UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Information to be Included in Statements Filed Pursuant
to 13d-1(a) and Amendments Thereto Filed Pursuant to 13d-2(a)
Under the Securities Exchange Act of 1934
(Amendment No.__)*
LOEWS CINEPLEX ENTERTAINMENT CORPORATION
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
540423 10 0
(CUSIP Number)
Karen Randall, Esq.
Universal Studios, Inc.
100 Universal City Plaza
Universal City, California 91608
(818) 777-1000
(Name, Address and Telephone Number of person Authorized to Receive Notices
and Communications)
May 14, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Section 240.13d-1(e), 240.13d-1(f) or
240.13d-1(g), check the following box /___/.
Note: Schedule filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Sections 240.13d-
7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
PAGE 1 OF 29 PAGES
<PAGE>
SCHEDULE 13D
CUSIP No. 540423 10 0 Page 2 of 29 Pages
----------- ------- --------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Seagram Company Ltd.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /___/
(b) /_X_/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00; WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /___/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY 11,691,249
EACH
9 SOLE DISPOSITIVE POWER REPORTING
PERSON
0
WITH
10 SHARED DISPOSITIVE POWER
11,691,249
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,691,249
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/___/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.6%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
SCHEDULE 13D
CUSIP No. 540423 10 0 Page 3 of 29 Pages
----------- ------- --------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Universal Studios, Inc.
IRS Identification No. 95-2011468
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) /___/
(b) /_X_/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
00; WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) /___/
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY 8 SHARED VOTING POWER
OWNED
BY 11,691,249
EACH
9 SOLE DISPOSITIVE POWER REPORTING
PERSON
0
WITH
10 SHARED DISPOSITIVE POWER
11,691,249
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,691,249
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/___/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.6%
14 TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION
<PAGE>
Page 4 of 29 Pages
Item 1. Security and Issuer.
This Statement on Schedule 13D relates to shares of common
stock, par value $0.01 per share (the "Common Stock"), of Loews Cineplex
Entertainment Corporation, a Delaware corporation formerly known as LTM
Holdings, Inc. (the "Company"). The principal executive office and mailing
address of the Company is 711 Fifth Avenue, 11th Floor, New York, New York
10022.
Item 2. Identity and Background.
(a) - (f) This Schedule 13D is being filed jointly by The
Seagram Company Ltd., a Canadian corporation ("Seagram"), and Universal
Studios, Inc., a Delaware corporation ("Universal") (each, a "Reporting
person" and, collectively, the "Reporting Persons"), to report the
acquisition of beneficial ownership of more than 5% of the Common Stock. The
agreement between the Reporting Persons relating to the joint filing of this
Schedule 13D is attached as Exhibit 1 hereto.
The principal executive offices of Seagram are located at
1430 Peel Street, Montreal, Quebec, Canada H3A 1S9 and the principal
executive offices of Universal are located at 100 Universal City Plaza,
Universal City, California 91608.
Seagram operates in two global segments: beverages and
entertainment. The beverage businesses are engaged principally in the
production and marketing of distilled spirits, wines, fruit juices, coolers,
beers and mixers throughout more than 150 countries and territories. The
entertainment company, Universal, produces and distributes motion picture,
television and home video products; produces and distributes recorded music;
and operates theme parks and retail stores.
Descendants of the late Samuel Bronfman and trusts
established for their benefit (collectively, the "Bronfman Family")
beneficially own directly or indirectly approximately 34.6% of the
outstanding common shares without nominal or par value of Seagram (the
"Seagram Common Shares"). Of that amount, Bronfman Associates, a partnership
of which Edgar M. Bronfman, his children and a trust for the benefit of
Edgar M. Bronfman and his descendants are the sole partners and of which
Edgar M. Bronfman is the managing partner, along with a second trust for the
benefit of Edgar M. Bronfman and his descendants, own directly approximately
17.5% of the Seagram Common Shares, trusts for the benefit of Charles R.
Bronfman and his descendants own directly approximately 14.9% of the Seagram
Common Shares, trusts for the benefit of the family of the late Minda de
Gunzburg and members of her immediate family own directly or indirectly
approximately 0.7% of the Seagram Common Shares, Phyllis Lambert owns
directly or indirectly approximately 0.3% of the Seagram Common Shares, a
charitable foundation of which Charles R. Bronfman is among the directors
owns approximately 1.0% of the Seagram Common Shares, another charitable
foundation of which Charles R. Bronfman is among the directors owns
approximately 0.2% of the Seagram Common Shares, a charitable foundation of
which Edgar M. Bronfman and Charles R. Bronfman are among the trustees owns
approximately 0.1% of the Seagram Common Shares, a charitable foundation of
which Phyllis Lambert is one of the directors owns less than 0.01% of the
Seagram Common Shares and Edgar M. Bronfman, Charles R. Bronfman and their
<PAGE>
Page 5 of 29 Pages
respective spouses and children own directly approximately 0.02% of the
Seagram Common Shares. In addition, such persons hold currently exercisable
options to purchase an additional 1.0% of the Seagram Common Shares,
calculated pursuant to Rule 13d-3 of the Rules and Regulations under the Act.
Percentages set forth in this Item 2 are based on the number of Seagram
Common Shares outstanding as of April 30, 1998.
Edgar M. Bronfman is Chairman of the Board of Seagram and a
director of Seagram. Charles R. Bronfman is Co-Chairman of the Board and
Chairman of the Executive Committee of Seagram and a director of Seagram.
Edgar M. Bronfman, Charles R. Bronfman, Phyllis Lambert and the late Minda de
Gunzburg are siblings.
Pursuant to a voting trust agreement, Charles R. Bronfman
serves as voting trustee for Seagram Common Shares beneficially owned
directly or indirectly by Bronfman Associates, the aforesaid trusts for the
benefit of Edgar M. Bronfman and his descendants, the aforesaid trusts for
the benefit of Charles R. Bronfman and his descendants, the first two of the
four aforesaid charitable foundations and Charles R. Bronfman. Pursuant to
another voting trust agreement, Edgar M. Bronfman and Charles R. Bronfman are
among the voting trustees for Seagram Common Shares beneficially owned
directly or indirectly by trusts for the benefit of the family of the late
Minda de Gunzburg and members of her immediate family. Neither voting trust
agreement contains restrictions on the right of the voting trustees to vote
the deposited Seagram Common Shares.
The Bronfman Family may be deemed to be in control of
Seagram. Information concerning the foregoing persons and entities, together
with information concerning the directors and executive officers of Universal
and Seagram, is contained in Schedule 1 attached hereto.
During the last five years, neither Seagram nor Universal,
nor to the best knowledge of Seagram or Universal, any of their respective
directors or executive officers (or any other person or entity set forth in
Schedule 1), has been (i) convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding has been or is subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 4 below, Universal purchased
4,426,606 shares of Common Stock for $84.5 million in cash pursuant to an
Amended and Restated Subscription Agreement dated as of September 30, 1997
between Universal and the Company (the "Subscription Agreement"). Universal
obtained funds for such purchase from its general corporate funds.
Item 4. Purpose of Transaction.
