or conversion of the Class B Shares by
the record holder thereof after the date of this Agreement or (z) any
acquisition by the Apollo Purchasers of any shares of Common Stock or Class
B Stock after the date hereof (other than those shares of Common Stock
received upon conversion of the Preferred Stock), no Change of Control (as
such term is defined in the indentures governing the Company's Existing
High Yield Indebtedness or as defined in any employment agreements between
the Company and any Executive Officer) will occur upon the following: (i)
the purchase of the Preferred Stock at Closing or (ii) the payment of
Additional Series A Securities or Additional Series B Securities (other
than shares paid as dividends as set forth in clause (x) above) in
accordance with the terms set forth in the Certificate of Designations
(giving effect to Section 2(a)(4) thereof).
5. Conditions of Parties' Obligations.
5.1 Conditions of the Purchaser's 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.
(a) Representations and Warranties Correct. The
representations and warranties of the Company under this Agreement shall be
true, complete and correct in all material respects (except with respect to
any provisions including the word "material" or words of similar import and
the representation and warranty set forth in Section 4.8 with respect to
which such representations and warranties must be true, complete and
correct) 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.
(b) Compliance with Agreement. The Company shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
(c) No Material Adverse Effect. No condition or event
shall have occurred that has had, or could reasonably be expected to have,
a Material Adverse Effect.
(d) Supporting Documents and Certificate of Officers. The
Company shall have delivered to the Purchaser the supporting documents and
certificates set forth on Annex 5.1(d) hereto.
(e) Opinion of the Company's Counsel. The Apollo
Purchasers shall have received from Skadden, Arps, Slate, Xxxxxxx & Xxxx
LLP and Xxxxxxx & Xxxx X.X., counsel for the Company, favorable opinions
dated the Closing Date substantially in the form of Annex 5.1(e) hereto.
(f) Certificate of Designations. The Certificate of
Designations substantially in the form of Annex 5.1(f) hereto (the
"Certificate of Designations") shall have been duly adopted and executed
and filed with the Secretary of State of the State of Delaware, the Company
shall not have adopted or filed any other document designating terms,
relative rights or preferences of the Preferred Stock, the Certificate of
Designations shall be in full force and effect as of the Closing under the
laws of Delaware and shall not have been amended or modified, and a copy of
the Certificate of Designations certified by the Secretary of State of the
State of Delaware shall have been delivered to counsel for the Purchasers.
(g) Composition of Board of Directors. On the Closing
Date, the Company's Board of Directors shall be expanded to eight persons
comprising those five persons elected to the Board of Directors at the
Company's 2000 Annual Meeting and the three designees of the Apollo
Purchasers. Specifically, AIF IV shall have the right to elect one member
to Board of Directors, AIF V shall have the right to elect one member to
the Board of Directors and the Apollo Purchasers, collectively, shall have
the right to elect the third member to the Board of Directors. If for any
reason, any director appointed by any of AIF IV, AIF V or the Apollo
Purchasers ceases to be a director before the expiration of his or her
term, and the Apollo Purchasers have Preferred Stock Approval Rights at
such time, the Apollo Purchaser who elected such director shall have the
right to appoint a director to fill such vacancy. In addition, to the
extent AIF IV or AIF V, as the case may be, is no longer a holder of any
shares of Preferred Stock and the Apollo Purchasers have Preferred Stock
Approval Rights at such time, the right of AIF IV or AIF V, as the case may
be, to elect a member to the Board of Directors shall be deemed transferred
to AIF V or AIF IV, as the case may be. To the extent neither AIF IV nor
AIF V is a holder of any shares of Preferred Stock and the Apollo
Purchasers have Preferred Stock Approval Rights at such time, the Apollo
Purchasers, collectively, shall have the right to elect the two members of
the Board of Directors previously elected by AIF IV and AIF V.
(h) Transaction Documents and Company Agreements. The
Company shall have executed and delivered each of the Transaction
Documents, each substantially in the form of Annex 5.1(h) hereto.
(i) Board Resolution and Bylaw Amendment. The Board of
Directors shall have adopted (i) resolutions of the Board of Directors,
substantially in the form attached hereto as Annex 5.1(i)(1), which
resolutions shall include, among other items, the establishment of a
Nominating Committee and matters relating to Capital Expenditures,
amendments to the Senior Facility and certain employment arrangements for
Executive Officers (the "Board Resolutions") and (ii) the Bylaw Amendments
in the form attached hereto as Annex 5.1(i)(2).
5.2 Conditions of Company's Obligations. The Company's
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 Company.
(a) Representations and Warranties Correct. The
representations and warranties of the Purchaser under this Agreement shall
in all material respects be true, correct and complete (except with respect
to any provisions including the word "material" or words of similar import,
which such representations must be true, complete and correct) 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.
(b) Compliance with Agreement. The Purchaser shall have
performed and complied with all agreements and conditions required by this
Agreement to be performed or complied with by it on or before the Closing
Date.
(c) Payment of Purchase Price. The Company shall have
received from the Purchasers the Purchase Price as set forth on Schedule 1
hereto.
(d) Standstill Agreement. The Apollo Purchasers shall
have executed and delivered the Standstill Agreement, substantially in the
form of Annex 5.1(h) hereto.
5.3 Conditions of Each Party's Obligations. The
respective obligations of each party to consummate the transactions
contemplated hereunder are subject to the fulfillment prior to or on the
Closing Date of the following conditions:
(a) No Injunction. No Governmental Entity or any other
Person shall have issued an order which shall then be in effect restraining
or prohibiting the completion of the transactions contemplated hereby or by
the other Transaction Documents, nor shall any such order be threatened or
pending.
(b) Absence of Litigation. The Purchasers and the Company
shall be satisfied as to the absence of litigation which could result in
the award of significant damages or which seeks to enjoin or void any
material aspect of the transactions contemplated by this Agreement or by
the Transaction Documents.
(c) Approvals. The Company shall have obtained any and
all consents, waivers, approvals or authorizations, with or by any
Governmental Entity and all material consents, waivers, approvals or
authorizations of any other Person required for the valid execution of the
Transaction Documents and the consummation of the transactions contemplated
hereby, including the consent of the Company's Senior Lenders, except for
such consents, waivers approvals or authorizations the failure of which to
obtain would not reasonably be expected to have a Material Adverse Effect.
6. Covenants. The Company agrees that until the earlier
of (x) the Closing Date or (y) the termination of this Agreement pursuant
to Section 12.3 (provided, however, that the obligations of the Company
pursuant to the provisions of Sections 6.3 and 6.5 shall survive the
Closing for so long as the Apollo Purchasers possess Preferred Stock
Approval Rights and the obligations of the Company pursuant to the
provisions of Sections 6.6, 6.8, and 6.9 shall survive the Closing until
the redemption of all of the outstanding shares of Preferred Stock or
conversion of all of the outstanding shares of Preferred Stock ultimately
into Common Stock), the Company (and each of its Subsidiaries unless the
context otherwise requires) will do the following:
6.1 Maintain Corporate Rights and Facilities. Maintain
and preserve its corporate existence and all rights, franchises, licenses,
trademarks, service marks, trade names, copyrights and other authority, in
each case to the extent reasonably deemed adequate by the Company for the
conduct of its business. Maintain its properties, equipment and facilities
in good order and repair; and conduct its business in an orderly manner
without voluntary interruption except where failure to do so would not
reasonably be expected to have a Material Adverse Effect.
