Exhibit 10.7

 

 

[SEAL]

 

RECEIVED

 

 

 

DEC 22 AM 9:39

 

 

 

RICHARD W. WEEKING

 

CLERK, U.S. DISTRICT COURT

 

NORTHERN DISTRICT OF CALIFORNIA

 

BILL LOCKYER

Attorney General of the State of California

RICHARD M. FRANK

Chief Deputy Attorney General

THOMAS GREENE

Chief Assistant Attorney General

KATHLEEN E. FOOTE

Senior Assistant Attorney General

ADAM MILLER, State Bar No. 168254

Deputy Attorney General

455 Golden Gate Avenue, Suite 11000

San Francisco, CA 94102-7004

Telephone: (415) 703-5551

Fax: (415) 703-5480

Email: Adam.Miller@doj.ca.gov

 

Attorneys for the State of California

 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

 

STATE OF CALIFORNIA,

 

CASE NO.

 

 

 

Plaintiff,

 

[PROPOSED]

 

 

STIPULATED FINAL JUDGMENT

v.

 

 

 

 

 

MARQUEE HOLDINGS, INC.,

 

 

a Delaware corporation,

 

 

d/b/a AMC ENTERTAINMENT INC.,

 

 

 

 

 

and

 

 

 

 

 

LCE HOLDINGS, INC.,
a Delaware corporation,
d/b/a LOEWS CINEPLEX
ENTERTAINMENT CORPORATION,

 

 

 

 

 

Defendants.

 

 

 

STIPULATED FINAL JUDGMENT

 

WHEREAS, on June 21, 2005, defendants announced their intention to merge (the
“proposed transaction”);

 

AND WHEREAS, the State of California (“plaintiff”) filed its Complaint against
Marquee Holdings Inc. and LCE Holdings, Inc. (“defendants”)
on            ,       2005, plaintiff and defendants by their respective
attorneys have consented to the entry of this Final Judgment

 

STIPULATED FINAL JUDGMENT

 

1

--------------------------------------------------------------------------------

 

without trial or adjudication of any issue of fact or law herein, defendants and
their respective attorneys have waived notice of presentation of this Final
Judgment and service of summons, and without this Final Judgment constituting
any evidence against or an admission by any party with respect to any issue of
law or fact herein;

 

AND WHEREAS, defendants have agreed to be bound by the provisions of this Final
Judgment pending its approval by the Court;

 

AND WHEREAS, this Final Judgment requires defendants, as a condition of the
proposed transaction, to promptly divest the two theaters in the State of
California identified below;

 

AND WHEREAS, plaintiff’s purpose in seeking these divestitures, and plaintiff’s
actions in effectuating these divestitures, are to establish a viable
competitor(s) in the State of California in the exhibition of first-run movies;

 

AND WHEREAS, defendants have represented to the plaintiff that the divestitures
ordered herein will be made, and that defendants will later raise no claim of
hardship or difficulty in accomplishing the divestitures as grounds for asking
the Court to modify the divestiture requirements of this Final Judgment;

 

NOW, THEREFORE, before the taking of any testimony, and without trial or
adjudication of any issue of fact or law herein, and upon consent of the parties
hereto, it is hereby ORDERED, ADJUDGED, AND DECREED as follows:

 

I.              JURISDICTION

 

This Court has jurisdiction over each of the parties hereto and over the subject
matter of this action. The Complaint states a claim by the plaintiff upon which
relief may be granted against the defendants, as hereinafter defined, under
Section 7 of the Clayton Act, as amended (15 U.S.C. § 18).

 

II.            DEFINITIONS

 

“OAG” means the Office of the Attorney General for the State of California.

 

“AMC” means Marquee Holdings Inc. d/b/a AMC Entertainment Inc. and AMC Theatres,
a Delaware corporation with its principal place of business in Kansas City,
Missouri,

 

2

--------------------------------------------------------------------------------

 

and its successors, assigns, subsidiaries, divisions, groups, affiliates,
partnerships and joint ventures, and directors, officers, managers, agents, and
employees.

 

“Loews” means LCE Holdings, Inc. d//b/a Loews Cineplex Entertainment Corporation
and Loews Theatres, a Delaware corporation with its principal place of business
in New York, New York, and its successors, assigns, subsidiaries, divisions,
groups, affiliates, partnerships and joint ventures, and directors, officers,
managers, agents, and employees.