On September 30, 1997, Cineplex Odeon Corporation
("Cineplex"), Sony Pictures Entertainment Inc. ("SPE") and the Company, which
was then a wholly-owned subsidiary of SPE, entered into a Master Agreement
(the "Master Agreement") providing for, among other things, a business
combination involving the Company and Cineplex which resulted in Cineplex
<PAGE>
Page 6 of 29 Pages
becoming a wholly-owned subsidiary of the Company. On May 14, 1998 (the
"Closing Date"), the business combination was effected (the "Closing")
pursuant to a plan of arrangement (the "Arrangement") of Cineplex under the
Business Corporations Act (Ontario). As part of the Arrangement, (i) the
Company acquired from Cineplex all of the capital stock of Plitt Theatres,
Inc., a wholly-owned subsidiary of Cineplex, in exchange for 8,242,385 shares
of Common Stock, (ii) Cineplex distributed such shares to its shareholders
(including Universal, which owned 73,446,426 Subordinate Restricted Voting
Shares of Cineplex immediately prior to the Closing), on a pro rata basis, in
consideration for the purchase for cancellation of approximately 46.6% of
their shares of Cineplex capital stock, on a pro rata basis, and (iii) the
Company acquired each remaining outstanding share of Cineplex capital stock
in exchange for one-tenth of one share of Common Stock, except that the
Company acquired 800,000 Subordinate Restricted Voting Shares of Cineplex
from Universal in exchange for 80,000 shares of Class B non-voting common
stock, par value $.01 per share, of the Company ("Class B Non-Voting Common
Shares") and the Company acquired 40,000 shares of Cineplex capital stock
from the Charles Rosner Bronfman Family Trust (the "Trust") in exchange for
4,000 Class B Non-Voting Common Shares.
In addition to receiving Common Stock pursuant to the
Arrangement as a Cineplex shareholder, as an integral part of the business
combination between Cineplex and the Company, Universal purchased 4,426,606
shares of Common Stock for $84.5 million in cash on the Closing Date (the
"Purchase") pursuant to the Subscription Agreement, which Universal and the
Company entered into concurrently with the execution and delivery of the
Master Agreement. The number of shares of Common Stock purchased by
Universal is subject to adjustment in connection with certain issuances of
securities by the Company. See Item 6 below for a further description of the
Subscription Agreement.
The preceding summary of certain provisions of the Master
Agreement and the Subscription Agreement is not intended to be complete and
is qualified in its entirety by reference to the full text of such
agreements. The Subscription Agreement is incorporated herein by reference.
In the ordinary course of business, Universal intends to
review the performance of its investment in the Company. Depending on
various factors, including the Company's business affairs, prospects,
financial position, current and anticipated future price levels of the Common
Stock, conditions in the securities markets, general economic and industry
conditions, as well as other opportunities available to it, Universal will
take such actions with respect to its investment in the Company as it deems
appropriate in light of the circumstances existing from time to time and
subject to the Stockholders Agreement (as defined and described in Item 6
below). Subject to such agreement, Universal may purchase additional equity
in the Company or may, and hereby reserves the right to, sell some or all of
its holdings in the open market or in privately negotiated transactions to
one or more purchasers under appropriate circumstances.
Other than as described above, none of the Reporting Persons
has any plans or proposals that relate to or would result in any of the
actions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D
(although each Reporting person reserves the right to develop such plans).
<PAGE>
Page 7 of 29 Pages
Item 5. Interest in Securities of the Issuer.
Universal beneficially owns 11,691,249 shares of Common
Stock, representing 26.6% of the outstanding shares of Common Stock,
consisting of the shares acquired by Universal pursuant to the Arrangement
and the 4,426,006 shares acquired pursuant to the Purchase. Universal and an
affiliate also beneficially own 80,000 Class B Non-Voting Common Shares which
were acquired pursuant to the Arrangement and which are identical to the
Common Stock except that the Class B Non-Voting Common Shares (i) are not
entitled to vote, except as required by law, and (ii) shall convert into Common
Stock, on a one-for-one basis, upon the later of (A) their transfer to any
person, other than Universal or an affiliate thereof and (B) the fifth
anniversary of the Closing Date. As a result of its ownership of an indirect
84% interest in Universal, Seagram may also be deemed to beneficially own such
shares of Common Stock and Class B Non-Voting Common Shares. Subject to the
terms of the Stockholders Agreement, Universal has the power to vote and
dispose of the foregoing shares of Common Stock.
As disclosed in a Statement on Schedule 13D filed by the
Claridge Group (as defined below) with respect to the Common Stock, (i)
Charles R. Bronfman, Co-Chairman of the Board of Directors and Chairman of
the Executive Committee of Seagram, beneficially owns, indirectly, 3,918,907
shares of Common Stock, representing 8.9% of the outstanding Common Stock,
(ii) E. Leo Kolber, a director of Seagram, beneficially owns, indirectly,
350,309 shares of Common Stock, representing 0.8% of the outstanding Common
Stock, and (iii) The Phyllis Lambert Foundation, a charitable foundation the
members and directors of which include Charles R. Bronfman and Phyllis
Lambert, beneficially owns 31,410 shares of Common Stock, representing 0.07%
of the outstanding Common Stock. The shares described in this paragraph are
all subject to the Stockholders Agreement as shares held by members of the
Claridge Group. Upon consummation of the Arrangement, members of the
Claridge Group owned an aggregate of 4,324,003 shares of Common Stock or 9.8%
of the Common Stock and 4,000 shares of Class B Non-Voting Common Shares.
Except as described above, none of the Reporting Persons
nor, to the best knowledge of the Reporting Persons, any of their respective
directors or executive officers (or any other person or entity set forth in
Schedule 1 to the Schedule 13D), has the power to vote or direct the vote or
to dispose or to direct the disposition of any shares of Common Stock.
In addition, upon consummation of the transactions
contemplated by the Master Agreement, SPE, directly and indirectly, owned
21,934,625 shares, or 49.9%, of the Common Stock and 1,202,486 shares of
Class A Non-Voting Common Stock, par value $.01 per share, of the Company
("Class A Non-Voting Common Shares" and, together with Class B Non-Voting
Common Shares, "Non-Voting Common Shares"), which are identical to the Common
Stock except that the Class A Non-Voting Common Shares (i) are not entitled
to vote, except as required by law, and (ii) shall convert into Common Stock,
on a one-for-one basis (A) upon their transfer to any party other than SPE
and its affiliates, (B) if, before giving effect to their conversion, SPE and
its affiliates would beneficially own in the aggregate less than 49.9% of the
outstanding Common Stock, in an amount that would result in SPE and its
affiliates beneficially owning not more than 49.9% of the outstanding Common
Stock and (C) upon the third anniversary of the Closing.
The Reporting Persons may be deemed to have formed a group
with respect to the Common Stock with SPE and the members of the Claridge
<PAGE>
Page 8 of 29 Pages
Group as a result of such parties entering into the Stockholders Agreement.
Neither the fact of this filing nor anything contained herein shall be deemed
to be an admission by the Reporting Persons that a group among the Reporting
Persons and any of SPE or any member of the Claridge Group exists with
respect to the Common Stock, and each of the Reporting Persons disclaims the
existence of any such group. Accordingly, each Reporting Person disclaims
beneficial ownership of the shares of Common Stock beneficially owned by SPE
and the Claridge Group. The Reporting Persons are advised that each of SPE
and the Claridge Group is separately filing a Statement on Schedule 13D with
respect to its ownership of Common Stock.
Except with respect to the acquisition of Common Stock and
Class B Non-Voting Common Shares pursuant to the Arrangement and the
Purchase, neither the Reporting Persons, nor, to the best knowledge of the
Reporting Persons, any person or entity named in Schedule 1, has effected any
transaction in Common Stock during the past 60 days.
Percentages set forth in this Item 5 are based on the
43,963,333 shares of Common Stock anticipated to be outstanding as of the
Closing Date as reported in the Company's Registration Statement on Form S-4
relating to the Arrangement.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
As described in Item 4 above, Universal purchased 4,426,606
shares of Common Stock on the Closing Date in exchange for a cash payment of
$84.5 million or $19.0891 per share. The number of shares of Common Stock to
be issued to Universal pursuant to the Subscription Agreement is subject to
adjustment pursuant to the anti-dilution provisions contained therein. In
accordance with these provisions, the Company will be required to issue,
subject to applicable stock exchange requirements, additional Common Stock to
Universal for no additional consideration if the Company issues or sells any
Common Stock (other than in connection with employee stock options or the
conversion of Non-Voting Common Shares) in certain types of transactions to
any person other than Universal or any of its affiliates (a "Sale"),
including issuances upon conversion, exchange or exercise of voting share
equivalents, whether in one or a series of transactions for consideration
(the "Subsequent Sale Price") of less than $19.0891 per share, subject to
adjustments.