6.2 Maintain Insurance. Maintain in full force and effect
a policy or policies of insurance issued by insurers of recognized
responsibility, insuring it and its properties and business against such
losses and risks, and in such types and amounts of insurance, with respect
to the Company's business and properties, on both a per occurrence and an
aggregate basis, as are customarily carried by Persons engaged in the same
or similar business as the Company and its Subsidiaries.
6.3 Information Rights.
(a) Access to Records.
The Company shall, and shall cause each Subsidiary to,
afford to the Apollo Purchasers and their respective Affiliates, officers,
employees, advisors, counsel and other authorized representatives
(collectively with the Affiliates of the Apollo Purchasers, the
"Representatives"), during normal business hours, reasonable access, upon
reasonable advance notice, to all of the books, records and properties of
the Company and such Subsidiary and all officers and employees of the
Company and such Subsidiary. Subject to compliance with customary
confidentiality obligations, each Apollo Purchaser shall also be entitled
to receive copies of all confidential financial information and reports
prepared for the Company's lenders promptly upon furnishing such
information to such lenders. The Apollo Purchasers and their
Representatives shall maintain the confidentiality of any confidential and
proprietary information regarding the Company and its Subsidiaries;
provided, however, that the foregoing shall in no way limit or otherwise
restrict the ability of the Apollo Purchasers or any of their
Representatives to disclose any such information concerning the Company and
each Subsidiary which it may be required to disclose (i) to its partners or
limited partners to the extent required to satisfy its fiduciary
obligations to such Persons, provided that the recipients of such
information are informed of, and agree to be bound by, the confidentiality
provisions hereof, or (ii) otherwise pursuant to or as required by law.
(b) Financial Reports.
The Company shall furnish each Purchaser,
promptly upon becoming available, copies of all financial
statements, reports, press releases, notices, proxy statements and other
documents sent by the Company or its Subsidiaries to its stockholders
generally or released to the public and copies of all regular and periodic
reports, if any, filed by the Company or its Subsidiaries with the SEC, any
securities exchange or the NASD to the extent such reports are not publicly
available via XXXXX.
6.4 Conduct of Business. Conduct its business in
accordance with all applicable provisions of federal, state, local and
foreign law, except for either (i) instances of noncompliance which would
not reasonably be expected to have a Material Adverse Effect or (ii)
instances of noncompliance which are or may be reasonably cured without the
incurrence by the Company or any Subsidiary of any material cost or
liability.
6.5 Indemnification of the Board of Directors. The
Company shall reimburse all directors of the Company for their reasonable
out-of-pocket expenses in connection with attending meetings of the
Company's Board of Directors and all committees thereof and all reasonable
out-of-pocket expenses otherwise incurred in fulfilling their duties as
directors. The Company's Bylaws or charter shall at all times require the
indemnification of all of the Company's directors against liability for
actions and omissions to act in their capacity as directors of the Company
to the maximum extent that such individuals may lawfully be so indemnified
by the Company. The Company shall maintain directors' and officers'
liability insurance in an amount equal to at least $25,000,000.00.
6.6 Reservation of Common Stock. The Company shall
reserve and keep available out of its authorized but unissued Common Stock
(that is not reserved for issuance under any stock or option plan or upon
conversion of Class B Stock) the number of shares required for issuance
upon the conversion of the Preferred Stock and otherwise complying with the
terms of this Agreement, it being understood that the Company will require
Shareholder Approval before it is able to reserve any shares of Common
Stock issuable upon conversion of the Series A Preferred Stock that, in
turn, would have been issued upon conversion of Series B Preferred Stock.
If at any time the number of authorized but unissued shares of Common Stock
shall not be sufficient to effect the conversion of the Preferred Stock or
otherwise to comply with the terms of this Agreement, the Company will use
its reasonable best efforts to obtain Shareholder Approval in accordance
with Section 6.9 and shall take such other corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. The Company
will use its best reasonable efforts to obtain any authorization, consent,
approval or other action by, and shall make any filing with any court or
administrative body that may be required under applicable state securities
laws in connection with the issuance of shares of Common Stock upon
conversion of the Preferred Stock.
6.7 Advice of Changes; Filings. The Company shall confer
with the Purchasers on a regular and frequent basis as reasonably requested
by the Purchasers, orally and, if requested by Purchaser, in writing, with
regard to any change that has had a Material Adverse Effect. The Company
shall promptly provide to the Purchasers (or their counsel) copies of all
filings made by the Company or any Affiliate with any Governmental Entity
in connection with this Agreement and the transactions contemplated hereby.
6.8 Tax Treatment of the Preferred Stock. The Company
agrees to treat the Series A Preferred Stock and the Series B Preferred
Stock as stock that participates in the corporate growth of the Company to
a significant extent within the meaning of Treasury Regulation
ss.1.305-5(a), and hence will not treat the Preferred Stock as "preferred
stock" for purposes of Section 305 of the Code and the Treasury Regulations
promulgated thereunder, unless required to treat it otherwise pursuant to a
"determination" within the meaning of Section 1313(a) of the Code. The
Apollo Purchasers shall be entitled to receive prompt notice of any Tax
assessment, deficiency, audit or judicial proceeding received by the
Company or of which the Company is aware that relates to the taxation of
the Preferred Stock. The Apollo Purchasers shall indemnify, and hold
harmless, the Company for any Taxes imposed on or incurred by the Company
as a result of any "determination" that the Preferred Stock is "preferred
stock" for purposes of Section 305 of the Code and Treasury Regulations
promulgated thereunder; provided that the Apollo Purchasers (i) have
received prompt notice from the Company of any tax assessment, deficiency,
audit or judicial proceeding received by the Company or of which the
Company is aware that relates to the taxation of the Preferred Stock, (ii)
are given the opportunity to participate, whether directly or indirectly,
through the Company or counsel to the Company, in all proceedings that
affect the taxation of Preferred Stock, and (iii) have consented to any
closing or other agreement with the IRS or final disposition of a claim for
refund by the IRS that affects the taxation of the Preferred Stock. In the
event the Preferred Stock is outstanding at the time of a "determination,"
the Company will use its reasonable best efforts to restructure such
Preferred Stock, with the advice and subject to the consent of the Apollo
Purchasers, so that the Preferred Stock will not be treated as "preferred
stock" for purposes of Section 305 of the Code and the Treasury Regulations
promulgated thereunder.
6.9 Solicitation of Shareholder Approval. The Company
shall solicit Shareholder Approval at its next regularly scheduled annual
meeting following the Closing Date (the "Initial Solicitation") which shall
take place no later than 270 days after the Closing Date. In addition,
until Shareholder Approval is obtained, the Company shall solicit such
Shareholder Approval whenever it solicits proxies subject to Section 14(a)
of the Exchange Act and until Shareholder Approval is obtained, any shares
of Common Stock that are authorized after the date hereof shall be reserved
for issuance (i) subject to Section 8 of this Agreement, upon the exercise
of options pursuant to any option plan and (ii) upon conversion of Series A
Preferred Stock to allow for exchange of the Series B Preferred Stock into
the Series A Preferred Stock (including the Series A Preferred Stock that
would be received upon a conversion of Series B Preferred Stock).