 

“Defendants” means AMC and Loews, collectively or individually.

 

The “State of California theatre assets” means the movie theatre businesses
operated by AMC at 1000 Van Ness Avenue, San Francisco, CA (commonly known as
the AMC Van Ness), and 1881 Post Street, San Francisco, CA (commonly known as
the AMC Kabuki). This term includes all tangible and intangible assets used in
the operation of these theatres including: all real property (owned and leased);
all personal property, inventory, office furniture, fixed assets and fixtures,
materials, supplies, and other tangible property or improvements used in the
operation of the theatres; all licenses, permits and authorizations issued by
any governmental organization relating to the operation of the theatres, and all
contracts, agreements, leases, licenses, commitments and understandings
pertaining to the theatres including supply agreements and licenses to exhibit
motion pictures. Provided however, that this term does not include (1) any right
to use or interest in the defendants’ trade names, trade marks and copyrighted
material, or (2) assets that the defendants do not own and are not legally able
to transfer. With the approval of OAG, in its sole discretion, the State of
California theatre assets may be modified to exclude assets and rights that are
not necessary to meet the competitive aims of this Final Judgment and assets
that the Acquirer(s) does not desire to purchase.

 

“Acquirer” means the entity or entities to whom defendants divest the State of
California theatre assets under this Final Judgment.

 

III.           APPLICABILITY

 

A.            The provisions of this Final Judgment apply to defendants, their
successors and assigns, their subsidiaries, directors, officers, managers,
agents, and employees, and all other

 

3

--------------------------------------------------------------------------------

 

persons in active concert or participation with any of them who shall have
received actual notice of this Final Judgment by personal service or otherwise.

 

B.            Defendants shall require a party that acquires all or
substantially all of the assets used in defendants’ business of operating movie
theatres in the State of California to be bound by the provision of this Final
Judgment; provided, however, that defendants need not obtain such an agreement
from an Acquirer in connection with the divestiture of the State of California
theatre assets.

 

IV.           DIVESTITURE

 

A.            Defendants are hereby ordered and directed in accordance with the
terms of this Final Judgment, within 180 calendar days after the filing of the
Complaint in this matter or within 60 calendar days of the consummation of the
proposed transaction, whichever is later, to divest the State of California
theatre assets to an Acquirer or Acquirers acceptable to OAG in its sole
discretion.

 

B.            Defendants shall use their best efforts to accomplish the
divestitures as expeditiously and timely as possible. The OAG, in its sole
discretion, may extend the time period for any divestiture for two additional 30
day periods of time, not to exceed 60 calendar days in total.

 

C.            In accomplishing the divestitures ordered by this Final Judgment,
defendants shall promptly make known, by usual and customary means, the
availability of the State of California theatre assets described in this Final
Judgment. Defendants shall inform any person making an inquiry regarding a
possible purchase that the sale is being made pursuant to this Final Judgment
and provide such person with a copy of this Final Judgment. Defendants shall
also furnish to all prospective Acquirers, subject to customary confidentiality
assurances, all information regarding the State of California theatre assets
customarily provided in a due diligence process, except such information subject
to attorney-client privilege or attorney work-product privilege.

 

D.            Defendants shall not take any action that will impede in any way
the operation of the State of California theatre assets or jeopardize the
divestitures described in this Final Judgment. Unless OAG otherwise consents in
writing, defendants shall maintain and operate the

 

4

--------------------------------------------------------------------------------

 

theatres to be divested as active businesses, maintain the management, staffing,
sales, and marketing of the theatres at levels substantially the same as current
levels, and maintain the theatres in operable condition at current capacity
configurations. The obligation of defendants to maintain and operate State of
California theatre assets terminates at the accomplishment of the divestitures
or by order of the Court pursuant to Section V.F. of this Final Judgment.
Nothing in this paragraph shall prevent the defendants from competing with the
Acquirer(s) after the divestiture of the State of California theatre assets has
been accomplished.