Upon the closing of the first Sale having a Subsequent Sale
Price of less than $19.0891, the number of additional shares to be issued to
Universal would equal (a) the quotient of $84,500,000 divided by the
Subsequent Sale Price, minus (b) 4,426,606 shares of Common Stock. Upon the
completion of each subsequent Sale, the number of additional shares would
equal (w) the quotient of $84,500,000 divided by the weighted average
Subsequent Sale Price (determined in accordance with the Subscription
Agreement) of all Sales, minus (x) the number of additional shares of Common
Stock previously issued to Universal pursuant to the adjustment provisions of
the Subscription Agreement, minus (y) the 4,426,606 shares of Common Stock
issued to Universal on the Closing, plus (z) any shares of Common Stock that
Universal may be required to deliver as described in the following sentence.
In certain circumstances, if there is more than one Sale, Universal may be
required to deliver shares of Common Stock to the Company to the extent that
the Subsequent Sale Price is greater than the weighted average Subsequent
<PAGE>
Page 9 of 29 Pages
Sale Price of all Sales. The anti-dilution provisions terminate once the
aggregate proceeds of all Sales equals or exceeds $100 million.
The Subscription Agreement also provides that from and after
the later of (i) the second anniversary of the Closing Date and (ii) the
fifteenth day of the month following the first month end as of which the
outstanding debt of the Company is less than 4.75 times the consolidated
EBITDA of the Company for the twelve-month period then ended (the "Start
Date"), Universal will have the right (the "Put Right") to cause the Company
to lease the Universal City Cinema motion picture theater facility located at
the Universal City, California retail and entertainment complex (the
"Universal City Cinema") pursuant to a 20-year lease (the "Lease"). If
Universal exercises the Put Right, on the date the Lease is signed (the
"Lease Signing Date") the Company will pay to Universal cash consideration
for entering into the Lease and the conveyance of the related personal
property equal to (i) ten times the cash flow of the Universal City Cinema
for the 12-month period ended on the last day of the month preceding
Universal's giving notice (the "Put Notice") of its exercise of the put (the
"Base Price") minus (ii) (if applicable) the cost of eliminating any
deficiencies from the operating requirements and standards set forth in the
Lease specifically listed on a certificate executed by an officer of
Universal, which cost shall be estimated by an engineering firm or other
expert (the "Engineering Firm") selected by Universal and reasonably
acceptable to the Company (the "Deficiency Amount"). On the Lease Signing
Date, Universal shall elect one of the following three options: (i) to
provide a surviving representation and warranty to the Company that, as of
the Lease Signing Date, the Universal City Cinema satisfies all of the
operating requirements and standards set forth in the Lease; (ii) to (A)
certify that, as of the Lease Signing Date, the Universal City Cinema
satisfies all of the operating requirements and standards set forth in the
Lease with only such deficiencies therefrom as are (x) specifically listed on
a certificate executed by an officer of Universal and (y) accompanied by an
estimate of the Deficiency Amount prepared by the Engineering Firm and (B)
agree that such Deficiency Amount shall be deducted from the Base Price; or
(iii) to (A) certify as described in clause (ii) (A) above and (B) agree, at
Universal's sole cost and expense, to cause such deficiencies to be
eliminated in full in accordance with the terms of the Lease in lieu of
deducting the Deficiency Amount from the Base Price. The Put Right shall
terminate as of the close of business on the third anniversary of the Start
Date if the Put Notice has not been delivered prior to such date. The
Company shall provide to Universal not less than five days prior written
notice of the Start Date, and, if the Company shall fail to provide such
notice, the Start Date shall be tolled until the fifth day following delivery
of such notice.
I. THE STOCKHOLDERS AGREEMENT
The Company, SPE, Universal, the Trust, Charles R. Bronfman,
E. Leo Kolber, Arnold M. Ludwick and certain related persons (the Trust and
such individuals and related persons, collectively the "Claridge Group") have
entered into an Amended and Restated Stockholders Agreement dated as of
September 30, 1997 (the "Stockholders Agreement"), which provides for certain
board, voting, consent, standstill, purchase, transfer and other rights and
obligations for the parties thereto following the Closing (the parties to the
Stockholders Agreement, being referred to herein collectively, as the
"Stockholders").
<PAGE>
Page 10 of 29 Pages
A. The Company's Board of Directors
Pursuant to the Stockholders Agreement, effective as of the
Closing, the Board of Directors of the Company (the "Board") will be
comprised of 16 members, consisting initially of six designees of SPE (the
"SPE Directors"), three designees of Universal (the "Universal Directors"),
one designee of the Claridge Group (the "Claridge Director"), two Management
Directors (as defined in the Stockholders Agreement) and four Independent
Directors (as defined in the Stockholders Agreement). The Independent
Directors were designated by mutual agreement of the Company, SPE, Universal
and a majority of the members of the Independent Committee prior to the
Closing. The Management Directors are the two most senior executive officers
of the Company; provided that Allen Karp shall be one of the Management
Directors as long as he is an executive officer of the Company or an affiliate.
At the Closing, the Stockholders acknowledged that,
notwithstanding the foregoing provisions of the Stockholders Agreement, two
Independent Directors as opposed to four Independent Directors were appointed
as of the Closing. The Company has agreed to use its best efforts to cause
an additional two Independent Directors to be appointed as soon as possible
following the Closing, such two additional Independent Directors to be
designated by mutual agreement of the Company, Universal, SPE and the two
Independent Directors appointed at Closing. Until such two additional
Independent Directors shall have been duly elected to the Board, the Company
has agreed not to take any action requiring Board authorization unless such
action is approved by (i) such vote as may be required by the Stockholders
Agreement and the Company's Charter and By-Laws and the Delaware General
Corporation Law and (ii) a "Weighted Majority of the Board" (which is defined
to mean a majority of the votes cast by Directors at any meeting at which a
quorum is present, in which the vote of each Independent Director is
multiplied by the quotient of (i) 4 divided by (ii) the number of Independent
Directors then in office).
The Stockholders Agreement provides that after the Closing,
SPE, Universal and the Claridge Group will, subject to the exceptions and
limitations described below, be entitled to designate for nomination for
election to the Board, the number of directors of the Company (the
"Directors") that generally corresponds to such Stockholder's "Applicable
Percentage" set forth on the following chart (the "Directors Chart"):
<PAGE>
Page 11 of 29 Pages
Number of
Applicable Percentage Directors
---------------------- -----------
> 6.25 % and < 9.375% . . . . . . . . . . . . . 1
- -
> 9.375% and < 15.625% . . . . . . . . . . . . . 2
- -
> 15.625% and < 21.875% . . . . . . . . . . . . . 3
- -
> 21.875% and < 28.125% . . . . . . . . . . . . . 4
- -
> 28.125% and < 34.375% . . . . . . . . . . . . . 5
- -
> 34.375% and < 40.625% . . . . . . . . . . . . . 6
- -
> 40.625% and < 46.875% . . . . . . . . . . . . . 7
- -
> 46.875% and < 53.125% . . . . . . . . . . . . . 8
- -
> 53.125% and < 59.375% . . . . . . . . . . . . . 9
- -
> 59.375% and < 65.625% . . . . . . . . . . . . . 10
- -
> 65.625% and < 71.875% . . . . . . . . . . . . . 11
- -
> 71.875% and < 78.125% . . . . . . . . . . . . . 12
- -
> 78.125% and < 84.375% . . . . . . . . . . . . . 13
- -
> 84.375% and greater . . . . . . . . . . . . . . 14
- -<PAGE>
Page 12 of 29 Pages
provided however, that:
(i) (x) until the five-year anniversary of the Closing,
the Claridge Group shall be entitled to designate one Director if its
Applicable Percentage exceeds 3.5%, and, thereafter, if its
Applicable Percentage exceeds 5%, and (y) the Claridge Group's
entitlement to designate two or more Directors shall be determined in
accordance with the Stockholders Agreement on the same basis as the
entitlement of the other Stockholders;
(ii) if, pursuant to the Directors Chart, the
Stockholders would in the aggregate be entitled to designate more
than 14 Directors, each reference to a percentage in the Directors
Chart under the "Applicable Percentage" column will be increased by
the least number of percentage points that would result in the
Stockholders in the aggregate being entitled to designate 14
Directors (after giving effect to the provisions of clause (i)(x)
above);
(iii) prior to the four-year anniversary of the Closing,
no Stockholder will be entitled to designate more than eight
Directors; provided, however, that if any Stockholder would be
entitled to designate more than eight Directors pursuant to the
Directors Chart based on such Stockholder's Adjusted Applicable
Percentage (as defined in the Stockholders Agreement) (rather than
such Stockholder's Applicable Percentage), (x) such Stockholder will
be entitled to designate the number of Directors set forth in the
Directors Chart based on such Stockholder's Applicable Percentage and
(y) the limitation contained in this clause (iii) regarding a
Stockholder's entitlement to designate Directors will thereupon
terminate.