6.10 Board Resolution and Bylaw Amendment. The Board of
Directors shall have adopted (a) resolutions of the Board of Directors,
substantially in the form attached hereto as Annex 5.1(i)(1), which
resolutions shall include, among other items, the establishment of a
Nominating Committee and matters relating to capital expenditures,
amendments to the Company's Senior Facility and certain employment
arrangements for Executive Officers (the "Board Resolutions") and (b) the
Bylaw Amendments in the form attached hereto as Annex 5.1(i)(2).
6.11 Listing Obligation. The Company will take all
reasonable steps necessary, and pay all reasonable fees required, to list
all of the shares of Common Stock issuable upon any conversion of shares of
Series A Preferred Stock (including such additional shares as may be
issuable after Shareholder Approval or as dividends) on the American Stock
Exchange or such other stock exchanges or systems of automated
dissemination of quotations of securities prices in the United States on
which the Common Stock is then listed. Following the initial listing of
such shares, the Company shall use its reasonable best efforts to maintain
the listing of such shares for so long as the Company's Common Stock
continues to be listed on any such exchange where the Common Stock is
listed.
7. Negative Covenants.
7.1 No Solicitation. On the date hereof, the Company
shall and shall cause each Subsidiary and its Subsidiaries' officers and
directors to, and each of the foregoing shall cause their respective
Agents, representatives, advisors or subsidiaries, to cease any discussions
or negotiations with any parties (other than the Purchaser) that may be
ongoing with respect to (A) any acquisition or purchase of a material
amount of assets of the Company and its Subsidiaries (other than properties
disclosed in writing to Apollo as possible candidates for disposition), (B)
the purchase of any equity securities of the Company or any Subsidiary
(including a self tender offer) or any securities that are convertible,
exchangeable or exercisable for any equity securities, (C) any merger,
consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any Subsidiary (other than a Permitted Acquisition), or (D)
any other transaction the consummation of which would, or could reasonably
be expected to, impede, interfere with, prevent or materially delay the
transactions contemplated by this Agreement or which would, or could
reasonably be expected to, materially dilute the benefits to the Purchaser
of the transactions contemplated hereby (each of the foregoing items set
forth in (A) through (D), an "Alternative Transaction"). From the date
hereof through the Closing Date, the Company shall not, shall cause each
Affiliate not to and shall not authorize or permit any of its or any such
Person's officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative
representing any such Person to, directly or indirectly, (i) solicit,
initiate or encourage (including by way of furnishing information), or take
any other action to facilitate, any inquiries or the making of any proposal
that may lead to an Alternative Transaction (it being understood that
public announcement of the execution of this Agreement, and disclosure of
the terms thereof, shall not in any way be deemed to be a solicitation in
violation of this clause (i)) or (ii) participate in any discussions or
negotiations with any third party regarding any proposed Alternative
Transaction unless the Company's Board of Directors determines in good
faith that failure to take such action would be a violation of its
fiduciary duties under applicable law. Notwithstanding anything else in
this Agreement to the contrary, if the Company's Board of Directors
determines in good faith the terms of any Alternative Transaction are more
favorable to the Company and its shareholders than the transactions
contemplated by this Agreement, the Company may terminate this Agreement.
In the event the Company or any of its Subsidiaries or Affiliates receives
an indication of interest or engages in any discussions or negotiations
with any parties (other than the Purchasers) with respect to any
Alternative Transaction, the Company shall promptly notify the Apollo
Purchasers of such occurrence within two business days.
8. Protective Provisions.
8.1 Preferred Stock Approval Rights. In addition to any
other rights provided by applicable law, as long as the Apollo Purchasers
continue to beneficially own shares of Preferred Stock representing more
than 50% of the Preferred Stock issued pursuant to this Agreement, the
Company shall not, and shall not permit any Subsidiary to, without the
prior written consent of Apollo, acting at the direction of the Apollo
Purchasers:
(a) amend, alter or repeal, whether by merger,
consolidation, combination, reclassification or otherwise, the Certificate
of Incorporation or the Bylaws of the Company, or any provision thereof
(including the adoption of a new provision thereof);
(b) create, authorize or issue any class, series or
shares of preferred stock (other than Additional Securities issued pursuant
to section 2 of the Certificate of Designations) or any other class, series
or shares of capital stock (other than capital stock intended to be used in
the redemption of the Preferred Stock or to be authorized and issued
pursuant to the Shareholder Approval); or amend or alter the rights
provided in any class, series or shares of preferred stock or any other
class of capital stock;
(c) purchase, redeem, repurchase or otherwise acquire for
value (or pay into or set aside a sinking fund for such purpose) shares of
the Company's capital stock or of any Affiliate thereof (other than
Wholly-Owned Subsidiaries)(except for redemptions or repurchases of
Preferred Stock or Common Stock issued upon conversion of the Preferred
Stock) or any other options, warrants or other rights to acquire such
capital stock;
(d) pay any dividend or declare any distribution on any
shares of stock (subject to Section 8.1(b) above, excluding (i) dividends
paid to the Company by any of its Wholly-Owned Subsidiaries and (ii)
dividends or distributions payable in shares of its capital stock or in
options, warrants, or other rights to purchase such capital stock but
including dividends or distributions payable in shares of Redeemable
Capital Stock or options, warrants or other rights to purchase Redeemable
Capital Stock (other than dividends on Redeemable Capital Stock payable in
such Redeemable Capital Stock) held by any person other than the Company or
any of its Wholly-Owned Subsidiaries);
(e) redeem, prepay, defease or repurchase any
indebtedness of the Company (other than Permitted Debt Repayments);
(f) merge, consolidate or consummate a similar
transaction involving the Company (other than a merger, consolidation or
similar transaction between the Company and a direct or indirect
Wholly-Owned Subsidiary of the Company which transaction would not
adversely impact the rights of the Preferred Stock);
(g) incur any indebtedness (excluding any borrowings in
the ordinary course of business under the Company's Senior Facility), other
than debt that is used to redeem the Preferred Stock and other Permitted
Indebtedness, or amend or alter the material terms of any existing or
future material senior indebtedness (including term loans, revolvers and
other similar bank loans, but excluding indebtedness incurred under the
Company's Senior Facility); provided, the Company may amend or renew the
Senior Facility;
(h) voluntarily initiate any liquidation, dissolution or
winding up of the Company or permit the commencement of a proceeding for
bankruptcy, insolvency, receivership or similar action;
(i) enter into any Affiliate Transactions;
(j) increase or decrease the size of the Board of
Directors of the Company; or
(k) acquire or dispose (for either cash or non-cash
consideration) of, in a single transaction or a series of related
transactions, any business or assets (including investments in third
parties) with an aggregate value in such transaction or series of related
transactions in excess of $25,000,000 (including all assumed debt, all cash
payments, and the fair market value of all securities or other property
issued as consideration).
Collectively, the consents of the Apollo Purchasers required by this
Section 8.1 shall be hereinafter referred to as the "Preferred Stock
Approval Rights."
8.2 Committees of the Board of Directors. So long as the
Apollo Purchasers continue to possess Preferred Stock Approval Rights and
subject to the provisions of applicable law and the fiduciary duties of the
members of the Board of Directors, a member of the Board of Directors
designated by the Apollo Purchasers pursuant to Section 5.1(g) shall be
nominated to serve on each of the committees of the Board of Directors,
including the Nominating Committee.