 

E.             Unless OAG otherwise consents in writing, the divestitures
pursuant to Section IV, or by trustee appointed pursuant to Section V of this
Final Judgment, shall include the entire State of California theatre assets and
be accomplished by selling or otherwise conveying the State of California
theatre assets in such a way as to satisfy OAG in its sole discretion that the
State of California theatre assets will be used by the Acquirer(s) as part of a
viable, ongoing business of exhibition of first-run films. The divestitures,
whether pursuant to Section IV or Section V of this Final Judgment: (1) shall be
made to an Acquirer or Acquirers who it is demonstrated to OAG’s sole
satisfaction has or have the intent and capability (including the necessary
managerial, operational, and financial capability) of competing effectively in
the business of exhibition of first-run films; (2) shall be accomplished so as
to satisfy OAG, in its sole discretion, that none of the terms of any agreement
between an Acquirer and AMC or Loews give the defendants the ability
unreasonably to raise the Acquirer’s costs, to lower the Acquirer’s efficiency,
or otherwise to interfere with the ability of the Acquirer to compete
effectively.

 

F.             Within 20 calendar days of the filing of the Complaint in this
matter and every 30 calendar days thereafter until the divestitures have been
completed, defendants shall deliver to OAG a progress report describing
defendants’ efforts in divesting and maintaining the State of California theatre
assets. The progress report shall include, at a minimum, (1) the name, address,
phone number of any person who has expressed any interest in acquiring,
negotiating or receiving more information about the State of California theatre
assets; (2) the efforts defendants

 

5

--------------------------------------------------------------------------------

 

have made in soliciting and providing information to prospective Acquirers; and
(3) any changes in the management, staffing, sales, and play policies of the
State of California theatre assets.

 

V.            APPOINTMENT OF TRUSTEE

 

A.            In the event that defendants have not divested the State of
California theatre assets within the time specified in Section IV of this Final
Judgment, the Court shall appoint, on application of OAG, a trustee selected by
OAG to effect the divestiture of the State of California theatre assets.

 

B.            After the appointment of a trustee becomes effective, only the
trustee shall have the right to sell the State of California theatre assets
included in the trustee’s appointment. The trustee shall have the power and
authority to accomplish any divestitures at the best price then obtainable upon
a reasonable effort by the trustee and shall have such other powers as the Court
shall deem appropriate. Subject to Section V.C. of this Final Judgment, the
trustee shall have the power and authority to hire at the cost and expense of
defendants any investment bankers, attorneys, or other agents reasonably
necessary in the judgment of the trustee to assist in the divestitures, and such
professionals and agents shall be accountable solely to the trustee. The trustee
shall have the power and authority to accomplish any State of California theatre
assets divestitures at the earliest possible time to an Acquirer or Acquirers
acceptable to OAG in its sole discretion, and shall have such other powers as
this Court shall deem appropriate. Defendants shall not object to a sale by the
trustee on any grounds other than the trustee’s malfeasance, or on the grounds
that the sale is contrary to the express terms of this Final Judgment. Any such
objections by defendants must be conveyed in writing to OAG and the trustee
within ten calendar days after the trustee has provided the notice required
under Section VI of this Final Judgment.

 

C.            The trustee shall serve at the cost and expense of defendants, on
such terms and conditions as the Court may prescribe, and shall account for all
monies derived from the sale of the assets sold by the trustee and all costs and
expenses so incurred. After approval by the Court of the trustee’s accounting,
including fees for its services and those of any professionals and agents
retained by the trustee, all remaining money shall be paid to defendants and the
trust shall

 

6

--------------------------------------------------------------------------------

 

then be terminated. The compensation of such trustee and of any professionals
and agents retained by the trustee shall be reasonable in light of the value of
the divested business and based on a fee arrangement providing the trustee with
an incentive based on the price and terms of the divestitures and the speed with
which they are accomplished.

 

D.            Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestitures, including best efforts to effect all
necessary consents and regulatory approvals. The trustee, and any consultants,
accountants, attorneys and other persons retained by the trustee, shall have
full and complete access to the personnel, books, records, and facilities of the
businesses to be divested, and defendants shall develop financial or other
information relevant to the business to be divested customarily provided in a
due diligence process as the trustee may reasonably request, subject to
customary confidentiality assurances. Defendants shall permit prospective
Acquirers of the assets to have reasonable access to personnel and to make such
inspection of physical facilities and any and all financial, operational or
other documents and other information as may be relevant to the divestitures
required by this Final Judgment.