Each of SPE and Universal have agreed with the other and
each member of the Claridge Group has agreed with each of SPE and Universal
that, notwithstanding the foregoing:
(i) no stockholder shall be entitled to designate more
than six Directors; provided, however, that if any Stockholder would
be entitled to designate more than eight Directors pursuant to the
Directors Chart based on such Stockholder's Adjusted Applicable
Percentage (rather than such Stockholder's Applicable Percentage),
such Stockholder shall be entitled to designate such greater number
of Directors and the limitation contained in this clause (i)
regarding a Stockholder's entitlement to designate Directors will
thereupon terminate, provided, further, that, if at any time
commencing on the three-year anniversary of the Closing, any
Stockholder's Applicable Percentage exceeds 45%, the limitation
contained in this clause (i) regarding a Stockholder's entitlement to
designate Directors will be increased from six Directors to seven
Directors;
(ii) at any time that SPE's Applicable Percentage equals
or exceeds 40.625%, but the number of SPE Directors is limited to six
by the immediately preceding clause (i) of this paragraph, Universal
has agreed with SPE that one of the individuals designated by
Universal to serve as a Director shall be an Independent Director so
long as Universal's Applicable Percentage equals or exceeds 21.875%;
and
<PAGE>
Page 13 of 29 Pages
(iii) at any time that Universal's Applicable Percentage
equals or exceeds 40.625%, but the number of Universal Directors is
limited to six by clause (i) of this paragraph, SPE has agreed with
Universal that one of the individuals designated by SPE to serve as a
Director shall be an Independent Director so long as SPE's Applicable
Percentage exceeds 21.875%.
If the Stockholders collectively have the right to designate
at least 13 of the members of the Board pursuant to the provisions described
above, SPE and Universal have agreed that at least one of the individuals
designated by each such Stockholder to serve as a Director shall be an
Independent Director; provided that if one of such Stockholders shall be
entitled to designate only one Director, such Stockholder shall not be
required to designate an Independent Director and the other such Stockholder
shall be required to designate two Independent Directors.
The parties to the Stockholders Agreement have agreed that
following the Closing Date, except for the designees of the Stockholders and
for the Management Directors, individuals to be nominated for election as
Directors shall all be Independent Directors (unless the Independent
Directors shall otherwise agree), and there shall be at least two Independent
Directors and two Management Directors nominated in each such election. Each
Stockholder has agreed to vote (and to cause its affiliates to vote) any
Voting Shares (as defined in the Stockholders Agreement) beneficially owned
by it to cause the designees of SPE, Universal and the Claridge Group and
each of the Independent Directors and Management Directors designated by the
Nominating Committee (as described below) to be elected to the Board, and the
Company has agreed to use its best efforts to cause the election of each such
designee, including nominating such individuals to be elected as members of
the Board, as provided in the Stockholders Agreement.
In connection with each election of members of the Board,
the Management Directors and the Independent Directors will be designated by
a nominating committee of the Board (the "Nominating Committee"), which will
be established to determine whether prospective nominees as Management
Directors and Independent Directors meet the criteria for such positions.
The Nominating Committee will be comprised of four Directors, consisting of
(x) two Independent Directors designated by a majority of the Independent
Directors and (y) one SPE Director and one Universal Director; provided that
if at any time there shall cease to be at least one SPE Director or Universal
Director, then the Nominating Committee will include two SPE Directors or two
Universal Directors, as the case may be, to the extent that SPE or Universal,
as applicable, then has two designees serving as Directors.
The Stockholders Agreement provides that all other
committees of the Board will include, subject to any applicable stock
exchange or requirement of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), a number of SPE Directors and Universal Directors
equivalent to the proportion of such Directors then serving on the whole
Board multiplied by the total number of members comprising such committee.
The Stockholders Agreement contains other provisions relating to committees
of the Board and various provisions relating to the procedures, including
meetings and agendas, and the powers of the Board.
Each Stockholder has agreed that it will not without the
prior written consent of SPE and Universal (i) seek the election or removal
of any Director, except in accordance with the terms of the Stockholders
<PAGE>
Page 14 of 29 Pages
Agreement; (ii) deposit any Common Stock in a voting trust or subject any
Common Stock to any arrangement with respect to the voting of such shares
(other than a voting trust or arrangement solely among members of the
Claridge Group); (iii) subject to certain exceptions, engage in any
"solicitation" (within the meaning of Rule 14a-1 under the Exchange Act) of
proxies or consents or become a "participant" in any "election contest"
(within the meaning of Rule 14a-11 under the Exchange Act) with respect to
the Company, or (iv) form a Group (as defined in the Stockholders Agreement)
with respect to any Common Stock, other than a Group consisting exclusively
of Stockholders, any of their affiliates or Permitted Transferees (as defined
in the Stockholders Agreement).
B. Consent Rights
The Stockholders Agreement provides SPE and Universal with
specified consent rights in respect of specified actions by the Company and
its subsidiaries, so long as their respective Applicable Percentages equal or
exceed the Minimum Percentage (as defined in the Stockholders Agreement).
These events include: (a) voluntary bankruptcy filings by the Company or any
significant subsidiary; (b) acquisitions and dispositions meeting specified
tests of materiality; (c) entering into or engaging in any business other
than the exhibition of films with certain limited exceptions; (d) any
transaction or series of related transactions with SPE or Universal or any of
their respective affiliates involving more than $1,000,000 per calendar year
(excluding arm's-length transactions in the ordinary course of business,
including film booking arrangements); (e) changing the number of directors
comprising the entire Board; (f) with certain exceptions, issuing or selling
any Voting Shares or voting share equivalents exceeding specified thresholds;
(g) paying cash dividends on, or making any other cash distributions on or
redeeming or otherwise acquiring for cash, any shares of capital stock of the
Company, or any warrants, options, rights or securities convertible into,
exchangeable or exercisable for, capital stock of the Company exceeding
specified thresholds; (h) incurring any debt in excess of specified amounts
with certain specified exceptions; (i) hiring, or renewing the employment
contract (including option renewals) of, either of the two most senior
executive officers of the Company; (j) entering into any arrangement (other
than the Stockholders Agreement or pursuant thereto) with any holder of
Voting Shares in such holder's capacity as a holder of Voting Shares which
subjects actions taken by the Company or any subsidiary to the prior approval
of any person; (k) entering into certain discriminatory shareholder
arrangements including any stockholders rights plan; and (l) amending the By-
Laws by action of the Board.
