Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_05-cv-05306/USCOURTS-cand-3_05-cv-05306-1/pdf.json

Parties Involved:
AMC Entertainment Inc.,
Defendant
LCE Holdings, Inc.,
Defendant
Loews Cineplex Entertainment Corporation
Defendant
Marquee Holdings, Inc.,
Defendant
The State of California
Plaintiff

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STIPULATED FINAL JUDGMENT

1

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,

Plaintiff,

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.

CASE NO. C 05-5306

STIPULATED FINAL JUDGMENT

AND ORDER CLOSING FILE

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 December 22, 2005, plaintiff

and defendants by their respective attorneys have consented to the entry of this Final Judgment

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STIPULATED FINAL JUDGMENT

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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,

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STIPULATED FINAL JUDGMENT

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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

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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

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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

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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

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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

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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

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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.

Pursuant to the parties’ stipulated judgment, the Clerk of Court shall close the file.

IT IS SO ORDERED.

 January 19, 2006 ________________________________ Dated: MARIA-ELENA JAMES

United States Magistrate Judge

Stipulated Judgment.wpd

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