9. Transfer Restrictions.
9.1 Private Placement. Each Purchaser understands and
agrees that the shares of Preferred Stock to be purchased hereunder have
not been registered under the Securities Act by reason of their issuance in
a transaction exempt from the registration requirements of the Securities
Act, and that accordingly they will not be fully transferable except as
permitted under various exemptions contained in the Securities Act or upon
satisfaction of the registration and prospectus delivery requirements of
the Securities Act. Each Purchaser acknowledges that it must bear the
economic risk of the shares of Preferred Stock to be purchased hereunder
for an indefinite period of time (subject, however, to the Company's
obligation to redeem the Preferred Stock in accordance with the terms
thereof, and to the Company's obligation to effect the registration of the
registrable securities under the Securities Act in accordance with the
Registration Rights Agreement) since they have not been registered under
the Securities Act and therefore cannot be sold unless they are
subsequently registered or an exemption from registration is available.
Each Purchaser understands that the exemption from registration afforded by
Rule 144 promulgated under the Securities Act depends upon the satisfaction
of various conditions and that, if applicable, Rule 144 affords the basis
for sales only in limited amounts. Furthermore, except as set forth in the
Registration Rights Agreement, the Company has not agreed to make Rule 144
available for any resale of the Preferred Stock or the shares of Common
Stock into which the Preferred Stock is convertible.
9.2 Legend. Each Purchaser agrees with the Company 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 TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES OR THE SECURITIES ARE SOLD AND
TRANSFERRED IN A TRANSACTION THAT IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN LIMITATIONS ON TRANSFER SET FORTH
IN A STANDSTILL AGREEMENT DATED AS OF APRIL 19, 2001 BETWEEN AMC
ENTERTAINMENT INC. AND CERTAIN OTHER INVESTORS NAMED THEREIN, COPIES OF
WHICH ARE ON FILE WITH THE SECRETARY OF AMC ENTERTAINMENT INC.
9.3 Removal of Legend. The Securities Act legend endorsed
on the certificates pursuant to Section 9.2 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 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).
9.4 Standstill Agreement. Subject to the terms of the
Standstill Agreement and Section 9.5, the Preferred Stock shall be freely
transferable by the holders thereof; provided that the Purchasers shall
provide written notice to the Company within three days of any transfer of
Preferred Stock.
9.5 Restrictions on Conversion of Series A Preferred.
(a) During the period commencing on the date hereof and
ending on the fifth anniversary of the date hereof, the Purchasers shall
not convert any shares of Series A Preferred Stock into Common Stock,
except in connection with a Disposition effected pursuant to paragraph (b)
below.
(b) If, at any time during the period commencing on the
date hereof and ending on the fifth anniversary of the date hereof, any
Apollo Purchaser desires to effect a Disposition of any shares of Series A
Preferred Stock to any person other than members of the Apollo Group and
Other Investor Affiliates, such Apollo Purchaser may, as part of such
Disposition, elect to convert such shares of Series A Preferred Stock into
Common Stock, prior to transfer to such purchasing Person. In order to
convert shares of Preferred Stock to effect any such Disposition, the
selling Apollo 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
Apollo 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. Any Disposition pursuant to a
third party made under this Section 9.5 or Section 5.2(b) of the Standstill
Agreement shall comply with the provisions of Section 5.1 of the Standstill
Agreement.
9.6 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 a date that is eighteen (18) months after
the Closing Date.
9.7 Preferred Stock Approval Rights. The Preferred Stock
Approval Rights granted to the Apollo Purchasers are not transferable by
the Apollo Purchasers and shall be exercised solely by Apollo. The Apollo
Purchasers will not enter into any agreements with any person or entity
limiting their discretion with respect to the exercise of their Preferred
Stock Approval Rights. In the event (i) the Apollo Purchasers or their
Affiliates cease to own at least 50% of the Preferred Stock issued, (ii)
Apollo is terminated as the investment manager, or (iii) an Affiliate is
removed as the general partner of the Apollo Purchasers (and, in either
case, such terminated or removed party is not replaced by an Affiliate of
Apollo), Apollo and the Apollo Purchasers shall promptly notify the Company
and the Preferred Stock Approval Rights granted to the Apollo Purchasers
shall terminate.
10. Definitions. Unless the context otherwise requires,
the terms defined in this Section 10 shall have the meanings specified for
all purposes of this Agreement.
Except as otherwise expressly provided, all accounting
terms used in this Agreement, whether or not defined in this Section 10,
shall be construed in accordance with United States GAAP. If and so long as
the Company has one or more Subsidiaries, such accounting terms shall be
determined on a consolidated basis for the Company and each of its
Subsidiaries, and the financial statements and other financial information
to be furnished by the Company pursuant to this Agreement shall be
consolidated and presented with consolidating financial statements of the
Company and each of its Subsidiaries prepared in accordance with GAAP.
"Additional Securities" shall mean the shares of
Preferred Stock that are issued to the holders of Preferred Stock as
payment of dividends thereon pursuant to the Certificate of Designations.
"Additional Series A Securities" shall have the meaning
assigned it in the Certificate of Designations.
"Additional Series B Securities" shall have the meaning
assigned it in the Certificate of Designations.
"Affiliate" means, with respect to any Person, (i) any
other Person directly or indirectly controlling or controlled by, or under
direct or indirect common control with, such specified Person; (ii) any
other Person that owns, directly or indirectly, ten percent or more of such
Person's capital stock or other equity interests or any officer or director
of any such Person or other Person; or (iii) with respect to any natural
Person, any person having a relationship with such Person by blood,
marriage or adoption not more remote than first cousin; provided, however,
that with respect to Apollo or the Apollo Purchasers, the term "Affiliate"
shall not include any limited partner of the Apollo Purchasers or their
Affiliates nor any portfolio or investee companies of the Apollo Purchasers
or their Affiliates so long as, in either case, (x) Apollo does not control
or have investment authority over such limited partner or portfolio or
investee company; (y) such limited partner or portfolio or investee company
does not operate in the domestic theatrical exhibition industry or
otherwise compete with the Company and (z) Apollo does not own, directly or
indirectly, 33% or more of such portfolio or investee company's capital
stock or other equity interests. For purposes of this definition, "control"
when used with respect to any specified Person means the power to direct
the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and
the terms "controlling" and "controlled" shall have correlative meanings.
"Affiliate Transaction" shall mean any transaction or
series of related transactions (including, without limitation, the sale,
purchase, exchange or lease of assets, property or services) with any
Affiliate of the Company (other than a direct or indirect Wholly-Owned
Subsidiary of the Company) involving aggregate consideration in excess of
$5 million unless (A) such transaction or series of transactions is on
terms that are no less favorable to the Company or such Subsidiary, as the
case may be, than would be available at the time of such transaction or
series of transactions in a comparable transaction in an arms-length
dealing with an unaffiliated third party, (B) such transaction or series of
transactions is in the best interests of the Company and (C) with respect
to a transaction or series of transactions involving aggregate payments
equal to or greater than $50 million, a majority of disinterested members
of the Board of Directors determines that such transaction or series of
transactions complies with clauses (A) and (B) above, as evidenced by a
Board Resolution; provided, however, that notwithstanding the foregoing the
following transactions shall not be deemed Affiliate Transactions: (i) any
transaction pursuant to any contract in existence on the Initial Issuance
Date; (ii) any "Restricted Payment" (as such term is defined in the
indentures governing the Company's Existing High Yield Indebtedness)
permitted to be made pursuant to the provisions of such Existing High Yield
Indebtedness; (iii) any transaction or series of transactions between the
Company and one or more of its Subsidiaries or between two or more of its
Subsidiaries (provided that no more than 5% of the equity interest in any
such Subsidiary is owned, directly or indirectly (other than by direct or
indirect ownership of an equity interest in the Company), by any Affiliate
of the Company other than a Subsidiary) and (iv) the payment of
compensation (including amounts paid pursuant to employee benefit plans)
for the personal services of officers, directors and employees of the
Company or any of its Subsidiaries.
