Document:

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                                                                   EXHIBIT 10.10

                              PARTNERSHIP AGREEMENT

                                       OF

                             MAGIC JOHNSON THEATRES

Dated: As of March 31, 1994

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                                TABLE OF CONTENTS
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ARTICLE 1         DEFINITIONS........................................................      1

ARTICLE 2         FORMATION..........................................................      5

ARTICLE 3         NAME AND PLACE OF BUSINESS; NUMBER.................................      5
                  3.1.     Name......................................................      5
                  3.2.     Registration and Use of Name..............................      5
                  3.3.     Principal Place of Business...............................      6
                  3.4.     Number....................................................      6

ARTICLE 4         PURPOSES...........................................................      6
                  4.1.     Purpose...................................................      6

ARTICLE 5         TERM...............................................................      7

ARTICLE 6         CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS; CAPITAL
                  ACCOUNTS; WITHDRAWAL FROM ACCOUNTS.................................      7
                  6.1.     Contributions.............................................      7
                  6.2.     Non-Assumption of Liabilities.............................      8
                  6.3.     Expenses Reimbursable to JDC..............................      8
                  6.4.     Use of Capital............................................      8
                  6.5.     Percentage Interests......................................      8
                  6.6.     Capital Accounts..........................................      8
                  6.7.     Withdrawal................................................      9

ARTICLE 7         CAPITAL EXPENDITURE COMMITMENT AND FUND............................      9
                  7.1.     Capital Expenditure Fund..................................      9
                  7.2.     Security Interest.........................................      9

ARTICLE 8         REPRESENTATIONS AND WARRANTIES OF S&J..............................     10
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ARTICLE 9         REPRESENTATIONS AND WARRANTIES OF JDC..............................    10

ARTICLE 10        TAXES..............................................................    10
                  10.1.    Tax Allocations:  Code Section 704(c).....................    10
                  10.2.    Tax Elections.............................................    10
                  10.3.    Tax Matters Partner.......................................    11
                  10.4.    Preparation of Tax Returns................................    11

ARTICLE 11        DISTRIBUTIONS......................................................    11
                  11.1.    Distributions.............................................    11
                  11.2.    Distributions in Kind.....................................    11

ARTICLE 12        MANAGEMENT.........................................................    12
                  12.1.    Authority.................................................    12
                  12.2.    Members of the Management Committee and Voting............    12
                  12.3.    Actions Requiring Approval of the Management Committee....    12
                  12.4.    Guaranties................................................    13
                  12.5.    Timely Performance........................................    13
                  12.6.    Procedures................................................    13

ARTICLE 13        S&J'S RESPONSIBILITIES.............................................    14
                  13.1.    [OMITTED].................................................    14
                  13.2.    Delegation of Duties......................................    14
                  13.3.    S&J's Duties and Powers...................................    14
                  13.4.    Conflicts of Interest.....................................    18
                  13.5.    Books, Records and Reports................................    18
                  13.6.    Compensation..............................................    19
                  13.7.    Indemnification...........................................    19
                  13.8.    Employment of Affiliates, etc.............................    20
                  13.9.    S&J's Film Buying Duties and Powers.......................    20
                  13.10.   Conflicts of Interest.....................................    21
                  13.11.   Compensation..............................................    22
                  13.12.   Discontinuance of S&J Services............................    23

ARTICLE 14        JDC'S RESPONSIBILITIES.............................................    23
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                  14.1.    (OMITTED).................................................    23
                  14.2.    JDC's Duties and Powers...................................    23
                  14.3.    Compensation..............................................    24
                  14.4.    Cooperation of S&J........................................    25
                  14.5.    Indemnification...........................................    25

ARTICLE 15        ADDITIONAL AGREEMENTS..............................................    25
                  15.1.    Non-Competition...........................................    25
                  15.2.    Restrictions on the S&J Partner...........................    27
                  15.3.    Restrictions on JDC and the JDC Group.....................    27
                  15.4.    Restrictions on the Partnership...........................    27
                  15.5.    Cessation of Restrictions.................................    27
                  15.6.    Refusal to Operate........................................    27
                  15.7.    Lease Renewals............................................    28
                  15.8.    Tax Year; Fiscal Year.....................................    29
                  15.9.    Accountant................................................    29
                  15.10.   Transfer Taxes............................................    29

ARTICLE 16        OPERATING ACCOUNTS AND PAYMENTS OF EXPENSES........................    29
                  16.1.    Operating Accounts........................................    29
                  16.2.    Payment of Expenses.......................................    30
                  16.3.    Budgets...................................................    31

ARTICLE 17        TRANSFER OF PARTNERSHIP INTERESTS..................................    32
                  17.1.    Prohibited Transfers......................................    32
                  17.2.    Permitted Transfers.......................................    33
                  17.3.    Sale of Partnership Interest..............................    33
                  17.4.    Transfer Agreements.......................................    34
                  17.5.    Effective Date of Transfers...............................    34
                  17.6.    Conditions Applicable to All Transfers....................    34
                  17.7.    Acceleration of Capital Expenditure Loans.................    35

ARTICLE 18        VOLUNTARY TERMINATION OF PARTNERSHIP...............................    35
                  18.1.    Appointment of Appraiser(s)...............................    35
                  18.2.    Qualifications of Appraiser(s)............................    35
                  18.3.    Conditions Applicable to All Transfers....................    37
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ARTICLE 19        INDEMNITY..........................................................    37
                  19.1.    JDC Indemnity.............................................    37
                  19.2.    S&J Indemnity.............................................    37
                  19.3.    Partnership Indemnification...............................    38
                  19.4.    Procedure for Indemnification.............................    38

ARTICLE 20        NOTICES............................................................    39

ARTICLE 21        MISCELLANEOUS......................................................    40
                  21.1.    Amendment or Termination..................................    40
                  21.2.    No Third Party Beneficiaries..............................    40
                  21.3.    No Waiver.................................................    40
                  21.4.    Rights and Remedies.......................................    41
                  21.5.    Integration...............................................    41
                  21.6.    Partial Invalidity........................................    41
                  21.7.    Governing Law.............................................    41
                  21.8.    Counterparts..............................................    41
                  21.9.    Successors and Assigns....................................    42
                  21.10.   Disposition of Documents..................................    42
                  21.11.   Table of Contents, Article and Section Headings...........    42
                  21.12.   Guaranties................................................    42

ARTICLE 22        DISPUTE RESOLUTION.................................................    42
                  22.1.    Binding Arbitration.......................................    42
                  22.2.    Arbitrator/Place of Arbitration...........................    42
                  22.3.    Arbitration Procedures....................................    43
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EXHIBITS
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A - License Agreement......................................................   Section 3.2

B - Representations and Warranties of S&J..................................   Article 8

C - Representations and Warranties of JDC..................................   Article 8

D - Guaranty by Earvin Johnson, Jr.........................................   Section 21.12

E - Guaranty by SPE........................................................   Section 21.12
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                                        v

<PAGE>

                              PARTNERSHIP AGREEMENT

                                       OF

                             MAGIC JOHNSON THEATRES

                  PARTNERSHIP AGREEMENT, dated as of March 31, 1994, between S&J
Theatres, Inc., a corporation organized and existing under the laws of the State
of California, having an office at 711 Fifth Avenue, New York, New York 10022
("S&J") and Johnson Development Corporation, a corporation organized and
existing under the laws of the State of California having an office at 9100
Wilshire Boulevard, Suite 1000 West, Beverly Hills, California 90212 ("JDC").

                  NOW, THEREFORE, the parties hereto hereby agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

                  1.1. The following terms shall have the meanings assigned to
them below. Certain terms are defined elsewhere in this Agreement.

                  "Accountant" - Section 15.9.

                  "Affiliate" - With reference to a specified person, any Person
that directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with the specified Person.

                  "Agreement" - This Partnership Agreement, as it may be amended
from time to time.

                  "Annual Operating Budget" - Section 16.3.(b).

                  "Approved Budget" - The Approved Capital Budget and/or the
Approved Operating Budget as may be applicable.

                  "Booking Management Activities" - Section 13.9.(a).

                  "Capital Account" - Section 6.6.

                  "Capital Budget" - Section 16.3.(a).

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                  "Capital Contributions" - The amount of cash contributed by
each Partner to the Partnership or in the event such contribution is goods or
services, the fair market value of such goods and services as may mutually be
agreed upon in writing by the Management Committee.

                  "Capital Expenditure Commitment" - Section 7.1.(a).

                  "Capital Expenditure Loan" - Section 7.1.(a).

                  "Cash Flow" - In respect of any Theatre Property (other than a
Theatre Property managed by the Partnership) shall mean (a) total operating
revenue derived from Theatre Property during the period in question from (i) the
sale of admission tickets and concession items, (ii) the rental or sale of home
video materials, (iii) the rental of the Theatre Property, (iv) the operation of
vending and gaming machines, (v) pay telephones, and (vi) any other source
(excluding borrowings, refinancings and extraordinary or nonrecurring items or
revenue attributable to the sale of fixtures, equipment, capital assets or
operating leases) minus (b) the sum of the following: (i) cost of sales
including film expenses, direct advertising expenses and concession purchases,
and (ii) all direct operating expenses of the Theatre Property (including signs
and marquees) including, without limitation, labor; employee benefits; security;
utilities (including, without limitation, sewer rent and water charges),
supplies and services; premiums for insurance; bank collection and deposit
charges; marketing costs at the Theatre level of group sales; cost of obtaining
and maintaining operating licenses and fees; manager's awards; direct Theatre
special event expenses; real property Taxes, sales, income, payroll,
miscellaneous and franchise Taxes; maintenance and repair costs and charges and
all amounts payable under leases including, but not limited to, basic rent,
percentage rent, common area charges, advertising contributions, and merchant
association fees, legal fees, costs and expenses, reasonable reserves for film
rental as determined by S&J and reserves for capital improvements and
refurbishing, payments made pursuant to Sections 6.3., 13.11. and 14.3 all to be
determined on an accrual basis in accordance with generally accepted accounting
principles consistently applied. In respect of a Theatre Property managed by the
Partnership, Cash Flow shall mean all amounts paid to the Partnership to manage
the Theatre Property.

                  "Claims" - Section 13.7.

                  "Code" - The Internal Revenue Code of 1986, as amended from
time to time.

                  "Distributors" - Section 13.9.(c).

                  "Film Settlements" - Section 13.9.(d).

                  "First Class Theatre" - Section 13.3.(a).

                  "Guaranteed Repair and Replacement Fund" - Section 16.3.

                  "Gross Receipts" - All items included in the definition of
Cash Flow under Subdivision (a)(i)-(vi) thereof, inclusive.

                                       2
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                  "Impositions" - Section 13.3.(k).

                  "Indemnitee" - Section 19.4.

                  "Indemnitor" - Section 19.4.

                  "Investing Partner" - Section 15.1.(a)(1).

                  "JDC" or "JDC Partner" - Johnson Development Corporation, a
California corporation, having an office at 9100 Wilshire Boulevard, Suite 1000
West, Beverly Hills, California 90212, or any successor thereto pursuant to any
merger, consolidation, combination, recapitalization or similar reorganization.

                  "JDC Group" - Section 15.1.

                  "JDC Restricted Investment" - Section 15.1.(a)(1).

                  "JDC Transfer Notice" - Section 17.3.(b).

                  "JDC Transferee" - Section 17.3.(b).

                  "Johnson, Jr." - Earvin Johnson, Jr.

                  "Key Documents" - Any deeds, leases, mortgages, certificates
of occupancy, permits, licenses, consents or other recorded and unrecorded
agreements affecting a Theatre Property or its operation.

                  "Lease" - Section 12.3.(a).

                  "License Agreement" - Section 3.2.

                  "LTMC" - Loews Theatre Management Corp., a Delaware
corporation, or any successor thereto pursuant to any merger, consolidation,
combination, recapitalization or similar reorganization.

                  "Management Committee" - A committee whose members are
appointed by each Partner in accordance with this Agreement and which oversees
the operation of the Partnership.

                  "Non-Discretionary Capital Contribution" - An infusion of cash
funds into the Partnership made necessary by the Partnership's inability to pay
any of its current obligations as and when due in an amount not greater than the
aggregate amount of such current obligations due at the time of such infusion.

                  "Offer Notice" - Section 15.1.(a)(2).

                                       3
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                  "Operating Management Activities" - Section 13.3.(a).

                  "Operating Management Standards" - Section 13.3.(a).

                  "Partners" - S&J and JDC, while any such Person owns a
Partnership Interest hereunder, or any other Person who may be admitted as a
Partner in substitution for S&J or JDC in accordance with the terms of this
Agreement. Reference to a "Partner" shall refer to either of the Partners.

                  "Partnership" - The partnership governed by this Agreement.

                  "Partnership Act" - The California Partnership Act, as in
effect from time to time.

                  "Partnership Interest" - The interest of a Partner in the
Partnership.

                  "Percentage Interest of a Partner" - A percentage determined
by a fraction, the numerator of which is the Capital Account of that Partner,
the denominator of which is the Capital Accounts of all Partners.

                  "Person" - Any individual, partnership, trust, corporation,
firm or other entity.

                  "Settlement Policies" - Section 13.9.(d).

                  "S&J" or "S&J Partner" - S&J Theatres, Inc., a California
corporation, having an office at 711 Fifth Ave., New York 10022, or any
successor thereto pursuant to any merger, consolidation, combination,
recapitalization or similar reorganization.

                  "S&J Restricted Investment" - Section 15.1.(a)(1).

                  "S&J Transfer Notice" - Section 17.3.(a).

                  "S&J Transferee" - Section 17.3.(a).

                  "SPE" - Sony Pictures Entertainment Inc., a Delaware
corporation or any successor thereto pursuant to any merger, consolidation,
combination, recapitalization or similar reorganization.

                  "Subsidiary" - A "Subsidiary" of a specified Person means an
entity, 50% or more of the outstanding voting securities of which are owned by
such Person and/or such Person's other Subsidiaries,

                  "Tax Basis" - The Partnership's basis in any property for
Federal income Tax purposes at the time such property is contributed to the
Partnership.

                  "Taxes" - All taxes, charges, fees, levies or assessments,
including, without limitation, income, gross receipts, excise, real and personal
property, sales, transfer, license, payroll and franchise

                                       4
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taxes or any other taxes, imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof; and such term shall include
any interest, penalties or additions to tax attributable to such Taxes.

                  "Territory" - African-American and Hispanic communities
under-served by motion picture exhibitors throughout the Continental United
States.

                  "Theatre Property" or "Theatre" - A motion picture theatre
within the Territory owned, operated or managed by the Partnership, or a motion
picture theatre for which a binding commitment has been made by the Partnership
to own, hire, operate or manage within the Territory, excluding, however, any
theatre now owned, hired, operated or managed by S&J or its Affiliates as of the
date hereof, or for which it or its Affiliate has made a binding commitment.

                  "Transfer" - Section 17.1.

                  "Treasury Regulations" - The Regulations issued by the United
States Department of the Treasury, as amended from time to time, pursuant to the
Code.

                  "Unaffiliated Partner" - Section 15.1.(a)(2).

                  "Upper Tier Transfer" - Section 17.1.

                                    ARTICLE 2

                                    FORMATION

                  The Partners hereby form, as of the date first above written,
a general partnership pursuant to the provisions of the Partnership Act.

                                    ARTICLE 3

                       NAME AND PLACE OF BUSINESS; NUMBER

                  3.1. Name. The business of the Partnership shall be conducted
under the name "Magic Johnson Theatres" or "Earvin Johnson, Jr. Magic Theatres"
or such other name as may be determined by the Management Committee from time to
time.

                  3.2. Registration and Use of Name. Concurrently herewith, the
Partnership and June Bug Lifetime Trust ("Licensor") are entering into that
certain License Agreement, dated the date hereof, the form of which is attached
as Exhibit A hereto (the "License Agreement"), providing for the use of the name
"Magic Johnson Theatres" and "Earvin Johnson, Jr. Magic Theatres" by the
Partnership. Licensor

                                       5
<PAGE>

shall promptly undertake to register with the United States Patent and Trademark
Office the trade name "Magic Johnson Theatres" and "Earvin Johnson, Jr. Magic
Theatres" (provided no other Person has the rights to said trade names) which
shall be licensed exclusively to the Partnership pursuant to the License
Agreement. Except as provided in the License Agreement, neither the Partnership
nor any Partner other than JDC has or shall acquire any right, title or interest
to the trade names "Magic Johnson Theatres" and "Earvin Johnson, Jr. Magic
Theatres" hereunder provided that the names have been legally filed by Licensor
as a service mark in the Principal Register of the United States Patent and
Trade Mark Office. No charge shall be made to the Partnership on account of said
License Agreement and the right to use the licensed names shall not be deemed a
contribution by JDC to its Capital Account. If, at any time, the Partnership
shall use any name of, or trade name used by, S&J, SPE, LTMC or any of its
Affiliates neither the Partnership nor any Partner other than S&J has or shall
acquire any right, title or interest to such name or trade name and upon S&J's
request the use of such name by the Partnership shall be changed as promptly as
practicable to a name which does not include such trade name. The parties
recognize that SPE has heretofore used the name "Sony Magic" or names similar
thereto and nothing herein contained shall in any way restrict, impair or
prohibit SPE and its Affiliates from using the name "Sony Magic," "Magic" or any
name similar thereto. Nothing herein contained shall prevent S&J or its
Affiliates from using the term "Magic" in connection with the operation of any
motion picture theatre nor shall the use by the Partnership of the trade name
"Magic Johnson Theatres" and/or "Earvin Johnson, Jr. Magic Theatres" be deemed
to infringe in any manner on the right of SPE to use the name "Sony Magic,"
"Magic" or similar name.

                  3.3. Principal Place of Business. The principal place of
business of the Partnership shall be at 9100 Wilshire Boulevard, Suite 1000
West, Beverly Hills, California 90212, or such other place as the Management
Committee may designate.

                  3.4. Number. At no time during the term of this Partnership
shall there be more than two Partners.

                                    ARTICLE 4

                                    PURPOSES

                  4.1. Purpose. (a) The sole purpose of the Partnership shall be
to acquire, own, hold, improve, develop, use, operate, manage, hire or lease
Theatre Properties in the Territory under the name of "Magic Johnson Theatres"
or "Earvin Johnson, Jr. Magic Theatres" and the conduct of related businesses
(including, if appropriate, selling or leasing of such Theatre Properties), and
to do all other things reasonably incident thereto, in accordance with the terms
of this Agreement. This Agreement shall not be deemed to create a general
partnership between the Partners with respect to any other activities
whatsoever.

                  (b) It is the present intent of the Partners (but the Partners
shall have no obligation) ultimately to develop and operate at least 10 Theatre
Properties in the Territory based on the plans and specifications referred to in
Section 6.1.(c).

                                       6
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                                    ARTICLE 5

                                      TERM

                  The term of the Partnership shall begin on the date hereof and
shall continue until November 30, 2044, unless sooner terminated pursuant to the
provisions hereof.

                                    ARTICLE 6

                  CAPITAL CONTRIBUTIONS; PERCENTAGE INTERESTS;
                   CAPITAL ACCOUNTS; WITHDRAWAL FROM ACCOUNTS

                  6.1. Contributions. (a) Simultaneously with the execution and
delivery of this Agreement, each of the Partners shall contribute $500,000 in
cash to the Partnership. Each of the Partners further agrees to contribute an
additional $1,500,000 in cash to the Partnership if and when needed as
determined by the Management Committee.

                  (b) If, in the reasonable opinion of a Partner, any additional
Non-Discretionary Capital Contribution is required, each of the Partners shall,
within 20 days after demand by such Partner contribute 50% thereof. If any
Partner fails, refuses or neglects to make a Non-Discretionary Capital
Contribution, the other Partner shall have the right (but not the obligation) to
make such additional Non-Discretionary Capital Contribution.

                  (c) S&J has heretofore and without charge, delivered to the
Partnership a complete set of plans and specifications for a prototype 12-screen
motion picture theatre ("Prototype"). The Partnership shall use such plans as
the basis for constructing and developing Theatre Properties. No charge shall be
made to the Partnership on account of the use of the Prototype by the
Partnership, and the right to use the Prototype shall not be deemed a
contribution by S&J to its Capital Account. S&J makes no representation or
warranty of any kind whatsoever in respect of such plans and specifications
including, but not limited to, title, compliance with building codes,
governmental regulations, Americans with Disabilities Act, or other governmental
requirements, availability of materials, cost of construction, suitability for
future Theatre Properties, adequacy of architectural, mechanical or engineering
specifications, etc. Any modifications or alterations made to the Prototype by
the Partnership shall be the responsibility of the Partnership, including any
fees or expenses related to such modifications or alterations. In the event S&J
ceases to be a Partner, Johnson agrees that the Partnership and the Johnson
Group shall not use the Prototype or any expansion or contraction thereof in
respect of newly constructed theatres except in geographical market areas where
JDC Group or the Partnership operated motion picture theatres at the time S&J
ceased to be a Partner.

                  (d) Promptly after the date hereof, JDC shall, without charge,
deliver to S&J all plans, specifications and proposed leases in its possession
relating to proposed Theatre Properties.

                                        7
<PAGE>
                  6.2. Non-Assumption of Liabilities. (a) Except as stated in
Section 6.3., it is the agreement of the Partners that all costs, expenses,
liabilities, obligations and claims, relating or attributable to, or arising by
reason of, the business of JDC prior to the date hereof, whether known, unknown,
contingent or accrued shall be borne by JDC, and JDC agrees to indemnify and
hold harmless S&J and the Partnership against all such costs, expenses,
liabilities, obligations and claims, including reasonable counsel fees.

                  (b) It is the agreement of the Partners that all costs,
expenses, liabilities, obligations and claims, relating or attributable to, or
arising by reason of, the business of S&J prior to the date hereof, whether
known, unknown, contingent or accrued shall be borne by S&J, and S&J agrees to
indemnify and hold harmless JDC and the Partnership against all such costs.
expenses, liabilities, obligations and claims, including reasonable counsel
fees.

                  6.3. Expenses Reimbursable to JDC. The Partnership shall
promptly reimburse JDC for certain outside expenses properly vouchered
heretofore incurred and paid in developing the proposed lease for a proposed
theatre complex at the Baldwin Hills-Crenshaw Plaza, Los Angeles, California,
subject to review and approval of such expenses by the S&J Partner, provided,
however, that such expenses shall not exceed $50,000.

                  6.4. Use of Capital. The source of funds for the Partnership
shall be drawn upon in the following order of priority: first, from
contributions to capital made by the Partners as provided in Section 6.1.;
secondly, from the funds reserved pursuant to Section 11.1.; and thirdly, from
the funds available pursuant to Section 7.1., but only for the purposes provided
therein.

                  6.5. Percentage Interests. Initially, the "Percentage
Interest" of each Partner shall be 50%. Whenever a Partner makes an additional
Capital Contribution in excess of the Capital Contribution if any, made by the
other Partner, the Percentage Interest of the Partners shall be adjusted to
reflect their respective Capital Accounts.

                  6.6. Capital Accounts. (a) Each Partner shall have a Capital
Account. "Capital Account" shall mean an account of each Partner determined and
maintained throughout the full term of the Partnership on the accrual basis in
accordance with the capital accounting rules of Section 1.704-1(b)(2)(iv) of the
Treasury Regulations and this Section 6.6. (to the extent it is consistent with
Section 1.704-1(b)(2)(iv) of the Treasury Regulations). The Capital Account
balances of each Partner shall be zero prior to the initial contribution of the
Partners pursuant to Section 6.1.

                  (b) For purposes of maintaining the Capital Accounts, all
items of income, gain, loss and deduction, as well as any expenditures which are
permitted to be neither capitalized nor deducted for Federal income Tax
purposes, shall be allocated or apportioned in proportion to the Partner's
respective Percentage Interest.

                                        8
<PAGE>

                  (c) Upon the transfer of a Partnership Interest, the
transferee shall succeed to the Capital Account attributable to the transferred
Partnership Interest.

                  6.7. Withdrawal. Neither Partner shall be entitled (i) to the
withdrawal or return of any of its capital from the Partnership, except as
expressly provided in this Agreement, (ii) to interest upon any capital
contributed by it to the Partnership, or (iii) to receive property other than
cash in return for its capital contribution.

                                    ARTICLE 7

                     CAPITAL EXPENDITURE COMMITMENT AND FUND

                  7.1. Capital Expenditure Fund. (a) SPE shall lend to the
Partnership ("Capital Expenditure Commitment"), up to an aggregate amount of
$7.5 million, to finance expenditures for capital assets or acquisitions of
properties which the Partnership (with the consent of both Partners) proposes to
acquire or develop ("Capital Expenditure Loans"), and for no other purposes. The
Partnership shall not be entitled to reborrow the Capital Expenditure Loans when
repaid. Capital Expenditure Loans shall bear interest at the rate of 1/2% above
the prime rate from time to time as established by Bank of America or such other
bank as may be determined by the Management Committee. Each Capital Expenditure
Loan shall be repayable in 120 equal consecutive monthly installments together
with interest with the first such installment of principal and interest due on
the first day of the month next following the date that the Theatre Property
which is the subject of such loan is opened (in the case of new construction or
other development) or acquired (in the case of an acquisition). In the event S&J
ceases to be a Partner, the Capital Expenditure Commitment shall automatically
terminate at the time of such cessation, and SPE shall not be obligated to make
any future Capital Expenditure Loans.

                  (b) Each Capital Expenditure Loan shall be evidenced by a Loan
Agreement, a Promissory Note of the Partnership and secured by a Security
Agreement of each Partner's interest in the Partnership and by all of the assets
of the Partnership, all such instruments to be in form and substance
satisfactory to SPE and shall be subject to the provisions of Section 17.7.

                  (c) After the Capital Expenditure Commitment shall have been
exhausted, the Management Committee shall meet to discuss in good faith the
method of financing further capital expenditures and acquisitions.

                  7.2. Security Interest. Except as provided in Section 7.1. and
approved by the Management Committee, neither JDC nor S&J shall incur on behalf
of the Partnership, or pledge the Partnership's assets as security for, any
indebtedness except indebtedness relating to borrowings the proceeds of which
are used by the Partnership.