Under the Stockholders Agreement, SPE and Universal are
entitled to certain additional consent rights if the Company fails to meet
certain budgeted financial targets and their respective Applicable
Percentages then equal or exceed the Minimum Percentage. These rights
include the right to approve a new five-year strategic business plan for the
Company and the following actions by the Company or any subsidiary thereof:
(a) making capital expenditures exceeding specified thresholds; (b) incurring
any debt in excess of specified amounts with certain specified exceptions;
(c) incurring liens to secure unsecured debt; and (d) with certain
exceptions, issuing or selling any capital stock of the Company.
If the Company and either SPE or Universal, as the case may
be, disagree in good faith as to whether the consent rights of such
Stockholder described above are triggered in connection with an action
<PAGE>
Page 15 of 29 Pages
proposed to be taken by the Company, the parties have agreed to submit such a
dispute to arbitration by an independent arbitrator. Pending resolution of
such dispute (which generally must be resolved within ten business days of
the submission of the dispute), the Company may not take the action which is
the subject of the dispute and its operations may be interrupted or delayed
during such time period as a result.
In addition to the foregoing consent rights, in connection
with any vote or action by written consent of the Board related to any (a)
Merger (as defined in the Stockholders Agreement), (b) voluntary liquidation,
dissolution or winding up of the Company (a "Dissolution"), (c) amendment or
restatement of the Company's Charter or (d) amendment or repeal of any
provision of, or addition of any provision to, the Company's By-laws (a
"By-law Amendment"), each Stockholder has agreed to use its best efforts to
cause the Directors designated by such Stockholder to vote against such
action at the request of SPE or Universal if its Applicable Percentage
exceeds the Minimum Percentage. The Stockholders have also agreed to vote
(and not to consent to) the Voting Shares beneficially owned by them against
any of the foregoing items in connection with any vote or action by written
consent of the stockholders of the Company related thereto at the request of
SPE or Universal if its Applicable Percentage exceeds the Minimum Percentage.
So long as the Applicable Percentage of SPE or Universal
equals or exceeds the Minimum Percentage, (i) the Company has agreed that the
Company's Charter will provide that effecting a Merger or Dissolution or
adopting an amendment or restatement of the Company's Charter or adopting a
By-law Amendment by action of the stockholders of the Company shall require
the affirmative vote or written consent of the holders of at least 80% of the
outstanding Common Stock; provided that in the case of any of the foregoing
matters (other than adopting a By-law Amendment by action of the
stockholders) such 80% stockholder approval requirement shall not be
applicable if 14 members of the Board shall have approved such matter;
provided, further, that in the case of any Merger that is approved by 14
members of the Board, such Merger shall require the affirmative vote or
written consent of the holders of at least 66 2/3% of the outstanding Common
Stock and (ii) no Stockholder shall vote in favor of, consent in writing to,
or take any other action to effect an amendment or repeal of such provisions
of the Company's Charter.
C. Approval of Certain Transactions by Disinterested Directors
The Stockholders Agreement provides that so long as the
Applicable Percentage of SPE or Universal equals or exceeds the Minimum
Percentage, neither SPE nor any of its affiliates, nor Universal nor any of
its affiliates, as the case may be, shall enter into any contract with the
Company or any subsidiary thereof, nor shall the Company otherwise engage in
or become obligated to engage in any transaction or series of related
transactions with SPE and/or its affiliates, or Universal and/or its
affiliates, as the case may be, in any case involving more than $1,000,000
per calendar year, unless such contract or transaction shall have been
approved by a majority of the Disinterested Directors (as defined in the
Stockholder's Agreement) following disclosure of the material facts of the
contract or transaction to the Disinterested Directors. The approval
requirement does not apply to contracts or transactions in the ordinary
course of the Company's business, including film booking arrangements.
<PAGE>
Page 16 of 29 Pages
D. Restrictions on Transfers of Common Stock by the Stockholders
The Stockholders Agreement includes the following
restrictions on Transfers (as defined in the Stockholders Agreement) by SPE and
Universal:
Without the consent of a majority of the Independent
Directors, each of SPE and Universal has agreed not to Transfer in privately
negotiated transactions more than 20% of its Initial Interest (as defined in
the Stockholders Agreement) for a period of six months following the Closing.
This restriction does not apply to Transfers (i) to a Permitted Transferee,
(ii) to another Stockholder or its Permitted Transferees, (iii) pursuant to a
merger or consolidation in which the Company is a constituent corporation or
(iv) pursuant to a bona fide third party tender offer or exchange offer which
was not induced directly or indirectly by such Stockholder or any of its
affiliates.
Neither SPE nor Universal nor any of their respective
affiliates may Transfer, individually or collectively, an aggregate of more
than 50% of the outstanding Common Stock in one or a series of related
transactions to a Third Party Transferee (as defined in the Stockholders
Agreement) (or to one or more Third Party Transferees constituting a Group)
unless each stockholder of the Company has the right to participate in such
Transfer on the same basis as the proposed transferor(s), subject to the
prior right of first refusal of SPE and Universal described below to purchase
the shares so being transferred if such party is not the transferring
stockholder.
Neither SPE nor any of its affiliates may Transfer an
aggregate of more than 50% of SPE's Initial Interest to any person (including
any Group), other than an SPE Permitted Transferee, in one or a series of
related transactions, unless Universal and the Claridge Group each has the
right to participate in such Transfer on the same basis as SPE and its
affiliates.
The following Transfers of Voting Shares by SPE or Universal
or their respective affiliates (the proposed transferor, the "Transferring
Party") will be subject to the right of first refusal in favor of the other:
(a) any Transfer in one or a series of related privately negotiated
transactions or a public offering if (i) 5% or more of the then outstanding
Voting Shares are subject to the Transfer, (ii) any transferee, or any Group
of which a transferee is a member, would, following such Transfer,
beneficially own 5% or more of the outstanding Voting Shares (except, in the
case of any public offering, the limitation set forth in this clause (ii)
shall not be applicable if the Transferring Party has taken all reasonably
steps to assure that such limitation shall have been satisfied) or (iii) in
the case of any Transfer by SPE or any of its affiliates, SPE's Applicable
Percentage exceeds 25%; (b) any Transfer pursuant to a bona fide third party
tender offer or exchange offer; (c) any Transfer to the Company or to a
subsidiary of the Company pursuant to a self-tender offer or otherwise; and
(d) any Transfer in a market sale. No right of first refusal applies to any
Transfer between SPE or Universal and any of their respective Permitted
Transferees.
E. Standstill Agreements
Standstill Among the Company and the Stockholders. Each of
SPE and Universal and each member of the Claridge Group has agreed with the
<PAGE>
Page 17 of 29 Pages
Company and with each of SPE and Universal not to, and to cause its
affiliates not to, acquire, directly or indirectly, the beneficial ownership
of any additional Voting Shares, except for: (a) acquisitions of up to an
aggregate of 5% of the outstanding Voting Shares during any twelve-month
period, subject to certain price restrictions; and (b) acquisitions in
privately negotiated transactions from five or fewer persons pursuant to
offers not made generally to holders of Voting Shares and pursuant to which
the value of any consideration paid for any Voting Shares, including
brokerage fees or commissions, does not exceed 115% of the "Market Price" (as
determined in accordance with the regulations under the Securities Act
(Ontario)). The exceptions described in clauses (a) and (b) above are not
available to a Stockholder whose Applicable Percentage would equal or exceed
25% after the acquisition if, as a result of such acquisition, the Public
Stockholders (as defined in the Stockholders Agreement) would beneficially
own less than 20% of the outstanding Voting Shares.
There are additional exceptions for acquisitions, (i) from a
Stockholder, (ii) pursuant to the exercise of equity purchase rights (see "--
Equity Purchase Rights" below), (iii) on terms and conditions approved by the
Independent Directors, (iv) pursuant to a tender or exchange offer made in
accordance with applicable law, (v) to restore a Stockholder's percentage
interest following a dilutive issuance of Voting Shares or (vi) acquisitions
of Common Stock upon the conversion of Non-Voting Common Shares.