"Affiliated Group" shall mean any affiliated group within
the meaning of Section 1504(a) of the Code (or any similar group defined
under a similar provision of state, local or foreign law).
"Agent" of a Person shall mean any officer, director,
employee, agent, partner stockholder or Affiliate of such Person.
"Agreement" shall mean this Investment Agreement.
"AIF IV" shall have the meaning assigned it in the
introductory paragraph.
"AIF V" shall have the meaning assigned it in the
introductory paragraph.
"Apollo" shall have the meaning assigned it in the
introductory paragraph.
"Apollo Group" shall have the meaning assigned it in
Section 1.1.4 of the Standstill Agreement.
"Apollo Management IV" shall have the meaning assigned it
in the introductory paragraph.
"Apollo Management V" shall have the meaning assigned it
in the introductory paragraph.
"Apollo IV Purchasers" shall have the meaning assigned it
in the introductory paragraph.
"Apollo V Purchasers" shall have the meaning assigned it
in the introductory paragraph.
"Apollo Purchasers" shall have the meaning assigned it in
the introductory paragraph of this Agreement.
"Alternative Transaction" shall have the meaning assigned
it in Section 7.1 hereof.
"AOP IV" shall have the meaning assigned it in the
introductory paragraph.
"AOP V" shall have the meaning assigned it in the
introductory paragraph.
"B Trustees" shall mean Xxxxxxx X. Xxxxxx, Xx. and
Xxxxxxx X. Xxxx, Xx., as (1) successor trustees of the 1992 Xxxxxxx, Inc.
Voting Trust dated December 12, 1992, as amended and restated on August 12,
1997, (2) successor trustees of the trust created under the revocable Trust
Agreement dated August 14, 1989 of Xxxxxxx X. Xxxxxxx, as amended and
restated on May 12, 1999, and (3) surviving trustees of the Foundation, or
any successor trustees of any of the trusts referred to in clauses (1), (2)
or (3) above.
"Board of Directors" shall mean the Board of Directors of
the Company.
"Board Resolutions" shall have the meaning assigned to it
in Section 5.1(i) hereof.
"Bylaw Amendments" shall mean the amendments to the
Bylaws to be adopted by the Board of Directors at Closing, substantially in
the form set forth in Annex 5.1(i)(2) hereto, which amendment shall provide
that the maximum number of directors on the Board of Directors be increased
by three and that the three additional directors shall be elected by
holders of the Preferred Stock pursuant to the Certificate of Designations
(and in accordance with Section 5.1(g) hereof).
"Bylaws" shall have the meaning assigned it in Section
4.1(c) hereof.
"Capital Expenditures" shall mean, for any fiscal period,
all expenditures (including outlays of cash and incurrence of obligations)
of the Company and its Subsidiaries in any such fiscal period which are
required to be included in property, plant and equipment or a similar fixed
or long-lived asset account on a consolidated balance sheet of the Company
prepared in accordance with GAAP which shall include, for these purposes,
Capitalized Lease Obligations.
"Capitalized Lease Obligations" means any obligation to
pay rent or other amounts under a lease (or other agreement conveying a
right to use) any property (whether real, personal or mixed) that is
required to be classified and accounted for as a capitalized lease
obligation (including financing lease obligations) under generally accepted
accounting principals.
"Certificate of Designations" shall mean the certificate
of designations described in Section 5.1(f) hereof.
"Certificate of Incorporation" shall have the meaning
assigned it in Section 4.1(c) hereof.
"Change of Control" shall have the meaning assigned it in
Section 4.26 hereof.
"Class B Stock" shall have the meaning assigned it in
Section 4.1 hereof.
"Closing" shall have the meaning assigned it in Section 2
hereof.
"Closing Date" shall have the meaning assigned it in
Section 2 hereof.
"Code" shall mean the Internal Revenue Code of 1986, as
amended. References to "Code" made herein shall include, where applicable,
references to the Treasury Regulations promulgated thereunder.
"Common Stock" shall have the meaning assigned it in
Section 4.1(a) hereof.
"Company" shall have the meaning assigned it in the
introductory paragraph.
"Company 10-K" shall have the meaning assigned it in
Section 4.8 hereof.
"Company 10-Q" shall have the meaning assigned it in
Section 4.8 hereof.
"Company Balance Sheet" shall have the meaning assigned
it in Section 4.8 hereof.
"Company Balance Sheet Date" shall have the meaning
assigned it in Section 4.8 hereof.
"Company SEC Documents" shall have the meaning assigned
in Section 4.7 hereof.
"Conversion Shares" shall mean the shares of Common Stock
issued upon conversion of any shares of Series A Preferred Stock (including
shares of Series A Preferred Stock issued upon conversion of any shares of
Series B Preferred Stock).
"Disposition" shall mean a sale, assignment, transfer,
pledge, hypothecation, grant of any option with respect to or otherwise
dispose of any interest in (or enter into an agreement or understanding
with respect to the foregoing) of any shares of Series A Preferred Stock.
"Disposition Notice" shall have the meaning assigned it
in Section 9.5(b) hereof.
"Employee Benefit Plans" shall have the meaning assigned
it in Section 4.21(c) hereof.
"Encumbrances" shall have the meaning assigned it in
Section 4.2(a).
"Environmental Laws" shall mean any and all applicable
foreign, federal, state, local or municipal laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, requirements of any
Governmental Entity or other Requirement of Law (including common law)
regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment, as are now or may
at any time be in effect during the term of this Agreement.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended. "Executive Officer" shall have the
meaning assigned it in Section 4.21(a).
"Existing High Yield Indebtedness" means the currently
existing indebtedness of the Company pursuant to (i) the Indenture dated
March 19, 1997 by and between the Company and Bank of New York, as Trustee,
in respect of AMC Entertainment Inc.'s 9 1/2% Senior Subordinated Notes due
2009 and as supplemented by the First Supplemental Indenture dated June 9,
1997 and (ii) the Indenture dated January 27, 1999 by and between the
Company and Bank of New York, as Trustee, in respect of AMC Entertainment
Inc.'s 9 1/2% Senior Subordinated Notes due 2011.
"Foundation" shall mean The Xxxxxxx X. Xxxxxxx
Foundation.
"GAAP" shall mean generally accepted accounting
principles in effect in the United States of America applied on a
consistent basis.
"Governmental Entity" shall mean any national, federal,
state, municipal, local, territorial, foreign or other government or any
department, commission, board, bureau, agency, regulatory authority or
instrumentality thereof; or any court, judicial, administrative or arbitral
body or public or private tribunal exercising executive, legislative,
judicial, regulatory or administrative functions pertaining to government.
"Hazardous Substances" shall mean any waste or other
substance that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, toxic, or a pollutant or a
contaminant under or pursuant to any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"HSR Conversion" shall have the meaning assigned thereto
in Section 12.13.