                                        9
<PAGE>

                                    ARTICLE 8

                      REPRESENTATIONS AND WARRANTIES OF S&J

                  In order to induce JDC to enter into this Agreement, S&J makes
the representations and warranties set forth in Exhibit B hereto which
representations and warranties are incorporated herein as if set forth in full
herein.

                                    ARTICLE 9

                      REPRESENTATIONS AND WARRANTIES OF JDC

                  In order to induce S&J to enter into this Agreement, JDC makes
the representations and warranties set forth in Exhibit C hereto which
representations and warranties are incorporated herein as if set forth in full
herein.

                                   ARTICLE 10

                                      TAXES

                  10.1. Tax Allocations: Code Section 704(c). (a) Except as
otherwise required under Section 704 of the Code, each item of income, gain,
loss and deduction for Federal income Tax purposes shall be allocated between
both Partners in accordance with their respective Percentage Interests;
provided, however, that in accordance with Section 704(c) of the Code and the
Treasury Regulations thereunder, income, gain, loss, and deduction (including
depreciation and amortization), as determined for Federal income Tax purposes,
with respect to any property the value of which differs from its Tax Basis
shall, for Tax purposes, be allocated between both Partners so as to take
account of any variation between the Tax Basis of such property to the
Partnership and such value. For purposes of the preceding sentence, "value"
means the fair market value of such property on the date it was contributed to
the Partnership.

                  (b) Tax credits shall be allocated between both Partners in
accordance with Section 1.704-1(b)(4)(ii) of the Treasury Regulations.

                  (c) Any elections or other decisions relating to such
allocations shall be made in accordance with and in direct proportion to the
Capital Account of each of the Partners.

                  10.2. Tax Elections. Either Partner may cause the Partnership
to make the election provided for in Section 754 of the Code on behalf of the
Partnership. Any other election on behalf of the Partnership under the Code
shall be made only by mutual agreement, in writing, of the Partners.

                                       10
<PAGE>

                  10.3. Tax Matters Partner. S&J shall be authorized to
represent the Partnership (at the expense of the Partnership) in connection with
all examinations of the affairs of the Partnership by any Federal, state or
local Tax authorities, including any administrative and judicial proceedings
relating thereto, and to incur reasonable expenditures of Partnership funds for
professional services and costs associated therewith. JDC shall cooperate with
S&J and S&J shall consult fully with JDC in connection with the conduct of all
such proceedings. S&J shall not settle any claim or terminate any proceeding
without the consent of JDC.

                  10.4. Preparation of Tax Returns. S&J, at the expense of the
Partnership, shall arrange for the preparation and timely filing of all Tax and
information returns of the Partnership showing all items of income, gain,
deduction, loss and credit necessary for Federal, state and local income Tax
purposes, and shall use all reasonable efforts to furnish to JDC within 90 days
after the close of each Taxable Year the Tax information reasonably required for
Federal, state and local income Tax reporting purposes. The classification,
realization and recognition of income, gains, losses, deductions and credits and
other items of the Partnership shall be on the accrual method of accounting for
Federal income Tax purposes. Each of the Partners shall, in its respective
income Tax return and other statements filed with the Internal Revenue Service
and other Taxing authorities, report Taxable income and credits in accordance
with the provisions of this Agreement.

                                   ARTICLE 11

                                  DISTRIBUTIONS

                  11.1. Distributions. The Partnership shall, no less often than
quarterly, distribute its available Cash Flow ("Partnership Distributions") to
both Partners in accordance with their respective Percentage Interests, subject
to the retention of cash reserves for working capital in the amount set forth in
the Operating and Capital Budget, except as otherwise provided in this Section
11.1. The average Capital Account of each Partner as reflected on the books of
the Partnership for the applicable fiscal year shall be used to determine the
Percentage Interest of each of the Partners for the purpose of Partnership
Distributions. The Management Committee shall, at such time or times as either
Partner reasonable requests, meet in good faith to consider an increase in the
working capital reserves which either Partner believes to be appropriate to meet
pending or anticipated liabilities, or cash requirements. Anything herein to the
contrary notwithstanding, the Partnership agrees that after the first $1 million
in the aggregate of Cash Flow has been distributed by the Partnership, only 50%
of the available Cash Flow shall be distributed by the Partnership and the
balance of the Cash Flow shall be retained by the Partnership to augment the
reserves in its Capital Budget, unless the Management Committee determines
otherwise. It is the intent of the Partners that the Partnership make
Partnership Distributions sufficient to permit each Partner to pay income Taxes
due in respect of its interest in the Partnership. The working capital reserved
for each Theatre Property shall be not less than $100,000.

                  11.2. Distributions in Kind. Assets of the Partnership (other
than cash) shall not be distributed in kind to the Partners, except, if both
Partners so determine, in liquidation of the Partnership.

                                       11
<PAGE>
 If any assets of the Partnership are distributed to the Partners in kind, such
assets shall be valued on the basis of the fair market value thereof on the date
of the distribution.

                                   ARTICLE 12

                                   MANAGEMENT

                  12.1. Authority. All decisions with respect to the management
and control of the business and affairs of the Partnership, except as otherwise
provided in this Agreement, shall be vested in the Management Committee. The
Management Committee shall establish policies regarding the operations of the
Theatre Properties including film buying guidelines, personnel guidelines in
conformity with federal, state and local laws, the hiring and firing of
personnel at the management level, security procedures and publicity, prices to
be charged for admission and sale of concession items. The Management Committee
shall also be responsible for approving future locations, negotiating the terms
thereof, obtaining financing and negotiating the terms thereof.

                  12.2. Members of the Management Committee and Voting. So long
as the Percentage Interests of the Partners are equal, each Partner shall
appoint three members to the Management Committee. For every 15%, or any part
thereof, that the Percentage Interest of one Partner exceeds the Percentage
Interest of the other Partner, an additional member to the Management Committee
may be appointed by the Partner which has the greater Percentage Interest. All
decisions of the Management Committee shall be made by majority vote based on
the aggregate number of members in the Management Committee and not on the
number present at any meeting. Johnson, Jr., Ken T. Lombard ("Lombard") and
Warren Grant or such other person selected by JDC, shall represent the JDC
Partner on the Management Committee, and so long as Lawrence Ruisi is actively
engaged in supervising the activities of LTMC and Jim and Barrie Loeks are
actively engaged in managing LTMC, they shall represent the S&J Partner on the
Management Committee. In the event any of the above persons refuses, resigns or
is unable to serve on the Management Committee, the Partner which such person
represents shall have the right to designate a substitute member.

                  12.3. Actions Requiring Approval of the Management Committee.
Without limiting the generality of Section 12.1., and except as otherwise
provided in this Agreement including, without limitation, Articles 13 and 14,
the following decisions in respect of the business affairs of the Partnership
shall be determined by the Management Committee:

                  (a) to execute, terminate, modify, amend, renew or extend any
lease or sublease (a "Lease") or management agreement with respect to any
present or future Theatre Property or to execute, terminate, modify, amend,
renew or extend any other Key Documents, subject to the provisions of Section
15.7.(b);

                  (b) to terminate operations at any Theatre Property;

                                       12
<PAGE>

                  (c) to effect a sale or other disposition of all or
substantially all of (i) the Partnership's property or assets or (ii) the
Partnership's interest in the assets of any Theatre Property;

                  (d) to acquire by purchase, lease or otherwise an interest (as
owner, lessee, manager or otherwise) in any Theatre Property or substantial
assets or substantial property;

                  (e) to cause the Partnership to incur indebtedness for
borrowed money, guarantee indebtedness, or pledge any of its assets;

                  (f) to commence or settle any legal action in excess of
$50,000 on behalf of the Partnership other than a claim covered by liability
insurance, or to release, compromise, assign or transfer any material claims or
material rights of the Partnership;

                  (g) to cause the Partnership to enter into any agreement or
transaction with any Partner or any Affiliate of a Partner, excluding those
types of agreements referred to in Sections 13.4., 13.8., 13.9. or 13.10.;

                  (h) except as otherwise provided in this Agreement, to change
the Partnership's elections or choices of methods of reporting income or loss
for Federal, state or local income Tax purposes;

                  (i) except in accordance with a previously Approved Capital or
Operating Budget, to make any material alterations or renovations or
restorations to any Theatre Property;

                  (j)      to do any act in contravention of this Agreement.

                  12.4. Guaranties. Nothing contained in this Agreement shall
require Johnson, Jr., Lombard, SPE or any of their respective Affiliates, to
guarantee any obligations of the Partnership including, but not limited to, any
Lease or any other Key Documents, except as otherwise provided in Section 21.12.

                  12.5. Timely Performance. S&J and JDC shall each perform all
of its respective obligations under this Agreement in a proper, prompt and
timely manner. Each shall, subject to the terms and limitations of this
Agreement, furnish the other with such information and assistance as the other
may from time to time reasonably request in order to perform its
responsibilities hereunder. S&J and JDC shall each take all such actions as the
other may from time to time reasonably request and otherwise cooperate with the
other so as to avoid or minimize any delay or impairment of either party's
performance of its obligations under this Agreement.

                  12.6. Procedures. (a) JDC or S&J, as the case may be, may
execute for and on behalf of the Partnership any documents or instruments in
connection with any actions permitted to be taken by it under this Agreement,
and such execution by JDC or S&J alone on behalf of the Partnership will bind
the Partnership without any signed authorization by the other Partner. If JDC or
S&J, as the case may be,
                                       13
<PAGE>
requests, the other Partner will join in such execution and/or execute and
deliver any instruments which JDC or S&J may reasonably require to confirm its
authority hereunder.

                  (b) Any person dealing with JDC or S&J, as the case may be,
may rely upon a certificate of the Partnership signed by JDC or S&J, as the case
may be, as to the existence or non- existence of any fact or facts which
constitute a condition precedent to acts by JDC or S&J.

                                   ARTICLE 13

                             S&J'S RESPONSIBILITIES

                  13.1.    [OMITTED].

                  13.2. Delegation of Duties. JDC has been advised that S&J is
an Affiliate of LTMC and that it acts as a servicing agent for the circuit of
motion picture theatres operated by LTMC and its Subsidiaries and Affiliates.
S&J shall have the right to delegate various aspects of its duties under this
Article 13 to LTMC, its Subsidiaries and Affiliates and their personnel, but no
additional charge shall be made to the Partnership on account thereof. Except as
set forth in Section 13.8. and 13.11., it is understood and agreed that in
performing such duties and powers, LTMC, its Subsidiaries and Affiliates, and
their personnel are acting on behalf of S&J and LTMC, its Subsidiaries and
Affiliates and their personnel shall have no liability on account thereof, but
the acts of LTMC, its Subsidiaries and Affiliates and their personnel shall be
deemed the acts of S&J, and S&J shall be fully responsible therefor.

                  13.3.    S&J's Duties and Powers.

                  (a) General Scope. (1) Subject to the provisions of Sections
12.1., 12.2. and 12.3., S&J shall have the exclusive right to manage, coordinate
and supervise all aspects of the day- to-day operations of Theatre Properties
(collectively the "Operating Management Activities"). The Operating Management
Activities shall be conducted in a manner (hereinafter referred to as "Operating
Management Standards") consistent and in accordance with, in the case of each
Theatre Property, (i) the operation of such Theatre Property as a First-Class
Theatre and (ii) the requirements of all Key Documents now or hereafter
affecting such Theatre Property. S&J shall have no liability to the Partnership
with respect to the conduct of the Operating Management Activities other than to
carry out the Operating Management Activities in accordance with the Operating
Management Standards in a reasonable manner and the Partnership shall indemnify
and hold harmless S&J, its Subsidiaries, Affiliates and their officers,
directors and personnel against any and all obligations and liabilities in the
performance of the duties provided for hereunder as provided in Section 13.7.

                      (2) Unless otherwise specifically provided in this
Agreement, all services and actions which S&J is required or permitted to
perform or take, or cause to be performed or taken, under this Agreement in
connection with the Operating Management Activities shall be performed or taken,
as the case may be, on behalf of the Partnership, at the Partnership's sole
expense and within the limitations

                                       14
<PAGE>

of and in accordance with the Approved Capital and Operating Budgets; provided
that anything herein to the contrary notwithstanding, but subject to Section
16.2., S&J need not take any action that it would otherwise be required to take
if it has reasonable grounds to believe that the Partnership (to the extent it
is required to do so) will not bear the expense of such action or will not have
sufficient funds to bear the expense of such action. S&J shall be obligated to
use in- house (at S&J or its Affiliates) construction and other personnel
whenever possible in the performance of its duties hereunder and, except as
otherwise provided in Section 13.11.(b), shall not charge the Partnership any
separate fee or seek any reimbursement of expenses relating to such in- house
personnel so used, and S&J shall give the Partnership the benefit of all volume
discounts and other benefits generally available to S&J and its Affiliates by
virtue of the size of their operations or otherwise.

                           (3) As used in this Agreement, the term "First-Class
Theatre" shall mean, with respect to any Theatre Property, a first-class, and
(except as the Management Committee may otherwise determine) first-run motion
picture Theatre, as determined by reference to the geographic area in which such
Theatre Property is located.

                  (b) Employees. S&J shall cause the Partnership to employ
personnel to operate, maintain and manage each Theatre Property. S&J shall
direct and supervise such personnel in the performance of their duties and shall
determine the wages, benefits and other terms and conditions of their
employment. S&J shall consult with the Management Committee prior to hiring or
discharging any personnel at the management level at any Theatre Property.

                  (c) Concessions. S&J shall, on behalf of the Partnership,
operate, maintain and manage the sale of concessions and the operation of
vending and video and other gaming machines at each of the Theatre Properties.
S&J has advised JDC that S&J is obligated to sell products of The Coca-Cola
Company at theatres pursuant to an agreement which expires on June 30, 1996.

                  (d) Initial Prices. When the Partnership commences to operate
a Theatre Property, S&J shall initially fix admission and concession prices
charged at the Theatre so that they are competitive with other motion picture
theatres operated by other theatre circuits in the area, subject to the rights
granted to the Management Committee to change such concession and admission
prices pursuant to Section 12.1. Notwithstanding the foregoing, S&J shall have
the right as an inducement to encourage patronage to offer patrons periodic
"special sales" in respect of admission and concession purchases. S&J shall also
have the right, in its discretion, to issue "good will" tickets and passes in
accordance with customary and reasonable practice.

                  (e) Seeking and Construction of Theatre Properties. S&J shall,
in conjunction with JDC and at the expense of the Partnership, seek additional
sites in the Territory to develop as Theatre Properties for the Partnership,
taking into consideration demographics, visibility, competitive theatres,
availability of films, access and other relevant matters, and shall supervise
and manage, on behalf of the Partnership, the design and construction of new
Theatre Properties.

                                       15

<PAGE>

                  (f) Professionals and Contractors. To the extent S&J deems
necessary in connection with its Operating Management Activities and the
activities set forth in Section 13.3.(e), and subject to Section 13.3.(a)(2),
S&J shall identify and enter into contracts on behalf of the Partnership with
architects, engineers, accountants, attorneys, tradesmen and other independent
contractors to perform services and supervise the administration, and monitor
the performance, of all work to be performed and services to be rendered under
all such contracts. S&J shall not enter into any contract with any such
professional or other independent contractor which would require the payment of
more than $50,000 in any 12-month period unless such contract is provided for in
an Approved Operating Budget or Approved Capital Budget or is approved by JDC.

                  (g) Maintenance. S&J shall cause each Theatre Property to be
maintained in a manner consistent with Operating Management Standards. S&J
shall, except as otherwise specifically provided in this Agreement, enter into
such service, maintenance and other contracts, or otherwise obtain or provide
such service, maintenance or refurbishment, as shall be necessary or appropriate
for the operation, maintenance and refurbishment of each Theatre Property in a
manner consistent with Operating Management Standards. No such contract shall be
for a term of more than one year, unless it may be cancelled without penalty
upon not more than 30 days' notice. S&J shall purchase, on behalf of the
Partnership and in accordance with the Approved Operating Budget, in reasonable
quantities and at reasonable prices all supplies, materials, tools and equipment
as shall be necessary or appropriate for the operation and maintenance of each
Theatre Property in accordance with the Operating Management Standards.

                  (h) Repairs. S&J shall cause such ordinary and necessary
repairs to be made to each Theatre Property, and to all equipment and system
located in or servicing such Theatre Property, as shall be necessary or
advisable for its operation and maintenance in accordance with the Operating
Management Standards.

                  (i) Insurance. S&J shall obtain and maintain for each Theatre
Property all such insurance coverage as is customary and appropriate for
comparable properties in the geographic area in which the Theatre Property is
located. Notwithstanding the foregoing, S&J shall maintain a policy of public
liability insurance from a nationally recognized insurance company for property
damage and personal injury (including death) in an amount of not less than $10
million combined single limit (consisting of primary or umbrella coverage) and
the Approved Operating Budget shall provide for payment of all necessary
premiums for such policies. The Partnership and each of the Partners and their
Affiliates shall be named as insured parties under all insurance policies. S&J
shall upon request provide to JDC copies of all insurance policies.

                  S&J shall monitor the insurance coverage of the Partnership
and shall at least annually advise JDC if, in S&J's judgment, the Partnership
should change the type or amount of casualty, liability or other insurance it
carries. S&J shall prepare and file all reports, claims, notices and other
documents required in connection with all policies of insurance carried by the
Partnership and any claims thereunder. S&J shall advise JDC of any material
casualty to any Theatre Property, or of any material claims asserted by third
parties for personal injury or property damage. Any casualty to any Theatre
Property resulting in

                                       16

<PAGE>

damage exceeding $50,000, or any claim by a third party for more than $50,000,
except a claim covered by liability insurance, shall be deemed material. If the
amount of any casualty insurance claim or claim by any third party is $50,000 or
more, S&J shall not agree to any settlement without the prior written consent of
JDC.

                  (j) Compliance with Laws. S&J shall take or cause to be taken
all such appropriate action in and about or affecting each Theatre Property as
shall be necessary to cause the Partnership to be in compliance with all legal
requirements applicable to such Theatre Property and the requirements of any
Board of Fire Underwriters or similar agency. Notwithstanding the cost
limitations set forth in this Agreement, S&J may, without JDC's prior written
approval, take or cause to be taken any such actions without limitation as to
cost if failure to do so would or might, in S&J's reasonable judgment, expose
S&J, JDC or the Partnership to criminal or civil liability; provided, however,
that in each such instance S&J shall, before taking or causing to be taken any
such action, notify JDC of the need for such action and use reasonable efforts
to obtain JDC's approval. S&J shall promptly notify JDC of any violation, order,
rule or determination affecting any Theatre Property of any governmental
authority or Board of Fire Underwriters or similar agency. Each Partner shall
promptly notify the other Partner of all litigation of which it is aware filed
against the Partnership, any Theatre Property, or such Partner in connection
with or relating to the Partnership, claiming damages in excess of $50,000,
except for claims covered by liability insurance.

                  (k) Taxes. S&J shall timely prepare for each Theatre Property
Tax returns, and obtain and verify bills for real estate, personal property,
payroll, miscellaneous and franchise and all other similar Taxes and
assessments, if any, against such Theatre Property and promptly cause the
Partnership to pay such Tax bills and any other Impositions (as defined below)
which are the obligation of the Partnership to pay. S&J and JDC shall assist and
cooperate with each other in connection with all such Taxes and assessments in
all ways reasonably requested by S&J, including allocations or petitions for
reduction of Taxes or assessments. As used herein, "Impositions" shall mean all
Taxes, assessments, special assessments, rents and charges for any easement or
agreement maintained as part of or for the benefit of any Theatre Property, use
or occupancy Taxes and charges, water and sewer charges, rates and rents,
charges and fees for vaults, charges for public and private utilities, excises,
levies, license and permit fees and other governmental charges, general and
special, ordinary and extraordinary, unforeseen and foreseen, of any kind and
nature whatsoever which at any time during the term of the Partnership may be
assessed, levied, confirmed, imposed upon or grow or become due and payable out
of or in respect of, or become a lien on, (i) any Theatre Property or any part
thereof or any appurtenances thereto, or the sidewalks or streets adjacent
thereto or upon any personal property located, or used in connection with any
Theatre Property, (ii) the rent, income or other payments received by or on
behalf of the Partnership (but not including any Taxes imposed upon the Partners
on the income of the Partnership), (iii) any use or occupation of any Theatre
Property, (iv) such franchises, licenses, and permits as may be appurtenant to
the use of any of the Theatre Properties, and (v) any document to which the
Partnership is a party transferring an interest or estate in any Theatre
Property. S&J shall collect, and pay over to the appropriate Tax authority when
due, all sales and admissions Taxes and all other similar Taxes required to be
collected under applicable law.

                                       17
<PAGE>
                  (l) Waivers of Liens. S&J shall obtain all waivers of lien
necessary to keep each Theatre Property free and clear of all mechanics' and
materialmen's liens in connection with any work to be performed on such Theatre
Property. If a Partner becomes aware of the filing of any mechanics' or
materialmen's lien against any Theatre Property it shall promptly advise the
other Partner thereof and, except as the Management Committee shall otherwise
determine, S&J shall cause such lien to be bonded or otherwise discharged of
record.

                  (m) Mortgages and Other Key Documents. S&J shall administer
the payment by the Partnership of all debt service on any mortgages affecting
any Theatre Property which it is the obligation of the Partnership to pay and
shall use diligent efforts to enforce all of the Partnership's rights under all
Key Documents. Notwithstanding any other provision hereof to the contrary, if
S&J, LTMC or any of its Subsidiaries is a party (other than on behalf of the
Partnership) to any lease or other Key Document, all determinations on behalf of
the Partnership with respect to the rights and obligations of the Partnership
shall be made by S&J as directed by JDC, excluding, however, those types of
agreements referred to in Sections 13.4., 13.8., 13.9. and 13.10.

                  (n) Advertising. S&J shall hire such advertising services,
place such advertisements and generally supervise and, attend to all promotional
matters pertaining to the exhibition of motion picture films at the Theatre
Properties.

                  13.4. Conflicts of Interest. JDC acknowledges and agrees that
S&J and its Affiliates conduct Operating Management Activities and Booking
Management Activities for other motion picture theatres and that its Affiliates
distribute and license motion pictures, and JDC recognizes that such activities
may result in actual or potential conflicts of interest. JDC agrees that the
existence of such actual or potential conflicts of interest shall not be a basis
for any claim by JDC or the Partnership against S&J or its Affiliates.

                  13.5.    Books, Records and Reports.

                  (a) Books and Records. S&J shall establish and maintain full
and true books of account and such other records and other documentation
pertaining to the operation and maintenance of each Theatre Property as are
customarily maintained for comparable Theatre Properties, in accordance with
generally accepted accounting principles, consistently applied. Such books of
account, records and other documentation shall be and remain the property of the
Partnership, and either Partner or its duly authorized representatives shall
have the right to inspect and make extracts from such books of account, records
and other documentation during normal business hours upon reasonable notice. In
the event that any inspection by JDC of such books and records indicates that
S&J has overcharged or underpaid the Partnership, S&J shall promptly reimburse
the Partnership to the extent of any overcharge and rectify any underpayment.
S&J shall promptly reimburse JDC for any amounts reasonably expended in making
such inspection if the difference is 3% of more of the total charge, and S&J is
required to reimburse the Partnership hereunder.

                                       18
<PAGE>

                  (b) Monthly Reports. S&J shall within 30 days after the end of
each month prepare and deliver to JDC a monthly statement of income and expense
for each Theatre Property and for the Partnership as a whole. In addition, S&J
shall make available to JDC on a daily basis its flash reports of Gross
Receipts.

                  (c) Quarterly Reports. No later than 45 days after the end of
each quarter of each fiscal year of the Partnership, S&J shall cause to be
prepared and delivered to JDC an unaudited statement showing the results of
operations and the financial position of the Partnership as of the end of such
quarter. Such statements shall be prepared in accordance with generally accepted
accounting principles, consistently applied. S&J shall prepare and deliver to
JDC on a quarterly basis S&J's written estimates of the amounts, if any, by
which any major categories of the Approved Budgets should be revised to provide
adequately for the operation and maintenance of each Theatre Property or
anticipated capital expenditures for the next succeeding fiscal quarter. S&J
also shall furnish JDC with such further information covering the operation and
maintenance of each Theatre Property and capital expenditures as JDC may
reasonably request.

                  (d) Annual Report. S&J shall endeavor to deliver to JDC no
later than 60 days after the beginning of the next succeeding fiscal year, a
working draft of the proposed financial statements for the previous fiscal year.
As soon as practicable after the close of each fiscal year, but not later than
90 days after the beginning of the next succeeding fiscal year, S&J shall cause
to be prepared and delivered to JDC audited financial statements for such fiscal
year prepared in accordance with generally accepted accounting principles,
consistently applied and which shall fairly present the results of operations,
cash flow and the financial position of the Partnership as of the end of such
fiscal year audited by the Accountant. The cost of the outside auditors for
preparing the annual audited financial statements shall be charged to the
Partnership.

                  (e) Computer Services. If feasible, the Partnership shall
install computers at the office of the Partnership which will provide the JDC
Partner access to all revenue, expenses and other operating data relating to the
Partnership. In any event, S&J shall provide the JDC Partner with timely access
to all such information.

                  13.6. Compensation. The Partnership shall pay to S&J an annual
fee equal to 5% of the Gross Receipts of each Theatre Property, payable on the
5th day of each month in respect of the immediately preceding month (the
"Management Fee"). The amount paid to S&J pursuant to this Section 13.6. shall
not be deemed a Partnership Distribution, but shall be an expense of the
Partnership.

                  13.7. Indemnification. The Partnership shall and does hereby
indemnify and hold harmless S&J, LTMC, SPE and their Affiliates, and their
respective officers, directors and personnel from and against all claims,
losses, liabilities, damages, fines, penalties, costs and expenses (including,
without limitation, interest which may be imposed in connection therewith,
expenses of investigation, reasonable fees and disbursements of counsel and
other experts, as the case may be) ("Claims") sustained or incurred by any such
indemnified parties in connection with the performance of their duties in
accordance with the standards provided in this Agreement, except and only to the
extent such Claims result from a violation of

                                       19
<PAGE>

federal, state or local law, gross negligence or willful misconduct on the part
of S&J, LTMC, SPE or any of their Affiliates.