The Stockholders have agreed that, in the case of any
acquisition permitted pursuant to the foregoing provisions that would
constitute a "Rule 13e-3 transaction" (as defined in Rule 13e-3 under the
Exchange Act), prior to the consummation of any such transaction (x) a
nationally recognized investment bank shall have delivered an opinion to the
Board that such transaction is fair from a financial point of view to the
stockholders of the Company, other than the applicable Stockholder, (y) a
majority of the Independent Directors shall have approved the transaction and
(z) if the Public Stockholders of the Company beneficially own more than 20%
of the Voting Shares and if approval of stockholders of the Company is
required by Delaware law or the Company's Charter, a majority of the Common
Stock held by such Public Stockholders shall have been voted in favor of the
transaction.
The restrictions described in the preceding three paragraphs
terminate on the earlier of (x) the six-year anniversary of the Closing and
(y) any time after the four-year anniversary of the Closing upon the Claridge
Group ceasing to have the right to designate a Director pursuant to the
Stockholders Agreement, or upon the occurrence of:
(a) a bona fide tender or exchange offer to acquire more
than 20% of the Voting Shares having been made by any person (except
that such restrictions shall not terminate as to any Stockholder if
such tender or exchange offer is made by such Stockholder or any of
its affiliates or by any person acting in concert with such
Stockholder or any of its affiliates or is induced by such
Stockholder or any of its affiliates); provided that if such offer is
withdrawn or expires without being consummated, such restrictions
shall be reinstated (but no such reinstatement shall prohibit any
Stockholder from thereafter purchasing Voting Shares pursuant to a
contract entered into prior to the withdrawal or expiration of such
tender offer or exchange offer or pursuant to a tender offer or
exchange offer commenced by a Stockholder prior to such time);
<PAGE>
Page 18 of 29 Pages
(b) the Application Percentage of SPE, Universal or the
Claridge Group equaling or exceeding 80%; provided that, in the case
of Universal, such percentage shall be 33-1/3% at any time Universal
and its affiliates beneficially own more Voting Shares than any other
holder of Common Stock;
(c) with respect to any Stockholder, such Stockholder's
Applicable Percentage being less than 15% (provided that such
restrictions shall be reinstated if such Stockholder's Applicable
Percentage equals or exceeds 15% within one year thereafter);
(d) any person (other than a Stockholder or a Permitted
Transferee) beneficially owning more than 20% of the Voting Shares,
excluding from the Voting Shares beneficially owned by such person
Voting Shares acquired from a Stockholder, a Permitted Transferee or
the Company; or
(e) the Public Stockholders beneficially owning more than
66-2/3% of the Voting Shares.
Standstill Among the Stockholders. Each of SPE and
Universal has agreed with the other and each member of the Claridge Group has
agreed with each of SPE and Universal that neither such Stockholder nor any
of its affiliates will acquire, directly or indirectly, the beneficial
ownership of any Voting Shares if immediately prior to such acquisition such
Stockholder's Applicable Percentage exceeds 50%, excluding Voting Shares
acquired from another Stockholder or its Permitted Transferees, or if, as a
result of such acquisition, (i) such Stockholder and its affiliates would
beneficially own an aggregate of more than 50% of the Voting Shares,
excluding Voting Shares acquired from another Stockholder or its Permitted
Transferees, or (ii) the Public Stockholders would beneficially own less than
20% of the outstanding Voting Shares. The restriction described in clause
(ii) does not apply to a Stockholder and its affiliates, if, upon
consummation of such acquisition, such Stockholder's Applicable Percentage
would be less than 25%. This restriction does not prohibit the acquisition
of Common Stock upon the conversion of Non-Voting Common Shares.
The restrictions described in the preceding paragraph will
terminate if: (a) the Applicable Percentage of either SPE or Universal is
less than 10% (provided that such restrictions shall be reinstated if such
Stockholder's Applicable Percentage equals or exceeds 10% within one year
thereafter); (b) a bona fide tender or exchange offer to acquire more than
15% of the outstanding Voting Shares is made by any person (except that such
restrictions shall not terminate as to any Stockholder if such tender or
exchange offer is made by such Stockholder or any of its affiliates or by any
person acting in concert with such Stockholder or any of its affiliates or is
induced by such Stockholder or any of its affiliates); provided that if such
offer is withdrawn or expires without being consummated, such restrictions
shall be reinstated (but no such reinstatement shall prohibit any Stockholder
from thereafter purchasing Voting Shares pursuant to a contract entered into
prior to the withdrawal or expiration of such tender offer or exchange offer
or pursuant to a tender offer or exchange offer commenced by a Stockholder
prior to such time); or (c) any person (other than a Stockholder or a
Permitted Transferee) beneficially owns more than 15% of the Voting Shares,
excluding Voting Shares acquired from a Stockholder or a Permitted
Transferee, but only if the sum of the Applicable Percentages of SPE and
Universal is less than 45%.
<PAGE>
Page 19 of 29 Pages
F. Registration Rights
The Stockholders Agreement grants to the Stockholders
customary demand and piggyback rights with respect to the registration of
Common Stock (including any Common Stock issuable upon conversion of Non-
Voting Common Shares) owned by them as of the Closing or thereafter acquired
by them. The Company has agreed to pay all expenses of the initial
registration demanded by each of SPE, Universal and the Claridge Group.
G. Equity Purchase Rights
The Stockholders Agreement provides that if the Company
proposes to issue or sell any Voting Shares pursuant to a transaction in
respect to which SPE or Universal shall have the right to consent under the
Stockholders Agreement, each such Stockholder will have the right,
exercisable in whole or in part and subject to the applicable rules of any
stock exchange on which Common Stock shall then be listed, to acquire from
the Company a portion of the Voting Shares proposed to be issued or sold to
persons other than such Stockholder and its affiliates (the "Issuance
Shares") up to an amount equal to the number of Issuance Shares multiplied by
such Stockholder's then Applicable Percentage, prior to giving effect to the
consummation of the proposed issuance or sale and any acquisition by a
Stockholder pursuant to the exercise of such rights.
H. Assignments of Rights and Obligations to Transferees
Permitted Transferees of a Stockholder will be subject to
the terms and conditions of the Stockholders Agreement as if such Permitted
Transferees were SPE (in the case SPE or a Permitted Transferee of SPE is the
transferor), Universal (in the case Universal or a Permitted Transferee of
Universal is the transferor) or a member of the Claridge Group (in the case a
member of the Claridge Group or a Permitted Transferee thereof is the
transferor).
Third Party Transferees of a Stockholder will be subject to
certain terms and conditions in the Stockholders Agreement. In certain
circumstances, Third Party Transferees will have the right to designate Board
members and may also be entitled to registration rights. Third Party
Transferees will not receive tag-along rights, rights of first refusal or
equity purchase rights described above. In addition, the rights of SPE and
Universal to consent to certain significant corporate events described under
"Consent Rights" above are not assignable to third parties.
I. Certain Remedies
In the event that SPE or Universal has a good faith belief
that the Company or any other Stockholder is likely to breach, or has
breached, in any material respect, certain of its obligations under the
Stockholders Agreement, such Stockholder may deliver notice of such belief to
the Company and/or such other Stockholder, as the case may be. Upon receipt
of such notice and until the dispute is resolved (by a court of competent
jurisdiction, an independent arbitrator or otherwise), neither the Company
nor any other Stockholder may take any action that would facilitate such a
breach and shall take reasonable actions to prevent such breach, if it has
not yet occurred, or to minimize any adverse consequences to the aggrieved
Stockholder of any such breach. In addition, in the event that SPE or the
Company breaches in any material respect any of their obligations to
<PAGE>
Page 20 of 29 Pages
Universal under the Stockholders Agreement, SPE and the Company shall, at the
request of Universal, use their best efforts to amend the Company's Charter
to authorize a new class of common stock to be issued by the Company to
Universal and its Permitted Transferees in exchange for the Common Stock held
by them. Such new class would be identical in all respects to the Common
Stock, except that such class would entitle the holders thereof to
proportionate representation on the Board on the same basis that Universal is
entitled to representation thereon pursuant to the Stockholders Agreement and
that the rights described under "Consent Rights" above would be incorporated
in such class and SPE and Universal will cease to have any consent rights
under the Stockholders Agreement. Such new class of common shares, if
issued, would be convertible into shares of Common Stock on a one-for-one
basis at any time at the discretion of the holder.
