EXHIBIT 10.1
LIONS GATE ENTERTAINMENT CORP.
LIONS GATE ENTERTAINMENT INC.
3.625% CONVERTIBLE SENIOR SUBORDINATED NOTES DUE 2025
PURCHASE AGREEMENT
February 18, 2005
▇▇ ▇▇▇▇▇ & CO., LLC
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
JEFFERIES & CO.
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
▇▇▇▇▇▇▇▇▇▇▇ & CO.
▇▇▇▇▇ PARTNERS
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o ▇▇ ▇▇▇▇▇ & Co., LLC
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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 ▇. ▇. ▇▇▇▇▇▇ 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 ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇) 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
6
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 ▇▇▇▇ 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 ▇▇▇▇, 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
9
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.
10
(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
▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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
11
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, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, ▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or at such other place as shall be
agreed upon by ▇▇ ▇▇▇▇▇ & Co., LLC ("▇▇ ▇▇▇▇▇"), ▇.▇. ▇▇▇▇▇▇
Securities Inc. ("▇▇ ▇▇▇▇▇▇") 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 ▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
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 ▇▇ ▇▇▇▇▇ 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 ▇▇ ▇▇▇▇▇ at The
Depository Trust Company. If applicable, the Company shall
make the certificates representing the Notes available for
inspection by ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ 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.
12
(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).
13
(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 ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇,
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
14
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 ▇▇ ▇▇▇▇▇ and ▇▇
▇▇▇▇▇▇), 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 ▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇. 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 ▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇), 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 Memorandum, without the prior written
consent of each of ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇.
(l) To assist the Initial Purchasers in arranging for the Notes to
be designated Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market securities in accordance
with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. ("NASD") relating to
trading in the PORTAL Market and for the Notes to be eligible
for clearance and settlement through The Depository Trust
Company ("DTC").
(m) Not to, and to cause its affiliates not to, sell, offer for
sale or solicit offers to buy or otherwise negotiate in
respect of any security (as such term is defined in the
Securities Act) which could be integrated with the sale of the
Notes in a manner which would require registration of the
Notes under the Securities Act.
(n) Not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their
behalf to, solicit any offer to buy or offer to sell the Notes
by means of any form of general solicitation or general
advertising within the meaning of Regulation D or in any
manner involving a public offering within the meaning of
Section 4(2) of the Securities Act; and not to offer, sell,
contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such
offer, sale, contract or disposition would cause the exemption
afforded by Section 4(2) of the Securities Act to cease to be
applicable to the offering and sale of the Notes as
contemplated by this Agreement and the Offering Memorandum.
(o) During the period from the Closing Date until two years after
the Closing Date, without the prior written consent of the
Initial Purchasers, not to, and not permit any of its
affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Notes that have been reacquired by them
for so long as the Notes are "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act, except
for Notes purchased by the Company or any of its subsidiaries
and resold in a transaction registered under the Securities
Act.
(p) Prior to the Closing Date, to furnish to the Initial
Purchasers, as soon as they have been prepared and reviewed by
the Company's independent auditors, copies of any unaudited
quarterly consolidated financial statements of the Company for
any periods subsequent to
15
the periods covered by the financial statements appearing or
incorporated by reference in the Offering Memorandum.
(q) Prior to the Closing Date, except for routine communications
in the ordinary course of business and consistent with the
past practices of the Company, the Company and the Issuer will
not issue any press release or other communication directly or
indirectly or hold any press conference with respect to the
Company, the Issuer, their respective condition, financial or
otherwise, or earnings, business affairs or business
prospects, without the prior written consent of the Initial
Purchasers, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchasers,
such press release or communication is required by law or by
an applicable stock exchange.
(r) The Company will use its reasonable best efforts to obtain
conditional approval prior to the Closing Date of the listing
on each of the New York Stock Exchange and the Toronto Stock
Exchange of the Common Shares issuable upon conversion of the
Notes in accordance with the requirements of each such
exchange.
(s) To apply the net proceeds from the sale of the Notes as set
forth in the Offering Memorandum under the heading "Use of
Proceeds."
(t) The Company will not, for so long as the Notes are
outstanding, be or become, or be or become owned by, an
open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be
registered under Section 8 of the Investment Company Act, and
will not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not
registered thereunder.
(u) In connection with the offering of the Notes, to make its
officers, employees, independent accountants and legal counsel
reasonably available upon request by ▇▇ ▇▇▇▇▇ and/or ▇▇
▇▇▇▇▇▇.