                  13.8. Employment of Affiliates, etc. S&J may cause the
Partnership to enter into agreements or other arrangements with any Person which
is an Affiliate of S&J if such agreements or arrangements are on terms which,
taken as a whole, are no less favorable to the Partnership than those the
Partnership could have obtained from an unaffiliated third party, and are in
accordance with the Approved Operating Budget. Nothing herein contained shall be
deemed to modify, impair or affect the provisions of Sections 13.3. and 13.9.

                  13.9. S&J's Film Buying Duties and Powers. (a) S&J shall
manage, coordinate and supervise the proper conduct of the ordinary and usual
business and affairs of the Partnership pertaining to the rental or other
acquisition for exhibition of motion picture films at the Theatre Properties
(collectively the "Booking Management Activities"), but the final determination
of which films to exhibit at any Theatre Property shall be determined
exclusively by S&J, subject to the provisions of subsection (b) next following.
Subject to Sections 12.1., 12.2., 12.3. and 13.10., the Booking Management
Activities shall be conducted in a manner (hereinafter referred to as "Booking
Management Standards") consistent and in accordance with (i) prudent business
and management practices applicable to the operation of the Theatre Properties,
(ii) the operation of the Theatre Properties as First-Class Theatres and (iii)
the requirements of any Key Documents now or hereafter affecting the Theatre
Properties. Except as otherwise provided for in this Agreement, S&J shall have
such responsibilities, and shall perform and take, or cause to be performed or
taken, all such services and actions as shall be necessary or advisable for the
proper conduct of the Booking Management Activities in accordance with the
Booking Management Standards, including, without limitation, the duties set
forth in subsections (b) through (f) inclusive immediately below. Unless
otherwise provided for in this Agreement, all services and actions which S&J is
required or permitted to perform or take, or cause to be performed or taken,
under this Agreement in connection with the Booking Management Activities shall
be performed or taken, as the case may be, on behalf of the Partnership, at the
Partnership's sole expense and within the limitations of and in accordance with
the Approved Capital and Operating Budgets; provided that anything herein to the
contrary notwithstanding, but subject to Section 16.2., S&J need not take any
action it would otherwise be required to take if it has reasonable grounds to
believe that the Partnership (to the extent it is required to do so) will not
bear the expense of such action or will not have sufficient funds to bear the
expense of such action. S&J shall be obligated to use in-house (at S&J or its
Affiliates) personnel whenever possible in the performance of its Booking
Management Activities and shall not charge the Partnership any separate fee or
seek any reimbursement of expenses relating to such in-house personnel so used.
S&J shall give the Partnership the benefit of all volume discounts and other
benefits generally available to S&J and its Affiliates by virtue of the size of
their operations or otherwise. S&J shall have no liability to the Partnership or
to JDC with respect to the conduct of the Booking Management Activities other
than to carry out the Booking Management Activities in accordance with the
Booking Management Standards in a reasonable manner, and the Partnership shall
indemnify and hold harmless S&J against all obligations and liabilities incurred
by S&J in the performance of its duties hereunder as provided in Section 13.7.

                                       20
<PAGE>

                  (b) Licensing of Certain Films. If JDC in the exercise of its
reasonable judgment determines that the exhibition at a Theatre Property of any
particular film will have an adverse social or political impact, create a
dangerous environment or require substantial additional security, JDC shall
notify S&J in sufficient time prior to the licensing of that film so that the
Partners can determine whether to exhibit that film at a Theatre Property. If
the Partners cannot resolve the issue, the matter shall be referred to the
Management Committee for decision.

                  (c) Licensing. Subject to the provisions of Section 13.9.(b),
S&J shall have the sole responsibility to negotiate and enter into agreements
with distributors or other Persons (collectively, "Distributors") with respect
to, or otherwise arrange for, the license or other acquisition of motion picture
films to be exhibited at each of the Theatre Properties, including, without
limitation, film licensing agreements and guarantees or advances of film rental
provided, however, that S&J shall not enter into any guaranty or advance of film
rental for any individual film at any individual Theatre Property in excess of
$100,000 without the prior written consent of JDC. Notwithstanding the preceding
sentence, S&J acknowledges and agrees that, except for its agreement to fulfill
the Booking Management Standards, S&J has not made and does not make any
representation or warranty to, or covenant with JDC as to the manner of
licensing motion pictures at any of the Theatre Properties, the clearances or
run or type of motion pictures to be exhibited at any of the Theatre Properties,
or whether any motion picture films of a particular producer or Distributor will
be exhibited at any of the Theatre Properties.

                  (d) Film Settlements. S&J shall be responsible for the
negotiation of settlements ("Film Settlements") arising from the rental or other
acquisition of motion pictures exhibited at any of the Theatre Properties and,
in connection therewith, may, on behalf of the Partnership, enter into
agreements with respect to such Film Settlements. S&J shall determine Film
Settlement items in accordance with prudent business and management practices
("Settlement Policies").

                  (e) Advertising Allowances. S&J, at its election, may
negotiate advertising allowances from Distributors and settlements of such
allowances and enter into agreements with respect to such allowances, including
co-op advertising agreements and settlements.

                  (f) Compliance with Laws. S&J shall take or cause to be taken
on behalf of the Partnership all such appropriate actions in performing the
Booking Management Activities as shall be necessary to comply with all legal
requirements applicable thereto.

                  13.10. Conflicts of Interest. JDC acknowledges and agrees that
S&J and its Affiliates are involved in, and may increase their involvement in,
numerous aspects of the motion picture industry, including the production and
distribution of motion picture films for exhibition in motion picture theaters,
and the ownership, operation and/or management of other motion picture theatres.
JDC recognizes that these involvements may result in actual or potential
conflicts of interest and that, except as otherwise provided in this Agreement,
the existence of such actual or potential conflicts of interest shall not be a
basis for any claims by JDC or the Partnership against S&J or any of its
Affiliates. Without limiting the foregoing:

                                       21
<PAGE>

                  (a) JDC acknowledges that with respect to Booking Management
Activities and Film Settlements, S&J may license motion pictures produced or
distributed by Affiliates of S&J or by persons with whom such Affiliates have
commercial relationships. JDC acknowledges that numerous subjective and
non-quantifiable matters of judgment go into the decision of which films are to
be licensed and the terms of such licensing agreement, and that S&J for a
variety of reasons may find it in the best interest of the Partnership and of
S&J, to license films of certain Distributors (including Affiliates of S&J) and
not to license films of other Distributors. Without limiting or otherwise
affecting S&J's obligation to conduct the Booking Management Activities in
accordance with the Booking Management Standards, or JDC's or the Partnership's
right to enforce the same, JDC acknowledges that S&J would not have entered into
this Agreement if it (or any of its Affiliates) would be subject to claims of
breach of duty or for other liabilities by JDC on the grounds that it licensed
certain films, or dealt with certain Distributors, or that it licensed films
(regardless of terms) of S&J's Affiliates and JDC agrees, in order to induce S&J
to enter into this Agreement that it will not assert any such claim(s).

                  (b) JDC acknowledges that S&J and its Affiliates are engaged
in the operation and/or ownership of motion picture theatres in various market
areas, and that they intend to expand their interest in the operation and
ownership of motion picture theatres. JDC further acknowledges that (i) market
areas may be unique and involve factors relevant to Settlement Policies that are
not of equal importance to other market areas, (ii) S&J would not have entered
into this Agreement if its conduct with respect to Settlement Policies for the
Partnership were evaluated against or compared to the Settlement Policies which
it or its Affiliates apply in other market areas or markets, and (iii) S&J would
not have entered into this Agreement if it were required to apply the same or
similar Settlement Policies hereunder as it or its Affiliates follow in other
market areas. Accordingly, JDC and S&J agree that as between themselves, (w)
Settlement Policies followed in other market areas by S&J and its Affiliates
shall be deemed not relevant or pertinent to any review of or contest involving
S&J's Settlement Policies for any Theatre Property owned, managed or operated by
the Partnership and (x) JDC and the Partnership waive any right to challenge
S&J's Settlement Policies on the basis of Settlement Policies followed by S&J or
its Affiliates in any other market areas. S&J and its Affiliates shall have no
obligation to provide JDC or the Partnership, or to any of their accountants or
representatives, access to information (including access to work papers, books
and accounts, memoranda and other documentation) regarding procedures followed
or results achieved by S&J or any of its Affiliates with respect to film
settlements applicable to any motion picture theatres other than the Theatre
Properties owned, operated or managed by S&J or any of its Affiliates, and JDC
waives any and all rights to request or receive such information. Except as
provided in Sections 13.9.(a), (b), (c) and (d), JDC confirms that S&J has made
no representation or warranty to, or covenant with JDC as to Settlement Policies
or Booking Management Standards or with respect to any theatres which are owned,
managed or operated by the Affiliates of S&J.

                  13.11. Compensation. As compensation to S&J for the
performance of its obligations under this Agreement, the Partnership shall pay
to or reimburse S&J for the following:

                  (a) The Management Fee, payable as specified in Section 13.6.,

                                       22
<PAGE>
                  (b) All reasonable out-of-pocket expenses properly vouchered
and subject to appropriate internal controls incurred by S&J and its Affiliates
for travel and entertainment in
connection with the performance of its obligations to the Partnership in
acquiring or seeking new sites or prior to a Theatre Property opening to the
public for business and provided for in the Approved Operating Budget,

                  (c) Amounts paid by S&J under contracts entered into for the
benefit of the Partnership, and

                  (d) Goods, materials and services to be charged to the
Partnership pursuant to this Agreement if paid by or on account of S&J.

                  13.12. Discontinuance of S&J Services. If and when the
Management Committee, in its sole discretion, determines that the circuit of
Theatres operated by the Partnership has grown large enough so that it is in the
best interests of the Partnership that it furnish the services provided by S&J
pursuant to Article 13, then on 60 days' prior notice to S&J executed by both
Partners, S&J shall discontinue providing the services it performs pursuant to
this Article 13, and the Partnership shall thereafter provide such services.
Upon S&J ceasing to perform such services, the Partnership shall pay S&J for its
services performed to that date, and thereafter the Partnership shall not pay
S&J the amounts specified in Sections 13.6. or 13.11.(a).

                                   ARTICLE 14

                             JDC'S RESPONSIBILITIES

                  14.1.    (OMITTED)

                  14.2. JDC's Duties and Powers. Subject to the provisions of
Sections 12.1., 12.2. and 12.3., JDC shall perform the following for the
Partnership:

                        (1) The JDC Partner shall be responsible for
spearheading and participating in all public community relations, meeting with
politicians and community leaders, providing the Partnership with guidance on
unique sensitivities involved in successfully operating Theatre Properties in
African-American and Hispanic communities, working with S&J to establish
security plans appropriate for each Theatre Property and individual film
engagement and taking an active role together with S&J in finding and financing
locations for future Theatre Properties.

                        (2) JDC, through its principals, Johnson, Jr. and
Lombard, shall render services as, where and when reasonably requested by the
Partnership in connection with the publicity and promotion of Theatre Properties
and the motion pictures to be exhibited at Theatre Properties, including,
without limitation, attending the premieres of motion pictures, making
appearances at press conferences and on television, making personal appearances,
engaging in interviews, participating in photo sessions and promotional tours,
and appearing and making presentations to governmental and quasi-governmental

                                       23
<PAGE>

authorities, such as planning and zoning boards, to enable the Partnership to
obtain site plan approval, certificates of occupancy and other governmental
approvals for the construction, use and operation of Theatre Properties and such
other promotional and publicity services as may be reasonably required by the
Partnership. JDC agrees that Johnson, Jr. will not cause or permit the use of
his name or likeness in connection with any business engaged in the theatrical
exhibition of motion pictures other than the Partnership. Although such
principals will use all reasonable efforts to make themselves available to
perform such promotional and publicity services, their obligation to perform
such services shall be subject to their availability. It is the intent of the
Partners that the public appearance services provided for herein shall be
performed primarily by Johnson, Jr.

                        (3) JDC shall submit to the Partnership quarterly
community relations plans for each Theatre Property 20 days before the beginning
of each quarter scheduling activities for the forthcoming quarter to promote and
gain visibility for each Theatre Property within the community. Such plans shall
fit within the Approved Operating Budget. JDC shall be responsible for managing
and executing the plans, and S&J shall participate and cooperate as reasonably
required.

                        (4) JDC shall prepare plans to provide security and
safety for the patrons and staff of each Theatre Property, and shall work with
S&J, which shall participate and cooperate as reasonably required, to ensure
that the plans are properly executed.

                        (5) While the day-to-day Operating Management Activities
as provided in Article 13 are the responsibility of S&J, JDC shall assist in
such Activities as reasonably requested.

                        (6) JDC shall, at the expense of the Partnership, seek
additional sites in the Territory to develop as Theatre Properties for the
Partnership, taking into consideration demographics, visibility, competitive
theatres, availability of films, access and other relevant matters.

                        (7) JDC shall seek and bring to the attention of the
Management Committee locations where a governmental agency may be interested in
constructing a motion picture theatre in the Territory, and leasing such theatre
to the Partnership or contracting with the Partnership to manage such theatre,
or in making funds for construction available to the Partnership upon favorable
terms.

                        (8) JDC shall advise S&J in respect of films which will
appeal predominantly to the African-American and Hispanic communities to the
extent JDC has knowledge of such films.

                  14.3. Compensation. As JDC's sole compensation for the
performance of its obligations under this Agreement, (i) the Partnership shall
pay for the following services: (a) Lombard shall be employed by the
Partnership, and devote substantially his full time to the Partnership as an
employee-at-will at an annual salary rate of $125,000 payable in 26 bi-weekly
installments; (b) the renting of office space for the Partnership in Los
Angeles, California at a rate not to exceed $15,000 per year; (c) secretarial
services exclusively for the Partnership in its Los Angeles, California office
at a rate of $30,000 per year; and (ii) in addition, the Partnership shall
reimburse JDC for its reasonable out-of-pocket expenses properly

                                       24

<PAGE>

vouchered and subject to appropriate internal controls incurred in connection
with the performance of its obligations to the Partnership and provided for in
the Approved Operating Budget.

                  14.4. Cooperation of S&J. JDC shall have the primary
responsibility for, and S&J shall cooperate with JDC in the performance of, the
duties and powers specified in this Article 14 subject to the provisions of
Sections 12.1., 12.2. and 12.3., but nothing herein contained shall in any way
preclude S&J from exercising the powers and duties specified in this Article 14.

                  14.5. Indemnification. The Partnership shall and does hereby
indemnify and hold harmless JDC, Johnson, Jr., Lombard, Warren Grant and their
respective Affiliates, officers, directors and personnel from and against all
Claims sustained or incurred by any of such indemnified parties in connection
with the performance of their duties in accordance with the standards provided
in this Agreement, except and only to the extent such Claims result from a
violation of federal, state or local law, gross negligence or willful misconduct
on the part of JDC, Johnson, Jr., Lombard, Warren Grant or any of their
respective Affiliates.

                                   ARTICLE 15

                              ADDITIONAL AGREEMENTS

                  15.1. Non-Competition. (a) (1) Except for JDC's interest in
this Partnership and except as otherwise herein provided, Johnson, Jr., Lombard,
JDC or any of its Affiliates (the "JDC Group") shall not, directly or
indirectly, individually or as part of a group, own, lease, operate, rent,
build, acquire an economic interest in, or provide services to, any motion
picture theatre, or enter into an agreement to do any of the foregoing, or
acquire or maintain an economic interest in any entity which engages in any of
the foregoing activities (each, a "JDC Restricted Investment"), unless the JDC
Group (an "Investing Partner") shall, in accordance with the following
procedures, first give the Partnership the opportunity to acquire such JDC
Restricted Investment on the same terms and conditions. Except for S&J's
interest in this Partnership and except as otherwise provided in Section 15.2.,
from and after the date hereof, S&J, LTMC or any of its Subsidiaries (an
"Investing Partner") shall not, directly or indirectly, as a Partner or having a
controlling interest, operate, rent, build or acquire an economic interest in
any motion picture theatre in the Territory which is in a zone which competes
substantially for film or patronage with a Theatre Property (an "S&J Restricted
Investment") unless S&J (an "Investing Partner") shall in accordance with the
following procedures first give the Partnership the opportunity to acquire such
S&J Restricted Investment on the same terms and conditions. Notwithstanding the
foregoing, the following shall not constitute an "S&J Restricted Investment" or
a "JDC Restricted Investment": (A) the acquisition of "beneficial ownership" (as
defined in the Exchange Act) by the JDC Group or by S&J, LTMC or any of its
Subsidiaries of less than 5% of any class of equity securities (whether or not
entitling the holder to vote generally in the election of directors) of any
corporation having any class of securities registered pursuant to Section 12 of
the Exchange Act or which is subject to the reporting requirements of Section
12(d) of the Exchange Act, or voting securities of any such corporation
constituting up to 5% of the voting power of such corporation, which corporation
owns, leases, operates, rents or provides services to, motion picture theatres,
whether

                                       25

<PAGE>

or not located in the Territory; (B) the acquisition by an Investing Partner of
an Interest in any entity which operates, leases or manages at least 48 or more
screens, not more than 25% of which are located within the Territory; or (C) the
acquisition by an Investing Partner of an Interest in any entity which operates,
leases or manages 48 or more screens, more than 25% of which are located in the
Territory, if the Investing Partner within six months following such acquisition
either causes such entity to dispose of such interest in such screens within the
Territory which compete substantially for patronage or films with any Theatre
Property or causes such entity to make an "Offer Notice" in accordance with this
Section 15.1.(a)(2) with respect to such theatres located in the Territory.

                        (2) An Investing Partner shall deliver written notice
(an "Offer Notice") of a proposed Restricted Investment to the other Partner
(the "Unaffiliated Partner") as promptly as practicable after the earlier to
occur of (x) the delivery of a term sheet by or to the Investing Partner, (y)
the execution of a letter of intent or agreement in principle, (z) the
negotiation of a proposed form of definitive agreement, or the date of the
actual investment (or within six months thereafter in the case of an Offer
Notice delivered pursuant to clause (C) of Section 15.1.(a)(1)), setting forth
the terms of the proposed Restricted Investment. The Offer Notice shall specify,
in reasonable detail, the terms and conditions of the proposed Restricted
Investment and include copies of any term sheet, letter of intent or proposed
form of agreement relating to the proposed Restricted Investment. If an Offer
Notice shall be given, the Partnership shall have the right, exercisable by the
Unaffiliated Partner alone by giving notice (an "Acceptance Notice") to the
Investing Partner within 45 days after the date on which such Unaffiliated
Partner shall have first received the Offer Notice, to acquire the Restricted
Investment upon the same terms and conditions set forth in the Offer Notice, the
parties agreeing that in the event that a proposed Restricted Investment is to
be made as part of a transaction involving the acquisition of an economic
interest in assets in addition to any motion picture theatre located in the
Territory, the Investing Partner shall cause the assets which comprise the
Restricted Investment to be offered for separate transfer to the Partnership at
a cash purchase price equal to a fair allocation of the aggregate consideration
for all assets which are a part of such transaction. If the seller will not make
such an offer, and the Restricted Investment is acquired by the Investing
Partner, the Investing Partner shall deliver an Offer Notice to the Unaffiliated
Partner relating to the assets which comprise the Restricted Investment as
provided in this Agreement. If the Unaffiliated Partner shall deliver on behalf
of the Partnership an Acceptance Notice, the Partners shall use reasonable
efforts to negotiate promptly a definitive agreement providing for the
acquisition by the Partnership of the Restricted Investment on terms identical
to (or more favorable to the Partnership than) the terms specified in the Offer
Notice, and, upon the successful completion of such negotiations, the
Partnership shall sign such agreement. Each of the Partners shall cooperate with
the other and use its best efforts to complete the negotiations and execute such
agreement. If an Acceptance Notice is given, each Partner shall provide such
portion of the funds necessary to enable the Partnership to make such
acquisition, including all costs and expenses relating thereto, as is equal to
such Partner's Percentage Interest.

                        (3) If no Acceptance Notice shall have been delivered
within 45 days after the date on which the Offer Notice shall have been
delivered, or if the Unaffiliated Partner shall not have, on behalf of the
Partnership, within 90 days after the date on which the Acceptance Notice shall
have been delivered, executed a definitive agreement providing for the
acquisition by the Partnership of the Restricted Investment, the Investing
Partner may, no later than 30 days after the end of the later of such 45-day or

                                       26
<PAGE>

90-day period, sign a definitive agreement providing for the consummation of
such Restricted Investment on terms and conditions no more favorable to the
Investing Partner than as set forth in the Offer Notice, and the acquisition of
such Restricted Investment and the continued operation of the motion picture
theatres included in such Restricted Investment or the expansion thereof shall
not be deemed a violation of Sections 15.1., 15.2., 15.3. or 15.4. by the
Investing Partner. If the Investing Partner shall not execute such definitive
agreement within such period and thereafter proceed to acquire the Restricted
Investment pursuant to such definitive agreement, the provisions of this Section
15.1. shall again apply to such Restricted Investment, and no acquisition of a
Restricted Investment shall be made otherwise than in accordance with the terms
of this Section 15.1.

                  15.2. Restrictions on the S&J Partner. The S&J Partner, LTMC
and its Subsidiaries will not enter into another joint venture which has as its
purpose the development, building and operating of movie theatres in the
Territory, and further agree not to operate or manage any other motion picture
theatre which competes substantially for the same film or patronage as a Theatre
Property. The foregoing restriction and the restriction set forth in Section
15.1. shall not apply to any motion picture theatre presently operated by S&J or
any of its Affiliates or to any transaction for which S&J or any of its
Affiliates has made a binding commitment as of the date hereof.

                  15.3. Restrictions on JDC and the JDC Group. Each of JDC and
the JDC Group and any of its Affiliates agrees not to operate or manage any
motion picture theatre and not to enter into another joint venture which has as
its purpose the development, building or operating of motion picture theatres.

                  15.4. Restrictions on the Partnership. The Partnership shall
not operate or manage any motion picture theatre which substantially competes
for patronage or film with any motion picture theatre operated by S&J or its
Affiliates.

                  15.5. Cessation of Restrictions. The restrictions imposed
pursuant to Section 15.1., 15.3. and 15.4. shall continue and be effective only
so long as JDC, the JDC Group or any of its Affiliates is a Partner. The
restrictions imposed pursuant to Section 15.1., 15.2. and 15.4 shall continue
and be effective only so long as S&J or any of its Affiliates is a Partner.

                  15.6. Refusal to Operate. Each Partner shall be required to
submit to the Management Committee any proposed motion picture theatre site in
the Territory. If the Management Committee turns down any particular motion
picture theatre site proposed by a Partner, such Partner shall have the right to
proceed with such motion picture theatre site provided it does not violate any
of the restrictions set forth in Sections 15.2. or 15.3., except that if either
Partner decides to proceed with such motion picture theatre site, such motion
picture theatre shall not be operated under the name "Magic Johnson Theatres" or
"Earvin Johnson, Jr. Magic Theatres" or any name similar thereto unless the
operation of such motion picture theatre is managed by the Partnership (whether
directly or by S&J pursuant to Article 13). In such event, such motion picture
theatre shall be managed by the Partnership under terms and conditions set forth
for the operation of a Theatre Property.

                                       27
<PAGE>
         15.7. Lease Renewals. (a) With respect to every Lease, S&J shall keep
JDC informed of the progress of all negotiations and the proposed terms of
renewal of such Lease and JDC may attend and participate in such negotiations.

         (b) On or before the fifteenth day (the "Communication Date") prior to
the earlier of (x) the expiration of any Lease which does not grant to the
Partnership a renewal option or (y) the last day for the Partnership to give
notice of its election to renew any Lease in accordance with its terms (either
of such days being hereinafter referred to as the "Expiration Date"), S&J, after
taking into account the status of negotiations with the landlord immediately
prior to the Communication Date, shall inform the Management Committee of the
proposed terms of renewal of such Lease which are acceptable to the lessor of
the Theatre Property. If the Management Committee approves such proposed terms
by the fifth day (the "Objection Date") after the Communication Date, S&J shall
use its best efforts to complete its negotiations and renew the Lease on terms
which are at least as favorable to the Partnership as described by S&J on the
Communication Date.

         (c) In the event that on or prior to the Objection Date the Management
Committee has not approved the proposed terms of renewal of any Lease, the
Partner whose representatives objected to such terms (such Partner referred to
as the "Objecting Partner"), at the request of the other Partner (the
"Non-Objecting Partner"), the Partnership shall assign to the Non-Objecting
Partner, for no consideration, all of the Partnership's right, title and
interest in and to such Lease, including any renewal rights, and shall sell to
the Non-Objecting Partner, at their fair market value as jointly determined by
both Partners in good faith, the Partnership's interest in all tangible
property, fixtures and improvements located in the Theatre Property which is
subject to such Lease, together with the business, if any, as a going concern of
such Theatre Property, concurrently with the later of the renewal of such Lease
(the "Renewed Lease") or the expiration of date of the term of such lease prior
to its renewal. If the Partners are unable to agree on the fair market value of
such tangible property, fixtures and improvements, such fair market value shall
be determined by an independent appraiser selected by both Partners or if they
are unable to agree, the Accountant. The Renewed Lease shall be on terms not
materially more favorable to the Non-Objecting Partner than the terms rejected
by the Objecting Partner. The Non-Objecting Partner shall be liable for and
shall pay all transfer, sales, use, stamp, withholding, gains, and other Taxes
in connection with such transfer, and all costs of recording instruments
effecting such transfer and related documents, including reasonable attorneys'
fees of the Partnership. The theatre demised pursuant to the renewal of lease
shall not operate under the trade name "Magic Johnson Theatres" or "Earvin
Johnson, Jr. Magic Theatres" or any other trade name similar thereto.

         (d) If the renewal or transfer of any Lease to the Non-Objecting
Partner requires the consent or approval of a landlord, mortgagee or other
Person which has not been obtained, both Partners shall use all reasonable
efforts to enter into a management contract or other arrangement that transfers
to the Non-Objecting Partner the rights and obligations it would have obtained
or incurred had it succeeded to such lease as tenant or sub-tenant, provided the
Partnership shall be adequately indemnified by the Non-Objecting Partner, on
terms and conditions satisfactory to the Objecting Partner, against all Claims
in respect of or relating to such management contract or other arrangement.