J. Termination
Except as otherwise described in the Stockholders Agreement,
the rights and obligations of a Stockholder and its Permitted Transferees
under the Stockholders Agreement shall terminate upon such Stockholder's
Applicable Percentage equaling less than 6.25% (or, in the case of the
Claridge Group, 3.5% until the five-year anniversary of the Closing and 5%
thereafter), subject to an exception in circumstances where a Stockholder's
Applicable Percentage is reduced as a result of the issuance of additional
Voting Shares by the Company.
The preceding summary of certain provisions of the Subscription
Agreement and the Stockholders Agreement is qualified in its entirety by
reference to the full texts of such agreements, which are incorporated herein
by reference.
Item 7. Material to be Filed as Exhibits.
1. -- Joint Filing Agreement between The Seagram Company Ltd. and
Universal Studios, Inc.
2. -- Stockholders Agreement, dated as of September 30, 1997
(incorporated by reference to Exhibit 2 to Amendment No. 24 to the
Schedule 13D filed by Universal Studios, Inc. with respect to
Cineplex Odeon Corporation).
3. -- Subscription Agreement, dated as of September 30, 1997
(incorporated by reference to Exhibit 1 to Amendment No. 24 to the
Schedule 13D filed by Universal Studios, Inc. with respect to
Cineplex Odeon Corporation).
<PAGE>
Page 21 of 29 Pages
SIGNATURE
After reasonable inquiry and to the best of their knowledge
and belief, the undersigned certify that the information set forth in this
statement is true, complete and correct.
Date: May 26, 1998
THE SEAGRAM COMPANY LTD.
By: /s/ Daniel R. Paladino
Name: Daniel R. Paladino
Title: Executive Vice President,
Legal and Environmental
Affairs
UNIVERSAL STUDIOS, INC.
By: /s/ Karen Randall
Name: Karen Randall
Title: Senior vice President and
General Counsel<PAGE>
Page 22 of 29 Pages
SCHEDULE 1
1. Set forth below are the name, business address,
principal occupation or employment and citizenship of each director and
executive officer of Universal. The name of each person who is a director of
Universal is marked with an asterisk. Unless otherwise indicated, the
business address of each person listed below is 100 Universal City Plaza,
Universal City, California 91608.
Principal Occupation
Name and Business Address or Employment Citizenship
- ---------------------------- --------------------------- --------------
EDGAR BRONFMAN, JR.* Chief Executive Officer and United States
375 Park Avenue President of Seagram and
New York, New York 10152 Chairman of the Executive
Committee of Universal
SAMUEL BRONFMAN II* President of Seagram Chateau United States
2600 Campus Drive & Estate Wines Company (a
Suite 160 division of a subsidiary of
San Mateo, CA 94403 Seagram)
ARNOLD M. LUDWICK* Vice President of Seagram Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2
ROBERT W. MATSCHULLAT* Vice Chairman and Chief United States
375 Park Avenue Financial Officer of Seagram
New York, New York 10152
YASUO NAKAMURA* General Manager, Matsushita Japan
Entertainment & Media
Liaison Office at Universal
FRANK J. BIONDI, JR.* Chairman and Chief Executive United States
Officer of Universal
RON MEYER* President and Chief United States
Operating Officer of
Universal
BRUCE L. HACK* Executive Vice President and United States
Chief Financial Officer of
Universal
DOUGLAS P. MORRIS Executive Vice President United States
CATHY A. NICHOLS Executive Vice President United States
CASEY SILVER Executive Vice President United States
KAREN RANDALL Senior Vice President and United States
General Counsel of Universal
<PAGE>
Page 23 of 29 Pages
KENNETH L. KAHRS Senior Vice President, Human United States
Resources of Universal
DEBORAH S. ROSEN Senior Vice President, United States
Corporate Communications and
Public Affairs of Universal
BRIAN C. MULLIGAN Senior Vice President of United States
Universal
HELLENE S. RUNTAGH Senior Vice President of United States
Universal
JAY E. SHECTER Vice President, Strategic Canada
Sourcing of Universal
PAUL BUSCEMI Vice President, Tax of United States
800 Third Avenue Joseph E. Seagram & Sons,
New York, New York 10022 Inc. and Vice President of
Universal
MAREN CHRISTENSEN Vice President of Universal United States
H. STEPHEN GORDON Vice President of Universal United States
MARC PALOTAY Vice President of Universal United States
WILLIAM A. SUTMAN Vice President and United States
Controller of Universal
SHARON S. GARCIA Secretary of Universal United States
PAMELA F. CHERNEY Treasurer of Universal United States
LEW R. WASSERMAN* Chairman Emeritus of United States
Universal
2. Set forth below are the name, business address,
principal occupation or employment and citizenship of each director and
executive officer of Seagram. The name of each person who is a director of
Seagram is marked with an asterisk. Unless otherwise indicated, the business
address of each person listed below is 375 Park Avenue, New York, New York
10152.
Principal Occupation
Name and Business Address or Employment Citizenship
- ---------------------------- --------------------------- --------------
EDGAR M. BRONFMAN* Chairman of the Board of United States
Seagram
THE HON. CHARLES R. Co-Chairman of the Board and Canada
BRONFMAN, PC., C.C.* Chairman of the Executive
501 North Lake Way Committee of Seagram
Palm Beach, Florida 33480
<PAGE>
Page 24 of 29 Pages
EDGAR BRONFMAN, JR.* Chief Executive Officer and United States
President of Seagram
SAMUEL BRONFMAN II* President of Seagram Chateau United States
2600 Campus Drive & Estate Wines Company (a
Suite 160 division of a subsidiary of
San Mateo, CA 94403 Seagram)
MATTHEW W. BARRETT, O.C.* Chairman and Chief Executive Canada
First Bank Tower Officer of Bank of Montreal
68th Floor (a financial institution)
First Canadian Place
100 King Street West
Toronto, Ontario M5X 1A1
LAURENT BEAUDOIN, C.C.* Chairman and Chief Executive Canada
800 Rene-Levesque Blvd. West Officer of Bombardier Inc.
30th Floor (a transportation, aerospace
Montreal, Quebec and motorized products
Canada H3B 1Y8 company)
FRANK J. BIONDI, JR.* Chairman and Chief Executive United States
100 Universal City Plaza Officer of Universal
Universal City, CA 91608 Studios, Inc.
