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EXHIBIT 10.1
LIONS GATE ENTERTAINMENT CORP.
LIONS GATE ENTERTAINMENT INC.
3.625% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2025
PURCHASE AGREEMENT
February 18, 2005
SG COWEN & CO., LLC
J.P. MORGAN SECURITIES INC.
JEFFERIES & CO.
THOMAS WEISEL PARTNERS LLC
OPPENHEIMER & CO.
JANCO PARTNERS
SANDERS MORRIS HARRIS
c/o SG Cowen & Co., LLC
1221 Avenue of the Americas
New York, New York 10020
Dear Sirs:
1.
INTRODUCTORY. Lions Gate Entertainment Inc., a Delaware
corporation
(the "Issuer"), proposes to sell, pursuant
to the terms of this Agreement, to
the several initial purchasers named in
Schedule A hereto (the "Initial
Purchasers," or, each, an "Initial
Purchaser"), $150,000,000 aggregate principal
amount of its 3.625% Convertible Senior
Subordinated Notes Due 2025 (the "Firm
Notes"). In addition, the Issuer proposes
to grant to the Initial Purchasers the
option to purchase from the Issuer some or
all of the Option Notes (as defined
in Section 8 below). The Firm Notes and the
Option Notes are hereinafter
collectively sometimes referred to as the
"Notes." The Notes will have the terms
and provisions that are described in the
Memorandum (as defined below) under the
heading "Description of the Notes" and are
to be issued pursuant to an Indenture
dated as of February 24, 2005 (the
"Indenture") to be entered into among the
Issuer, Lions Gate Entertainment Corp., a
British Columbia corporation (the
"Company") and J. P. Morgan Trust Company,
National Association, as trustee (the
"Trustee"). Payment of principal and
interest on the Notes will be fully and
unconditionally guaranteed, jointly and
severally, on a senior subordinated
basis (the "Guarantee") by the Company.
Subject to certain conditions, the Notes
will be convertible into common shares, no
par value, of the Company (the
"Common Shares").
The Notes
will be offered and sold to the Initial Purchasers without
being
registered under the Securities Act of
1933, as amended (together with the rules
and regulations promulgated thereunder, the
"Securities Act"), in reliance upon
an exemption therefrom. The Issuer has
prepared a preliminary offering
memorandum dated February 17, 2005 (the
"Preliminary Offering Memorandum") and
will prepare an offering memorandum dated
the date hereof (the "Offering
Memorandum" and, together with the
Preliminary Offering Memorandum, the
"Memorandum") setting forth information
concerning the Issuer, the Company and
the Notes. The Memorandum will incorporate
by reference the Company's (i) Annual
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Report on Form 10-K and 10-K/A for the year
ended March 31, 2004, (ii) Quarterly
Reports on Form 10-Q for the quarters ended
June 30, 2004, September 30, 2004
and December 31, 2004, (iii) Proxy
Statement for the annual meeting of
shareholders of the Company held on
September 14, 2004 and (iv) Current Reports
on Form 8-K or Form 8-K/A filed with the
Commission (as defined below) on
September 28, 2004, October 4, 2004,
December 13, 2004, January 21, 2005,
February 9, 2005 and February 18, 2005
(other than information in the documents
that is deemed not to be filed with the
Commission) (all such documents listed
in clauses (i) through (iv) referred to
herein as the "Incorporated Documents").
Copies of the Preliminary Offering
Memorandum have been, and copies of the
Offering Memorandum will be, delivered by
the Issuer to the Initial Purchasers
pursuant to the terms of this Agreement.
Any references herein to the Memorandum
shall be deemed to include all amendments
and supplements thereto and the
Incorporated Documents and any amendments
thereto, unless otherwise noted. The
Issuer hereby confirms that it has
authorized the use of the Memorandum in
connection with the offering and resale of
the Notes by the Initial Purchasers
in accordance with Section 3.
Holders of
the Notes (including the Initial Purchasers and their direct
and indirect transferees) will be entitled
to the benefits of a Registration
Rights Agreement, among the Company, the
Issuer and the Initial Purchasers (the
"Registration Rights Agreement") pursuant
to which the Company and the Issuer
will agree, among other things, to file a
registration statement on the
appropriate form with the Securities and
Exchange Commission (the "Commission")
registering the Notes and the common shares
of the Company to be issued upon the
conversion thereof under the Securities
Act. Any common shares issued by the
Company to the Issuer in connection with
the conversion of the Notes will be
subject to a four month hold period from
the date of the Contribution Agreement
(as hereinafter defined) and may not be
sold in Canada, including through the
facilities of the Toronto Stock Exchange,
until the expiry of such hold period.
This Agreement, the Notes, the Guarantee,
the Indenture and the Registration
Rights Agreement are hereinafter referred
to collectively as the "Offering
Documents."
2.
REPRESENTATIONS AND WARRANTIES OF THE ISSUER AND THE COMPANY.