                                       28
<PAGE>
         15.8. Tax year; Fiscal Year. If permission is granted by the Internal
Revenue Service, the Partnership's Taxable year shall be the period in each year
beginning on November 1 and ending on October 31, or such year as shall be
selected from time to time jointly by the Partners consistent with applicable
law, except that the initial Taxable year of the Partnership shall be the period
beginning on the date hereof and ending on October 31, 1994. The Partnership
shall promptly apply to the Internal Revenue Service for special permission to
use such Taxable year provided that if such permission is not granted, the
Partnership's Taxable year shall be the period in each year beginning on January
1 and ending on December 31, or such fiscal year as shall be selected from time
to time jointly by the Partners consistent with applicable law.

         15.9. Accountant. The books and records of the Partnership shall be
audited by a reputable firm of independent certified public accountants selected
by S&J and approved by JDC (the "Accountant") which approval JDC agrees not to
unreasonably withhold or delay. The initial Accountant shall be Price
Waterhouse. The Partnership shall pay the fees and expenses of the Accountant.

         15.10. Transfer Taxes. In the event of any sale of a Partnership
Interest to a Partner pursuant to Sections 17.3., 18.1., 18.2. or 18.3., the
selling Partner shall be liable for and shall pay all transfer, sales, use,
stamp, withholding and other Taxes.

                                   ARTICLE 16

                   OPERATING ACCOUNTS AND PAYMENTS OF EXPENSES

         16.1. Operating Accounts. S&J shall cause the Partnership to open and
maintain such account or accounts (collectively, "Operating Accounts") as S&J
shall deem necessary or appropriate in a banking institution or institutions in
New York jointly designated from time to time by both the Partners in the
Partnership's name. Representatives of each of the Partners shall be entitled to
make deposits. Withdrawals from any Operating Account shall only be made by S&J,
provided, however, that S&J shall obtain the approval of an authorized
representative of JDC before making any withdrawal that is not covered by the
Approved Budgets. The Partners understand that the film rental provided for in
the Approved Operating Budget is an annual percentage rental and is not
applicable to any particular film. Nothing contained herein shall be deemed to
prohibit S&J from entering into a film licensing agreement at a percentage
rental in excess of the annual amount provided for in the Approved Operating
Budget. S&J shall cause the Partnership to deposit in the Operating Accounts as
promptly as practicable all receipts and revenues received from the sale of
admissions tickets, concession items or otherwise.

         16.2. Payment of Expenses. If at any time the funds in the Operating
Accounts are insufficient to pay the expenses of the Partnership, such funds
shall be disbursed in the following order of priority:

                                       29
<PAGE>
         (a) First, to the payment of payroll expenses (including FICA income
Tax withholding and payments mandated by governmental authority in respect of
any health plan) for employees of the Partnership;

         (b) Next, to the payment of debt service under any mortgages affecting
any Theatre Property which it is the obligation of the Partnership to pay;

         (c) Next, to the payment of Impositions;

         (d) Next, to the payment of rent and other charges under any Lease;

         (e) Next, to the payment of utilities;

         (f) Next, to the payment of insurance premiums;

         (g) Next, to the payment of Film Settlements;

         (h) Next, to the payment of direct operating expenses or liabilities of
the Partnership;

         (i) Next, to the repayment of interest and principal on Capital
Expenditure Loans made by SPE;

         (j) Next, to the payment of indirect operating expenses or liabilities
of the Partnership including compensation to S&J and JDC as specified in
Sections 13.11. and 14.3., respectively.

         If after applying all funds in the Operating Accounts in the priority
required by the previous sentence the funds in the Operating Accounts are
insufficient to pay all the expenses referred to in any of clauses (a) through
(j) then, after paying in full all the expenses referred to in any clause having
higher priority, S&J shall apply any remaining funds in the Operating Accounts
to the payment of the expenses referred to in any such clause as determined by
the Management Committee in good faith.

         16.3. Budgets.

         (a) Capital Budgets. S&J shall prepare a pro forma capital budget for
the Partnership as promptly as practicable after the date hereof for the first
Operating Year and thereafter at least 30 days prior to the beginning of each
subsequent Operating Year. Each pro forma capital budget must be approved by the
Management Committee and the budget so approved shall be deemed to be an
"Approved Capital Budget" for the period covered by such budget. The Capital
Budget shall establish a working capital reserve of not less than $10,000 per
screen, but not more than $100,000 in respect of each Theatre Property.

         (b) Annual Operating Budgets. The Management Committee shall approve an
annual operating budget for the Partnership as promptly as practicable after the
date hereof or the first Operating

                                    30
<PAGE>
Year and thereafter at least 30 days prior to the beginning of each subsequent
Operating Year. The Management Committee shall determine a range of projected
gross box office receipts to be utilized in formulating the operating budget.
Based on the determined range of projected gross box office receipts, S&J shall
prepare a pro forma budget for all costs of film rental and of licensing film
and all costs pertaining to the operation and maintenance of each Theatre
Property. These budgets shall be combined in a pro forma operating budget. The
individual line items in the pro forma operating budget may be expressed as a
range of dollar amounts, a fixed percentage of box office sale and/or concession
sales, or a range of such percentages.

         Unless the Management Committee determines otherwise, each such pro
forma operating budget shall be substantially in the same form as the Approved
Budget in effect for the prior Operating Year (exclusive of extraordinary items
in the Approved Budget for the prior Operating Year) and shall set forth costs
on an annual basis for each Theatre Property. Each pro forma operating budget
shall be approved by the Management Committee. Any pro forma operating budget so
approved shall be deemed to be an "Approved Operating Budget" for the period
covered by such budget. Notwithstanding the foregoing, each Approved Operating
Budget shall provide for the expenditure, at S&J's discretion, of up to 2% of
total revenue of all Partnership Theatre Properties in the preceding year for
maintenance, repairs, replacement and refurbishment of the Theatre Properties
(the "Guaranteed Repair and Replacement Fund"). The Management Committee shall
have the right to increase or decrease the Guaranteed Repair and Replacement
Fund.

         (c) Dispute Resolution. In the event that any item set forth in a pro
forma operating budget is not approved by the Management Committee (the
"Disputed Item"), the Partners shall negotiate in good faith to reach joint
approval on the Disputed Item. In the event the Partners are unable to negotiate
an Approved Operating Budget, each Partner shall independently propose the
amount to be budgeted for each Disputed Item which is a regularly occurring
expense that was included in the prior year's Approved Operating Budget and
which will not be materially affected by change in the number of theatre screens
or locations since the preparation of the prior year's Approved Operating
Budget. If each of the amounts of the Disputed Item proposed by S&J and JDC is
greater than 95% of the amount of the Disputed Item for the immediately
preceding Operating Year, the amount of the Disputed Item set forth in the
Approved Operating Budget shall be the lower of the amount proposed by S&J and
JDC. If each of the amounts of the Disputed Item proposed by S&J and JDC is
lower than 95% of the amount of the Disputed Item for the immediately preceding
Operating Year, the amount of the Disputed Item set forth in the Approved
Operating Budget shall be the greater of the amounts proposed by S&J and JDC. If
only one of the amounts of the Disputed Item proposed by S&J and JDC is less
than or equal to 95% of the amount of the Disputed Item for the immediately
preceding Operating Year, the amount of the Disputed Item set forth in the
Approved Operating Budget shall be 95% of the amount of the Disputed Item for
the immediately preceding year.

         In the event that a Disputed Item is materially affected by a change in
the number of screens in Theatre Properties or locations since the preparation
of the prior year's Approved Budget, the above dispute resolution formula shall
apply, provided, however, that in applying the formula the amount of the

                                       31
<PAGE>
Disputed Item for the immediately preceding Operating Year shall be adjusted pro
rata for the number of theatre screens to be operated by the Partnership during
the next Operating Year.

         (d) Limitations of Approved Budgets. Except as otherwise specifically
provided in this Agreement, S&J shall not incur or be required to incur on
behalf of the Partnership any capital expenditures during any period except
within the limitations established by and in accordance with the Approved
Capital Budget for such period. Except as otherwise specifically provided in
this Agreement, S&J shall not incur or be required to incur on behalf of the
Partnership any costs or expenses in connection with the operation or
maintenance of the Theatre Properties during any Operating Year except within
the limitations established by and in accordance with the Approved Operating
Budget for such Operating Year.

         (e) Adjustment of Approved Budgets. In the event that either Partner or
the Management Committee reasonably believes that actual costs will exceed the
budgeted amounts for any major expense category, the Partner responsible for the
expense category shall promptly notify the other Partner in writing of the
projected amount by which actual costs are reasonably expected to exceed the
budget and the particular reasons therefor. Promptly after delivery and receipt
of such notice, the Management Committee shall in good faith make any necessary
adjustment to the Approved Budget. Any such adjustments approved by the
Management Committee shall automatically be incorporated in and become a part of
the Approved Budget for all purposes hereunder.

                                   ARTICLE 17

                        TRANSFER OF PARTNERSHIP INTERESTS

         17.1. Prohibited Transfers. Except as otherwise provided in this
Agreement, a Partner may not, directly or indirectly, sell, assign, transfer,
mortgage, pledge or collaterally assign, hypothecate, encumber or otherwise
dispose of (collectively, "Transfer"), all or any part of its Partnership
Interest, in whole or in part, without the prior written consent of the other
Partner. For purposes of this Agreement, any voluntary or involuntary change in
control of a Partner (an "Upper Tier Transfer") shall be deemed a transfer of a
Partnership Interest, except that a change in control of S&J shall not be deemed
the transfer of a Partnership Interest if the transferee simultaneously acquires
a major portion of the motion picture theatres operated by LTM Holdings, Inc. or
its Subsidiaries and Affiliates.

         17.2. Permitted Transfers. Notwithstanding the provisions of Section
17.1., but subject to the provisions of Section 17.6., a Partner may, without
the consent of the other Partner, Transfer all (but not less than all) of its
Partnership Interest to any of the following Persons: (i) if such Transfer is
not an Upper Tier Transfer, to any of its Affiliates; or (ii) if such Transfer
is an Upper Tier Transfer, (A) to any of the Affiliates of the transferring
Person, or (B) if the transferring Person is an individual, to any lineal
descendant of the transferring Person or any entity controlled by or trust
established for the benefit of any such descendant, or to the heirs, executors
or personal representatives of such transferring Person upon his death,
provided, however, that an Upper Tier Transfer shall only be deemed to be a
permitted transfer under this Section 17.2. if the transferee executes and
delivers to the other Partner an instrument, in form

                                       32
<PAGE>
reasonably satisfactory to such other Partner, whereby the transferee agrees to
be bound by all the provisions of this Agreement applicable to the transferring
Partner.

         17.3. Sale of Partnership Interest. A Partner shall not sell its
Partnership Interest prior to April 1, 1999.

         (a) If at any time after April 1, 1999 S&J receives a bona fide offer
from a non- Affiliated third party which it wishes to accept for the sale of its
Partnership Interest, it shall notify JDC setting forth in such notice ("S&J
Transfer Notice") the name of the purchaser (the "S&J Transferee") and the
terms, covenants and conditions under which the S&J Transferee is ready and
willing to purchase from S&J its Partnership Interest. Any such S&J Transferee
shall have a good reputation, be experienced in the motion picture exhibition
industry, financially sound, well qualified and capable of providing the type of
services S&J provides pursuant to Article 13 (unless the Partnership has
undertaken to furnish such services as provided in Section 13.12.) and operate
no less than 300 screens in the United States. S&J shall furnish JDC proof
thereof reasonably satisfactory to JDC simultaneously with the delivery of the
S&J Transfer Notice. JDC shall, within 60 days after receipt of the S&J Sale
Notice, notify S&J whether it elects to purchase the S&J Partnership Interest
upon the same terms, covenants and conditions as the S&J Transferee. If JDC does
not elect to purchase S&J's Partnership Interest on the terms, covenants and
conditions set forth above, or if JDC fails or neglects to respond to the S&J
Transfer Notice, S&J shall have the right to sell its Partnership Interest to
the S&J Transferee within 60 days after the expiration of such 60-day period. If
such sale is not consummated within such second 60-day period, this Section
shall again apply to any sale of S&J's Partnership Interest.

         (b) If at any time after April 1, 1999 JDC receives a bona fide offer
from a non- Affiliated third party which it wishes to accept for the sale of its
Partnership Interest, it shall notify S&J setting forth in such notice ("JDC
Transfer Notice") the name of the purchaser (the "JDC Transferee") and the
terms, covenants and conditions under which the JDC Transferee is ready and
willing to purchase from JDC its Partnership Interest. Any such JDC Transferee
shall have a good reputation, be financially sound, well qualified and capable
of providing the type of services JDC provides pursuant to Article 14; provided,
however, that the JDC Transferee need not be a celebrity. JDC shall furnish S&J
proof thereof reasonably satisfactory to S&J simultaneously with the delivery of
the JDC Transfer Notice. S&J shall, within 60 days of receipt of the JDC Sale
Notice, notify JDC whether it elects to purchase the JDC Partnership Interest
upon the same terms, covenants and conditions as the JDC Transferee. If S&J does
not elect to purchase the JDC Partnership Interest on the terms, covenants and
conditions set forth above, or if S&J fails or neglects to respond to the JDC
Transfer Notice, JDC shall have the right to sell its Partnership Interest to
the JDC Transferee within 60 days after the expiration of such 60-day period. If
such sale is not consummated within such second 60-day period, this Section
shall again apply to any sale of the JDC Partnership Interest.

         17.4. Transfer Agreements. At the closing of any sale of a Partnership
Interest pursuant to Sections 17.2. or 17.3., (i) the instrument of transfer
required to be delivered by the transferring Partner shall contain a surviving
representation concerning the absence of liens and encumbrances and shall
contain a provision indemnifying and holding the other Partner harmless from any
loss, cost or expense (including reasonable attorneys' fees) it may incur by
reason of any breach of such representation; and (ii) the

                                       33
<PAGE>
transferring Partner shall pay all transfer, stamp or gains Tax and any similar
taxes due in connection with the conveyance of its Partnership Interest.

         17.5. Effective Date of Transfers. For financial and Tax reporting
purposes, every sale, assignment or other Transfer (as distinguished from the
original issuance) of any Partnership Interest or portion thereof shall be
deemed to have occurred, and shall have no prior effect, as of the close of
business on the day on which such event shall have in fact occurred.

         17.6. Conditions Applicable to All Transfers. (a) Compliance with Laws,
etc. (a) Notwithstanding anything to the contrary contained in this Agreement,
the Transfer of any Partnership Interest made pursuant to Sections 17.2. or
17.3. shall be made in full compliance with (i) all applicable statutes, laws,
ordinances, rules and regulations of all federal, state and local governmental
bodies, agencies and subdivisions having jurisdiction over the Partnership and
the Theatre Properties, and (ii) the Key Documents affecting the Theatre
Properties, so that the operation of the Theatre Properties can continue without
interruption and without violation of any applicable law or any of such
instruments. In the event that any filing, application, approval or consent is
required in connection with any such sale, assignment or transfer, the
transferring Partner shall promptly make such filing or application or obtain
such approval or consent, at its sole expense, and shall reimburse the other
Partner for any costs or expenses (including attorneys' fees) incurred by such
Partner in connection with any filing, application, approval or consent. If,
pursuant to any such requirement, a closing is required to be postponed, such
closing shall be postponed until such requirement can be fulfilled and the
Partners shall use all reasonable efforts to cause such requirement to be
fulfilled as promptly as possible or practicable.

         (b) Instruments of Transfer. Notwithstanding anything to the contrary
contained in this Agreement, no Transfer of any Partnership Interest (excluding,
for purposes of this Section 17.6.(b) an Upper Tier Transfer) shall be binding
upon the other Partner or the Partnership unless and until (i) true copies of
the instruments of Transfer executed and delivered pursuant to or in connection
with such Transfer shall have been delivered to such other Partner and the
Partnership, (ii) the Transferee shall have delivered to such other Partner and
the Partnership an executed and acknowledged assumption agreement, which shall
be in form and substance satisfactory to the other Partner, pursuant to which
the Transferee assumes from and after the date of the Transfer all of the
obligations of the transferring Partner hereunder, whether theretofore accrued
or thereafter accruing, and agrees to be bound by all the provisions of this
Agreement applicable to the transferring Partner, (iii) the Transferee shall
have executed, acknowledged and delivered any instruments required under the
Partnership Act to effect such transfer and its admission to the Partnership,
and (iv) the Transferee shall have designated an address for delivery of
notices. If a transfer of the Partnership Interest is made to a corporation, as
permitted by Section 17.2., then such Transferee and all its shareholders shall,
in addition to any other documentation, deliver to the Partnership an agreement
not to further transfer its Partnership Interest except as permitted by this
Agreement, such agreement to be in form and substance satisfactory to the other
Partner. In connection with any transfer permitted under Section 17.1. or
Article 18, each Partner hereby consents to the withdrawal of the transferring
Partner as a Partner, and the admission of the Transferee as a Partner with the
rights of the transferring Partner.

                                       34
<PAGE>
         17.7. Acceleration of Capital Expenditure Loans. If S&J transfers its
Partnership Interest as provided in Section 17.3. or 18.1. or in the event of a
termination of the Partnership, then anything in the Loan Agreement, Promissory
Note which evidences the Capital Expenditure Loan or in the Agreement which is
security therefor to the contrary notwithstanding, all Capital Expenditure
Loans, together with interest thereon, shall immediately become due and payable.

                                   ARTICLE 18

                      VOLUNTARY TERMINATION OF PARTNERSHIP

         18.1. Appointment of Appraiser(s). After five years from the date
hereof, subject to extensions of time granted by the Management Committee, any
Partner shall have the right to terminate the Partnership by giving written
notice to the other Partner of its intent so to do ("Termination Notice"). In
such event within 30 days after receipt of the Termination Notice, the Partners
shall endeavor to agree on an Appraiser (the "Appraiser") whose duties shall be
to determine the fair market value of the Partnership Assets, and if they cannot
agree, then within 10 days thereafter, each of the Partners shall appoint an
Appraiser and the two Appraisers so appointed shall, within 10 days thereafter,
select a third Appraiser. If any Partner fails, refuses or neglects to appoint
an Appraiser, as above provided, then such Partner shall be deemed to have
waived its right so to appoint an Appraiser. If the two Appraisers so appointed
cannot agree on a third Appraiser within 20 days after both have been appointed,
then either Partner shall have the right to petition any Judge of the Superior
Court of the State of California to appoint a third Appraiser.

         18.2. Qualifications of Appraiser(s). (a) The Appraiser(s) appointed
pursuant to Section 18.1. shall be experienced in the motion picture industry
and in evaluating fair market value of motion picture theatre complexes. If
either Partner petitions a Judge of the Superior Court of the State of
California to appoint a third Appraiser, such petition shall request the Judge
to appoint an Appraiser of similar experience.

         (b) The Appraiser(s) shall schedule a conference to resolve procedural
matters, arrange for exchange of information, obtain stipulations and narrow the
issues. The scope of the duration of any necessary discovery shall be within the
sole discretion of the Appraiser(s). The Appraiser(s) shall have the discretion
to order production of documents, exchange of summaries of testimony of proposed
witnesses, an examination for deposition of parties and third party witnesses.
The discovery shall be exercised so as to limit the scope of discovery to the
amount of discovery which the Appraiser(s) determine to be reasonable under the
circumstances.

         (c) The proceedings shall be conducted in Los Angeles, California. Any
Partner may be represented by counsel or other authorized representative. The
Partners may offer such evidence as is relevant and material to the appraisal
process. The Appraiser(s) shall be the judge of relevance and materiality.

                                       35
<PAGE>
         (d) The Appraiser(s) shall determine the Fair Market Value of the
Partnership assets. "Fair Market Value" shall mean the highest price in terms of
cash which the assets of the Partnership will bring in a competitive and open
market under all conditions requisite to a fair sale with buyer and seller
acting prudently and assuming that (i) buyer and seller are typically motivated;
(ii) both parties are well informed or well advised and acting in what they
consider their best interest; (iii) reasonable time is allowed for exposure on
the open market; (iv) payment is made in cash or its equivalent; and (v) current
and long term liabilities are taken into account. The Appraiser(s) shall take
into account, among other things, (i) the value to the Partnership of the
exclusive right pursuant to the License Agreement to use the trade name "Magic
Johnson Theatres" or "Earvin Johnson, Jr. Magic Theatres" or similar name as
reflected in the Cash Flow of each Theatre Property, but only provided any of
said names has been legally filed by Licensor as a Service Mark in the Principal
Register of the United States Patent and Trade Mark Office, and (ii) the value
to the Partnership of an exclusive right to use such trade name, on terms
identical to those set forth in the License Agreement, for motion picture
theatre properties not owned or managed by the Partnership at such time (the
"New Theatre Value"). The New Theatre Value shall be separately set forth in the
Appraiser(s)' determination of fair market value.

         (e) If three Appraiser(s) are appointed, each Appraiser shall issue an
award fixing the fair market value of the Partnership assets as soon as
reasonably possible following the conclusion of the hearing, but in no event
later than 30 days thereafter. In fixing the fair market value of the
Partnership, the highest and lowest fair market value appraisal shall be
disregarded and the middle fair market value appraisal shall be determinative as
the fair market value of the Partnership assets.

         (f) The Appraiser(s)' award shall be determined in accordance with this
Section 18.2., shall be conclusive and binding on the Partners and a judgment
may be entered thereon by any court having jurisdiction.

         (g) Each of the Partners shall bear its own costs in respect of the
appraisal proceedings except that the fees of the Appraiser(s) shall be shared
equally between the Partners.

         (h) After the Fair Market Value of the Partnership assets and the New
Theatre Value have been determined, the non-terminating Partner shall have the
right within 20 days after receipt of the Appraiser(s)' determination to
purchase the Partnership Interest of the terminating Partner at a price equal to
the Fair Market Value determined by the Appraiser(s) multiplied by the
Percentage Interest of the terminating Partner. If the non-terminating Partner
fails, refuses or neglects, within such 20-day period, to exercise its right to
purchase such Partnership Interest as above provided, the terminating Partner
shall be obligated to purchase the Partnership Interest of the non-terminating
Partner at a price equal to the Fair Market Value determined by the Appraiser(s)
multiplied by the Percentage Interest at the time of the non-terminating
Partner. The price to be paid for any such purchase shall also include the New
Theatre Value if the purchasing Partner is S&J and it intends to use the trade
name "Magic Johnson Theatres" or "Earvin Johnson, Jr. Magic Theatres" or similar
name, on terms identical to those set forth in the License Agreement, for motion
picture theatre properties not owned or managed by the Partnership at such time
and said name has been legally registered as provided in Section 18.2.(d).

                                       36
<PAGE>
         (i) The closing of the sale of the Partnership Interest under this
Section 18.2. shall take place at the Partnership's office within 60 days after
the Appraiser(s) have determined the Fair Market Value of the Partnership
assets, the New Theatre Value, if applicable.

         18.3. Conditions Applicable to All Transfers. The provisions of Section
17.6. shall be applicable to any transfer made pursuant to this Article 18.

                                   ARTICLE 19

                                    INDEMNITY

         19.1. JDC Indemnity. In addition to all other indemnifications provided
for in this Agreement, JDC hereby covenants and agrees to and does hereby
indemnify and hold harmless S&J and its Affiliates and their respective
officers, directors and personnel (collectively "S&J Indemnified Party") and the
Partnership from and against all Claims sustained or incurred by the S&J
Indemnified Party or the Partnership resulting from any breach of representation
or warranty on the part of JDC under this Agreement.

         19.2. S&J Indemnity. In addition to all other indemnifications provided
for in this Agreement, S&J hereby covenants and agrees to and does hereby
indemnify and hold harmless JDC and its Affiliates, and their respective
officers, directors and personnel (collectively, "JDC Indemnified Party") and
the Partnership from and against all Claims sustained or incurred by the JDC
Indemnified Party or the Partnership resulting from any breach of representation
or warranty on the part of S&J under this Agreement.

         19.3. Partnership Indemnification. The Partnership hereby covenants and
agrees to and does hereby indemnify and hold harmless the Partners, their
respective Affiliates and their respective officers, directors and personnel,
from and against all Claims arising out of the operation of the Partnership
except and only to the extent that such Claims result from violation of federal,
state or local law, fraud, gross negligence, willful misconduct or breach of the
Partnership Agreement by such indemnified Person.

         19.4. Procedure for Indemnification. Any party making a claim for
indemnification hereunder (an "Indemnitee") shall notify the indemnifying party
(an "Indemnitor") of the claim in writing, describing the claim, the amount
thereof, and the basis therefor, promptly after the Indemnitee learns of the
existence of the claim, provided that the failure so to notify an Indemnitor
shall not relieve the Indemnitor of its obligations hereunder except to the
extent such failure shall actually have harmed the Indemnitor. The Indemnitor
shall respond to each such claim within thirty (30) days of receipt of such
notice, provided that the failure to so respond within such time period shall
not constitute an admission of liability for the claim or claims to which the
notice related. Unless necessary to minimize or mitigate continuing losses, no
action shall be taken pursuant to the provisions of this Agreement or otherwise
by the Indemnitee until the later of (x) the expiration of the 30-day response
period or (y) 30 days following the receipt of a response within such 30-day
period by the Indemnitee requesting an opportunity to cure the matter giving
rise to

                                       37

<PAGE>
indemnification (and, in such event, the amount of such claim for
indemnification shall be reduced to the extent so cured). No response from the
Indemnitor shall preclude the Indemnitee from taking such action under this
Agreement or otherwise to obtain the indemnification to which the Indemnitee
shall be entitled, except to the extent that a right to cure is requested and
the cure has been performed within the 30-day cure period by or on behalf of the
Indemnitor; in case any legal or governmental proceeding is brought against any
Indemnitee, the Indemnitor shall be entitled to participate in (and at the
option of the Indemnitor shall assume) the defense thereof, by written notice to
the Indemnitee within 30 days after receipt of notice of the claim for
indemnification, with counsel reasonably satisfactory to the Indemnitee, and at
the Indemnitor's own expense; if the Indemnitor shall assume the defense of any
such claim as provided above, it shall not settle the same except on terms
reasonably acceptable to the Indemnitee. An Indemnitee shall not settle any
indemnified claim for which, and to the extent, it will seek indemnification
from Indemnitor hereunder, without the consent of the Indemnitor, which shall
not be unreasonably withheld; indemnified expenses include the reasonable legal
fees and expenses of the Indemnitee except to the extent that such fees and
expenses are incurred after the date and during the time that the Indemnitor has
assumed the defense of any such claim in accordance with the provisions of this
Section. However, notwithstanding the assumption by an Indemnitor of the defense
of any claim at the request of an Indemnitee as provided in this Section, the
Indemnitee shall be permitted to join in such defense and to employee counsel at
its own expense, except that the Indemnitor shall bear the reasonable fees and
disbursements of separate counsel of the Indemnitee if (a) in the reasonable
judgment of the Indemnitee, the engagement of the Indemnitor's counsel would
represent a conflict of interest or (b) the Indemnitor shall fail vigorously to
prosecute or defend, as the case may be, such claim.