"Independent Director" shall mean a member of the Board
of Directors (i) who is not and has never been an officer or employee of
the Company, Apollo or the Apollo Purchasers or any of their respective
Affiliates, or of an entity that derived more than 5% of its revenues or
earnings in its most recent fiscal year from transactions involving the
Company, Apollo or any of Apollo Purchasers or any of their respective
Affiliates, (ii) who has no relationship or affiliation or compensation,
consulting or contracting arrangement with the Company, the B Trustees, the
Foundation, Apollo or the Apollo Purchasers or any other entity such that a
reasonable person could regard such director as likely to be unduly
influenced by the Company, the B Trustees, the Foundation, Apollo or any of
Apollo Purchasers and (iii) who is nominated by the Nominating Committee in
accordance with the procedures set forth thereby, it being understood that
the Company's existing directors elected by the common stockholders will be
deemed independent for purposes of this provision through at least the
remainder of their current terms.
"Initial Issuance Date" shall mean the first date of
issuance of the Preferred Stock pursuant to the closing of this Agreement.
"Initial Solicitation" shall have the meaning assigned it
in Section 6.9 hereof.
"Material Adverse Effect" shall mean a material adverse
change (or effect) in the condition (financial or otherwise), assets,
properties, operations, business or results of operations (but not
prospects) of the Company and its Subsidiaries, taken as a whole (excluding
the effect of any events affecting the domestic theatrical exhibition
industry as a whole); provided that a decline in the Company's stock price
in and of itself shall not be deemed to be a Material Adverse Effect.
"Material Contract" shall mean any contract, commitment,
undertaking or agreement to which the Company or any Subsidiary is a party
or by which any of them are bound as of the date of this Agreement (i)
involving annual expenditures or liabilities in excess of $10.0 million in
any fiscal year; (ii) providing for the lending of money (whether as
borrower, lender or guarantor) in excess of $10.0 million; (iii) creating
or governing a joint venture or partnership material to the Company and its
Subsidiaries, taken as a whole; and (iv) that would otherwise constitute a
"material contract" within the meaning of Item 601(b)(10) of Regulation S-K
promulgated by the SEC.
"Nominating Committee" shall mean the committee
established by the Board of Directors pursuant to the Company's Bylaws as
of the Closing Date, which committee shall be charged with the task of
nominating for election by the holders of the Common Stock qualified
candidates to serve as directors on the Board of Directors.
"Other Investor Affiliates" shall have the meaning
assigned it in Section 4.1 of the Standstill Agreement.
"Permitted Acquisition" shall mean any acquisition by the
Company or any Subsidiary of (i) any business or assets with a purchase
price of $25,000,000 or less (including all assumed debt, all cash
payments, and the fair market value of all securities or other property
issued as consideration) or (ii) any business or assets for which the
consent or approval of the Purchaser has been given.
"Permitted Debt Repayments" shall mean scheduled or
ordinary course repayments of indebtedness of the Company or any
Subsidiary, including without limitation ordinary course payments with
respect to Capitalized Lease Obligations.
"Permitted Encumbrances" shall mean (i) Encumbrances upon
any property presently owned or hereafter acquired, created at the time of
acquisition to secure a portion of the purchase price thereof, or existing
thereon at the date of acquisition and assumed by the Company or one of its
Subsidiaries, provided that such Encumbrance shall apply only to the
property so acquired and fixed improvements thereon; (ii) any pledge of
current assets in the ordinary course of business made to secure current
liabilities; (iii) Encumbrances for Taxes not yet delinquent; (iv)
Encumbrances on the property of the Company and its Subsidiaries in the
ordinary course of business which do not materially affect the value of the
property of the Company and do not materially interfere with the use made
and proposed to be made of such property; (v) landlords' liens on fixtures
and movable property located on premises leased by the Company or a
Subsidiary in the ordinary course of business; (vi) zoning and planning
restrictions, easements, permits and other restrictions or limitations of
public record affecting the use of such properties; provided that such
restrictions, easements, permits or other restrictions do not impair the
use of such properties as exhibition theaters or for such other purposes as
such properties are currently being used; (vii) imperfections of title, if
any, not material in nature or amount and not materially detracting from
the value or impairing the use of the property subject thereto or impairing
the operations or proposed operations of the Company and its Subsidiaries,
including, without limitation, the ability of the Company and its
Subsidiaries to secure financing using such properties and assets as
collateral; and (viii) other Encumbrances that would not be reasonably
expected to have a Material Adverse Effect.
"Permitted Indebtedness" shall mean (i) indebtedness of
the Company or any of its Subsidiaries owing one to the other; (ii) any
indebtedness incurred to renew, extend, refinance or refund (each, a
"refinancing") any indebtedness outstanding on the Initial Issuance Date
(or with respect to the Senior Facility, an aggregate principal amount at
any one time outstanding not to exceed $425.0 million) in an aggregate
principal amount not exceeding the principal amount of the indebtedness so
refinanced (plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of the indebtedness
so refinanced or the amount of any premium reasonably determined by the
Company as necessary to accomplish such refinancing, plus the expenses of
the Company incurred in connection with such refinancing); (iii)
indebtedness related to interest rate protection or currency hedging
obligations entered into solely to protect the Company or its Subsidiaries
from fluctuations in interest or currency exchange rates; (iv) Capitalized
Lease Obligations; (v) indebtedness of the Company or any of its
Subsidiaries in connection with standby letters of credit or performance
bonds issued in the ordinary course of business; (vi) indebtedness of any
Subsidiary incurred in connection with the guaranty of indebtedness of the
Company or any other Subsidiary of the Company; (vii) indebtedness
represented by property, liability and workers' compensation insurance; and
(viii) other indebtedness in an aggregate principal amount at any time
outstanding not in excess of $30 million.
"Person" shall include all natural persons, corporations,
business trusts, associations, companies, partnerships, joint ventures and
other entities and governments and agencies and political subdivisions.
"Preferred Stock" shall mean the Series A Preferred Stock
and the Series B Preferred Stock.
"Preferred Stock Approval Rights" shall have the meaning
assigned it in Section 8.1 hereof.
"Purchase Price" shall have the meaning assigned it in
Section 1 hereof.
"Purchaser" shall have the meaning assigned it in the
introductory paragraph of this Agreement.
"Real Property Lease Recap Book" shall mean the
compilation of summaries and abstracts of the key terms of the Company's
Real Property Leases prepared by the Company.
"Real Property Leases" shall have the meaning assigned it
in Section 4.6(c) hereof.
"Redeemable Capital Stock" shall mean any capital stock
that, either by its terms, by the terms of any security into which it is
convertible or exchangeable or otherwise, is or upon the happening of an
event or passage of time would be required to be redeemed in cash prior to
the tenth anniversary of the Initial Issuance Date or is redeemable at the
option of the holder thereof in cash at any time prior to such date, or is
convertible into or exchangeable for debt securities at any time prior to
such date at the option of the holder thereof (other than redemptions
payable in the capital stock of the Company).
"Registration Rights Agreement" shall mean the
registration rights agreement, substantially in the form attached hereto as
Annex 5.1(h), to be entered into on or prior to the Closing Date by and
between the Company and the Purchasers.
"Representatives" shall have the meaning assigned it in
Section 6.3(a) hereof.