The
Issuer and the Company represent and
warrant to, and agree, jointly and
severally with, the several Initial
Purchasers that:
(a) Each of the
Preliminary Offering Memorandum and the Offering
Memorandum, as of its respective date, did not, and on the
Closing Date (as defined below) the Offering Memorandum will
not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading; provided that neither the Issuer nor the Company
makes any representation or warranty as to information
contained in or omitted from the Preliminary Offering
Memorandum or the Offering Memorandum in reliance upon and in
conformity with written information relating to the Initial
Purchasers furnished to the Issuer and the Company by any
Initial Purchaser specifically for inclusion therein, which
information the parties agree is limited to the Initial
Purchasers' Information (as defined in Section 18). Each of
the Preliminary Offering Memorandum and the Offering
Memorandum and any amendment or supplement thereto complied
with or will comply in all material respects with subsection
(d)(4) of Rule 144A promulgated under the Securities Act.
(b) Assuming the
accuracy of the representations and warranties of
the Initial Purchasers contained in Section 3 and their
compliance with the agreements set forth therein, it is not
necessary, in connection with the issuance and sale of the
Notes to the Initial Purchasers and the offer, resale and
delivery of the Notes by the Initial Purchasers in the manner
contemplated by this Agreement and the Offering Memorandum, to
register the Notes under the Securities Act or to qualify the
Indenture under the Trust Indenture Act of 1939, as amended
(the "Trust Indenture Act").
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(c) (i) The
Company's Annual Report on Form 10-K and Form 10-K/A
most recently filed with the Commission (the "Annual Report")
and (ii) the Incorporated Documents, did not, as of their
respective dates (or, when read together with the other
information in the Memorandum), contain any untrue statement
of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. Such
documents, when they were filed with the Commission, conformed
in all material respects to the requirements of the Securities
Exchange
Act of 1934, as amended (the "Exchange Act"), and the
rules and regulations of the Commission thereunder (including
Regulation S-X). Since the date of the filing of the Annual
Report with the Commission, the Company has made all filings
with the Commission required to be made by the Company under
the Exchange Act.
(d) The Company
and each of its subsidiaries (as defined in
Section 15) have been
duly incorporated (or, with respect to
subsidiaries that are not corporations, duly organized) are
validly existing as corporations (or other applicable
entities) in good standing under the laws of their respective
jurisdictions of incorporation (or organization, as
applicable), are duly qualified to do business and are in good
standing as foreign corporations (or other foreign entities,
as applicable) in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have
all power
and authority necessary to own or hold their
respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or
have such power or authority would not reasonably be expected
to have, singularly or in the aggregate, a material adverse
effect on the properties, business, results of operations,
condition (financial or otherwise), or shareholders' equity of
the Company and its subsidiaries, individually or taken as a
whole (a "Material Adverse Effect").
Each of the Company and its subsidiaries has all necessary
material consents, approvals, authorizations, orders,
registrations, qualifications, licenses, filings and permits
of, with and from all judicial, regulatory and other legal or
governmental agencies, bodies or administrative agencies, and
all third parties, foreign and domestic (collectively, the
"Consents"), to own, lease and operate its properties and
conduct its business as it is now being conducted and as
disclosed in the Memorandum and, to the Company's knowledge,
each such Consent is valid and in full force and effect, and
neither the Company nor any of its subsidiaries has received
notice of any
investigation or proceedings which results in
or, if decided adversely to the Company or any of its
subsidiaries, could reasonably be expected to result in, the
revocation of, or imposition of a materially burdensome
restriction on, any Consent. Each of the Company and the
Subsidiaries is in compliance with all applicable laws, rules,
regulations, ordinances, directives, judgments, decrees and
orders, foreign and domestic, except where failure to be in
compliance could not reasonably be expected to have a Material
Adverse Effect.
(e) This
Agreement has been duly authorized, executed and
delivered by the Company and the Issuer.
(f) All
outstanding share capital of the Company has been duly
authorized and validly issued and is fully paid,
non-assessable and free of any preemptive or similar rights
and will conform to any description thereof contained in the
Memorandum.
(g) When the
Common Shares issuable upon conversion of the Notes
are issued in accordance with the terms of the Contribution
Agreement and the Notes, such Common Shares will be duly
authorized and validly issued and will be fully paid,
non-assessable and free of any preemptive or similar rights.
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(h) The Common
Shares issuable upon conversion of the Notes will
be duly reserved on or before the Closing Date by the Company
for issuance.
(i) All the
outstanding shares or other equity interests of each
subsidiary of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and are
owned by the
Company directly or indirectly through one or
more wholly-owned subsidiaries, free and clear of any claim,
lien, encumbrance, security interest, restriction upon voting
or transfer or any other claim of any third party (except for
pledges of shares or other equity interests of certain
subsidiaries pursuant to the Amended and Restated Credit,
Security, Guaranty and Pledge Agreement by and among the
Company, the Issuer, the subsidiaries referred to therein, the
lenders referred to therein and the other parties thereto,
dated as of December 15, 2003, as amended to date) (the
"Credit Agreement").