                                   ARTICLE 20

                                     NOTICES

         Any notice or other communication that is required or permitted to be
given under the terms of this Agreement (each a "Notice") shall be in writing
and shall be deemed to have been duly given (a) upon being deposited in the
mail, postage prepaid for registered or certified mail, return receipt
requested, or (b) when personally delivered, or (c) when sent by overnight
courier, or (d) when given by facsimile, telecopier or telex with a copy either
personally delivered the next day or sent by overnight courier the same day, in
each case, to the parties hereto at the following addresses or at such other
address and/or such additional parties in the United States of America as any
party hereto shall hereafter specify by notice given and received in the manner
provided in this Article 20.

                                       38
<PAGE>
If to S&J:

                                                S&J Theatres, Inc.
                                        c/o Loews Theatre Management Corp.
                                                 711 Fifth Avenue
                                             New York, New York 10022
                                            Attention: General Counsel
                                           Facsimile No. (212) 702-6222

With a copy to:

                                         Sony Pictures Entertainment Inc.
                                             10202 W. Washington Blvd.
                                           Culver City, California 90232
                                            Attention: General Counsel
                                           Facsimile No. (310) 280-1797

If to JDC or
  Earvin Johnson, Jr.:

                                        Earvin Johnson, Jr. Magic Theatres
                                          Johnson Development Corporation
                                              9100 Wilshire Boulevard
                                                  Suite 1000 West
                                          Beverly Hills, California 90212
                                              Attention: Warren Grant
                                           Facsimile No. (310) 843-9204

With copies to:

                                                Kenneth T. Lombard
                                               4596 Don Valdes Drive
                                           Los Angeles, California 90008
                                           Facsimile No. (213) 291-3239

and:

                                          Katten Muchin Zavis & Weitzman
                                             1999 Avenue of the Stars
                                                    Suite 1400
                                        Los Angeles, California 90067-6042
                                   Attention: Karen Randall and Debra H. Snider
                                           Facsimile No. (310) 785-4471

                                       39
<PAGE>
         A Notice shall be deemed to have been duly received (and the time
period in which a response thereto is required shall commence) (w) if mailed, on
the date set forth on the return receipt, or (x) if personally delivered, on the
date of such delivery, or (y) if sent by overnight courier, on the date of such
delivery, or (z) if given by telecopier or telex, on the date of receipt.

                                   ARTICLE 21

                                  MISCELLANEOUS

         21.1. Amendment or Termination. Neither this Agreement nor any
provision hereof may be waived, modified, amended, discharged or terminated
except by an instrument in writing signed by the party against whom the
enforcement of such waiver, modification, amendment, discharge or termination is
sought, and then only to the extent set forth in such instrument.

         21.2. No Third Party Beneficiaries. The terms, covenants and conditions
herein contained are for the benefit of the parties hereto and no others. None
of the provisions of this Agreement shall be for the benefit of or enforceable
by any third party, including, without limitation, creditors of the Partnership
or of the Partners.

         21.3. No Waiver. No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon a breach thereof shall
constitute a waiver of any such breach or of such or any other covenant,
agreement, term or condition. Any Partner, by an instrument in writing may, but
shall be under no obligation to, waive any of its rights or any conditions to
its obligations hereunder, or any duty, obligation or covenant of the other
Partner, but no waiver shall be effective unless in writing and signed by the
Partner making such waiver. No waiver shall affect or alter the remainder of
this Agreement but each and every covenant, agreement, term and condition hereof
shall continue in full force and effect with respect to any other then existing
or subsequent breach.

         21.4. Rights and Remedies. The rights and remedies of any of the
parties hereunder shall not be mutually exclusive, and the exercise of one or
more of the provisions of this Agreement shall not preclude the exercise of any
other provisions of this Agreement. Each of the parties confirms that damages at
law may be an inadequate remedy for a breach or threatened breach of any
provision hereof. The respective rights and obligations hereunder shall be
enforceable by specific performance, injunction or other suitable remedy, but
nothing herein contained is intended to or shall limit or affect any rights of
law or by statute or otherwise of any party aggrieved as against the other party
for a breach or threatened breach of any provision hereof, it being the
intention by this paragraph to make clear the agreement of the parties that the
respective rights and obligations of the parties hereunder shall be enforceable
in equity as well as at law or otherwise.

         21.5. Integration. This Agreement, the License Agreement and the other
Exhibits attached hereto constitute the entire agreement between the parties
hereto pertaining to the subject matter

                                       40
<PAGE>
hereof and supersede all prior and contemporaneous agreements and understandings
of the parties in connection therewith. No covenant, representation or condition
not expressed in this Agreement, the License Agreement or the Exhibits shall
affect, or be effective to interpret, change or restrict, the express provisions
of this Agreement, the License Agreement or the Exhibits.

         21.6. Partial Invalidity. If any term or provision of this Agreement or
any part of such term or provision or the application thereof to any person or
circumstance shall be invalid or unenforceable, the remainder of this Agreement
or the application of such term or provision or remainder thereof to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by law.

         21.7. Governing Law. Except as otherwise specifically provided in this
Agreement, the Partnership shall be a general partnership subject to the
provisions of the California Partnership Act. S&J shall at the Partnership's
expense cause to be filed for record in the office of the appropriate
authorities of the State of California and the place of business of the
Partnership, such partnership certificates, amended partnership certificates,
fictitious name certificates and all other instruments of whatever nature that
are called for or required by the applicable statutes, rules or regulations of
the State of California. All matters in connection with the power, authority and
rights of the Partners and all matters pertaining to the operation, construction
or interpretation of this Agreement shall be governed by and construed in
accordance with the laws of the State of California, without giving effect to
conflicts of law principles.

         21.8. Counterparts. This Agreement and any amendments hereto may be
executed in multiple counterparts, all of which, taken together, shall be deemed
to constitute but one Agreement.

         21.9. Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and shall, in the case of assignments permitted
by the provisions hereof, inure to the benefit of the parties, their heirs,
legal representatives, successors and permitted assigns.

         21.10. Disposition of Documents. All documents and records of the
Partnership, including, without limitation, all financial records, vouchers,
cancelled checks, and bank statements shall be retained by the Partners upon
termination of the Partnership. The Partner holding such documents and records
shall retain them for a period of at least seven years after the termination of
the Partnership and shall make copies thereof available to the other Partner
during such period, subject to the provisions of Section 13.5.

         21.11. Table of Contents, Article and Section Headings. The Table of
Contents attached hereto and Article and Section headings herein are for
convenience only, and are not to be used in determining the meaning of this
Agreement or any part thereof.

         21.12. Guaranties. Johnson, Jr. shall guarantee the obligations of JDC
under Section 6.1. and SPE shall guarantee the obligations of S&J Theatres, Inc.
under Section 6.1., such Guaranties in the form of Exhibits D and E,
respectively, which are attached hereto and have been executed and delivered

                                       41
<PAGE>
simultaneously herewith. Anything in this Agreement to the contrary
notwithstanding, the determination of whether to prosecute a claim under any of
the Guaranties shall be made only by JDC if the claim is against SPE or only by
S&J if the claim is against Johnson, Jr.

                                   ARTICLE 22

                               DISPUTE RESOLUTION

         22.1. Binding Arbitration. Except as otherwise provided in Article 18,
S&J and JDC agree that all disputes, claims and other matters in controversy
arising out of or relating to this Agreement, or the performance or breach
thereof, shall be submitted to binding arbitration in accordance with the
provisions and procedures of this Article 22.

         22.2. Arbitrator/Place of Arbitration. The arbitration provided for in
this Article 22 shall take place in Los Angeles County, California, in
accordance with the provisions of Title 9, Sections 1280 et seq of the
California Code of Civil Procedure, except as provided to the contrary
hereunder. The arbitration shall be held before and decided by a single neutral
arbitrator. The single neutral arbitrator shall be selected from a list of
retired judges of the Superior Court of the State of California for the County
of Los Angeles by a process mutually agreed upon by S&J and JDC. If no agreement
can be reached as to the process for selecting the arbitrator or if the agreed
method fails, the arbitrator shall be appointed in accordance with the
provisions of California Code of Civil Procedure Section 1281.6.

         22.3. Arbitration Procedures.

         (a) Time and Place for Hearing. S&J and JDC shall mutually agree upon
the date and location of the arbitration, subject to the availability of the
arbitrator. If no agreement can be reached as to the date and location of the
arbitration, the arbitrator shall appoint a time and place in accordance with
the provisions of California Code of Civil Procedure Section 1282.2(a)(1),
except that the arbitrator shall give not less than 30 days' notice of the
hearing unless the parties mutually agree to shorten the time for notice.

         (b) Discovery. S&J and JDC shall be entitled to undertake discovery in
the arbitration in accordance with the provisions of subsections (a) through (d)
of California Code of Civil Procedure Section 1283.05. In conjunction with these
procedures, the parties shall be entitled to request and obtain production of
documents in discovery in the arbitration in accordance with the same rights,
remedies and procedures, and shall be subject to all of the same duties,
liabilities and obligations as if the subject matter of the arbitration were
pending in a civil action before a Superior Court of the State of California.
The partes hereby agree that any discovery taken hereunder shall be permitted
without first securing leave of the arbitrator and shall be kept to a reasonable
minimum.

         (c) Award Final. The decision of the arbitrator may be confirmed
pursuant to the provisions of California Code of Civil Procedure Section 1285,
and shall not be appealable for any reason, it

                                       42
<PAGE>
being understood that a petition to vacate an award for any of the reasons set
forth in California Code of Civil Procedure Section 1286.2 shall not be
permitted.

         (d) Confidentiality. The details and/or existence of any disputes,
claims and other matters in controversy to be arbitrated hereunder, as well as
the arbitration proceedings themselves and any discovery taken in connection
with the arbitration, shall be kept strictly confidential, except as may be
otherwise required by law or legal process, and shall not be disclosed or
discussed with any third party, provided, however, that Affiliates of a Partner
shall not be deemed third parties for purposes of this provision.

                                       43
<PAGE>
         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.

                                             JOHNSON DEVELOPMENT CORPORATION

                                             By:       /s/ Earvin Johnson, Jr.
                                                      --------------------------
                                                      Name: Earvin Johnson, Jr.
                                                      Title:

                                             S&J THEATRES, INC.

                                             By:       /s Barrie Lawson Loeks
                                                      --------------------------
                                                      Name:  Barrie Lawson Loeks
                                                      Title:  Chairman

SPE has hereto affixed its signature to
evidence its agreement to be bound by the
provisions of Section 7.1. of the Agreement
subject to the terms, covenants and conditions
contained in Sections 7.1. and 17.7.

SONY PICTURES ENTERTAINMENT INC.

 /s/ Lawrence J. Ruisi
--------------------------
By:  Lawrence J. Ruisi
Title:  Executive Vice President

                                       44<PAGE>
                                                                   Exhibit 10.11
                             JOINT VENTURE AGREEMENT

                                  by and among

                           LTM SPANISH HOLDINGS, INC.

                                       and

                              RICARDO EVOLE MARTIL
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----

<S>                                                                                <C>
ARTICLE I      DEFINITIONS.....................................................      1
               Section 1.1.      Definitions...................................      1

ARTICLE II     ORGANIZATION OF THE COMPANY.....................................      1
               Section 2.1.      Organizational Documents; Member Resolution...      1
               Section 2.2.      Purpose.......................................      2

ARTICLE III    INITIAL CAPITAL OF THE COMPANY..................................      2
               Section 3.1.      Membership Interests..........................      2

ARTICLE IV     CLOSING AND RELATED PROVISIONS..................................      2
               Section 4.1.      Pre-Closing Matters...........................      2
               Section 4.2.      Closing.......................................      2
               Section 4.3.      Subsequent LTM Funding........................      3
               Section 4.4.      Closing Date Contribution Amount Adjustment...      3
               Section 4.5.      Post-Closing Contribution Amount Adjustment...      4
               Section 4.6.      Independent Auditors..........................      4
               Section 4.7.      Repayment of Overfunding......................      5
               Section 4.8.      Failure of LTM to Fund........................      5
               Section 4.9.      Failure of RE to Purchase Minorities..........      6

ARTICLE V      EXCLUDED ASSETS.................................................      7
               Section 5.1.      Excluded Assets...............................      7

ARTICLE VI     REPRESENTATIONS AND WARRANTIES..................................      7

ARTICLE VII    CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS.................      7
               Section 7.1.      Voting of Membership Interests................      7
               Section 7.2.      Composition of the Board of Directors.........      7
               Section 7.3.      Managing Director and Other Executives........      8
               Section 7.4.      Approval of Certain Matters...................      8

ARTICLE VIII   TRANSFER AND SALE...............................................     10
               Section 8.1.      Transfer Restrictions.........................     10
               Section 8.2.      Consent.......................................     10
               Section 8.3.      First Refusal.................................     10

ARTICLE IX     COVENANTS OF RE.................................................     12
               Section 9.1.      Cooperation by RE.............................     12
               Section 9.2.      Conduct of Business...........................     13
               Section 9.3.      Access........................................     13
</TABLE>

                                  -i-
<PAGE>
<TABLE>
<CAPTION>
                                                                                   Page
                                                                                   ----

<S>                                                                                <C>
               Section 9.4.      Required Notices..............................     14
               Section 9.5.      Certain Tax Matters...........................     14
               Section 9.6.      Use of Certain Names..........................     14

ARTICLE X      CERTAIN AGREEMENTS..............................................     14
               Section 10.1.     Non-Competition...............................     14
               Section 10.2.     Access to Company.............................     15
               Section 10.3.     Financial Reporting Obligations...............     15
               Section 10.4.     Conduct of Business...........................     16

ARTICLE XI     CONDITIONS TO CLOSING AND TERMINATION...........................     16
               Section 11.1.     Conditions to Obligations of LTM..............     16
               Section 11.2.     Conditions to Obligations of RE...............     17
               Section 11.3.     Termination...................................     18

ARTICLE XII    INDEMNIFICATION.................................................     18
               Section 12.1.     Survival......................................     18
               Section 12.2.     Losses........................................     18
               Section 12.3.     Indemnification by RE.........................     18
               Section 12.4.     Indemnification by LTM........................     19
               Section 12.5.     Indemnification by the Company................     19
               Section 12.6.     Claims........................................     20

ARTICLE XIII   GENERAL.........................................................     21
               Section 13.1.     Arbitration...................................     21
               Section 13.2.     Notices.......................................     21
               Section 13.3.     Assignment; Binding Effect; Benefit...........     22
               Section 13.4.     Confidentiality...............................     23
               Section 13.5.     Entire Agreement..............................     23
               Section 13.6.     Amendment.....................................     23
               Section 13.7.     Counterparts..................................     23
               Section 13.8.     Headings......................................     24
               Section 13.9.     Interpretation................................     24
               Section 13.10.    Incorporation of Exhibits and Schedules.......     24
               Section 13.11.    Severability..................................     24
               Section 13.12.    Enforcement of Agreement......................     24
</TABLE>

                                      -ii-
<PAGE>
                             JOINT VENTURE AGREEMENT

         JOINT VENTURE AGREEMENT, dated as of April 27, 1998 (this "Agreement"),
by and among LTM Spanish Holdings, Inc., a Delaware corporation ("LTM") and
Ricardo Evole Martil ("RE") DNI n(degree) 2.450.193-A.

                                   BACKGROUND

         (1) LTM and RE desire to operate a motion picture exhibition business
in Spain through LTM Spain S.L., a company in formation (the "Company"), by
owning and operating the Yelmo Group Companies and constructing new
state-of-the-art multiplex theaters of high quality in key locations.

         (2) LTM and RE intend to acquire Membership Interests in the Company so
that immediately after giving effect to the transactions contemplated by this
Agreement to occur at the Closing and subject to the terms of this Agreement,
each of LTM and RE shall own Membership Interests in the Company which entitle
each of LTM and RE to 50% of the vote and to receive 50% of the profits and
losses of the Company.

         (3) The parties intend that the Company will own Yelmo Films S.A. and
all of its Subsidiaries, the names of which are set forth in Schedule X hereto.

         Accordingly, for good and valuable consideration the parties hereto
hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         Section 1.1. Definitions. Capitalized terms used herein are defined in
Appendix A.

                                   ARTICLE II
                           ORGANIZATION OF THE COMPANY

         Section 2.1. Organizational Documents; Member Resolutions. (a) The
parties hereto agree that the Company's initial Estatutos shall be as set forth
in Exhibit 2.1 attached to this Agreement. In the event that the Mercantile
Registry where the Company is registered considers that any portion of the
Estatutos should be changed from the form contained in Exhibit 2.1, the parties
will amend the Estatutos so as to as closely as possible reflect the agreements
set forth herein. Notwithstanding anything herein or in the Estatutos to the
contrary, to the extent that any provision of the Estatutos conflicts with, or
otherwise is inconsistent with, any provision of this Agreement with respect to
any matter, or this Agreement covers any matter that is not covered in the
Estatutos,

                                        1
<PAGE>
the provisions of this Agreement with respect to such matter shall control and
shall be binding upon each of the parties hereto.

         (b) The Members shall call such Members' meetings and shall cause the
Company to call such directors and Members' meetings as are reasonably required
to consummate the transactions contemplated by this Agreement to occur at
Closing.

         Section 2.2. Purpose. The purpose of the Company will be to develop and
operate, either itself or through its Subsidiaries, a motion picture exhibition
business (which business includes the concessions business associated with
motion picture exhibition) in Spain in accordance with the Business Plan and
otherwise as determined by the Members.

                                   ARTICLE III
                         INITIAL CAPITAL OF THE COMPANY

         Section 3.1. Membership Interests. Membership Interests in the Company
shall be divided into Class A Units and Class B Units ("Class A Units" and
"Class B Units"). The Class A Units and the Class B Units shall be equal in all
respects as to interests in the profits and losses of the Company and, following
contribution by LTM of an amount equal to the Contribution Amount as more
particularly described in Section 4.3 below, rights upon the liquidation or
termination of the Company. As more fully provided below under Section 7.2 and
subject to Section 4.8, Members holding Class A Units shall be entitled to elect
one half of the number of members of the Board of Directions and Members holding
Class B Units shall be entitled to elect the other half of the number of members
of the Board of Directors.

                                   ARTICLE IV
                         CLOSING AND RELATED PROVISIONS

         Section 4.1. Pre-Closing Matters. (a) On the date of this Agreement,
LTM shall subscribe for 750 Class A Units at a par value of Pesetas 500,000 per
Unit, for an aggregate purchase price of Pesetas 375,000,000, - payable in cash.

         (b) On the date of this Agreement, the Company shall enter into the
Loan Agreement with Yelmo Films, for the amount of Pesetas 363,267,410, which
Yelmo Films shall use (in whole or in part) to purchase all of the equity
interests in the Yelmo Group Companies held by Persons other than RE, subject to
the terms of this Agreement.

         Section 4.2. Closing. Subject to the terms and conditions of this
Agreement, promptly following satisfaction or waiver of the conditions set forth
in Article XI, but in no event later than 5 business days thereafter, the
following transactions shall occur, which transactions shall be deemed to occur
simultaneously:

                                        2
<PAGE>
                  (a) LTM shall subscribe for 3,249 Class A Units at Pesetas
         500,000 per Unit, for an aggregate purchase price of Pesetas
         1,624,500,000, payable in cash.

                  (b) The Company shall purchase from RE and RE shall sell to
         the Company 9,556 shares of Yelmo Stock, representing 15.92% of Yelmo
         Films for Pesetas 1,136,732,590 in cash in accordance with the terms of
         the Sale and Purchase Agreement.

                  (c) RE shall subscribe for 12,000 Class B Units at Pesetas
         500,000 per Unit in consideration for which RE will contribute to the
         Company all of the remaining shares of Yelmo Stock owned by him in a
         tax-free share exchange.

         Section 4.3. Subsequent LTM Funding. (a) From time to time during the
period commencing on the Closing Date and ending on the date 24 months following
the Closing Date, as directed by the Board of Directors, LTM shall make
additional capital contributions to the Company in cash up to an aggregate
amount (including the initial share capital of the Company subscribed to by LTM
and LTM's initial capital contribution pursuant to Sections 4.1 and 4.2.) equal
to the Contribution Amount.

         (b) For each cash contribution by LTM, the Members shall cause the
Company (i) to issue to LTM that number of Class A Units so that, following
determination of the Contribution Amount and the contribution by LTM of an
amount equal thereto, the number of Class A Units held by LTM is equal to the
number of Class B Units held by RE and (ii) to amend the Estatutos so that the
number of votes which the holder of Class A Units are entitled to cast, the
amount of dividends and the amounts to be received at liquidation in excess of
par value, after satisfying creditors, which the holders of Class A Units is
entitled to are equal to those of the holder of Class B Units. The parties agree
that any amount funded by LTM in excess of Pesetas 6,000,000,000 (including its
initial capital contribution and its contribution pursuant to Sections 4.1. and
4.2.) will be treated as share premium which will be allocated equally between
the holders of Class A Units and the holders of Class B Units. In addition, the
parties agree that they shall cause a Members' meeting to be held for purposes
of effecting the matters referred to in this Section 4.3.(b).

         Section 4.4. Closing Date Contribution Amount Adjustment. (a) No more
than 90 days following Closing, RE shall prepare and deliver to LTM a statement
(the "Initial Statement") setting forth (i) RE's calculation of Net Working
Capital and (ii) the principal amount of Debt, in each case, of the Yelmo Group
Companies as of the Closing Date. LTM shall have 45 days after receipt thereof,
to review the Initial Statement. If, within that 45 day period LTM and RE agree
on the calculation of Net Working Capital and the principal amount of Debt, the
Initial Statement shall be amended to reflect that agreement and shall be final
and binding on RE and LTM. If the parties cannot agree on the calculation of Net
Working Capital or the principal amount of Debt within the 45 day period
referred to above, the matters in dispute shall be referred to the Auditor (as
defined in Section 4.6.) who shall be instructed to deliver his report to RE and
LTM within 20 days of the date the disputed matters are referred to him, which
report shall be final and binding on RE and LTM. The amount of Net Working
Capital and the principal amount of Debt as agreed to by the parties or as
determined by the Auditor, as the case may be, is hereafter referred to as
"Final Net Working Capital" and "Final Debt", respectively.

                                       3
<PAGE>
         (b) The Contribution Amount shall be (i) increased by the amount of
positive Final Net Working Capital of the Yelmo Group Companies or decreased by
the amount of negative Final Working Capital of the Yelmo Group Companies, and
(ii) decreased by the amount by which the principal amount of Final Debt of the
Yelmo Group Companies exceeds pesetas 3,300,000,000, or increased by the amount
by which the principal amount of Final Debt of the Yelmo Group Companies is less
than Pesetas 3,300,000,000.

         Section 4.5. Post-Closing Contribution Amount Adjustment. (a) Subject
to the terms contained herein, from and after the Closing Date, the Contribution
Amount, as adjusted pursuant to Section 4.4, shall be further adjusted as
follows: if the EBITDA (earnings before interest, income taxes, depreciation and
amortization) of those operations of the Yelmo Group Companies set forth in
Schedule 4.5.(a)(i) over a consecutive 12 month period (the "Calculation
Period") falling between August 1, 1997 and July 31, 1999, as selected by RE is
less than or greater than Pesetas 1,100,000,000 (the "EBITDA Base Level"), the
Contribution Amount, as adjusted pursuant to Section 4.4, shall be reduced or
increased, as the case may be, in accordance with the table set forth in
Schedule 4.5(a)(ii), it being understood and agreed that, subject to Section
4.5(b), the Contribution Amount shall not be (i) less than Pesetas 6,300,000,000
plus any increase or minus any decrease (as the case may be) of the Contribution
Amount pursuant to Section 4.4 (the "Minimum Funding Amount") or (ii) greater
than Pesetas 7,900,000,000 plus any increase or minus any decrease (as the case
may be) of the Contribution Amount pursuant to Section 4.4.

         (b) If the Members mutually agree to close a theater prior to or during
the Calculation Period then (i) the EBITDA Base Level shall be decreased by the
pro-forma annual amount contributed by that closed theater to such EBITDA Base
Level and (ii) the Peseta 6,300,000,000 minimum and Pesetas 7,900,000,000
maximum Contribution Amount level referred to in Section 4.5(a) shall be reduced
by an amount equal to ten times the reduction in the EBITDA Base Level as
determined in Section 4.5(b)(i). In addition, if overhead expenses (i.e.,
salaries, employee benefit expense and head office rent expense) of the Yelmo
Group Companies, calculated on an annualized basis, during any portion of the
Calculation Period falling after Closing are greater than those overhead
expenses for the twelve month period ending on the Closing Date and such
increase is a result of the transactions contemplated by this Agreement, such
increase shall not be taken into account in calculating the EBITDA of the Yelmo
Group Companies for purposes of Section 4.5.

         (c) RE shall deliver to LTM on or before September 30, 1999, a
statement setting forth his calculation of EBITDA for the Calculation Period.

         Section 4.6. Independent Auditors. If LTM and RE cannot agree on the
adjustments to the Contribution Amount as described in Sections 4.4 and 4.5,
they shall each have the right, on five days notice to the other, to require the
Company to appoint an independent auditor (the "Auditor") to determine the
adjustments to the Contribution Amount. If LTM and RE cannot agree on an Auditor
within ten days of the notice referred to above, each shall appoint an auditor
which will appoint the Auditor. The Auditor's determination of the Contribution
Amount adjustments will be final and binding on LTM and RE.