"Requirement of Law" shall mean, as to any Person, the
Certificate of Incorporation and Bylaws or other organizational or
governing documents of such Person, and each law, treaty, rule or
regulation or determination of an arbitrator or a court or other
Governmental Entity, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933,
as amended.
"Senior Facility" shall mean The U.S. $ 425,000,000
Amended and Restated Credit Agreement, dated as of April 10, 1997, among
AMC Entertainment Inc, as the Borrower; and The Bank of Nova Scotia, as
Administrative Agent; and Bank of America National Trust and Savings
Association, as Documentation Agent; and Various Financial Institutions as
Lenders, as amended by the Second Amendment, dated as of January 16, 1998,
as further amended by the Third Amendment, dated as of March 15, 1999 and
as further amended by the Fourth Amendment, dated as of March 29, 2000.
"Senior Indebtedness" shall mean the Company's current
existing indebtedness pursuant to the Senior Facility.
"Senior Lenders" shall mean the lenders of the Company
pursuant to the Company's Senior Facility.
"Series A Preferred Stock" shall mean the Series A
Convertible Preferred Stock of the Company, par value $0.66 2/3 per share.
"Series B Preferred Stock" shall mean the Series B
Exchangeable Preferred Stock of the Company, par value $0.66 2/3 per share.
"Shareholder Approval" shall mean approval by (i) the
holders of a majority of the Common Stock, voting separately as a class and
(ii) a majority of the votes cast by the Company's stockholders voting
together as a single class, of an amendment to the Company's Certificate of
Incorporation increasing the number of authorized shares of Common Stock
(so as to permit the issuance of additional shares of Series A Preferred
Stock and the underlying Common Stock and until there are enough shares
that would allow all shares of Series A Preferred Stock to convert into
Common Stock and all shares of Series B Preferred Stock to convert into
Series A Preferred Stock, as contemplated by this Agreement and the
Transaction Documents).
"Standstill Agreement" shall mean the standstill
agreement, substantially in the form attached hereto as Annex 5.1(h), to be
entered into on or prior to the Closing Date by and between the Company and
the Purchasers.
"Subsidiary" shall mean any corporation, association or
other business entity (i) at least 50% of the outstanding voting securities
of which are at the time owned or controlled directly or indirectly by the
Company; or (ii) with respect to which the Company possesses, directly or
indirectly, the power to elect more than 50% of the board of directors or
others performing similar functions for such entity.
"Taxes" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including
taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return" means all returns and reports (including
elections, claims, declarations, disclosures, schedules, estimates,
computations and information returns) required to be supplied to a tax
authority in any jurisdiction relating to Taxes.
"Transaction Documents" shall mean this Agreement, the
Certificate of Designations, the Registration Rights Agreement and the
Standstill Agreement.
"Treasury Regulation" means a regulation promulgated
under the Code, as amended from time to time.
"Wholly-Owned Subsidiary" shall mean a Subsidiary of the
Company, all of the capital stock (other than directors' qualifying shares)
or other ownership or economic interests of which shall at the time be
owned by the Company or by one or more Wholly-Owned Subsidiaries of the
Company or by the Company and one or more Wholly-Owned Subsidiaries of the
Company.
11. Remedies.
11.1 Remedies at Law or in Equity. If any representation
or warranty made by or on behalf of the Company, on the one hand, or the
Purchaser, on the other hand, in this Agreement or in any certificate,
report or other instrument delivered under or pursuant to any term hereof
or in any of the Transaction Documents shall be untrue or misleading
(including by omission) in any material respect as of the date of this
Agreement (and not subsequently cured by Closing) or as of the Closing Date
or as of the date it was made, furnished or delivered, or any covenant
(whether under Section 6 or not) made by either party hereto shall be
breached by such party, a Purchaser, on the one hand, or the Company, on
the other hand, may proceed to protect and enforce its rights by suit in
equity or action at law, whether for the specific performance of any term
contained in this Agreement, or in any certificate, report or other
instrument delivered under or pursuant to any of the terms hereof or any of
the Transaction Documents or for an injunction against the breach of any
such term or in aid of the exercise of any power granted in this Agreement,
or in any certificate, report or other instrument delivered under or
pursuant to any of the terms hereof or any of the Transaction Documents, or
to enforce any other legal or equitable right of a Purchaser, on the one
hand, or the Company, on the other hand, or to take any one or more of such
actions.
In the event a Purchaser brings such an action against
the Company or the Company brings such an action against the Purchaser
arising under this Agreement, or under any certificate, report or other
instrument delivered under or pursuant to any of the terms hereof or any of
the Transaction Documents, the prevailing party in such dispute shall be
entitled to recover from the losing party all fees, costs and expenses of
enforcing any right of such prevailing party under or with respect to this
Agreement or the Certificate of Designations, including, without
limitation, such reasonable fees and expenses of attorneys and accountants.
11.2 Cumulative Remedies. None of the rights, powers or
remedies conferred upon a Purchaser on the one hand, or the Company on the
other hand, shall be mutually exclusive, and each such right, power or
remedy shall be cumulative and in addition to every other right, power or
remedy, whether conferred hereby or by the Certificate of Designations or
now or hereafter available at law, in equity, by statute or otherwise.
11.3 No Implied Waiver. Except as expressly provided in
this Agreement, no course of dealing between the Company and a Purchaser
and no delay in exercising any such right, power or remedy conferred hereby
or by the Certificate of Designations or now or hereafter existing at law
or in equity, by statute or otherwise, shall operate as a waiver of, or
otherwise prejudice, any such right, power or remedy.
12. Miscellaneous.
12.1 Waivers and Amendments. Upon the approval of the
Company and the written consent of the Apollo Purchasers (a) the
obligations of the Company and the rights of a Purchaser under this
Agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively and either for a specified period of
time or indefinitely), and (b) the Company may enter into a supplementary
agreement for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of any
supplemental agreement or modifying in any manner the rights and
obligations hereunder or thereunder of a Purchaser and the Company.
The foregoing notwithstanding, no such waiver or
supplemental agreement shall affect any of the rights of any holder of a
Security created by the Certificate of Designations or by the Delaware
General Corporation Law without compliance with all applicable provisions
of the Certificate of Designations and the Delaware General Corporation
Law.
Upon the effectuation of each such waiver or supplemental
agreement, the Company shall promptly give written notice thereof to the
Purchasers who have not previously consented thereto in writing.
Neither this Agreement, nor any provision hereof may be
changed, waived, discharged or terminated orally or by course of dealing,
but only by a statement in writing signed by the party against which
enforcement of the change, waiver, discharge or termination is sought,
except to the extent provided in this Section 12.1.
12.2 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 Apollo Purchasers:
c/o Apollo Management IV, L.P.
and Apollo Management V, L.P.
1301 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxx
Fax: (000) 000-0000
with a copy 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 (b) If to the Company:
AMC Entertainment Inc.
000 Xxxx 00xx Xxxxxx
P.O. Box 419615
Kansas City, MO
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
and a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
0 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
or at such other address as the Company or the Purchaser each may specify
by written notice to the other, 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.