(j) Prior to the
Closing Date, the Indenture will have been duly
authorized by the Company and the Issuer and, on the Closing
Date, will have been validly executed and delivered by the
Company and the Issuer. When the Indenture has been duly
executed and delivered by the Company and the Issuer (assuming
the due authorization, execution and delivery by the Trustee),
the
Indenture will be the valid and binding agreement of the
Company and the Issuer enforceable against the Company and the
Issuer in accordance with their respective terms except as (i)
the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles
of general applicability. Prior to the Closing Date, the
Contribution Agreement by and between the Company and the
Issuer whereby the Company agrees to contribute the Common
Shares to the Issuer upon conversion of the Notes by any or
all of the holders thereof (the "Contribution Agreement")
shall have been duly authorized by the Company and the Issuer
and validly executed and delivered by the Company and Issuer.
The Contribution Agreement, when executed, will be the valid
and binding agreement of the Company and the Issuer
enforceable against the Company and the Issuer in accordance
with its terms except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) rights of acceleration
and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing
Date, the Indenture will conform in all material respects to
the requirements of the Trust Indenture Act, and the rules and
regulations of the Commission applicable to an indenture which
is qualified thereunder. The Registration Rights Agreement has
been duly and validly authorized by the Company and the Issuer
and (except with respect to the indemnification provisions of
the Registration Rights Agreement, for which no representation
or warranty is made) when duly executed and delivered by the
Company and the Issuer (assuming the due authorization,
execution and delivery by the Initial Purchasers), will
constitute a valid and legally binding obligation of the
Company and the Issuer, enforceable against each of them in
accordance with its terms except that the enforcement thereof
may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally.
(k) Prior to the
Closing Date, the Notes will have been duly
authorized and, on the Closing Date, will have been validly
executed and delivered by the Issuer. When the Notes have been
duly and validly issued, executed and authenticated by the
Trustee in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchasers, the Notes
will be entitled to the benefits of the Indenture and will be
valid and binding obligations of the Issuer, enforceable in
accordance with their terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally and (ii) rights of
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acceleration and
the availability of equitable remedies may be
limited by equitable principles of general applicability.
(l) Prior to the
Closing Date, the Guarantee will have been duly
authorized and, on the Closing Date, will have been validly
executed and delivered by the Company. When the Guarantee has
been issued and executed by the Company, and authenticated by
the Trustee in accordance with the provisions of the
Indenture, and the Notes have been issued by the Issuer and
authenticated by the Trustee in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial
Purchasers, the Notes will be entitled to the benefits of the
Guarantee and the Guarantee will be a valid and binding
obligation of the Company, enforceable in accordance with its
terms except as (i) the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally and (ii)
rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general
applicability.
(m) The
execution, delivery and performance of this Agreement, the
Indenture, the Registration Rights Agreement and the Notes by
the Company and the Issuer and the consummation of the
transactions contemplated hereby and thereby will not (i)
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or the Issuer or
any of their respective subsidiaries is a party or by which
the Company or the Issuer or any of their respective
subsidiaries is bound or to which any of the property or
assets of the Company or the Issuer or any of their respective
subsidiaries is subject, (ii) result in any violation of the
provisions of the charter or by-laws (or other organizational
documents, as applicable) of the Company or the Issuer or any
of their respective subsidiaries or (iii) result in any
violation of any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction
over the Company or the Issuer or any of their respective
subsidiaries or any of their properties or assets, other than,
in the case of each of clauses (i) and (iii), any such
conflict, breach, violation or default that would not,
singularly or in the aggregate, have a Material Adverse
Effect.
(n) No consent,
approval, authorization or order of, or filing or
registration with, any court or governmental agency or body is
required for the execution, delivery and performance by the
Company or the Issuer of this Agreement, the Indenture, the
Registration Rights Agreement, the Notes and the consummation
of the transactions contemplated hereby and thereby, except
(1) as may be required under the Securities Act or the rules
and regulations thereunder in connection with the transactions
contemplated by the Registration Rights Agreement and (2) for
the qualification under the Trust Indenture Act.
(o) Ernst &
Young LLP, who has expressed opinions on the audited
financial statements and related schedules included or
incorporated by reference in the Memorandum, is an independent
public accounting firm as required by the Securities Act and
the Exchange Act.
(p) The
consolidated financial statements, together with the
related notes and schedules included or incorporated by
reference in the Memorandum fairly present the financial
position and the results of operations and changes in
financial position of the Company and its consolidated
subsidiaries and other consolidated entities at the respective
dates or for the respective periods therein specified. Such
financial statements and related notes and schedules have been
prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis except as
may be set forth in the
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Memorandum. The financial statements, together with the
related notes and schedules, included or incorporated by
reference in the Memorandum comply as to form with all
applicable accounting requirements of the Securities Act and
the Securities Act of British Columbia and the rules and
regulations promulgated thereunder (the "BCSA"). No other
financial statements or supporting schedules or exhibits are
required by the Securities Act or the BCSA, as the case may
be, to be included in the Memorandum. The pro forma and as
adjusted financial information and statements included or
incorporated by reference in the Memorandum have been properly
compiled and prepared in accordance with the applicable
requirements of the Securities Act and the Exchange Act and
include all adjustments necessary to present fairly in
accordance with United States generally accepted accounting
principles the pro forma and as adjusted financial position of
the respective entity or entities presented therein at the
respective dates indicated and the results of operations for
the respective periods specified.