                                        4
<PAGE>
         Section 4.7. Repayment of Overfunding. Until such time as the
Contribution Amount is finally determined, any contribution made to the Company
by LTM in excess of the Minimum Funding Amount shall, at LTM's option, be
treated as an advance on capital by LTM to the Company (the "Advance"). If the
Contribution amount as finally determined exceeds the Minimum Funding Amount,
the Advance, to the extent of that excess, shall be capitalized. The remaining
amount of the Advance shall be treated as a loan and shall bear interest at 0.5%
above the Madrid interbank borrowing rate ("MIBOR") in effect from time to time,
from the date that the Contribution Amount is finally determined until repaid in
full. The Members shall cause the remaining amount of the Advance, plus accrued
interest (if any) thereon, to be repaid by the Company to LTM out of 100% of the
Cashflow of the Company and its Subsidiaries. For the avoidance of doubt,
repayment of the Advance shall be made from the first peseta and each peseta
thereafter of Cashflow until fully repaid.

         Section 4.8. Failure of LTM to Fund. (a) If LTM fails to comply with
its funding obligations pursuant to Section 4.3, the parties agree that, in
addition to any other remedies RE may have for breach of contract, the Company's
Estatutos shall be amended so that the voting rights attached to the Class A
Units and the Class B Units shall entitle the holders thereof to one vote per
Unit only, and that the dividend and liquidation rights of holders of Class A
Units and Class B Units shall be in proportion to their interest in the capital
of the Company, it being understood and agreed that except with respect to the
matters referred to in Section 4.8(b), the provisions of Section 7.2.(c)
requiring a Director appointed by the holders of Class A Units to form a quorum
for attendance and voting at Board meetings shall no longer apply.

         (b) The parties agree that, if LTM fails to comply with its funding
obligations pursuant to Section 4.3, the limitations set forth in Sections
7.4(a) and (b) shall cease to apply and the following shall apply instead:

          (I) The Managing Director shall not and shall not permit the Company
     or any Subsidiary of the Company to take or agree to take any of the
     following actions or engage in any of the following transactions without
     the prior approval of the Board of Directors, including the vote of a
     director representing Class A Units, in accordance with the provisions of
     this Agreement:

                  (i) sale, transfer or disposal of assets of the Company or any
         of its Subsidiaries, in each case, in any single or series of related
         transactions for a consideration in excess of Pesetas 300,000,000;

                  (ii) engaging by the Company or any of its Subsidiaries in any
         business other than as provided in Section 2.2;

                  (iii) varying the Company's accounting policies and practices
         in any material respect, other than to comply with GAAP;

                  (iv) entering into, amending or waiving the provision of any
         agreements or transactions with any Member or any Affiliate of any
         Member after the Closing Date

                                        5
<PAGE>
         except as expressly provided for in this Agreement and except relating
         to the exhibition and settlement of motion pictures;

                  (v) entering into any arrangements in connection with the
         Excluded Assets other than as contemplated by the Ancillary Agreements;

                  (vi) entering into any joint venture, partnership agreement or
         similar arrangement with a Competitor of LTM; or

                  (vii) incurring any debt for borrowed money in excess of
         Pesetas 500,000,000.

          (II) Neither the Company nor any Subsidiary of the Company shall take
     any of the following actions without the unanimous approval of the Members:

                  (i) varying any of the rights attaching to the Membership
         Interests except as set forth in this Agreement;

                  (ii) taking any steps to effect the winding-up, liquidation,
         dissolution or voluntary bankruptcy of the Company or any of its
         Subsidiaries;

                  (iii) entering into any merger, amalgamation, consolidation or
         other business combination with a Competitor of LTM.

          (III) The Estatutos of the Company shall, as applicable, reflect the
     special voting requirements of the Board of Directors mentioned in I above
     of this section. The Estatutos of the Company shall also, as applicable,
     reflect the supermajority voting requirements for the members meeting
     established in II above of this section by requiring a quorum of eighty
     percent of the members to hold a members meeting that will deal with the
     matters enumerated in II above and an eighty percent voting majority to
     approve a resolution concerning said matters.

         Section 4.9. Failure of RE to Purchase Minorities. If at or after
Closing, Yelmo Films or its Subsidiaries has, as its shareholder, any Person
other than RE, LTM or any other Subsidiary of Yelmo Films, all costs, expenses,
reserves, losses or liabilities, including without limitation, rights to
distributions (together, "Minority Costs"), associated with such Persons shall
be for the account of RE and RE shall indemnify and hold harmless LTM against
such Minority Costs, it being understood and agreed that, except as provided for
in Section 4.8, LTM shall be entitled to 50% of the profits, losses and payments
on liquidation, of the Company and its Subsidiaries before taking into account
any Minority Costs.

                                        6
<PAGE>
                                    ARTICLE V
                                 EXCLUDED ASSETS

         Section 5.1. Excluded Assets. Prior to the Closing Date, RE shall cause
to be transferred out of the Yelmo Group Companies those assets described in
Section 2.01(a) of the Asset Transfer Agreement and in the Yelmo Arco Iris Share
Transfer Agreement (the "Excluded Assets") in accordance with the terms of those
Agreements. Any taxes, costs, losses and expenses relating to such transfers, to
the extent actually determined by the Closing Date, shall be recorded in the
books and records of the Yelmo Group Companies as a liability and taken into
account in the calculation of Working Capital pursuant to Section 4.4 and, to
the extent not determined on or prior to the Closing Date, shall be borne by RE
who shall reimburse the Yelmo Group Companies in cash within ten days of
determination thereof for any such taxes, costs, losses or expenses actually
paid by any Yelmo Group Company.

                                   ARTICLE VI
                         REPRESENTATIONS AND WARRANTIES

         The representations and warranties of the parties to this Agreement are
set forth in Appendix B.

                                   ARTICLE VII
                 CORPORATE GOVERNANCE; CERTAIN CORPORATE ACTIONS

         Section 7.1. Voting of Membership Interests. From and after the Closing
Date, each Member shall vote all Membership Interests owned or controlled by it,
and shall take all other necessary or desirable actions within its control
(including, without limitation, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), to effectuate the provisions of this Agreement.

         Section 7.2. Composition of the Board of Directors. Each Member shall
vote all Membership Interests owned or controlled by it and shall take all
necessary action within its control, so that the composition of the Board of
Directors and the manner of selecting members thereof shall be as follows:

         (a) On the Closing Date, the Board of Directors shall be comprised of
six persons, three of which shall be designated by the holders of Class A Units
and three of which shall be designated by the holders of Class B Units. All such
designations shall be notified in writing to the Company, which shall notify all
of the Members. A list of the initial Directors and their positions is set forth
in Schedule 7.2.

         (b) Each holder of Class A Units and Class B Units, respectively, shall
have the right by notice in writing to the Company to require the Board of
Directors to call a meeting of the

                                        7
<PAGE>
Members (i) to remove, with or without cause, any Director designated by such
holder pursuant to this Section 7.2 and (ii) to designate any replacement for a
Director designated by such holder pursuant to this Section 7.2, upon the death,
resignation, retirement, disqualification or removal from office of such
Director.

         (c) At all meetings of the Board of Directors, a quorum shall consist
of not less than four Directors provided that such quorum consist of at least
one Director designated by holders of Class A Units and one Director designated
by Class B Units. Written notice shall be duly given to each Director at least
five (5) business days in advance of each meeting, provided no notice need be
given to any Director who signs a written waiver of notice at or in advance of a
meeting, or who attends the meeting without protesting any lack of notice.
Unless a higher vote is specifically required by this Agreement, all actions of
the Board of Directors shall be determined by the vote of a simple majority
(i.e., greater than 50%) of the Directors attending the meeting; provided that
such majority includes at least one Director designated by holders of Class A
Units and one Director designated by holders of Class B units.

         (d) Board of Directors meetings shall be held no less frequently than
three times per year with at least one meeting being held between January 1 and
March 31 in each year for purposes of considering the annual financial
statements of the Company and its Subsidiaries. Minutes of the Board of
Directors meetings shall be taken and a copy of the minutes shall be distributed
to each Director in a timely fashion.

         Section 7.3. Managing Director and Other Executives. (a) Effective as
of the Closing Date, RE shall be appointed as the initial Managing Director on
the terms set forth in the Employment Agreement. The Managing Director will
report to the Board of Directors. The Managing Director, subject to the control
of the Board of Directors, shall have general charge and control of all of the
Company's business and affairs and shall perform all duties incident to the
office of Managing Director; provided that neither he nor any other executive of
the Company shall take or shall be entitled to take, and each Member shall use
its best efforts to prevent the Company or any of it Subsidiaries from taking,
any of the actions specified in Section 7.4(a) without the prior approval of the
Board of Directors in accordance with this Agreement. The Managing Director may
attend all meetings of the Members Committee and shall have such other powers
and perform such other duties as may from time to time be assigned to him by the
Board of Directors.

         (b) Except as provided in the next sentence, the Managing Director
shall have the right to appoint the senior executives of the Company and its
Subsidiaries subject to the reasonable approval of LTM. LTM shall have the
right, after consultation with RE, to appoint one senior executive of the
Company and its Subsidiaries and to remove such executive from office.

         Section 7.4. Approval of Certain Matters. (a) The Managing Director
shall not and shall not permit the Company or any Subsidiary of the Company to
take or agree to take any of the following actions or engage in any of the
following transactions without the prior approval of the Board of Directors in
accordance with the provisions of this Agreement:

                                        8
<PAGE>
                  (i) expenditure of any sum of Pesetas 7,500,000 or more that
         is not included in an Approved budget, it being understood and agreed
         that expenditures on film rental, to the extent such expenditures are
         determined by reference to box-office sales, shall not be restricted by
         this clause (i);

                  (ii) sale, transfer or disposal of assets of the Company or
         any of its Subsidiaries, or purchase or other acquisition of assets or
         businesses, in each case in any single or series of related
         transactions for a consideration in excess of Pesetas 7,500,000;

                  (iii) engaging by the Company or any of its Subsidiaries in
         any business other than as provided in Section 2.2;

                  (iv) varying the Company's accounting policies and practices
         in any material respect, other than to comply with GAAP;

                  (v) entering into, amending or waiving the provision of any
         agreements or transactions with any Member or any Affiliate of any
         Member after the Closing Date except as expressly provided for in this
         Agreement and except relating to the exhibition and settlement of
         motion pictures;

                  (vi) entering into any arrangements in connection with the
         Excluded Assets other than as contemplated by the Ancillary Agreements;

                  (vii) establishing any place of business outside Spain;

                  (viii) commencing or settling litigation where the amount
         involved exceeds Pesetas 7,500,000;

                  (ix) entering into any joint venture, partnership agreement or
         similar arrangement;

                  (x) approving and adopting the annual budget or the Business
         Plan or any change thereto;

                  (xi) incurring any debt for borrowed money in excess of
         Pesetas 7,500,000; or

                  (xii) entering into employment agreements or consulting
         agreements with any Person involving the payment in any such agreement
         of an amount in excess of Pesetas 7,500,000, or authorizing any Person
         to enter into employment agreements or consulting agreements.

         (b) Neither the Company nor any Subsidiary of the Company shall take
any of the following actions without the unanimous approval of the Members:

                                        9

<PAGE>
                  (i) varying any of the rights attaching to the Membership
         Interests except as set forth in this Agreement;

                  (ii) modifying the Estatutos;

                  (iii) taking any steps to effect the winding-up, liquidation,
         dissolution or voluntary bankruptcy of the Company or any of its
         Subsidiaries;

                  (iv) except as provided in Sections 4.1, 4.2 or 4.3, the
         issuance of additional Membership Interests or other equity interests
         by the Company;

                  (v) entering into any merger, amalgamation, consolidation or
         other business combination to which the Company or any of its
         Subsidiaries is a party;

                  (vi) declaring any dividend or making any other distribution
         with respect to, or the redemption, repurchase or other acquisition of,
         any class of equity securities of the Company;

                  (vii) changing the name of the Company; or

                  (viii) calling for capital contributions from Members in
         excess of the Contribution Amount.

                                  ARTICLE VIII
                                TRANSFER AND SALE

                  Section 8.1. Transfer Restrictions. No Member shall sell,
transfer, assign, pledge or otherwise dispose of (a "Transfer") all or part of
any Membership Interests beneficially owned by it or him (i) except in
compliance with the provisions of this Article VIII and the Estatutos, and (ii)
without obtaining a written agreement in form and substance reasonably
satisfactory to the Company executed by the transferee to be bound by the terms
of this Agreement, and any Transfer not in compliance with clauses (i) and (ii)
and any other provisions of this Article VIII shall have no effect and be null
and void.

                  Section 8.2. Consent. Until the fifth anniversary of the date
of formation of the Company (the "Transfer Waiver Date"), no Member will
Transfer any Membership Interests without the prior written consent of the other
Members other than to a Permitted Transferee.

                  Section 8.3. First Refusal. (a) If, following the Transfer
Waiver Date, either LTM (on behalf of itself and its Permitted Transferees) or
RE (for himself and on behalf of his Permitted Transferees) (as appropriate, the
"Transferring Members") desires to Transfer, directly or indirectly, all or any
portion of the Membership Interests owned by it (other than to a Permitted
Transferee), the Transferring Member shall provide the other Member (the
"Non-Transferring Member") with a written notice (the "First Refusal Notice"),
with a copy to the Company, setting forth:

                                       10
<PAGE>
                  (i) the number of Membership Interests to be offered;

                  (ii) the terms and conditions of the proposed Transfer
         including the price (the "Offering Price") at which the Transferring
         Member proposes to Transfer such Membership Interests; and

                  (iii) the name of the proposed transferee and a statement
         specifying whether that transferee is a Competitor or not.

Within 30 business days following the delivery of the First Refusal Notice, the
Non-Transferring Member shall, by notice in writing to the Transferring Member
(copied to the Company), have the opportunity and right to purchase 100% of the
Membership Interests referred to in the First Refusal Notice (on the terms
specified in the First Refusal Notice or on any other terms as are agreed by the
parties). If the Non-Transferring Member fails to exercise or waive its right to
purchase 100% of the Membership Interests referred to in the First Refusal
Notice, then the Transferring Member shall be free, for a three-month period
commencing at the end of such 30-day period to enter into a definitive agreement
to Transfer the offered Membership Interests to any third party other than a
Competitor (which shall be the subject of Section 8.3(b)), on terms (including,
without limitation, all terms affecting price) no more favorable to the proposed
purchaser than the terms specified in the First Refusal Notice, it being
understood, however, that if the Transferring Member does not complete the
Transfer of the Membership Interests within one month following the end of such
three month period, or if the definitive agreement is subsequently terminated,
the Transferring Member shall once again be subject to all the provisions of
this Section 8.3.

                  (b) In the event that a proposed transferee is a Competitor,
the Transferring Member shall provide the Non-Transferring Member with a written
notice (a "Competitor Notice"), copied to the Company, which shall include the
information required in a First Refusal Notice and shall also include an
indication of whether the Competitor is prepared to purchase 100% of the
outstanding equity of the Company. Within 30 business days following the
delivery of the Competitor Notice, the Non-Transferring Member shall, by notice
in writing to the Transferring Member (copied to the Company), have the
opportunity and right (i) to purchase 100% of the Membership Interests referred
to in the Competitor Notice (at 90% of the Offering Price specified in that
notice) or (ii) to notify the Transferring Member that it wishes to sell to the
Competitor all of the Membership Interests owned by it on terms specified in the
Competitor Notice in which case, the Transferring Member shall only be entitled
to sell its Membership Interests to the Competitor specified in the Competitor
Notice if the Non-Transferring Member's Membership Interests are also purchased
by that Competitor. If the Non-Transferring Member fails to exercise or waives
its right to purchase the Membership Interests referred to in that notice or
fails to exercise or waives its right to sell its membership interests to the
Competitor specified in the Competitor Notice, then the Transferring Member
shall be free, for a three-month period commencing at the end of such 30-day
period to enter into a definitive agreement to Transfer the offered Membership
Interests to the Competitor specified in the Competitor Notice on terms
(including, without limitation, all terms affecting price) no more favorable to
the buyer than the terms specified in that notice, it being understood, however,
that if the Transferring Member does not complete the Transfer of the Membership
Interests within one month following the end of such three-month period, or if
the

                                       11
<PAGE>
definitive agreement is subsequently terminated, the Transferring Members shall
once again be subject to all the provisions of this Section 8.3.

                  (c) Each acceptance made hereunder shall constitute a
separate, binding contract obligating the Transferring Member to sell, and the
Non-Transferring Member to purchase, the Membership Interests accepted on the
terms specified in the relevant notice (or on any other terms as the parties
shall have agreed). The parties agree to negotiate in good faith to consummate
the transaction as soon as possible, but in no event later than the date 120
days after the date the First Refusal Notice or Competitor Notice (as the case
may be) was given. Notwithstanding any provision of this Agreement to the
contrary, in the event of failure by the Non-Transferring Member to close the
transaction within the 120-day time periods referred to above, as extended if
applicable, the Transferring Member shall be entitled, in addition to all other
available remedies, to treat that failure as a waiver under Section 8.3(a) or
8.3(b), as the case may be, by the Non-Transferring Member, entitling the
Transferring Member to take the action specified in Sections 8.3(a) or 8.3(b),
as the case may be, pursuant to that waiver.

                  (d) If the Offering Price specified in the First Refusal
Notice or the Competitor Notice as the case may be, includes any property other
than cash, the fair market value of any non- cash property shall be determined
in the following manner:

                           (i) The fair market value of securities which are
         publicly traded shall be deemed to be the average of the daily closing
         prices of those securities for the five consecutive trading days
         immediately prior to the date of the First Refusal Notice or the
         Competitor Notice, as the case may be (or the date of the last written
         proposal made by the Transferring Member); and

                           (ii) The fair market value of any other property
         shall be determined by the good faith agreement of the Transferring
         Member and the accepting Non-Transferring Member or, if such parties
         are unable to agree, by an appropriate expert mutually selected by such
         parties. If the parties cannot mutually agree on an expert, each party
         shall select an expert and those experts shall select an independent
         expert to resolve the dispute. The costs and expenses of the appraisal
         shall be borne by the Transferring Member.

                  Notwithstanding anything to the contrary in this Section 8.3,
each Non-Transferring Member may pay the Offering Price in cash, with any
non-cash property valued as provided above.

                                   ARTICLE IX
                                 COVENANTS OF RE

                  RE hereby covenants and agrees with LTM as follows:

                  Section 9.1. Cooperation by RE. RE shall use all reasonable
efforts, and will cooperate with the Company and LTM, to secure all necessary
consents, approvals, authorizations, exemptions and waivers from third parties
as shall be required in order to enable RE to effect the

                                       12
<PAGE>
transactions contemplated hereby, and shall otherwise use all reasonable efforts
to cause the consummation of such transactions in accordance with the terms and
conditions hereof.

                  Section 9.2. Conduct of Business. Except as otherwise
expressly permitted by the terms of this Agreement or except as LTM may
otherwise consent to in writing, from the date hereof until the Closing, RE will
cause each of the Yelmo Group Companies to (i) conduct its business only in the
ordinary course in substantially the same manner as presently conducted; (ii)
preserve intact in all material respects its business organization; (iii)
maintain its properties, machinery and equipment in sufficient operating
condition and repair to enable it to conduct its business in all material
respects in the manner in which its business is currently conducted; (iv)
continue all existing insurance policies (or similar insurance) in full force
and effect; (v) not increase the rate or terms of compensation payable or to
become payable to its directors, officers, members, managers, key employees,
consultants or RE's family members and not increase the rate or terms of any
bonus, pension or other employee benefit plan covering any of its directors,
officers, members, managers, key employees, consultants or family members,
except, in each case, increases occurring in the ordinary course of business in
accordance with its customary practices (including normal periodic performance
reviews and related compensation and benefit increases) or as required by any
pre- existing Material Contract or applicable collective bargaining agreement;
(vi) preserve as far as possible its relationships with its suppliers,
customers, licensors and licensees and others having business dealings with it;
(vii) not declare or pay any dividend or make any other distribution to its
members or stockholders whether or not in respect of any equity interests;
(viii) not amend its Estatutos except amendments required to effect the
transactions contemplated by this Agreement; which amendments are provided to
and approved in writing by LTM; (ix) not redeem or otherwise acquire any of its
equity interests or issue any equity interest or any option, warrant or right
relating thereto or any securities convertible into or exchangeable for any
equity interests; (x) not adopt or amend in any material respect any employee
benefit plan except as required by Law; (xi) not incur or assume any Debt except
in the ordinary course of business; (xii) not permit, allow, or suffer any of
its assets to become subjected to any Lien or other restriction of any nature
except as required by Law or this Agreement; (xiii) not waive any claims or
rights of substantial value; (xiv) not pay, loan or advance any amount to, or
sell, transfer or lease any assets to, or enter into any agreement or
arrangement with RE or any Person affiliated with RE, other than with respect to
the Excluded Assets; (xv) not sell, exchange, lease, transfer or otherwise
dispose of any assets of the Yelmo Group Companies other than the sale of
inventory in the ordinary course of business and other than the sale or transfer
of the Excluded Assets; (xvi) not make any amendment to the terms upon which the
Excluded Assets were transferred out of the Yelmo Group Companies; (xvii) not
acquire any assets, business or securities, other than the acquisition of
current assets in the ordinary course of business, except as provided for in
this Agreement; (xviii) not incur any capital expenditures in excess of Pesetas
7,500,000; (xix) not change its accounting principles or policies except as
required by GAAP or by Law; and (xx) not agree, whether in writing or otherwise,
to do any of the foregoing.

                  Section 9.3. Access. RE shall provide the Company and LTM with
such information as the Company and LTM may from time to time reasonably request
with respect to the Yelmo Group Companies, and the transactions contemplated by
this Agreement and provide the Company and LTM and its representatives
reasonable access during regular business hours and upon

                                       13
<PAGE>
reasonable notice to the properties, books and records of the Yelmo Group
Companies as LTM may from time to time reasonably request.

                  Section 9.4. Required Notices. From the date hereof until the
Closing Date, RE shall cause the Yelmo Group Companies to promptly, upon
obtaining knowledge thereof, give written notice to the Company and LTM of (i)
any facts or circumstances or the occurrence of any event or the failure of any
event to occur, which will, or could reasonably be expected to, result in a
Material Adverse Effect, (ii) any failure by RE to comply in all material
respects with any covenant, condition or agreement contained in this Agreement,
(iii) any complaints, investigations, proceedings or hearings of any
Governmental Entity with respect to the Yelmo Group Companies or this Agreement,
(iv) any institution or threat of institution of any litigation or similar
action or (v) the occurrence of any event which will or could reasonably be
expected to result in the failure by RE to satisfy any condition set forth in
Article XI.

                  Section 9.5. Certain Tax Matters. RE agrees that he shall file
his personal Tax returns consistent with the terms of the transactions
contemplated hereby including, without limitation, consistent with the treatment
of the share for share exchange referred to in Section 4.2(c) as a tax free
transaction and that he shall not take any actions inconsistent with the
treatment of such share for share exchange as a tax-free transaction.

                  Section 9.6. Use of Certain Names. Promptly following the
Closing Date, but in no event later than 30 days thereafter, RE shall cause
Yelmo Arco Iris, S.L. and any other Excluded Asset that uses the name "Yelmo" to
(i) change its name to exclude the word "Yelmo" and (ii) remove the name "Yelmo"
and associated graphics from its signs, purchase orders, invoices, sales orders,
labels, letterheads, shipping documents, and other items and materials.

                                    ARTICLE X
                               CERTAIN AGREEMENTS

                  Section 10.1. Non-Competition. (a) Subject to and except as
permitted by Section 10.1(d), as long as LTM or any of its Permitted Transferees
directly or indirectly owns any Membership Interests, and until the fifth
anniversary of the date that LTM and its Permitted Transferees cease to own any
Membership Interests, LTM shall not directly or indirectly have any equity or
other ownership or participation interest in (other than passive investments of
no more than 5% of the equity of a company whose equity securities are publicly
traded) any motion picture exhibition business (which business includes the
concessions business associated with exhibition of motion pictures) in Spain
other than the Company.

                  (b) Subject to and except as permitted by Sections 10.1(c) and
10.1(d), as long as RE or his Permitted Transferees directly or indirectly own
Membership Interests, and until the fifth anniversary of the date that RE and
his Permitted Transferees cease to own any Membership Interests, RE shall not
directly or indirectly have any equity or other ownership or participation
interest (other than passive investments of no more than 5% of the equity of a
company whose equity securities are publicly traded) in any motion picture
exhibition business (which business includes

                                       14
<PAGE>
the concessions business associated with exhibition of motion pictures) in Spain
other than the Company.

                  (c) Notwithstanding Section 10.1(b), RE shall be entitled (i)
to retain a passive minority interest in Multidulce, S.L., Confiterias Regaliz,
S.L., and Multifiesta, S.L. and (ii) to retain an interest in Yelmo Arco Iris,
S.L., provided that the activities of Yelmo Arco Iris, S.L. do not, directly or
indirectly, breach the provisions of Section 10.1(b).

                  (d) If either LTM or RE wishes to participate in or undertake
any business venture which would otherwise be prohibited by Section 10.1(a) or
10.1(b) (a "New Venture"), the party proposing such New Venture (the "Proposing
Party") shall first offer it to the Company by providing written notice (a
"Notice of New Venture") to the Company containing a detailed description of the
nature, structure and terms of such New Venture as well as a copy of any
proposed agreements relating thereto. The Company shall have thirty days to
determine whether it wishes to pursue the New Venture, it being agreed that such
determination shall be made by the Directors representing the non-Proposing
Party. In the event that the Company determines not to participate in such New
Venture, then the Proposing Party (and/or its Affiliates) shall have the right
to enter into the New Venture as described in the Notice of New Venture
independently or with such third Persons as it selects; provided that the terms
related to such New Venture shall be no more favorable than the terms offered to
the Company. Notwithstanding the foregoing sentence, to the extent that there is
a material change in the details of the New Venture as described in the Notice
of New Venture, a Proposing Party will not have the right to directly or
indirectly, participate in or undertake the New Venture without giving an
additional Notice of New Venture to the Company pursuant to this Section
10.1(c).

