EXHIBIT 2
LTM HOLDINGS, INC.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
September 30, 1997
Xxxxxxx Xxxxxx Xxxxxxxx Family Trust
c/o Claridge Inc.
0000 Xxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxx Xxxxxxxxxxx
Dear Xx. Xxxxxxxxxxx:
Reference is made hereby to that certain Master Agreement dated as of the
date hereof (the "Master Agreement") by and among LTM Holdings, Inc. ("LTM"),
Cineplex Odeon Corporation ("Cineplex Odeon") and Sony Pictures Entertainment
Inc. ("SPE") pursuant to which LTM and Cineplex Odeon have agreed to engage in a
business combination (the "Transactions"). You (the "Trust") are a major
shareholder of Cineplex Odeon, holding beneficially 35,918,429 Cineplex Odeon
Common Shares, with sole power to direct the voting and disposition thereof. You
understand and agree that your agreements in this letter (the "Letter
Agreement") are additional inducements to SPE's and LTM's agreements to
consummate the Transactions and to enter into the related governance provisions
for the combined enterprise. (Capitalized terms used but not otherwise defined
herein shall have the meanings assigned to them in the Master Agreement.)
1. The Trust shall vote all of its Cineplex Odeon capital stock and shall
take all other necessary or desirable actions within its control (including,
without limitation, attending all meetings in person or by proxy for purposes of
obtaining a quorum, executing all written consents in lieu of meetings and
voting to remove members of the Cineplex Odeon Board of Directors, as
applicable) to approve the Documents and the Transactions and shall vote against
any transaction that could reasonably be expected to interfere with or adversely
affect the Transactions. The Trust hereby irrevocably appoints LTM, its
officers, agents and nominees, with full power of substitution, as proxy for the
Trust to act and vote the Trust's shares of Cineplex Odeon capital stock for and
in the name, place and stead of the Trust at any annual, special or other
meeting of the shareholders of Cineplex Odeon and at any adjournment thereof or
pursuant to any consent in lieu of a meeting, or otherwise, (i) in favor of the
Transactions and any transactions appropriate to implement the Transactions,
(ii) against (A) any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of Cineplex Odeon under the Master Agreement and (B) any action or
agreement that would impede, interfere with or attempt to discourage the
Transactions, including, but not limited to, any extraordinary corporate
transaction (other than the Transactions) that would conflict with or result in
a breach of any of the representations and warranties or covenants of Cineplex
Odeon under the Documents to which it is a party, such as:
(1) a merger, consolidation, business combination, reorganization,
recapitalization or liquidation involving Cineplex Odeon or any of its
Significant Subsidiaries,
(2) a sale or transfer of a material amount of assets of Cineplex Odeon or
any of its Significant Subsidiaries,
(3) any material change in the present capitalization or dividend policy
of Cineplex Odeon, or
(4) any other material change in Cineplex Odeon's corporate structure or
business;
Page 13 of 19 Pages
unless in any such case such transaction is permitted by Article V of the Master
Agreement. LTM may exercise the irrevocable proxy granted to it hereunder at any
time the Trust fails to comply with any provision of this paragraph. The proxies
and powers granted by the Trust pursuant to this paragraph are coupled with an
interest and are given to secure its performance under the Documents. Such
proxies and powers, to the extent permitted by law, shall survive any of the
bankruptcy, insolvency, dissolution or liquidation of the Trust and will be
effective until this Letter Agreement is terminated in accordance with its
terms.
2. The Trust agrees that, during the term of this Letter Agreement, it
shall not, except pursuant to the Plan of Arrangement, sell, offer to sell,
solicit an offer to buy, contract to sell, grant an option to purchase or
otherwise transfer or dispose of any shares of Cineplex Odeon capital stock held
beneficially by it, other than to Permitted Transferees (as such term if defined
in the Stockholders Agreement) of the Claridge Group.
3. The Trust shall use its best efforts to file as soon as practicable any
required notifications under the HSR Act in connection with the Transactions,
and to respond as promptly as practicable to any inquiries received from the
Federal Trade Commission, the Antitrust Division of the Department of Justice
and/or the DIR for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any state
Attorney General or other governmental authority in connection with antitrust or
competition matters.
4. The Trust shall use its reasonable best efforts, prior to the effective
date of the Form S-4 and mailing of the Proxy Statement, to identify in writing
to LTM, SPE, Universal and Cineplex Odeon the person who will serve as the
Claridge Director (as defined in the Stockholders Agreement) upon election
thereof effective as of the Closing pursuant to the Stockholders Agreement and
in cooperation with Universal and SPE designate persons to serve as Independent
Directors (as defined in the Stockholders Agreement) effective as of the Closing
as provided in the Stockholders Agreement.