(q) Neither the
Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements
included in the Memorandum, any material loss or interference
with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or
decree, otherwise than as set forth in the Memorandum; and,
since such date, other than as set forth in the Memorandum,
there has not been any change in the share capital or
long-term debt of the Company or any of its subsidiaries or
any material adverse change or, to the Company's knowledge,
any development involving a prospective material adverse
change, in or affecting the business, general affairs,
management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries
taken as a whole.
(r) There is no
legal or governmental proceeding pending to which
the Company or the Issuer or any of their respective
subsidiaries is a party or of which any property or assets of
the Company or the Issuer or any of their respective
subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to the Company or the
Issuer or any of their respective subsidiaries, would
reasonably be expected to have a Material Adverse Effect or
would prevent or adversely affect the ability of the Company
or the Issuer to perform its obligations under this Agreement;
and to the best of the Company's and the Issuer's knowledge,
no such proceedings have been threatened or contemplated by
governmental authorities or threatened by others.
(s) None of the
Company or any of its subsidiaries (i) is in
violation of its charter or by-laws (or other organizational
documents, as applicable), (ii) is in default in any respect,
and no event has occurred which, with notice or lapse of time
or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property
or assets is subject or (iii) is in violation in any respect
of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject
except, in the case of each of clauses (ii) and (iii), any
violations or defaults which, singularly or in the aggregate,
would not have a Material Adverse Effect.
(t)
The Company and
each of its subsidiaries possess all licenses,
certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate state,
federal, provincial or foreign regulatory agencies or bodies
which are necessary for the ownership of their respective
properties or the conduct of their respective businesses as
described in the Memorandum, except where any failures to
possess or make the same, singularly or in the aggregate,
would not reasonably be expected to have a Material
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Adverse Effect; neither the Company nor the Issuer has
received any notification of any revocation or modification of
any such license, certificate, authorization or permit and
neither has any reason to believe that any such license,
certificate, authorization or permit will not be renewed;
except where such non-renewal would not have a Material
Adverse Effect.
(u) None of the
Company nor the Issuer, nor any of their
respective subsidiaries is or, after giving effect to the
issuance and sale of the Notes and the application of the
proceeds thereof as described in the Memorandum, will become
an "investment company" within the meaning of the Investment
Company Act of 1940, as amended and the rules and regulations
of the Commission thereunder.
(v) The Company
and its subsidiaries own or possess the right to
use all patents, trademarks, trademark registrations, service
marks, service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets and rights (including all
rights to market, sell, distribute, exhibit, commercially
exploit and otherwise use all material film and television
titles) material to the conduct of their respective
businesses, singularly and in the aggregate, and the Company
is not aware of any claim to the contrary or any challenge by
any other person or entity to the rights of the Company and
its subsidiaries with respect to the foregoing, except any
such claim or challenge that would not have a Material Adverse
Effect. The business of the Company and its subsidiaries as
now conducted and as proposed to be conducted does not and
will not infringe or conflict with any patents, trademarks,
service marks, trade names, copyrights, trade secrets,
licenses or other intellectual property or franchise right of
any
person, except any such claim or challenge that would not
have a Material Adverse Effect. No claim has been made against
the Company or any of its subsidiaries alleging the
infringement by the Company or any of its subsidiaries of any
patent, trademark, service mark, trade name, copyright, trade
secret, license in or other intellectual property right or
franchise right of any person, except any such claim or
challenge that would not have a Material Adverse Effect.
(w) The Company
and each of its subsidiaries have good and
marketable title in fee simple to, or have valid rights to
lease or otherwise use, all items of real or personal
property, whether tangible or intangible, which are material
to the business of the Company and its subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances,
claims and defects which would reasonably be expected to have
a Material Adverse Effect.
(x) No labor
disturbance by the employees of the Company or any of
its subsidiaries exists or, to the best of the Company's
knowledge, is imminent which would reasonably be expected to
have a Material Adverse Effect. The Company is not aware that
any key employee of the Company plans to terminate employment
with the Company.
(y) No
"prohibited transaction" (as defined in Section 406 of the
Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations
thereunder ("ERISA"), or Section 4975 of the Internal Revenue
Code of 1986, as amended from time to time (the "Code")) or
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of
ERISA (other than events with respect to which the 30-day
notice requirement under Section 4043 of ERISA has been
waived) has occurred with respect to any employee benefit plan
which would reasonably be expected to have a Material Adverse
Effect; each employee benefit plan is in compliance in all
material respects with applicable law, including ERISA and the
Code; the Company has not incurred and does not expect to
incur any material liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any
"pension plan"; and each "pension plan" (as defined in ERISA)
for
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which the Company would have any liability that is intended to
be qualified under Section 401(a) of the Code is so qualified
in all material respects and nothing has occurred, whether by
action or by failure to act, which could cause the loss of
such qualification.