                  Section 10.2. Access to Company. Upon five business days'
notice, each Member and its representatives shall be permitted to inspect the
books and records of the Company for any proper purpose and make copies thereof
at any reasonable time during normal business hours, it being acknowledged that
any information provided under this Section 10.2 shall be subject to the
provisions of Section 13.4.

                  Section 10.3. Financial Reporting Obligations. The Members
shall cause the Company to deliver to each of the Members (i) as soon as
available, but in any event not later than 60 days after the end of each fiscal
year of the Company, a copy of the consolidated balance sheet of the Company as
at the end of such year and the related consolidated statements of net income
and retained earnings and of cash flows of the Company for such year setting
forth in each case in comparative form the figures for the previous year, (ii)
as soon as available, but in any event not later than 90 days after the end of
the fiscal year of the Company, its financial statements referred to in clause
(i), reported on by independent certified public accountants of internationally
recognized standing, (iii) as soon as available, but in any event not later than
30 days after the end of each of the first three quarterly periods of each
fiscal year of the Company, the unaudited consolidated balance sheet of the
Company as at the end of such quarter and the related unaudited consolidated
statements of net income and retained earnings and of cash flows of the Company
for such quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for the
previous year, certified by the Chief Financial Officer or equivalent director

                                       15
<PAGE>
or employee of the Company as being fairly stated in all material respects
(subject to normal year- end audit adjustments) and (iv) as soon as available,
but in any event not later than 30 days after the end of each month of each
fiscal year of the Company, the unaudited consolidated balance sheet of the
Company as at the end of such month and the related unaudited consolidated
statements of net income and retained earnings and of cash flows of the Company
for such month certified by the Chief Financial Officer or equivalent director
or employee of the Company as being fairly stated in all material respects
(subject to normal year-end audit adjustments). All such financial statements
shall be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as any inconsistent application of GAAP is approved by such accountants
or officer, as the case may be, and disclosed therein).

                  Section 10.4. Conduct of Business. The Members shall cause the
Company to adopt and maintain an integrity policy satisfactory to LTM and RE.

                                   ARTICLE XI
                      CONDITIONS TO CLOSING AND TERMINATION

                  Section 11.1. Conditions to Obligations of LTM. The obligation
of LTM (other than incorporation of the Company) to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction (or waiver,
where permissible) at or prior to the Closing of all of the following
conditions:

                  (a) Representations, Warranties and Covenants of RE. RE shall
have complied in all material respects with all of his agreements and covenants
contained herein to be performed on or prior to the Closing Date, and all the
representations and warranties of RE contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date. The Company shall have received a
certificate executed by RE, dated as of the Closing Date, certifying as to the
fulfillment of the conditions set forth in this Section 11.1.

                  (b) No Prohibition. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits the
parties from consummating the transactions contemplated hereby.

                  (c) Consents. All consents, approvals, authorization,
exemptions and waivers from any Governmental Entity or any third party including
those set forth in Schedule 11.1(c) hereof that shall be required in connection
with the transactions contemplated hereby shall have been obtained.

                  (d) Certificates and Resolutions. LTM shall have received
copies, in form and substance reasonably satisfactory to it, of such
certificates of good standing, board resolutions, officers and secretaries'
certificates and other documents with respect to the Yelmo Group Companies as
LTM or its counsel shall reasonably request.

                                       16
<PAGE>
                  (e) Minority Interests. Except for the Persons identified in
Schedule 11.1(e) holding the interests in the Yelmo Group Companies identified
on that Schedule, no Person other than RE shall have an equity interest in any
Yelmo Group Company and LTM shall have received evidence to that effect
satisfactory to it.

                  (f) Excluded Assets. The Excluded Assets shall have been
transferred out of the Yelmo Group Companies in accordance with the terms of the
Asset Transfer Agreement and LTM shall have received evidence to that effect
satisfactory to it.

                  (g) Certain Payments. RE shall have paid to Yelmo Films
(whether in repayment of a debt or otherwise) an amount of Pesetas 31,976,000
and LTM shall have received evidence to that effect satisfactory to it.

                  (h) Intercompany Accounts. All intercompany balances between
Yelmo Group Companies on the one hand and any Affiliates of RE on the other hand
shall have been eliminated, and for the sake of clarity there shall be no
intercompany balance between Yelmo Group Companies and the Excluded Assets, and
both of these requirements shall be evidenced in a manner satisfactory to LTM.

                  (i) Ancillary Agreements. The Ancillary Agreements shall have
been executed by LTM, the Company, RE, Yelmo Films, Multidulce, S.L.,
Multifiesta, S.L. and Confiterias Regaliz, S.L., as appropriate.

                  (j) Certain Business Combinations. The business combination of
LTM Holdings, Inc and Cineplex Odeon Corporation contemplated by the agreement
among these companies and others, dated September 30, 1997, shall have been
consummated.

                  Section 11.2. Conditions to Obligations of RE. The obligation
of RE to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction (or waiver, where permissible) at or prior to the
Closing of all of the following conditions:

                  (a) Representations, Warranties and Covenants of LTM. LTM
shall have complied in all material respects with all of its agreements and
covenants contained herein to be performed on or prior to the Closing Date, and
the representations and warranties of LTM contained herein shall be true in all
material respects on and as of the Closing Date with the same effect as though
made on and as of the Closing Date. RE shall have received a certificate
executed by or on behalf of the Company and LTM, dated as of the Closing Date,
certifying as to the fulfillment of the conditions set forth in this Section
11.2.

                  (b) No Prohibition. No statute, rule or regulation or order of
any court or administrative agency shall be in effect which prohibits the
parties from consummating the transactions contemplated.

                                       17
<PAGE>
                  (c) Incorporation of the Company. The Company shall have been
incorporated by LTM, and have a paid-in share capital of 2,000,000.000 pesetas
(said amount need not be registered with the Mercantile Registry at closing).

                  (d) Certificates and Resolutions. RE shall have received
copies, in form and substance reasonably satisfactory to him, of such
certificates of good standing, board resolutions, officers, and secretaries'
certificates and other documents with respect to LTM as RE or his counsel shall
reasonably request.

                  (e) Ancillary Agreements. The Ancillary Agreements shall have
been executed by LTM, the Company, RE, Yelmo Films, Multidulce, S.L.,
Multifiesta, S.L. and Confiterias Regaliz, S.L., as appropriate.

                  (f) Delivery of the principal amount to be loaned under the
Loan Agreement.

                  Section 11.3. Termination. This Agreement may be terminated at
any time prior to the Closing by the mutual written consent of RE and LTM or in
writing by either RE or LTM, as the case may be, if the conditions to Closing
set forth in this Article XI applicable to the obligation of RE or LTM, as the
case may be, to close shall not have been satisfied on or before the date 30
working days following the date of this Agreement.

                                   ARTICLE XII
                                 INDEMNIFICATION

                  Section 12.1. Survival. The representations and warranties
made in this Agreement (which, for the avoidance of doubt, are made as of the
Closing Date and not thereafter) shall survive the Closing and remain in full
force and effect (i) in the case of all such representations and warranties,
other than those contained in paragraphs A3, A4, A12 and A21 of Appendix B for a
period of two years after the Closing Date, (ii) in the case of the
representations and warranties contained in paragraphs A3 and A4 of Appendix B,
indefinitely, (iii) in the case of the representations and warranties contained
in paragraph A12 of Appendix B, for a period equal to 90 days in excess of the
applicable statute of limitations therefor and (iv) in the case of the
representations and warranties contained in paragraph A21 of Appendix B, for a
period of seven years after the Closing Date.

                  Section 12.2. Losses. For purposes of this Agreement, the
terms "Loss" or "Losses" shall mean each and all of the following items to the
extent actually incurred: claims, losses, liabilities, damages, judgments,
awards, costs and expenses (including, without limitation, reasonable fees and
disbursements of counsel). Losses shall exclude all consequential damages.

                  Section 12.3. Indemnification by RE. RE shall indemnify and
hold harmless LTM, the Company and their respective Affiliates from and against
any and all Losses based upon, arising out of, or resulting from, any of the
following:

                                       18
<PAGE>
                           (i) any breach by RE of any of the representations or
         warranties made by RE in this Agreement;

                           (ii) any failure by RE to perform any of his
         covenants or agreements contained in this Agreement;

                           (iii) all Pre-Closing Taxes for which the Yelmo Group
         Companies are liable;

                           (iv) the Excluded Assets (without duplication of
         amounts recovered pursuant to Section 5.1), to the extent relating to
         the period prior to the Closing Date or as a result of the transfer
         thereof; and

                           (v) the matters set forth on Schedule 12.3.

                  Section 12.4. Indemnification by LTM. LTM shall indemnify and
hold harmless RE, the Company and its Affiliates from and against any and all
Losses based upon or resulting from any of the following:

                           (i) any breach by LTM of any of the representations
         or warranties made by LTM in this Agreement; or

                           (ii) any failure by LTM to perform any of its
         covenants or agreements contained in this Agreement.

                  Section 12.5. Indemnification by the Company. (a) The Members
shall cause the Company to indemnify and hold harmless each Member and each
Director, each Affiliate of each holder of Membership Interests, each of the
foregoing's respective directors, officers, employees and agents and each of the
heirs, executors, successors and assigns or any of the foregoing, from and
against any and all Losses based upon or resulting from, (i) any Liability of
the Company or (ii) any act or omission performed or omitted to be performed by
such Person in its or his capacity as a Member, member of the Members' Committee
or holder of Membership Interests (or as an Affiliate, director, officer,
employee, agent, heir, executor, successor or assign of such Member, holder,
member of the Members Committee or Affiliate) except for acts or omissions
constituting gross negligence, bad faith, fraud or willful misconduct, or breach
of this Agreement, provided that no Person shall have any obligation or
liability under this Section 12.5 with respect to any Losses for which such
Person is indemnified or is entitled to indemnification pursuant to Section 12.3
or 12.4.

                  (b) The Members shall cause the Company to timely indemnify
and hold harmless RE from and against all capital gains tax and any penalties
and interest associated therewith, up to a maximum aggregate amount of Pesetas
326,000,000, actually incurred by RE directly and exclusively as a result of the
share for share exchange referred to in Section 4.2(c) being finally determined
to constitute a taxable transaction by the competent Spanish authorities and not
susceptible to appeal (the "Indemnified Amount"). RE undertakes to pay the
Indemnified Amount to the competent Spanish authorities within a period of three
working days from receipt by RE of

                                       19
<PAGE>
the Indemnified Amount and provide immediately after payment evidence
satisfactory to the Company of said payment. The Indemnified Amount is to be
paid by the Company to RE in the manner which best protects the interests of
both the Members and the Company.

                  (c) Except as expressly provided in this Article XII, no
Member or holder of Membership Interests will have any obligation or Liability
to any Member or holder of Membership Interests arising out of or relating to
any Liability of the Company.

                  Section 12.6. Claims. (a) When a party seeking indemnification
under Section 12.3, 12.4 or 12.5(a) (the "Indemnified Party") receives notice of
any claims made by third parties ("Third Party Claims") or has any other claim
for indemnification other than a Third Party Claim, which is to be the basis for
a claim for indemnification hereunder, the Indemnified Party shall give prompt
written notice thereof to the other party or parties (the "Indemnifying Party")
reasonably indicating (to the extent known) the nature of such claims and the
basis thereof; provided, however, that failure of the Indemnified Party to give
the Indemnifying Party prompt notice as provided herein shall not relieve the
Indemnifying Party of any of its obligations hereunder unless and only to the
extent that the Indemnifying Party shall have been materially prejudiced
thereby. The Indemnified Party shall have the right to either (i) assume the
defense of any Third Party Claim or (ii) request that the Indemnifying Party
assume the defense of such Third Party Claim. No compromise or settlement in
respect of any Third Party Claims may be effected by the Indemnifying Party
without the Indemnified Party's prior written consent (which consent shall not
be unreasonably withheld or delayed). Regardless of whether the Indemnified
Party assumes the defense of a Third Party Claim or requests the Indemnifying
Party to assume such defense, the Indemnifying Party shall pay all costs and
expenses thereof, including without limitation fees and expenses of legal
counsel.

                  (b) If RE receives notice of any claim which is the basis for
a claim for indemnification under Section 12.5(b), he shall give prompt written
notice thereof to the Company and LTM describing in detail the amount of such
claim and the basis thereof. The Company shall have the right to assume the
defense of such claim and the Company shall have the right to compromise or
settle such claim to the extent such compromise or settlement is for the payment
of cash in an amount equal to or less than Pesetas 326,000,000. No compromise or
settlement in respect of any such claims may otherwise be effected by the
Company without RE's prior written consent (which consent shall not be
unreasonably withheld or delayed). Notwithstanding anything in this Agreement to
the contrary, the Company shall exercise its rights under this Section 12.6(b)
with the consent of, and at the direction of, LTM, it being understood and
agreed that, except as expressly provided in this Section 12.6(b), RE shall not
be entitled to prevent the Company (whether in his capacity as a Member or as
Managing Director or otherwise) from complying with LTM's direction under this
Section 12.6(b). Without limiting the Company's rights pursuant to the
foregoing, it is understood and agreed that, if RE has appointed his own counsel
to defend a tax related claim of which a claim covered by this Section 12.6(b)
is part, counsel appointed by the Company shall keep RE's counsel informed of
the progress of the defense of the claim covered by this Section 12.6(b) and
shall cooperate in a reasonable manner with RE's counsel.

                                       20
<PAGE>
                                  ARTICLE XIII
                                     GENERAL

                  Section 13.1. Arbitration. In the event a dispute occurs with
respect to any matter in connection with this Agreement, RE and LTM will
promptly attempt to settle such dispute through consultation and negotiation in
good faith and in a spirit of mutual cooperation. If agreement is reached
concerning the resolution of such dispute, then such agreement shall be final,
conclusive and binding on RE and LTM. If, on or before the tenth day after
written notice of such dispute is given by one party to the other, such dispute
has not been resolved by the agreement of RE and LTM, LTM and RE shall each
appoint an arbitrator who shall, within five days of their appointment, agree on
a third arbitrator to whom the dispute shall be referred. If the two independent
arbitrators appointed by LTM and RE cannot agree on an appropriate third
arbitrator, the matter shall be referred to the Dean of the Bar of Madrid which
shall appoint an arbitrator. The finally appointed arbitrator shall be
instructed to apply the laws of Spain. The arbitrator's decision and award with
respect to the dispute referred to shall be final and binding on RE and LTM and
may be entered in any court with jurisdiction. The cost of the arbitration
proceeding and any proceeding in court to confirm or to vacate any arbitration
award, as applicable (including, without limitation, attorneys' fees and costs),
shall be borne by the unsuccessful party to the dispute and shall be awarded as
part of the arbitrator's award; provided, however, that (i) each of LTM and RE
shall bear its own attorneys' fees and costs in connection with the arbitration
proceedings and (ii) if the arbitrator does not find one of LTM or RE to be
unsuccessful then the cost of the arbitral proceeding shall be paid equally by
LTM and RE.

                  Section 13.2. Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by facsimile transmission
or by courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:

If to the Company:                           If to LTM:

Jacometrezo 4 - 7(degree),                   LOEWS THEATRES
28013, Madrid                                711 Fifth Avenue,
Attention:     Managing Director             New York, New York  10022
Facsimile:     (3491) 523-1658
                                             Attention:     John Cormie McBride,
                                                            General Counsel
                                             Facsimile:     (212) 833-8379

                                       21
<PAGE>
With a copy to:                         With a copy to:

Gomez-Acebo & Pombo                     Lawrence J. Ruisi
Castellana 164,                         Chief Executive Officer
28046 Madrid                            Loews Theatres
Attn:          Richard Silberstein      711 Fifth Avenue
Facsimile:     (3491) 582-9114          New York, New York  10022
                                        Facsimile:  (212) 833-6780

Lawrence J. Ruisi                       John J. Walker
Chief Executive Officer                 Chief Financial Officer
Loews Theatres                          Loews Theatres
711 Fifth Avenue                        711 Fifth Avenue
New York, New York  10022               New York, New York  10022
Facsimile:     (212) 833-6780           Facsimile:  (212) 833-6270

John J. Walker                          Fried, Frank, Harris, Shriver & Jacobson
Chief Financial Officer                 1 New York Plaza
Loews Theatres                          New York, New York  10004
711 Fifth Avenue                        Attention:     Sanford Kieger
New York, New York  10022               Facsimile:     (212) 859-4000
Facsimile:     (212) 833-6270

If to RE:

c/o Yelmo Films, S.A.
Jacometrezo, 4 - 7(degree)
28001 Madrid
Facsimile:     (3491) 523-1658

With a copy to:

Bufete Ramon Hermosilla
Claudio Coello, 32 - 1(degree)
Attention:     Ramon Hermosilla Gimeno
Facsimile:     (3491) 435-6366

or to such other address as any party or other addressee shall specify by
written notice so given, and such notice shall be deemed to have been delivered
as of the date so telecommunicated, personally delivered or mailed.

                  Section 13.3. Assignment; Binding Effect; Benefit. Except as
expressly contemplated herein, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the

                                       22
<PAGE>
prior written consent of the other parties, except any rights, interests or
obligations relating to Membership Interests Transferred to a Permitted
Transferee, provided that no such assignment will relieve the assigning party of
any of its obligations hereunder, and provided further that the foregoing
restriction shall not apply to any assignment to any successor Person in
connection with any merger or consolidation or sale of all or substantially all
of the assets. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, express or implied, is
intended to confer on any Person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement.

                  Section 13.4. Confidentiality. Each Member agrees that it
shall keep all information regarding the business, affairs or plans of the
Company strictly confidential and shall maintain and protect all information
regarding the business, affairs or plans of the Company in no less careful a
manner than it maintains and protects its own confidential business information;
provided, however, that such information may be disclosed by a Member or holder
if, in the reasonable opinion of counsel to such Member or holder, and after
prior consultation with the Members and their counsel (but not their consent),
such disclosure is required by law or applicable rules of any securities
exchange; provided further, that the provisions of this Section 13.4 shall not
apply to information which (i) becomes generally available to the public other
than as a result of a disclosure by such Member or holder or its
representatives, (ii) was available to such Member or holder on a
non-confidential basis prior to its disclosure to such Member or holder by any
other Member or holder or their representatives, or (iii) becomes available to
such Member or holder on a non-confidential basis from a source other than any
other Member or its representatives.

                  Section 13.5. Entire Agreement. This Agreement has been
prepared and executed in both English and Spanish, and both versions shall be
binding on the parties hereto, provided that, in the event that any provision of
the Spanish version conflicts with or is inconsistent with any provision of the
English version of this Agreement, the provisions of the English version shall
control and be binding upon each of the parties hereto. This Agreement (in both
English and Spanish), the exhibits, appendices and schedules hereto and any
certificate delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings (oral and written) among the
parties with respect thereto.

                  Section 13.6. Amendment. This Agreement may not be amended or
modified except by an instrument in writing signed by or on behalf of each of
the parties hereto.

                  Section 13.7. Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies of this Agreement, each of which may be signed by less than all of the
parties hereto, but together all such copies are signed by all of the parties
hereto.

                                       23
<PAGE>
                  Section 13.8. Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.

                  Section 13.9. Interpretation. In this Agreement, unless the
context otherwise requires, words describing the singular number shall include
the plural, and vice versa, "including" shall mean "including, without
limitation," words denoting any gender shall include all genders and references
to a Person include such Person's successors and permitted assigns. In this
Agreement, unless defined herein, all accounting terms shall have the meaning
given to them under GAAP.

                  Section 13.10. Incorporation of Exhibits and Schedules. All
exhibits, appendices and schedules hereto are hereby incorporated herein and
made a part hereof for all purposes as if fully set forth herein.

                  Section 13.11. Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or otherwise affecting the validity or
enforceability of any of the terms or provisions of this Agreement in any other
jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.

                  Section 13.12. Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of Articles VII and VIII or Section 10.1 of this Agreement was not
performed in accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of Articles VII and VIII or Section 10.1 of this
Agreement and to enforce specifically the terms and provisions of Articles VII
and VIII or Section 10.1 of this Agreement in any court of competent
jurisdiction, this being in addition to any other remedy to which they may be
entitled at law or in equity.

                                       24
<PAGE>
                  IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf as of the day and year
first written above.

                                         LTM SPANISH HOLDINGS, INC.

                                         By: /s/ John Cormie McBride
                                             --------------------------------
                                             Name:    John Cormie McBride
                                             Title:   Senior Vice President and
                                                      Counsel

                                         RICARDO EVOLE MARTIL

                                         By:       /s/ Ricardo Evole Martil
                                             --------------------------------

                                       25
<PAGE>
                                   Appendix A

                                   Definitions

                  "Advance":  as defined in Section 4.7.

                  "Affiliate": means with respect to a specified Person, any
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the specified
Person. As used in this definition, the term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, as trustee or executor, by contract or otherwise. If a Person is a
natural person, the term Affiliate also includes the wife, parents, children,
siblings, nieces, nephews and grandchildren of such natural person, any trusts
established for their benefit and any legal entities in which they are partners
or of which they own (legally or beneficially), directly or indirectly, 25% or
more of such entity's voting securities.

                  "Agreement":  as defined in the preamble to this Agreement.

                  "Ancillary Agreements": means the Sale and Purchase Agreement,
the Employment Agreement, the Transition Services Agreement, the License
Agreement, the Asset Transfer Agreement, the Columbia Bar Agreement, the Loan
Agreement, the Yelmo Arco Iris Share Transfer Agreement and the Pledge
Agreement.

                  "Approved Budget": for any fiscal year means the annual budget
of the Company for such fiscal year as approved by the Members pursuant to this
Agreement.

                  "Asset Transfer Agreement": means the Asset Transfer Agreement
dated the date of this Agreement between Yelmo Films and certain of its
Subsidiaries and Multidulce, S.L. and certain of its Affiliates relating to the
sale and purchase of certain included assets and Excluded Assets substantially
in the form set forth in Exhibit 5.1(a).

                  "Auditor": as defined in Section 4.6.

                  "Balance Sheet":  as defined in paragraph A.7 of Appendix B.

                  "Board of Directors": means the board of directors of the
Company established pursuant to Section 7.2.

                  "Business Plan": means the business plan of the Company as
approved and adopted by the Board of Directors from time to time.

                  "Calculation Period":  as defined in Section 4.5.

                  "Cashflow": means, for any period, (i) the consolidated net
income or net loss of the Company and its Subsidiaries for such period, plus
(ii) consolidated depreciation and amortization

                                        1
<PAGE>
expense and other non-cash charges of the Company and its Subsidiaries for such
period, minus (iii) consolidated capital expenditures of the Company and its
Subsidiaries for such period, plus (iv) any decrease in Working Capital during
such period minus (v) any increase in Working Capital during such period, in
such case, determined in accordance with GAAP.

                  "Class A Units":  as defined in Section 3.1.

                  "Class B Units":  as defined in Section 3.1.

                  "Closing": means the closing of the transactions contemplated
by Section 4.2.

                  "Closing Date":  means the date upon which the Closing occurs.

                  "Colombia Bar Agreement": means the agreement between Yelmo
Films and Multidulce, S.L. substantially in the form set forth in Exhibit A-1.

                  "Company":  as defined in the preamble to this Agreement.

                  "Competitor": means any person which engages in the business
of distributing or exhibiting motion pictures in Spain or the United States of
America.

                  "Competitor Notice":  as defined in Section 8.3(b).

                  "Contribution Amount": means Pesetas 7,500,000,000, subject to
adjustment as set forth in Sections 4.4 and 4.5

                  "Debt": means indebtedness for borrowed money (including
pursuant to capital leases) of the Yelmo Group Companies outstanding as of the
time of measurement.

                  "Director":  means a member of the Board of Directors.

                  "EBITDA Base Level":  as defined in Section 4.5.

                  "Employment Agreement": means the employment agreement between
RE and the Company to be entered into at Closing substantially in the form set
forth in Exhibit A-2.

                  "Estatutos": means the Estatutos of the Company, as amended
from time to time.

                  "Excluded Assets":  as defined in Section 5.1.

                  "Final Debt":  as defined in Section 4.4(a).

                  "Final Net Working Capital":  as defined in Section 4.4(a).

                  "First Refusal Notice":  as defined in Section 8.3(a).

                                        2
<PAGE>
                  "GAAP": means generally accepted accounting principles of
Spain (or such other jurisdiction as specified herein).

                  "Governmental Entity": as defined in paragraph A.6 of Appendix
B.

                  "Indemnified Party":  as defined in Section 12.6.

                  "Indemnifying Party":  as defined in Section 12.6.

                  "Initial Statement":  as defined in Section 4.4(a).

                  "Intellectual Property Rights": as defined in paragraph A.17
of Appendix B.

                  "License Agreement": means the License Agreement between Yelmo
Films and Confiterias Regaliz, S.L., substantially in the form set forth in
Exhibit A-3.

                  "Laws":  as defined in paragraph A.10 of Appendix B.

                  "Liabilities": means, as to any Person, all debts, liabilities
and obligations, direct, indirect, absolute or contingent of such Person,
whether accrued, vested or otherwise, whether known or unknown and whether or
not actually reflected, or required by GAAP to be reflected, in such Person's
balance sheets or other books and records, including, for the avoidance of
doubt, accrued interest.

                  "Lien":  as defined in paragraph A.9 of Appendix B.

                  "Loan Agreement": means the Loan Agreement, dated the date
hereof, between Yelmo Films and the Company.

                  "Losses":  as defined in Section 12.2.

                  "LTM": as defined in the preamble to this Agreement.

                  "Managing Director": means the managing director of the
Company.

                  "Material Adverse Effect": as defined in paragraph A.8 of
Appendix B.

                  "Material Contracts": as defined in paragraph A.14 of Appendix
B.

                  "Member": means initially each of LTM and RE and their
respective heirs, successors and permitted assigns and any other Person admitted
as a Member in accordance with this Agreement.

                  "Membership Interests": means as to any Member, such Member's
interest in the Company as represented by the number of Class A Units and Class
B Units held by such Member.