5. The Trust hereby acknowledges that the provisions of Letter Agreement
are an integral part of the Transactions and that without them, LTM and SPE
would not enter into the Master Agreement or any of the other Documents.
6. The Trust represents and warrants to LTM and SPE as of the date hereof
and as of the Closing Date as follows:
(a) (i) the Trust is a trust duly created, validly existing and in good
standing, under the laws of the province of Quebec, (ii) the Trust has all
requisite power and authority to own, operate and lease its properties and carry
on its business as now conducted, and (iii) the Trust is not, nor are any of its
Subsidiaries, in violation of any order of any court, governmental authority or
arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which any of them, or any of their respective properties or
assets, are subject that would prevent the Trust from performing its obligations
under the Documents to which it is a party;
(b) (i) the Trust has the requisite power and authority to execute and
deliver the Documents to which it is a party and all agreements and documents
contemplated thereby, and the consummation by it of the transactions
contemplated thereby has been duly authorized by the trustees of the Trust, and
(ii) the Documents to which the Trust is a party constitute, and all agreements
and documents contemplated thereby to which the Trust is a party (when executed
and delivered for value received) will constitute, the valid and legally binding
obligations of the Trust, enforceable against the Trust in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity;
(c) neither the execution and delivery by the Trust of the Documents to
which it is a party nor the consummation by it of the transactions contemplated
thereby in accordance with the terms hereof, will: (i) conflict with or result
in a breach of any provisions of the Trust's deed of donation; (ii) violate or
conflict with any agreement to which the Trust is a party or by which it is
bound, except to the extent any of the effects described in this clause (ii)
would not (x) impair the ability of the Trust to perform its obligations under
this Agreement in any material respect or (y) delay in any material respect or
prevent the consummation of the Transactions; or (iii) other than the Regulatory
Filings required of the Trust, require any material consent, approval or
authorization of, or declaration, filing or registration with, any Canadian
governmental or regulatory authority, the failure to obtain or make that would
have a Material Adverse Effect on the Trust;
Page 14 of 19 Pages
(d) (i) the Trust has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of LTM
or Cineplex Odeon to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, and (ii)
the Trust is not aware of any claim against Cineplex Odeon for payment of any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to the Master Agreement or any other
Document or the consummation of the Transactions except that the Special
Committee has retained Xxxxxx Xxxxxxx as its financial advisor; and
(e) the Trust holds beneficially 35,918,429 Cineplex Odeon Common Shares,
with sole power to direct the voting and disposition thereof, free and clear of
any Encumbrances or other restrictions on transfer except those imposed under
securities laws of general application.
7. (a) This Letter Agreement may be terminated at any time before the
Closing Date:
(i) by mutual written consent of the Trust and LTM; or
(ii) by either the Trust or LTM if the Closing shall not have occurred
on or before June 30, 1998 (the "Termination Date"); provided, however,
that the right to terminate this Letter Agreement under this Section
7(a)(ii) shall not be available to any party whose failure to fulfill any
obligation under this Letter Agreement has been the cause of, or resulted
in, the failure of the Closing to occur on or before the Termination Date;
provided, however, further, that if on the Termination Date the conditions
to the Closing set forth in Section 7. 1(b), 7 .1(d), 7.1(f) or 7.1(j) of
the Master Agreement shall not have been fulfilled, but all other
conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then the Termination Date shall be extended to December 31,
1998. The parties agree that any amendment of this Letter Agreement to
extend the Termination Date beyond June 30, 1998 shall be made without any
amendment to or renegotiation of any other material provisions of this
Letter Agreement;
(iii) by either the Trust or LTM, if a court of competent jurisdiction
or governmental, regulatory or administrative agency or commission shall
have issued an order, decree or ruling or taken any other action (which
order, decree or ruling the parties shall use their commercially reasonable
efforts to lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by the Universal
Subscription Agreement or the Master Agreement, and such order, decree,
ruling or other action shall have become final and nonappealable; and
(iv) by the Trust, if Cineplex Odeon shall have breached or violated
its obligations under the Three Party Agreement; provided that such breach
shall not have been induced by the Trust.