(z) There has
been no storage, generation, transportation,
handling, treatment, disposal, discharge, emission, or other
release of any kind of toxic or other wastes or other
hazardous substances by, due to, or caused by the Company or
any of its subsidiaries (or, to the best of the Company's
knowledge, any other entity for whose acts or omissions the
Company or any of its subsidiaries is or may be liable) upon
any of the property now or previously owned or leased by the
Company or any of its subsidiaries, or upon any other
property, in violation of any statute or any ordinance, rule
(including rule of common law), regulation, order, judgment,
decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation,
order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have,
singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; there has been no
disposal, discharge, emission or other release of any kind
onto such property or into the environment surrounding such
property of any toxic
or other wastes or other hazardous
substances with respect to which the Company or any of its
subsidiaries have knowledge, except for any such disposal,
discharge, emission, or other release of any kind which would
not have, singularly or in the aggregate with all such
discharges and other releases, a Material Adverse Effect.
(aa) Each of the
Company and each of its Significant Subsidiaries
(as defined in Section 15 of this Agreement) (i) has filed all
necessary federal, state, provincial and foreign income and
franchise tax returns, (ii) has paid all federal, state,
provincial, local and foreign taxes due and payable for which
it is liable, and (iii) does not have any tax deficiency or
claims outstanding or assessed or, to the best of the
Company's knowledge, proposed against it which such deficiency
or claim could reasonably be expected to have a Material
Adverse Effect. Each of the Company's subsidiaries (A) has
filed all necessary federal, state, provincial and foreign
income and franchise tax returns, (B) has paid all federal
state, provincial, local and foreign taxes due and payable for
which it is liable, and (C) does not have any tax deficiency
or claims outstanding or assessed or, to the best of the
Company's knowledge, proposed against it which, in the case of
any of (A), (B) or (C), could reasonably be expected to have a
Material Adverse Effect. The accruals and reserves on the
books and records of the Company or any of its subsidiaries in
respect of tax liabilities for any taxable period not finally
determined are adequate to meet any assessments and related
liabilities for any such period and, since March 31, 2004, the
Company and its subsidiaries have not incurred any liability
for taxes other than in the ordinary course of business.
(bb) The Company and
each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as the
Company reasonably believes is adequate for the conduct of
their respective businesses and the value of their respective
properties and customary for companies engaged in similar
businesses in similar industries.
(cc) Except as
described in the Memorandum, the Company and each of
its subsidiaries maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's
general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial
statements in conformity with United States generally accepted
accounting principles
and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv)
the recorded
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accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with
respect to any differences.
(dd)
The minute books of
the Company, the Principal Canadian
Subsidiary, LG Pictures Inc., Film Holdings Co. and each of
the Principal U.S. Subsidiaries have been made available to
the Initial Purchasers and counsel for the Initial Purchasers,
and such books (i) contain a complete summary in all material
respects of all meetings and actions of the board of directors
(including each board committee) (or comparable organizational
body, as applicable) and shareholders (or equity holders, as
applicable) of the Company and each of such subsidiaries since
the time of its respective incorporation (or other
organization, as applicable) through the date of the latest
meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes.
For purposes of this Agreement, the "Principal U.S.
Subsidiaries" are Lions Gate Entertainment Inc., Lions Gate
Films Inc., Lions Gate Television Inc., Artisan Home
Entertainment Inc., Artisan Pictures Inc. and Artisan
Releasing Inc., and the "Principal Canadian Subsidiary" is
Lions Gate Television Corp.
(ee) There is no
franchise, lease, contract, agreement or document
required by BCSA or the Securities Act to be described in the
Memorandum which is not described therein as required; and all
descriptions of any such franchises, leases, contracts,
agreements or documents contained in the Memorandum are
accurate and complete descriptions of such documents in all
material respects. No such franchise, lease, contract or
agreement has been suspended or terminated for convenience or
default by the Company or any of the other parties thereto
except as would not, singularly or in the aggregate, have a
Material Adverse Effect, and the Company has not received
notice and has no other knowledge of any such pending or
threatened suspension or termination, except for such pending
or threatened suspensions or terminations that would not
reasonably be expected to, singularly or in the aggregate,
have a Material Adverse Effect.
(ff) No relationship,
direct or indirect, exists between or among
the Company or the Issuer on the one hand, and the directors,
officers, shareholders, customers or suppliers of the Company
or the Issuer on the other hand, which is required to be
described in the Memorandum and which is not so described.
(gg) Except as
described in the Memorandum, there are no
outstanding subscriptions, rights, warrants, calls or options
to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale
or issuance of, any shares of capital stock of or other equity
or other ownership interest in the Company or any of its
subsidiaries.
(hh) None of the
Company or any of its subsidiaries owns any
"margin securities" as that term is defined in Regulation U of
the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), and none of the proceeds of the sale
of the Notes will be used, directly or indirectly, for the
purpose of purchasing or carrying any margin security, for the
purpose of reducing or retiring any indebtedness which was
originally incurred to purchase or carry any margin security
or for any other purpose which might cause any of the Notes or
Common Shares to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(ii) None of the
Company nor the Issuer nor any of their respective
subsidiaries is a party to any contract, agreement or
understanding with any person or entity that would give rise
to a valid claim against the Company or the Issuer or any of
their respective subsidiaries or the Initial Purchasers for a
brokerage commission, finder's fee or like payment in
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connection with the issuance, purchase or sale of the Notes or
the issuance of the Guarantee.
(jj) No
forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Memorandum has been made or reaffirmed
without a reasonable basis or has been disclosed other than in
good faith.