(v) To not take any action prior to the execution and delivery of
the Indenture which, if taken after such execution and
delivery, would have violated any of the covenants contained
in the Indenture.
5. PAYMENT OF EXPENSES. The Company and the Issuer agree with the
Initial Purchasers to pay (a) the costs incident to the authorization, issuance,
sale, preparation and delivery of the Notes and any taxes payable in that
connection; (b) the costs incident to the preparation, printing and distribution
of the Preliminary Offering Memorandum, Offering Memorandum any amendments,
supplements and exhibits thereto, the costs of printing, reproducing and
distributing the other documents contemplated hereby and by the Memorandum by
mail, telex or other means of communications; (c) all expenses incurred in
connection with the application for quotation of the Notes on the PORTAL Market
and the approval of the Notes for book-entry transfer by the Depository Trust
Company; (d) any applicable listing or other fees; (e) the fees and expenses of
qualifying the Notes under the securities or Blue Sky laws of the several
jurisdictions as provided in Section 4(i) and of preparing, printing and
distributing Blue Sky Memoranda and Legal Investment Surveys (including related
fees and expenses of counsel to the Initial Purchasers); (f) all fees and
expenses of the Trustee or any agent thereof; (g) any fees charged by securities
rating services for rating the Notes; (h) the transportation and other
"roadshow" expenses incurred by or on behalf of the Company representatives in
connection with presentations to and related communications with prospective
purchasers of the Notes; and (i) all other costs and expenses incident to the
performance of the obligations of the Company and the Issuer under this
Agreement (including, without limitation, the fees and expenses of the Company's
and the Issuer's counsel and the Company's and the Issuer's independent
accountants); provided that, except as otherwise provided in this Section 5 and
in Section 10, the Initial Purchasers shall pay their own costs and expenses,
16
including the fees and expenses of their counsel, any transfer taxes on the
Notes which they may sell and the expenses of advertising any offering of the
Notes made by the Initial Purchasers.
6. CONDITIONS OF INITIAL PURCHASERS' OBLIGATIONS. The respective
obligations of the several Initial Purchasers hereunder are subject to
satisfaction (or waiver by ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ in their respective sole
discretion) of the following conditions on or prior to the Closing Date:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the
Initial Purchasers as promptly as practicable on or following
the date of this Agreement or at such other date and time as
to which the Initial Purchasers may agree; and no stop order
suspending the sale of the Notes or Guarantee in any
jurisdiction shall have been issued and no proceeding for that
purpose shall have been commenced or shall be pending or
threatened.
(b) None of the Initial Purchasers shall have discovered and
disclosed to the Company or to the Issuer on or prior to the
Closing Date that the Offering Memorandum or any amendment or
supplement thereto contains an untrue statement of a fact
which, in the opinion of counsel for the Initial Purchasers,
is material or omits to state any fact which, in the opinion
of such counsel, is material and is required to be stated
therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of the Offering
Memorandum and the legal matters relating to this Agreement
and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the
Initial Purchasers, and the Company and the Issuer shall have
furnished to such counsel all documents and information that
they may reasonably request to enable them to pass upon such
matters.
(d) On the Closing Date, the Initial Purchasers shall have
received the opinion in form and substance satisfactory to the
Initial Purchasers and counsel to the Initial Purchasers,
dated as of the Closing Date and addressed to the Initial
Purchasers, of (i) O'Melveny & ▇▇▇▇▇ LLP, United States
counsel for the Company and the Issuer, in the form of Annex
III hereto, and (ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP, Canadian counsel for
the Company and the Issuer, substantially in the form of Annex
IV hereto.
(e) The Initial Purchasers shall have received from each of Ernst
& Young LLP and PricewaterhouseCoopers LLP comfort letters
dated each of the date hereof and the Closing Date, in form
and substance reasonably satisfactory to counsel for the
Initial Purchasers.
(f) The representations and warranties of the Company and the
Issuer contained in this Agreement shall be true and correct
on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date; the statements of
the Company's and the Issuer's officers made pursuant to any
certificate delivered in accordance with the provisions hereof
shall be true and correct on and as of the date made and on
and as of the Closing Date; the Company and the Issuer shall
have performed all applicable covenants and agreements and
satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date; and
subsequent to the date of the most recent financial statements
in such Memorandum there shall have been no event or
development, and no information shall have become known, that,
individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect.