(b) In addition to and without limiting the foregoing, this Letter
Agreement shall automatically terminate upon termination of the Master Agreement
in accordance with the provisions of Article VIII thereof
(c) In the event of termination of this Letter Agreement, the obligations
of LTM and the Trust shall terminate and neither of them shall have any further
liability to the other, except that nothing in this Section 7(c) shall prejudice
the ability of the non-breaching party from seeking damages from the other for
the willful breach of a covenant or agreement contained herein.
8. This Letter Agreement shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to the principles
of conflicts of law. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the courts
of the State of New York and of the United States of America, in each case
located in the County of New York, for any action, proceeding or investigation
in any court or before any governmental authority ("Litigation") arising out of
or relating to this Letter Agreement and the transactions contemplated hereby
(and agrees not to commence any Litigation relating thereto except in such
courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in this
Letter Agreement shall be effective service of process for any Litigation
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any
Page 15 of 19 Pages
Litigation arising out of this Letter Agreement or the transactions contemplated
hereby in the courts of the State of New York or the United States of America,
in each case located in the County of New York, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such Litigation brought in any such court has been brought in an
inconvenient forum. Each of the parties irrevocably and unconditionally waives,
to the fullest extent permitted by applicable law, any and all rights to trial
by jury in connection with any Litigation arising out of or relating to this
Letter Agreement or the transactions contemplated hereby.
9. Subject to the consummation of the Transactions, and excluding
obligations and liabilities included in clauses (ii)(x) and (y) of the
definition of Net Working Capital and Debt reflected in each case in Cineplex
Odeon's Closing Statement or arising under the Documents, the Trust, on behalf
of itself and its Affiliates, hereby acknowledges, releases and discharges, and
indemnities and saves harmless, Cineplex Odeon and the Cineplex Odeon
Subsidiaries and their successors and assigns from all actions, causes of
action, suits, debts, dues, sums of money, accounts, claims and demands owed by
Cineplex Odeon and the Cineplex Odeon Subsidiaries to the Trust and its
Affiliates by reason of any matter, cause, contract (whether written or oral),
course of dealing or thing whatsoever arising during, or in respect of, the
period on or before the Closing Date. Each of LTM and the Trust hereby
acknowledges and agrees that the release, discharge and indemnification set
forth in this Paragraph 9 excludes any obligations or liabilities of Cineplex
Odeon and/or its Subsidiaries arising or relating to events occurring subsequent
to the Closing Date pursuant to the provisions of the agreements listed on
Schedule A hereto.
10. Whether or not the Transactions are consummated, all costs and expenses
incurred in connection with the Documents and the Transactions shall be paid by
the party incurring such expenses, except as expressly provided herein. If the
Transactions are consummated, LTM shall reimburse the Trust for all reasonable
out-of-pocket expenses and fees paid or payable by or on behalf of Trust or any
of its Affiliates, whether incurred prior to, on or after the date of this
Letter Agreement, in connection with the Transactions; provided that such
amount, together with the amount payable to Universal under Section 7.3 of the
Universal Subscription Agreement, shall not exceed US$1,000,000. Such
reimbursement shall be made on the Closing Date in immediately available funds
to a bank account that the Trust shall designate in writing to LTM no less than
three business days prior to the Closing Date.
Please indicate your agreement and assent to the foregoing by executing
this Letter Agreement where indicated below.
Very truly yours,
LTM HOLDINGS, JNC.
/s/
------------------------------
Name:
Its:
Accepted and agreed:
XXXXXXX XXXXXX XXXXXXXX
FAMILY TRUST
/s/ Date: September 30, 1997
-----------------------------
Name:
Its:
/s/ Date:
-----------------------------
Name:
Its:
Page 16 of 19 Pages
SCHEDULE A
1. Indemnification agreements to be entered into between Cineplex Odeon and
its current directors;
2. Series of agreements between Cineplex Odeon and the CRB Foundation relating
to the screening of the heritage Minutes including, without limitation, the
agreements dated May 14, 1992, December 23, 1994, July 18, 1997, August 14,
1997 and September 25, 1997;
3. The Yonge-Eglinton Cinema limited partnership agreement dated July 31, 1985
and all amendments and ancillary agreements thereto (the "Limited
Partnership Agreement"). For greater certainty, the release set forth in
the Letter Agreement does not include any year end adjustments relating to
the level of Annual Gross Box Office Receipts (as such term is defined in
the Limited Partnership Agreement), attributable in part to the period
prior to the Closing Date; and
4. The Sublease Agreement dated June 1985 between Cineplex Odeon, as
Sublessor, and the Yonge-Eglinton limited partnership, as Sublessee, as
amended through the date hereof, together with year end adjustments.
Page 17 of 19 Pages