(kk) To the knowledge
of the Company and the Issuer, no action has
been taken and no law, statute, rule or regulation or order
has been enacted, adopted or issued by any governmental agency
or body
which prevents the execution, delivery and performance
of any of this Agreement, the Indenture, the Registration
Rights Agreement and the Notes, the issuance of the Notes or
suspends the sale of the Notes in any jurisdiction referred to
in Section 4(i); and no injunction, restraining order,
decision, decree or other order or relief of any nature by a
federal or state court or other tribunal of competent
jurisdiction has been issued with respect to the Company or
any of its subsidiaries which would prevent or suspend the
issuance or sale of the Notes in any jurisdiction heretofore
designated pursuant to Section 4(i).
(ll) Neither the
Company nor any of its affiliates has, directly or
through any agent, sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as
such term is defined in the Securities Act), which is or will
be integrated with the sale of the Notes in a manner that
would require registration of the Notes under the Securities
Act.
(mm) When the Notes
are issued and delivered pursuant to this
Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A under the Securities Act) as any security
of the Company or the Issuer that is listed on a national
securities exchange registered under Section 6 of the Exchange
Act or that is quoted in a United States automated
inter-dealer quotation system.
(nn) No form of
general solicitation or general advertising (as
defined in Regulation D under the Securities Act) was used by
the Company or the Issuer or any of its representatives in
connection with the offer and sale of the Notes contemplated
hereby, including, but not limited to, articles, notices or
other communications published in any newspaper, magazine, or
similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any
general solicitation or general advertising. No securities of
the same class as the Notes have been issued and sold by the
Company or the Issuer within the six-month period immediately
prior to the date hereof. Neither the Company nor the Issuer
have distributed and, prior to the later to occur of (i) the
Closing Date and (ii) completion of the distribution of the
Notes, will not distribute any offering material in connection
with the offering and sale of the Notes other than the
Memorandum.
(oo) No registration
under the Securities Act or the BCSA of the
Notes is required for the sale of the Notes to the Investors
as contemplated hereby.
(pp) Neither the
Company nor the Issuer nor any of the Company's or
the Issuer's subsidiaries or affiliates (within the meaning of
Rule 144A under the Securities Act) nor, to the Company's
knowledge, any of its officers or directors has taken,
directly or indirectly, any action designed to, or that might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company or
the Issuer or any of the Company's or the Issuer's
subsidiaries to facilitate the sale or resale of the Notes.
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<PAGE>
(qq) The Information
(as defined in Section 16 of this Agreement),
and any other information relating to the Company or the
Issuer provided to the Initial Purchasers or their counsel in
connection with the offering and sale of the Notes, will not
contain any untrue statement of a material fact or omit to
state any material fact necessary to make the statements
contained therein, in the light of circumstances under which
they were made, not misleading.
(rr) The Company is in
compliance with all applicable requirements
of the New York Stock Exchange, including corporate governance
requirements. The Company is in compliance with all applicable
requirements of the Toronto Stock Exchange, including
corporate governance requirements. The Company is subject to
the reporting requirements of Section 13 or 15(d) of the
Exchange Act and files reports with the Commission on the
EDGAR System. The Company's common shares (the "Common
Shares") are registered pursuant to Section 12(b) of the
Exchange Act and the outstanding Common Shares are listed on
the New York Stock Exchange, and the Company has taken no
action designed to, or likely to have the effect of,
terminating the registration of the Common Shares under the
Exchange Act or de-listing the Common Shares from the New York
Stock Exchange, nor has the Company received any notification
that the Commission or the New York Stock Exchange is
contemplating terminating such registration or listing.
(ss) The Company and,
to the Company's knowledge, each of its
directors and officers, in their capacities as such, are in
compliance in all material respects with all applicable
provisions of the Sarbanes-Oxley Act of 2002 and all rules and
regulations promulgated thereunder or implementing the
provisions thereof that are currently in effect.
(tt) None of the
Company, the Issuer, any Subsidiary and, to the
Company's and the Issuer's knowledge, any of their respective
employees or agents has at any time during the last five years
(i) made any unlawful contribution to any candidate for
foreign office, or failed to disclose fully any contribution
in violation of law, or (ii) made any payment to any federal
or state governmental officer or official, or other person
charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United
States of any jurisdiction thereof.
(uu) Each of the
Company and the Issuer acknowledges that the
Initial Purchasers and counsel to the Initial Purchasers will
rely upon the accuracy and truth of the foregoing
representations and warranties and their compliance with their
agreements contained in this Agreement and hereby consents to
such reliance.
(vv) The statistical,
industry-related and market-related data
included in the Memorandum are based on or derived from
sources which the Issuer and the Company reasonably and in
good faith believe to be reliable and accurate and such data
agree with the sources from which they are derived.
3.
PURCHASE, SALE AND DELIVERY OF OFFERED NOTES.
(a) On the basis
of the representations, warranties and agreements
herein contained, but subject to the terms and conditions
herein set forth, the Company agrees to issue and sell to each
Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a
purchase price of 97.25% of the principal amount thereof, plus
accrued interest, if any, from February 24, 2005 to the First
Closing Date (if the First Closing Date occurs after February
24, 2005), the principal amount of Notes set forth opposite
the name of such Initial Purchaser on Schedule A hereto. The
Company
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<PAGE>
shall not be obligated to deliver any of the Notes except upon
payment for all the Notes to be purchased as provided herein.