RICHARD H. BROWN* Chief Executive of Cable and United States
124 Theobolds Road Wireless plc (a provider of
London, England WC1X 8RX international
telecommunications services)
THE HON. WILLIAM G. DAVIS, Counsel to Tory Canada
P.C., C.C., Q.C.* Tory DesLauriers &
Suite 3000, Aetna Tower Binnington (attorneys)
79 Wellington Street West
Toronto, Ontario
Canada M5K 1N2
ANDRE DESMARAIS* President and Co-Chief Canada
751 Victoria Square Executive Officer of Power
Montreal, Quebec Corporation of Canada (a
Canada H2Y 2J3 holding and management
company) and Deputy Chairman
of Power Financial
Corporation
BARRY DILLER* Chairman and Chief Executive United States
c/o USA Networks, Inc. Officer of USA Networks,
2425 Olympic Boulevard Inc.
6th Floor
West Tower
Santa Monica, California
90404
MICHELE J. HOOPER* Corporate Vice President, United States
2211 Sanders Road Caremark
Northbrook, IL 60062 International Inc. (a health
care services provider)
<PAGE>
Page 25 of 29 Pages
DAVID L. JOHNSTON, C.C.* Professor of Law at McGill Canada
3690 Peel Street University (an educational
Room 200 institution)
Montreal, Quebec
Canada H3A 1W9
THE HON. E. LEO KOLBER, Member of The Senate of Canada
SENATOR* Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2
MARIE-JOSEE KRAVIS, O.E.* Senior Fellow of The Hudson Canada
625 Park Avenue Institute Inc. (a non-profit
New York, NY 10021 economics research
institute)
ROBERT W. MATSCHULLAT* Vice Chairman and Chief United States
Financial Officer of Seagram
C. EDWARD MEDLAND* President of Beauwood Canada
121 King Street West Investments Inc. (a private
Suite 2525 investment company)
Toronto, Ontario
Canada M5H 3T9
SAMUEL MINZBERG* President and Chief Canada
1170 Peel Street Executive Officer of
8th Floor Claridge Inc. (a management
Montreal, Quebec company)
Canada H3B 4P2
JOHN S. WEINBERG* General Partner of Goldman, United States
85 Broad Street Sachs & Co. (investment
New York, NY 10004 bankers)
JOHN D. BORGIA Executive Vice President, United States
Human Resources of Seagram
STEVEN J. KALAGHER Executive Vice President of United States
Seagram and President and
Chief Executive Officer, The
Seagram Spirits And Wine
Group (a division of a
subsidiary of Seagram)
ELLEN R. MARRAM Executive Vice President of United States
Seagram and President and
Chief Executive Officer,
Tropicana Beverage Group (a
division of a subsidiary of
Seagram)
<PAGE>
Page 26 of 29 Pages
DANIEL R. PALADINO Executive Vice President, United States
Legal and Environmental
Affairs of Seagram
GABOR JELLINEK Vice President, Production Canada
1430 Peel Street of Seagram and Executive
Montreal, Quebec Vice President,
Canada H3A 1S9 Manufacturing, The Seagram
Spirits And Wine Group (a
division of a subsidiary of
Seagram)
ARNOLD M. LUDWICK Vice President of Seagram Canada
c/o Claridge Inc.
1170 Peel St.
8th Floor
Montreal, Quebec
Canada H3B 4P2
JOHN R. PRESTON Vice President, Finance of United States
Seagram
MICHAEL C.L. HALLOWS Secretary of Seagram Canada
3. The trustees of the trusts for the benefit of Edgar
M. Bronfman and his descendants are Edgar M. Bronfman, Edgar Bronfman, Jr.,
Matthew Bronfman, Harold R. Handler, Mayo O. Shattuck III and John L.
Weinberg. The trustees of the trusts for the benefit of Charles R. Bronfman
and his descendants are Stephen R. Bronfman, Ellen J. Bronfman Hauptman,
Trevor Carmichael, Neville LeRoy Smith, Bruce I. Judelson, Gary J. Gartner,
Steven H. Levin, Arnold M. Ludwick, Jeffrey D. Scheine and Robert S.
Vineberg. The trustees of the trusts for the benefit of the family of the
late Minda de Gunzburg are Stanley N. Bergman, Dr. Guido Goldman and Leonard
M. Nelson. The directors of the first two charitable foundations referenced
in Item 2 include Charles R. Bronfman, Stephen R. Bronfman and Arnold M.
Ludwick, the trustees of the third charitable foundation include Edgar M.
Bronfman, Charles R. Bronfman, Samuel Bronfman II, Edgar Bronfman, Jr.,
Robert W. Matschullat and Daniel R. Paladino and the directors of the fourth
charitable foundation include Phyllis Lambert, Matthew Bronfman and Stephen
R. Bronfman. Set forth below or under Part 2 above are the address,
principal occupation or employment and citizenship of each person named in
this Part 3.
Principal Occupation
Name and Business Address or Employment Citizenship
------------------------- -------------------- -----------
PHYLLIS LAMBERT Architect Canada
1920 Baile Street
Montreal, Quebec
Canada H3H 2S6
<PAGE>
Page 27 of 29 Pages
MATTHEW BRONFMAN Chief Executive Officer of United States
30 West 26th Street Perfumes Isabell, L.L.C. (a
2nd Floor perfume company)
New York, NY 10010
STEPHEN R. BRONFMAN Private Investor Canada
c/o Claridge Inc.
1170 Peel Street
8th Floor
Montreal, Quebec
Canada H3B 4P2
ELLEN J. BRONFMAN Private Investor Canada
HAUPTMAN
c/o Withers Solicitors
12 Gough Square
London, England EC4A 3DE
HAROLD R. HANDLER Attorney whose professional United States
425 Lexington Avenue corporation is of counsel to
New York, NY 10017 Simpson Thacher & Bartlett
(attorneys)
MAYO O. SHATTUCK III President and Chief United States
Alex Brown & Sons Operating Officer of Alex.
Incorporated Brown & Sons Incorporated
135 East Baltimore Street (investment bankers)
Baltimore, MD 21202
JOHN L. WEINBERG Senior Chairman of Goldman, United States
85 Broad Street Sachs & Co.
New York, NY 10004 (investment bankers)
ROBERT S. VINEBERG Partner of Goodman Phillips Canada
1501 McGill College Avenue & Vineberg (barristers and
26th Floor solicitors)
Montreal, Quebec
Canada H3A 3N9
GARY J. GARTNER Resident Counsel of Goodman Canada
430 Park Avenue Phillips & Vineberg
10th Floor (attorneys)
New York, NY 10022
STEVEN H. LEVIN Resident Counsel of Goodman United States
430 Park Avenue Phillips & Vineberg
10th Floor (attorneys)
New York, NY 10022
JEFFREY D. SCHEINE Resident Counsel of Goodman United States
430 Park Avenue Phillips & Vineberg
10th Floor (attorneys)
New York, NY 10022
<PAGE>
Page 28 of 29 Pages
TREVOR CARMICHAEL, Q.C. Barrister, Chancery Chambers Barbados
Chancery Chambers, Chancery (attorneys)
House
High Street
Bridgetown, Barbados
NEVILLE LEROY SMITH Managing Director of Royal Barbados
Sunset Drive Bank of Canada Financial
Pine Gardens Corporation
St. Michael, Barbados (a financial institution)
BRUCE I. JUDELSON Partner of Bergman, Horowitz United States
157 Church Street & Reynolds, P.C. (attorneys)
New Haven, CT 06510
STANLEY N. BERGMAN Partner of Bergman, Horowitz United States
157 Church Street & Reynolds, P.C. (attorneys)
New Haven, CT 06510
DR. GUIDO GOLDMAN Director of German Studies United States
First Spring Corporation at the Center for European
499 Park Avenue Studies at Harvard
New York, NY 10022 University and Chairman of
First Spring Corporation (an
investment company)
LEONARD M. NELSON Shareholder of Bernstein, United States
100 Middle Street Shur, Sawyer & Nelson, P.C.
Portland, ME 04104 (attorneys)
<PAGE>
Page 29 of 29 Pages
EXHIBIT 1
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to
which this Agreement is attached, hereby agree that such statement is, and
any amendments thereto filed by any of us will be, filed on behalf of each of
us.
Dated: May 26, 1998
THE SEAGRAM COMPANY LTD.
By: /s/ Daniel R. Paladino
Name: Daniel R. Paladino
Title: Executive Vice President,
Legal and Environmental
Affairs
UNIVERSAL STUDIOS, INC.
By: /s/ Karen Randall
Name: Karen Randall
Title: Senior Vice President and
General Counsel