 

E.             After its appointment, the trustee shall file monthly reports
with the parties and the Court setting forth the trustee’s efforts to accomplish
the divestitures ordered pursuant to this Final Judgment; provided, however,
that to the extent such reports contain information that the trustee deems
confidential, such reports shall not be filed in the public docket of the Court.
Such reports shall include the name, address and telephone number of each person
who, during the preceding month, made an offer to acquire, expressed an interest
in acquiring, entered into negotiations to acquire, or was contacted or made an
inquiry about acquiring, any interest in the businesses to be divested, and
shall describe in detail each contact with any such person during that period.
The trustee shall maintain full records of all efforts made to divest the
businesses to be divested.

 

F.             If the trustee has not accomplished such divestitures within 90
days after its appointment, the trustee thereupon shall file promptly with the
Court a report setting forth (1) the trustee’s efforts to accomplish the
required divestitures, (2) the reasons, in the trustee’s judgment, why the
required divestitures have not been accomplished, and (3) the trustee’s

 

7

--------------------------------------------------------------------------------

 

recommendations; provided, however, that to the extent such reports contain
information that the trustee deems confidential, such reports shall not be filed
in the public docket of the Court. The trustee shall at the same time furnish
such report to the parties, who shall each have the right to be heard and to
make additional recommendations consistent with the purpose of the trust. The
Court shall enter thereafter such orders as it shall deem appropriate in order
to carry out the purpose of the trust which may, if necessary, include extending
the trust and the term of the trustee’s appointment by a period requested by
OAG.

 

VI.           NOTIFICATION

 

A.            Within two business days following execution of a definitive
agreement, contingent upon compliance with the terms of this Final Judgment, to
effect, in whole or in part, any proposed divestitures pursuant to Sections IV
or V of this Final Judgment, defendants or the trustee, whichever is then
responsible for effecting the divestitures, shall notify OAG of the proposed
divestitures. If the trustee is responsible, it shall similarly notify
defendants. The notice shall set forth the details of the proposed transaction
and list the name, address, and telephone number of each person not previously
identified who offered to, or expressed an interest in or a desire to, acquire
any ownership interest in the businesses to be divested that are the subject of
the binding contract, together with full details of same. Within ten calendar
days of receipt by OAG of notice, OAG may request from defendants, the proposed
Acquirer, or any other third party, additional information concerning the
proposed divestitures and the proposed Acquirer. Defendants and the trustee
shall furnish any additional information requested from them within ten calendar
days of the receipt of the request, unless the parties shall otherwise agree.
Within 30 calendar days after receipt of the notice or within 20 calendar days
after OAG has been provided the additional information requested from
defendants, the proposed Acquirer, and any third party, whichever is later, OAG
shall provide written notice to defendants and the trustee, if there is one,
stating whether or not it objects to the proposed divestitures. If OAG provides
written notice to defendants and the trustee that OAG does not object, then the
divestitures may be consummated, subject only to defendants’ limited right to
object to the sale under Section V of this Final Judgment Absent written notice
that OAG does not object to the proposed Acquirer or

 

8

--------------------------------------------------------------------------------

 

upon objection by OAG, a divestiture proposed under Section IV or Section V may
not be consummated. Upon objection by defendants under the provision in
Section V, a divestiture proposed under Section V shall not be consummated
unless approved by the Court.

 

B.            Until one year after any divestiture required by this Final
Judgment has been completed, defendants shall preserve all records of all
efforts made to preserve the business to be divested and effect the
divestitures.

 

VII.         RETENTION OF JURISDICTION

 

Jurisdiction is retained by this Court for the purpose of enabling any of the
parties to this Final Judgment to apply to this Court at any time for such
further orders and directions as may be necessary or appropriate for the
construction or carrying out of this Final Judgment, for the modification of any
of the provisions hereof, for the enforcement of compliance herewith, and for
the punishment of any violations hereof.

 

VIII.        ATTORNEYS’ FEES AND COSTS

 

Plaintiff is awarded the amount of $45,000 for reimbursement of attorneys’ fees
and costs incurred by Plaintiff in this matter for all work performed up to
entry of this Final Judgment.

 

IX.           TERMINATION

 

Unless this Court grants an extension, this Final Judgment will expire upon the
fifth anniversary of the date of its entry.

 

X.            PUBLIC INTEREST

 

Entry of this Final Judgment is in the public interest.

 

 

 

 

DATED this           day of      , 200   .

 

 

 

 

 

 

 

 

 

 

 

Dated:

 

United States District Court Judge

 

[ILLEGIBLE]

 

9

--------------------------------------------------------------------------------