Delivery of and payment for the Notes shall be made at the
offices of Paul, Hastings, Janofsky & Walker LLP, 75 East
55th
Street, New York, NY 10022, or at such other place as shall be
agreed upon by SG Cowen & Co., LLC ("SG Cowen"), J.P.
Morgan
Securities Inc. ("JP Morgan") and the Company, at 9:00 A.M.,
New York City time, on February 24, 2005, or at such other
date or time as shall be agreed upon by SG Cowen, JP Morgan
and the Company (such date and time being referred to herein
as the "Closing Date").
The Notes to be purchased by each Initial Purchaser hereunder
and sold to Qualified Institutional Buyers (as defined below)
shall be represented by one or more global securities in
book-entry form which will be deposited by or on behalf of the
Company with The Depository Trust Company or its designated
custodian. On the Closing Date, the Company shall deliver or
cause to be delivered the Notes to SG Cowen for the account of
each Initial Purchaser against payment to or upon the order of
the Company of the purchase price by wire transfer payable in
Federal (same day) funds by causing The Depository Trust
Company to credit the Notes to the account of SG Cowen at The
Depository Trust Company. If applicable, the Company shall
make the certificates representing the Notes available for
inspection by SG Cowen and JP Morgan at least twenty-four
hours prior to the Closing Date. Delivery at the time and
place specified pursuant to this Agreement is a further
condition of the obligation of each Initial Purchaser
hereunder.
(b) The Initial
Purchasers have advised the Company that they
propose to offer the Notes for resale upon the terms and
subject to the conditions set forth herein and in the
Memorandum. Each Initial Purchaser, severally and not jointly,
represents and warrants to, and agrees with, the Company that
(i) it is purchasing the Notes pursuant to a private sale
exempt from registration under the Securities Act, (ii) it has
not solicited offers for, or offered or sold, and will not
solicit offers for, or offer or sell, the Notes by means of
any form of general solicitation or general advertising within
the meaning of Rule 502(c) of Regulation D under the
Securities Act ("Regulation D") or in any manner involving a
public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit
offers for the Notes only from, and has offered or sold and
will offer, sell or deliver the Notes, as part of its initial
offering, only to persons whom it reasonably believes to be
qualified institutional buyers ("Qualified Institutional
Buyers") as defined in Rule 144A under the Securities Act, or
if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or
agent, only when such person has represented to it that each
such
account is a Qualified Institutional Buyer to whom notice
has been given that such sale or delivery is being made in
reliance on Rule 144A and in each case, in transactions in
accordance with Rule 144A. Each Initial Purchaser, severally
and not jointly, agrees that, prior to or simultaneously with
the confirmation of sale by such Initial Purchaser to any
purchaser of any of the Notes purchased by such Initial
Purchaser from the Issuer pursuant hereto, such Initial
Purchaser shall furnish to that purchaser a copy of the
Memorandum (and any amendment or supplement thereto that the
Issuer shall have furnished to such Initial Purchaser prior to
the date of such confirmation of sale). In addition to the
foregoing, each Initial Purchaser acknowledges and agrees that
the Company and, for purposes of the opinions to be delivered
to the Initial Purchasers pursuant to Sections 6(d) and (u),
counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the
representations and warranties of the Initial Purchasers and
their compliance with their agreements contained in this
Section 3, and each Initial Purchaser hereby consents to such
reliance.
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<PAGE>
(c) The Company
acknowledges and agrees that the Initial
Purchasers may sell Notes to any affiliate of an Initial
Purchaser and that any such affiliate may sell Notes purchased
by it to an Initial Purchaser.
(d) The Initial
Purchasers acknowledge and agree that they may not
sell the Notes to residents of Canada.
4. FURTHER
AGREEMENTS OF THE COMPANY AND THE ISSUER. The Company
and the Issuer jointly and severally agree
with each of the several Initial
Purchasers:
(a) To advise
the Initial Purchasers promptly and, if requested,
confirm such advice in writing, of the happening of any event
which makes any statement of a material fact made in the
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Offering Memorandum (as amended
or supplemented from time to time) in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; to advise the Initial
Purchasers promptly of any order preventing or suspending the
use of the Preliminary Offering Memorandum or the Offering
Memorandum, of any suspension of the qualification of the
Notes or related Guarantee under any state securities or Blue
Sky laws for offering or sale in any jurisdiction and of the
initiation or threatening of any proceeding for any such
purpose; and to use its reasonable best efforts to prevent the
issuance of any such order preventing or suspending the use of
the Preliminary Offering Memorandum or the Offering Memorandum
or suspending any such qualification and, if any such
suspension is issued, to obtain the lifting thereof at the
earliest possible time.
(b) To file
promptly all reports and any definitive proxy or
information statements required to be filed by the Company and
the Issuer with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of the Memorandum and for so long as the delivery of an
offering memorandum is required in connection with the
issuance or sale of the Notes.