12.3 Termination of Agreement. This Agreement may be
terminated prior to the Closing as follows:
(a) by mutual consent of the Purchaser and the Company;
(b) at the election of the Company, if any one or more of
the conditions to its obligations has not been fulfilled as of 120 days
following the date hereof;
(c) at the election of the Purchaser, if any one or more
of the conditions to its obligations has not been fulfilled as of 120 days
following the date hereof;
(d) at the election of the Company, if the Purchaser has
breached any material representation, warranty, covenant or agreement
contained in this Agreement and such breach is incapable of cure or is not
cured within 30 days of notice of such breach is received by the breaching
party;
(e) at the election of the Purchaser, if the Company has
breached any material representation, warranty, covenant or agreement
contained in this Agreement and such breach is incapable of cure or is not
cured within 30 days of notice of such breach is received by the breaching
party; or
(f) at the election of the Company pursuant to the terms
of Section 7.1.
If the Closing shall occur, this Agreement shall remain
in effect until the date upon which no Series A Preferred Stock or Series B
Preferred Stock shall remain outstanding.
In the event that the Company or the Purchaser, as the
case may be, elects 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 12.3, and setting forth therein the basis for such
termination.
12.4 Indemnification. The Company shall indemnify, save
and hold harmless the Purchaser, its directors, officers, employees,
partners, representatives and Agents from and against any and all
liability, loss, cost, damage, reasonable attorneys' and accountants' fees
and expenses, court costs and all other out-of-pocket expenses incurred by
the Purchaser in connection with or arising from the execution, delivery
and performance by the Company of this Agreement and each of the other
Transaction Documents and the transactions contemplated thereby, except to
the extent of any willful misconduct or gross negligence of Apollo or the
indemnified party. This indemnification provision shall be in addition to
the rights of the Purchaser to bring an action against the Company for
breach of any term of this Agreement and any of the other Transaction
Documents.
12.5 Survival of Representations and Warranties etc. All
representations and warranties made in, pursuant to or in connection with
this Agreement shall survive until sixty (60) days following the delivery
to Apollo of the final audited consolidated financial statements of the
Company for the year ended March 30, 2001 (provided, however, that the
provisions of Sections 4.2, 4.18, 4.19, and 4.26 shall survive until the
conversion or redemption of all of the outstanding shares of Preferred
Stock), notwithstanding any investigation at any time made by or on behalf
of the Purchaser, and the sale and purchase of the shares of Preferred
Stock and payment therefor; and all statements contained in any
certificate, instrument or other writing delivered by or on behalf of the
Company pursuant hereto or in connection with or in contemplation of the
transactions herein contemplated shall constitute representations and
warranties by the Company hereunder.
If this Agreement is terminated and the transactions
contemplated hereby are not consummated as described above, this Agreement
shall become void and of no further force and effect. None of the parties
hereto shall have any liability in respect of a termination of this
Agreement, except to the extent that failure to satisfy the conditions set
forth in Sections 5.1, 5.2 and 5.3 results from the intentional or willful
violation of the representations, warranties, covenants or agreements of
such party under this Agreement.
12.6 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.
12.7 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 and the Company, whether so expressed or not. This Agreement
shall not run to the benefit of or be enforceable by any other Person.
12.8 Successors and Assigns. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, 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.
12.9 Assignment and Transfers. This Agreement can be
assigned by the Apollo Purchasers to any Affiliate of Apollo over which
Apollo exercises investment authority, including with respect to voting and
dispositive rights; provided, any such assignee assumes the obligations of
the assignor hereunder and agrees in writing to be bound by the terms of
the Transaction Documents in the same manner as the assignor. In addition,
without limiting any other provisions of this Agreement, the shares of
Preferred Stock or Common Stock issued pursuant to this Agreement shall be
freely transferable to any Affiliate of Apollo, subject to the terms of the
Standstill Agreement.
12.10 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.
12.11 Governing Law; Jurisdiction; Venue; Process. THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK WITHOUT REGARD TO ANY CHOICE OF LAW OR CONFLICT OF
LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Any legal or equitable
action or proceeding arising out of or in connection with this Agreement or
in any certificate, report or other instrument delivered under or pursuant
to any term hereof or any of the Transaction Documents shall be brought in
the courts of the State of New York, in the county and city of New York or
of the United States District Court for the Southern District of New York,
and by execution and delivery of this Agreement, the parties hereby
irrevocably accept for themselves and in respect of their property,
generally and unconditionally, the exclusive jurisdiction of the aforesaid
courts. The parties hereby irrevocably waive any objection which they may
now or hereafter have to laying of jurisdiction or venue of any actions or
proceedings arising out of or in connection with this Agreement or in any
certificate, report or other instrument delivered under or pursuant to any
term hereof or any of the Transaction Documents brought in the courts
referred to above and hereby further irrevocably waive and agree, not to
plead or claim in any such court that any such action or proceeding has
been brought in an inconvenient forum. The parties further agree that thc
mailing by certified or registered mail, return receipt requested, of any
process required by any such court shall constitute valid and lawful
service of process against them, without necessity for service by any other
means provided by statute or rule of court.
12.12 Fees and Expenses.
(a) The Company agrees, subject to the consummation of
the transactions contemplated hereby to pay, and hold the Purchasers
harmless from liability for the payment of, all reasonable expenses,
including all out-of-pocket expenses, incurred by the Purchasers in
connection with the preparation and negotiation of this Agreement, and the
other Transaction Documents, the other supporting documents referred to in
Section 5 of this Agreement, and the consummation of the transactions
contemplated hereby and thereby. Notwithstanding the foregoing or anything
else in this Agreement to the contrary, the Company shall not be required
to reimburse the Purchasers for more than $125,000 in filing fees (plus
reasonable legal expenses incurred in connection with the preparation of
one filing) for all filings under the HSR Act.
(b) Upon Closing, the Company agrees to pay Apollo or
their designees a fee equal to three and one half percent (3.50%) of the
Purchase Price.
12.13 HSR Act. The Company and each Purchaser required to
file notification under the HSR Act with respect to the acquisition by
holders of Series B Preferred Stock of a present right to vote in the
election of directors of the Company, whether pursuant to the terms of
Section 9(a) of the Certificate of Designations or prior to exchange of
Series B Preferred Stock for Series A Preferred Stock pursuant to Section 7
of the Certificate of Designations (an "HSR Conversion"), shall file
notification under the HSR Act within 30 days after the Initial Issuance
and the waiting period shall have expired or been terminated prior to any
HSR Conversion being consummated, notwithstanding any provision of this
Agreement or the Certificate of Designations to the contrary.
12.14 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.
12.15 Entire Agreement. This Agreement and the other
Transaction Documents contain the entire agreement among the parties hereto
with respect to the subject matter hereof and such Agreement supersedes and
replaces all other prior agreements, written or oral among the parties
hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Investment Agreement to be duly executed as of the day and year first above
written.
AMC ENTERTAINMENT INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman of the Board,
President and Chief
Executive Officer
APOLLO INVESTMENT FUND IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
APOLLO OVERSEAS PARTNERS IV, L.P.
By: APOLLO ADVISORS IV, L.P.
its managing general partner
By: Apollo Capital Management IV, Inc.
its general partner
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
APOLLO MANAGEMENT IV, L.P.
in its capacity as investment manager to
Apollo Investment Fund IV, L.P.
By: AIF IV Management, Inc.
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
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/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
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/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
APOLLO MANAGEMENT V, L.P.
in its capacity as investment manager to
Apollo Investment Fund V, L.P.
By: AIF V Management, Inc.
By: /s/ Xxxx Xxxxx
--------------------------
Name: Xxxx Xxxxx
Title: Vice President
Schedule 3.9
Brokers Xxxxxx Brothers Inc.