                                        3
<PAGE>
                  "Minimum Funding Amount":  as defined in Section 4.5.

                  "Minority Costs":  as defined in Section 4.9.

                  "Net Working Capital": means, (x) the sum of all current
assets plus all long term assets to the extent convertible to cash (other than
long term fixed assets) less (y) the sum of all current and long term
liabilities (other than Debt), in each case, of the Yelmo Group Companies on a
consolidated basis.

                  "New Venture":  as defined in Section 10.1(d).

                  "Non-Transferring Member":  as defined in Section 8.3(a).

                  "Notice of New Venture":  as defined in Section 10.1(d).

                  "Offering Price":  as defined in Section 8.3(a).

                  "Permits":  as defined in paragraph A.11 of Appendix B.

                  "Permitted Transferee": means any Subsidiary of LTM or any
corporation in which RE owns at least 51% of the outstanding equity and in which
any of his children and/or spouse own the remaining equity, provided that such
transferee (i) must, in the case of Subsidiaries of LTM with a net worth of less
than US$100 million, continue to be a Subsidiary of LTM, or be owned by RE and
his spouse and children with RE holding at least 51% of the outstanding equity
thereof, as the case may be, as long as such transferee holds any Membership
Interests and if at any time after such Transfer the transferee ceases to be a
Subsidiary of LTM or owned by RE and his spouse and children with RE holding at
least 51% of the outstanding equity thereof, as the case may be, the transferee
must immediately Transfer any Membership Interests it holds back to the
transferring Member from whom it received its Membership Interests and (ii) has
agreed in writing to be bound by the terms of this Agreement.

                  "Person": means any natural person, corporation, company,
partnership, firm, association, trust, government, governmental agency or other
entity, whether acting in an individual, fiduciary or other capacity.

                  "Pesetas":  means the lawful currency of Spain.

                  "Pledge Agreement": means the Pledge Agreement between the
Company and RE dated the date hereof.

                  "Pre-Closing Taxes": means all Taxes of the Yelmo Group
Companies attributable to any period or portion of any period ending on or
before the Closing Date, or, in the case of Taxes which are not reported on a
periodic basis, attributable to transactions occurring prior to the Closing
Date. Pre-Closing Taxes with respect to the portion of a period ending on the
Closing Date shall be calculated as though such date constituted the end of a
taxable period.

                                        4
<PAGE>
                  "Proposing Party":  as defined in Section 10.1(d).

                  "RE":  as defined in the preamble to this Agreement.

                  "Sale and Purchase Agreement": means the Sale and Purchase
Agreement between RE and the Company to be entered into at Closing substantially
in the form set forth in Exhibit A-4.

                  "Subsidiary": of any Person shall mean any corporation or
other legal entity of which such Person (either alone or through or together
with its Subsidiaries) owns, directly or indirectly, 50% or more of the stock or
other equity interests, the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity.

                  "Tax" or "Taxes": means taxes of any kind, levies or other
like assessments, duties, imposts, charges or fees, including any interest,
penalties or additions to tax attributable to any such Tax or requirement to
report information with respect thereto and any damages, costs, fees or other
liability arising from such Tax or reporting requirement.

                  "Transfer":  as defined in Section 8.1(a).

                  "Transfer Waiver Date":  as defined in Section 8.2.

                  "Transferring Member":  as defined in Section 8.3(a).

                  "Transition Services Agreement": means the Transition Services
Agreement substantially in the form set forth in Exhibit A-5.

                  "Yelmo Arco Iris Share Transfer Agreement": means the Share
Transfer Agreement between Yelmo Films and RE substantially in the form set
forth in Exhibit 5.1(b).

                  "Yelmo Films": means Yelmo Films S.A., a Spanish corporation.

                  "Yelmo Financial Statements": as defined in paragraph A.7 of
Appendix B.

                  "Yelmo Group Companies": means Yelmo Films together with its
Subsidiaries including, without limitation, those Subsidiaries set forth on
Schedule X.

                  "Yelmo Stock": means shares of representing the share capital
of Yelmo Films.

                                        5
<PAGE>
                                   Appendix B

                         Representations and Warranties

         A.       RE hereby represents and warrants to LTM as follows:

                  1. Organization. Each of the Yelmo Group Companies is a
corporation duly organized and validly existing under the laws of its respective
jurisdiction of incorporation and has all requisite power and authority to
enable it to own, lease or otherwise hold its properties and assets and to carry
on its business as it is now being conducted. True and correct notarial copies
as of the date hereof of the estatutos registered and adopted, pursuant to Royal
Legislative Decree 1564/1989 or Law 2/1995, as appropriate, of each of the Yelmo
Group Companies have been provided to LTM.

                  2. Authority. RE has full power and authority to execute and
deliver this Agreement and each of the Ancillary Agreements to which he is a
party, to perform all his obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and each of the Ancillary Agreements to which he is a party and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action (corporate or otherwise). This Agreement
and each of the Ancillary Agreements has been duly and validly executed and
delivered by RE (to the extent a party thereto) and constitutes the valid and
binding obligation of RE (to the extent a party thereto), enforceable against
him in accordance with its terms.

                  3. Subsidiaries and Equity Interests. Schedule A.3 accurately
sets forth (x) the authorized capital of each Yelmo Group Company and (y) the
number of issued and outstanding shares or other equity interests of each class
of equity capital of each Yelmo Group Company and the ownership thereof. Except
as disclosed on Schedule A.3, all of the issued and outstanding shares or other
equity interests of each class of equity capital of each Yelmo Group Company
have been duly authorized and validly issued, are fully paid and nonassessable
and are owned beneficially and of record by RE or another Yelmo Group Company
(as the case may be), free and clear of any Lien. Such shares or other equity
interests are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding restricting or otherwise
relating to the voting, dividend rights or disposition of such shares or other
equity interests, except for this Agreement. There are no outstanding securities
convertible into or exchangeable for or carrying the right to acquire any equity
security of any of the Yelmo Group Companies and no outstanding options,
warrants or other agreements or commitments that relate to or require the
issuance, sale or other disposition of any equity securities of any of the Yelmo
Group Companies, except for this Agreement. Except as disclosed in Schedule A.3,
none of the Yelmo Group Companies owns, directly or indirectly, any capital
stock of, or other equity interests in, any Person other than another Yelmo
Group Company, and none of the Yelmo Group Companies is a member of, or
participant in, any partnership, joint venture or similar Person or entity.

                  4. Capitalization. (a) The authorized capital stock of Yelmo
Films consists of 60,000 shares of common stock, par value Pesetas 1,000 per
share, all of which are duly authorized and validly issued and outstanding,
fully paid and nonassessable. RE is the record and beneficial

                                        1
<PAGE>
owner of Yelmo Stock and has good and valid title to the Yelmo Stock, free and
clear of any Liens and restrictions of any kind except those provided for in the
estatutos of Yelmo Films. Except for the Yelmo Stock, there are no shares of
capital stock or other equity securities of Yelmo Films outstanding.

                           (b) Upon delivery to the Company at the Closing of a
notarial or public deed evidencing transfer of the Yelmo Stock to the Company,
and upon receipt by RE of the Membership Interests to be issued to him in
consideration for such Yelmo Stock, good and valid title to the Yelmo Stock will
pass to the Company, free and clear of any Liens and restrictions of any kind.
Other than this Agreement, the Yelmo Stock is not subject to any voting trust
agreement or other contract, agreement, arrangement, commitment or
understanding, including any such agreement, arrangement, commitment or
understanding restricting or otherwise relating to the voting, dividend rights
or disposition of the Yelmo Stock.

                  5. No Conflicts. The execution and delivery by RE of this
Agreement and the Ancillary Agreements to which he is a party, and the
consummation of the transactions contemplated hereby and by the Ancillary
Agreements will not (i) violate, conflict with, result in a breach of, or
default under, or permit the termination of, or require consent under any
agreement, obligation or commitment to which RE or any of the Yelmo Group
Companies is bound, or to which any of their properties or assets is subject,
(ii) violate any provision of any Laws to which RE or any of the Yelmo Group
Companies is subject, (iii) violate any order, judgment or decree applicable to
RE or any of the Yelmo Group Companies, or (iv) conflict with, or result in a
breach of or default under, any term or condition of the governing documents of
the Yelmo Group Companies.

                  6. Consents. No consent, license, approval, waiver, expiration
of waiting period or authorization of, or registration or declaration with, any
federal, provincial, local or foreign government or any court of competent
jurisdiction, administrative agency or commission or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Entity") is
required to be obtained or made by RE or any of the Yelmo Group Companies in
connection with the execution, delivery and performance of the transactions
contemplated by this Agreement and by the Ancillary Agreements. To the knowledge
of RE, no creditor, employee, client, customer or other Person having a business
relationship with any of the Yelmo Group Companies intends to change (in a
manner adverse to any of the Yelmo Group Companies) such relationship because of
the sale and transfer of the Yelmo Stock or the transactions contemplated hereby
and by the Ancillary Agreements.

                  7. Financial Statements; No Undisclosed Liabilities. (a)
Schedule A.7(a) sets forth (i) the unaudited consolidated balance sheet of Yelmo
Films as of December 31, 1997, and the unaudited consolidated statement of
income and cash flows of Yelmo Films for the twelve-month period ended December
31, 1997, together with the notes to such financial statements, (ii) the
unaudited consolidated balance sheets of Yelmo Films as of December 31, 1996 and
December 31, 1995 and the unaudited consolidated statements of income and cash
flows of Yelmo Films for the years ended December 31, 1996 and December 31,
1995, together with the notes to such financial statements and (iii) a pro forma
unaudited consolidated balance sheet of Yelmo Films as of December 31, 1997 (the
"Balance Sheet"), and a pro forma unaudited consolidated statement of

                                        2
<PAGE>
income and cash flows for the twelve month period ended December 31, 1997, in
each case, as adjusted to reflect the exclusion of the Excluded Assets and the
elimination of certain intercompany accounts (the financial statements described
above, together with the notes to such financial statements, collectively, the
"Yelmo Financial Statements"). The Yelmo Financial Statements have been prepared
in conformity with GAAP consistently applied (except in each case as described
in the notes thereto) and fairly present (subject, in the case of the unaudited
statements, to normal recurring year-end audit adjustments) the financial
condition and results of operations of the Yelmo Group Companies (or, in the
case of the Balance Sheet, the assets and liabilities of the Yelmo Group
Companies as held in connection with the transactions contemplated by this
Agreement) as of the date thereof and for the period indicated. The parties
acknowledge that the Yelmo Financial Statements have been prepared in Spanish
and translated into English. Notwithstanding anything in this Agreement to the
contrary, if any line item set forth in the English version of the Yelmo
Financial Statements does not comply with GAAP but the equivalent line item in
the Spanish version of the Yelmo Financial Statements does not comply with GAAP,
the Spanish version of the Yelmo Financial Statements with respect to that line
item will prevail.

                           (b) The Yelmo Group Companies have no liabilities or
obligations of any kind (whether absolute, accrued, contingent, determined,
determinable or otherwise), except to the extent such liabilities or obligations
(i) are fully reflected as liabilities or reserved for on the Balance Sheet, or
(ii) are disclosed in Schedule A.7(b) hereto, or (iii) are liabilities or
obligations incurred since the date of the Balance Sheet in the ordinary course
of business consistent with past practice and not in violation of any of the
terms of this Agreement.

                  8. Absence of Changes. Except as set forth on Schedule A.8,
since the date of the Balance Sheet, the business of the Yelmo Group Companies
has been conducted in the ordinary course of business consistent with past
practice, and (i) there have been no changes in the business, assets or
liabilities or prospects of the Yelmo Group Companies which individually or in
the aggregate have had, or could reasonably be expected to have, a material
adverse effect on the business, assets, condition (financial or otherwise),
results of operations or prospects of the Yelmo Group Companies taken as a whole
or on the ability of RE to consummate the transactions contemplated hereby (a
"Material Adverse Effect"), and (ii) there has not been any transaction or event
of the type restricted or prohibited by Section 9.2 which, if such transaction
or event occurred after the date hereof, would constitute a violation of Section
9.2.

                  9. Title to Assets. The Yelmo Group Companies have good title
to all of the assets and properties which they purport to own (except for assets
and properties sold, consumed or otherwise disposed of in the ordinary course of
business since the date of the Balance Sheet) free and clear of all Liens,
except (a) as set forth in Schedule A.9, (b) Liens for taxes not yet due, (c)
Liens which do not interfere with the use or value of the asset affected
thereby. As used in this Agreement, "Liens" shall mean all liens, claims,
charges, security interests, pledges, mortgages, rent charges, covenants,
easements, restrictions, provisions, consents, licenses, licenses or other
encumbrances, obligations or restrictions or rights or claims of others
(including, without limitation, any options or similar rights) of any character
whatsoever which impair the relevant Person's right, title or interest in, or
the value, use or enjoyment of, the asset subject thereto.

                                        3
<PAGE>
                  10. Compliance with Laws. Except as set forth in Schedule
A.10, the Yelmo Group Companies have been and are in compliance in all material
respects with all applicable laws (including statutes and judicial and
administrative decisions, orders and decrees), rules and regulations ("Laws").
Neither RE nor any of the Yelmo Group Companies has received notice of any
noncompliance by the Yelmo Group Companies with such Laws.

                  11. Permits. Except as set forth in Schedule A.11, the Yelmo
Group Companies have all material licenses, permits and authorizations
("Permits") which are necessary or desirable for the conduct of the business of
the Yelmo Group Companies. Except as set forth in Schedule A.11, all such
Permits are validly held by the Yelmo Group Companies, the Yelmo Group Companies
have complied in all material respects with all terms and conditions relating to
such Permits and the same will not be subject to suspension, modification,
revocation or nonrenewal as a result of the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby and
thereby. The Permits listed in Schedule A-11 correspond to complete and valid
applications that have been previously submitted to the appropriate authorities
and RE has no reason to believe that each such Permit shall not be granted by
the competent authorities in the ordinary course. The Yelmo Group Companies have
not received notice or otherwise have any knowledge that any Governmental Entity
intends to cancel or terminate any such Permits and no consent or approval of
any Governmental Entity is required under any such Permit in connection with the
transactions contemplated by this Agreement. All such Permits which are held in
the name of an employee, officer, member or agent or otherwise on behalf of the
Yelmo Group Companies shall be deemed included under this paragraph A.11.

                  12. Tax and Social Security. Each of the Yelmo Group Companies
(i) is current with payment of all its tax and social security obligations,
including those related to salary, and does not have any liabilities apart from
those expressly appearing in the Yelmo Financial Statements; (ii) has presented
in due time and form all required declarations concerning all types of tributes,
including for those purposes social security quotes; (iii) has established
sufficient reserves in the Yelmo Financial Statements for all those tributes or
payments to social security that having come due have not been paid yet; (iv)
has not carried out any operation that may be qualified as fictitious, irregular
or unusual: (v) except as listed in Schedule A.12, is not involved in, nor has
there been threatened, any litigation, administrative, judicial or other types
of procedures, tax or labor inspection in relation to all tax and social
security matters, nor does it have reasons or motives to believe that it may be
in the future.

                  13. Litigation. Except as set forth in Schedu1e A.13, there is
no suit, legal or administrative action or arbitration pending or, to the
knowledge of RE, threatened against the Yelmo Group Companies which, if
adversely determined, is reasonably likely to result in liability of Pesetas
15,000,000 or more, nor are there any judgments, decrees or orders of any
Governmental Entity binding on the Yelmo Group Companies. There are no pending
or, to the knowledge of RE, threatened governmental investigations or inquiries
or proceedings concerning the Yelmo Group Companies or the business or
operations of the Yelmo Group Companies.

                  14. Agreements. Except as set forth in Schedule A.14, none of
the Yelmo Group Companies is party to or is bound by, and none of the
properties, assets or operations of each such

                                        4
<PAGE>
company is subject to, any agreement, contract, lease, license, commitment or
instrument of the type described below:

                           (a) any license agreement, assignment or contract
(whether as licensor or licensee, assignor or assignee and whether written or
oral) relating to any Intellectual Property Rights;

                           (b) any agreement with any of its employees,
shareholders or members of the family of, or any Person controlled by any
members of the family of, RE or any employment or consulting agreement or any
agreement related to the Excluded Assets;

                           (c) any agreement, contract, lease (whether as lessor
or lessee), commitment or instrument with any Person, including any customer or
supplier, (i) providing for any payment in excess of Pesetas 15,000,000 by any
party thereto or (ii) which does not contemplate performance within 12 months;

                           (d) any collective bargaining or other agreement with
any labor union;

                           (e) any agreement relating to the acquisition or
disposition of any business, corporation or other legal entity or a material
amount of assets (by way of merger, consolidation, purchase, sale or otherwise);

                           (f) any agreement granting any Person a Lien on any
of its assets or properties. including, without limitation, any factoring
agreement or agreement for the assignment of accounts receivable or inventory;

                           (g) any agreement that creates a joint venture or
partnership with any other Person;

                           (h) any indenture, mortgage, note, bond or other
evidence of indebtedness, any credit or similar agreement under which it has
borrowed any money, and any guarantee of or agreement to acquire any such
obligation, of any other Person;

                           (i) any agreement which restricts it from entering
into any new or existing line of business or any agreement which contains
geographic restrictions on its ability to conduct business activities (including
a covenant not to compete);

                           (j) any guarantee of third party obligations; or

                           (k) any other agreement which is material to the
business or financial condition of the Yelmo Group Companies.

                  Except as set forth in Schedule A.14, all agreements,
contracts, leases, licenses; commitments or instruments of the Yelmo Group
Companies listed or required to be listed in Schedule A.14 (collectively, the
"Material Contracts") are valid, binding and in full force and effect

                                        5
<PAGE>
and are enforceable by the Yelmo Group Companies in accordance with their terms.
Except as set forth in Schedule A.14, (a) the Yelmo Group Companies have
performed all material obligations required to be performed by them to date
under the Material Contracts, and are not (with or without the lapse of time or
the giving of notice, or both) in breach or default in any material respect
thereunder, and (b) to the knowledge of RE, no other party to any of the
Material Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder.
Correct and complete copies of all written Material Contracts (and true and
complete summaries of all oral Material Contracts) have been made available to
LTM prior to the date hereof.

                  15. Broker's and Finder's Fee. RE has not employed any broker,
finder, or financial intermediary in connection with the transactions
contemplated by this Agreement or the Ancillary Agreements that would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith.

                  16. Employment and Employee Benefits. Schedule A.16 lists all
of the employees of each of the Yelmo Group Companies, broken out by company.
The information concerning their gross annual salary, position, category, age,
and seniority which appear in Schedule A.16 is exact and complete. There is no
labor claim pending or outstanding against any of the Yelmo Group Companies nor
do there exist reasons or motives to believe that any claims may arise in the
future. No Yelmo Group Company has any retirement plans or pension fund and has
not undertaken to establish any such retirement plan or pension fund in the
future. There exists no service or consultancy agreements signed by any of the
Yelmo Group Companies. The collective bargaining agreements applicable to the
Yelmo Group Companies are listed in Schedule A.16. There is no loan, bond, or
guaranty by any of the Yelmo Group Companies in favor of any of their employees,
directors or shareholders. There exists no contract or relationship that can be
considered as "top executive" under Spanish labor law with any of the Yelmo
Group Companies.

                  17. Trademarks, Trade Names, Etc. Schedule A.17 sets forth, as
of the date hereof, all registered trademarks, trade names, copyrights and
applications therefor which are held or used by the Yelmo Group Companies (the
"Intellectual Property Rights"). Except as set forth in Schedule A.17, (i) the
Yelmo Group Companies are the sole owners of the Intellectual Property Rights;
(ii) to the knowledge of RE, none of the Intellectual Property Rights is being
infringed upon or appropriated by others; (iii) all Intellectual Property Rights
have been duly registered or filed, and such registrations have been properly
maintained and renewed in accordance with all applicable laws, rules, and
regulations and all fees associated therewith have been paid; (iv) the Yelmo
Group Companies have not received notice of any claim or demand of any Person
pertaining to any prosecution, suit, action or proceeding pending or threatened,
that challenges the exclusive right of the Yelmo Group Companies to use any of
the Intellectual Property Rights; (v) no aspect of the Intellectual Property
Rights is subject to any outstanding order, ruling, decree, judgment or
stipulation by or with any court, arbitrator or administrative agency; (vi) the
Yelmo Group Companies are not engaged in any litigation, and, to the knowledge
of RE, no litigation is threatened, with respect to the use of any of the
Intellectual Property Rights; and (vii) to the knowledge of RE, the conduct of
the Yelmo Group Companies as now being conducted does not, and as currently

                                        6
<PAGE>
proposed to be conducted, will not, infringe or otherwise conflict with, any
patents, trademarks, service marks, trade names, copyrights or other
intellectual property or proprietary rights of others.

                  18. Insurance. Schedule A.18 sets forth, as of the date
hereof, a correct and complete list of all of the material policies of insurance
and fidelity or surety bonds with respect to the Yelmo Group Companies. All such
policies are in full force and effect, all premiums due and payable thereon have
been paid (other than retroactive or retrospective premium adjustments that are
not yet, but may be, required to be paid with respect to any period ending prior
to the Initial Closing Date), and no notice of cancellation or termination has
been received with respect to any such policy which has not been replaced on
substantially similar terms prior to the date of such cancellation. There are no
claims by the Yelmo Group Companies as to which any insurance company is denying
liability or defending under a reservation of rights or similar causes. The
activities and operations of the Yelmo Group Companies have been conducted in a
manner so as to conform in all material respects to all applicable provisions of
such insurance policies and, except as set forth in Schedule A.18, proper notice
of all known claims that the Yelmo Group Companies reasonably believe they have
under such insurance policies, has been given to the providers of such insurance
policies.

                  19. Affiliate Matters. Except as set forth on Schedule A.19,
neither RE nor any other Affiliate of the Yelmo Group Companies has any interest
in any property (real or personal, tangible or intangible) or contract used in
or pertaining to the business of the Yelmo Group Companies and neither RE nor
any other Affiliate of the Yelmo Group Companies has any direct or indirect
ownership interest or economic interest in any Person with which any of the
Yelmo Group Companies competes or with which any such company has a business
relationship.

                  20. Information. To the knowledge of RE, none of the
information provided by RE to LTM in connection with the transactions
contemplated by this Agreement and the Ancillary Agreement contains any material
misstatement of fact or omits to state any material fact necessary to be stated
in order to make the statements therein not misleading.

                  21. Environmental. None of the Yelmo Group Companies has been
in the past, and is not currently, a defendant in any product liability or
environmental related claim nor does RE have knowledge of a threatened or
pending claim in respect thereof. The contracts that the Yelmo Group Companies
have entered into and their activities are in compliance with all Spanish and
applicable European Union legislation, including but not limited to
environmental and employment health and safety issues.

                  22. Real Property. Schedule A.22 sets forth a list of all real
property owned or leased by each of the Yelmo Group Companies. With respect to
each parcel of owned real property set forth in Schedule A.22, each Yelmo Group
Company has registered in the corresponding land registry good, valid,
marketable and insurable title thereto in fee simple, in all cases free and
clear of all Liens except as set forth in Schedule A.22. All title deeds to such
owned real property are in the possession of the Yelmo Group Companies and the
Yelmo Group Companies have complied with all statutory requirements, By-laws and
regulations relating to their real properties as well as

                                        7
<PAGE>
all contractual covenants and conditions with respect to such properties. None
of the leases set forth in Schedule A.22 shall be adversely affected by the
transactions contemplated in this Agreement.

                  23. Executive Compensation etc. RE has no knowledge or reason
to believe that any of the principal executives of the Yelmo Group Companies
will leave the same after the execution of this Agreement. The individual
employment contracts reflect in writing each and every one of the employment
conditions agreed with each and every one of the employees of all the Yelmo
Group Companies. The Yelmo Group Companies have assumed no obligation to
increase the compensation, salary or benefits of any administrator or employee
now or in the future.

                  24. Entire Business. The Yelmo Group Companies own or lease
all of the assets necessary for each of them to operate their respective
businesses as currently conducted and as contemplated to be conducted
immediately following Closing.

         B.       LTM hereby represents and warrants to RE as follows:

                  1. Organization. LTM is a corporation duly organized and
validly existing under the laws of its jurisdiction of incorporation and has all
requisite power and authority to enable it to own, lease or otherwise hold its
properties and assets and to carry on its business as it is now being conducted.

                  2. Authority. LTM has full corporate power and authority to
execute and deliver this Agreement and each Ancillary Agreement to which it is a
party, to perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Except for approval referred to in
Section 11.1(j) of this Agreement the execution and delivery by LTM of this
Agreement and the Ancillary Agreements to which it is party and the consummation
of the transactions contemplated hereby and thereby have been duly authorized by
all necessary action (corporate or otherwise) of LTM. This Agreement and the
Ancillary Agreements has been duly and validly executed and delivered by LTM (to
the extent a party thereto) and constitutes the valid and binding obligation of
LTM (to the extent a party thereto), enforceable against it in accordance with
its terms.

                  3. No Conflicts. The execution and delivery by LTM of this
Agreement and the Ancillary Agreement to which it is party, and the consummation
of the transactions contemplated hereby and thereby will not (i) violate,
conflict with, result in a breach of, or default under, or permit the
termination of, or require consent under any agreement, obligation or commitment
to which LTM is bound, or to which any of its properties or assets is subject,
(ii) violate any provision of any Laws to which LTM is subject, (iii) violate
any order, judgment or decree applicable to LTM, or (iv) conflict with, or
result in a breach of or default under, any term or condition of the governing
documents of LTM.

                  4. Consents. No consent, license, approval, waiver, expiration
of waiting period or authorization of, or registration (other than registration
with the U.S. Securities and Exchange Commission) or declaration with, any
Governmental Entity is required to be obtained or made by

                                        8
<PAGE>
LTM in connection with the execution, delivery and performance of the
transactions contemplated by this Agreement and the Ancillary Agreements to
which it is party.

                  5. Broker's and Finder's Fee. LTM has not employed any broker,
finder, or financial intermediary in connection with the transactions
contemplated by this Agreement and the Ancillary Agreements to which it is party
that would be entitled to a broker's, finder's or similar fee or commission in
connection therewith.

                                        9

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