(c) To advise
the Initial Purchasers, promptly after either the
Company or the Issuer receives notice thereof, of the
suspension of the qualification of the Notes for issuance or
sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the
British Columbia Securities Commission (the "BCSC") or the
Commission with respect to the issuance and sale of the Notes.
(d) To furnish
promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many
copies of the Preliminary Offering Memorandum and the Offering
Memorandum (and any amendments or supplements thereto) as may
be reasonably requested.
(e) Prior to
making any amendment or supplement to the Offering
Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to
effect any such amendment or supplement to which the Initial
Purchasers shall reasonably and promptly object by notice to
the Company after a reasonable period to review.
(f) To make
generally available to the Company's shareholders as
soon as practicable, but in any event not later than eighteen
months after the date hereof, an earnings statement of the
Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Securities Act (including,
at the option of the Company, Rule 158).
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<PAGE>
(g) If, at any
time prior to completion of the resale of the Notes
by the Initial Purchasers, any event shall occur or condition
exist as a result of which it is necessary, in the opinion of
counsel for the Initial Purchasers or counsel for the Company,
to amend or supplement the Offering Memorandum in order that
the Offering Memorandum will not include an untrue statement
of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances existing at the time it is delivered to a
purchaser, not misleading, or if it is necessary to amend or
supplement the Offering Memorandum to comply with applicable
law, to promptly prepare such amendment or supplement as may
be necessary to correct such untrue statement or omission or
so that the Offering Memorandum, as so amended or
supplemented, will comply with applicable law.
(h) For so long
as the Notes are outstanding and are "restricted
securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Notes and
prospective purchasers of the Notes designated by such
holders, upon request of such holders or such prospective
purchasers, the information required to be delivered pursuant
to Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to and in compliance with Section 13
or 15(d) of the Exchange Act (the foregoing agreement being
for the benefit of the holders from time to time of the Notes
and prospective purchasers of the Notes designated by such
holders).
(i) To promptly
take from time to time such actions as the Initial
Purchasers may reasonably request to qualify the Notes for
offering and sale under the securities or Blue Sky laws of
such jurisdictions as the Initial Purchasers may designate and
to continue such qualifications in effect for so long as
required for the distribution of the Notes; provided that the
Company and the Issuer shall not be obligated to qualify as
foreign corporations in any jurisdiction in which they are not
so qualified or to file a general consent to service of
process in any jurisdiction.
(j) For so long
as any of the Notes remain outstanding, the
Company and the Issuer will furnish to the Initial Purchasers
upon their request (i) as soon as they are available, copies
of all reports and other communications (financial or
otherwise) furnished by the Company or the Issuer to the
Trustee or to the holders of the Notes, (ii) as soon as they
are available, copies of all reports or other communications
furnished to shareholders of the Company and (iii) as soon as
they are available, copies of any reports and financial
statements furnished or filed with the Commission pursuant to
the Exchange Act, furnished or filed in Canada through the
System for Electronic Document Analysis and Retrieval (SEDAR),
or furnished or filed with any national securities exchange or
automatic quotation system on which the Notes may be listed or
quoted.
(k) Without the
prior written consent of SG Cowen and JP Morgan,
during the period beginning from the date hereof and
continuing to and including ninety (90) days after the date of
the Offering Memorandum, the Company will not offer for sale,
sell, contract to sell or otherwise dispose of directly or
indirectly, or file a registration statement for, or announce
any offering of, any of the Common Shares, the Notes, or
securities convertible into or exercisable or exchangeable for
Common Shares or the Notes or any securities of the Company or
the Issuer that are substantially similar to the Notes (other
than (1) the filing of a registration statement for the resale
of the Common Shares issuable upon conversion of the Notes or
issuable upon conversion of convertible notes issued by the
Issuer prior to the date hereof, (2) the issuance of shares
pursuant to employee benefit plans, qualified option plans or
other employee compensation plans existing on the date hereof
(including the filing of a registration statement on Form S-8
covering such shares) or pursuant to currently outstanding
options, warrants or rights and (3) the issuance and
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<PAGE>
sale of up to $4,000,000 of the Common Shares in connection
with an acquisition of capital stock or assets of a third
party). The Company will cause each officer listed in Annex I
to furnish to the Initial Purchasers, prior to the Closing
Date, a letter, substantially in the form of Exhibit I hereto
(with such changes as may be approved by SG Cowen and JP
Morgan), pursuant to
which each such person shall agree not to
directly or indirectly offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of any Common Shares,
or securities convertible into or exercisable or exchangeable
for Common Shares, for a period continuing to and including
forty-five (45) days after the date of the Offering
Memorandum, without the prior written consent of each of SG
Cowen and JP Morgan. The Company will cause each officer
listed in Annex II to furnish to the Initial Purchasers, prior
to the Closing Date, a letter, substantially in the form of
Exhibit II hereto (with such changes as may be approved by SG
Cowen and JP Morgan), pursuant to which each such person shall
agree not to (except as permitted under such letter) directly
or indirectly offer, sell, assign, transfer, pledge, contract
to sell, or otherwise dispose of any Common Shares, or
securities convertible into or exercisable or exchangeable for
Common Shares, for a period ending ninety (90) days after the
date of the Offering Memor