17
(g) The sale of the Notes shall not be enjoined (temporarily or
permanently) on the Closing Date.
(h) On the Closing Date, the Initial Purchasers shall have
received a letter (the "bring-down letter") from each of Ernst
& Young LLP and PricewaterhouseCoopers LLP, respectively,
addressed to the Initial Purchasers and dated the Closing Date
confirming, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information
is given in the Offering Memorandum as of a date not more than
three business days prior to the date of the bring-down
letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered
by its letter delivered to the Initial Purchasers concurrently
with the execution of this Agreement pursuant to Section 6(e).
(i) The Company shall have furnished to the Initial Purchasers a
certificate, dated the Closing Date, of its Chairman of the
Board, its President or a Vice President and its Chief
Financial Officer stating that (i) such officers have
carefully examined the Offering Memorandum and, in their
opinion, the Offering Memorandum, as of its date, did not
include any untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii)
since the date of the Offering Memorandum no event has
occurred which should have been set forth in a supplement or
amendment to the Offering Memorandum, (iii) to the best of
their knowledge after reasonable investigation, as of the
Closing Date, the representations and warranties of the
Company and the Issuer in this Agreement are true and correct
and each of the Company and the Issuer has complied with all
agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing
Date, and (iv) subsequent to the date of the most recent
financial statements included in the Offering Memorandum,
there has been no material adverse change in the financial
position or results of operation of the Company and its
subsidiaries, or any change, or any development including a
prospective change, in or affecting the condition (financial
or otherwise), results of operations or business of the
Company and its subsidiaries taken as a whole, except as set
forth in the Offering Memorandum.
(j) Subsequent to the date hereof, none of the Company or any of
its subsidiaries shall have sustained any loss or interference
with respect to its business or properties from fire, flood,
hurricane, earthquake, accident or other calamity, whether or
not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or from any legal or governmental
proceeding, order or decree, which loss or interference,
individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect.
(k) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued
by any governmental agency or body which would, as of the
Closing Date, prevent the issuance or sale of the Notes; and
no injunction, restraining order or order of any other nature
by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent
the issuance or sale of the Notes.
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading, including any negative outlook, shall have
occurred or been threatened to occur in the rating accorded
the Company's debt securities by any "nationally recognized
statistical rating organization," as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the
Securities Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review
(other than an announcement with positive implications of a
possible upgrading) its rating of any of the Company's debt
securities.
18
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange
or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or
such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having
jurisdiction; (ii) a banking moratorium shall have been
declared by Federal or state authorities; (iii) the United
States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United
States or there shall have been a declaration of a national
emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic,
political or financial conditions (or the effect of
international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of
▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇, impracticable or inadvisable to
proceed with the sale or delivery of the Notes on the terms
and in the manner contemplated in the Offering Memorandum.
(n) The Indenture shall have been duly executed and delivered by
the Company, the Issuer, and the Trustee, and the Notes and
the Guarantee thereof shall have been duly executed and
delivered by the Company and duly authenticated by the
Trustee.
(o) The Issuer, the Company and the Initial Purchasers shall have
entered into the Registration Rights Agreement and the Initial
Purchasers shall have received counterparts thereof, conformed
as executed, and such agreement shall be in full force and
effect.
(p) Prior to the Closing Date, the Required Lenders (as defined in
the Credit Agreement) shall have consented to the issuance of
the Notes in accordance with the terms of the Credit
Agreement.
(q) On or prior to the Closing Date, the Company and the Issuer
shall have entered into the Contribution Agreement, involving
the provision of the Common Shares by the Company to the
Issuer to satisfy the conversion rights under the Notes.
(r) Prior to the Closing Date, the New York Stock Exchange and the
Toronto Stock Exchange shall have conditionally approved the
listing of the Common Shares in accordance with the
requirements of such exchange.
(s) The Notes shall have been approved by the NASD for trading in
the PORTAL Market and shall have been cleared for settlement
at DTC.
(t) All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in
compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the
Initial Purchasers.
(u) The Initial Purchasers shall have received an opinion, dated
the Closing Date, in form and substance reasonably
satisfactory to the Initial Purchasers, of Paul, Hastings,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Initial Purchasers,
relating to this Agreement and such other related matters as
the Initial Purchasers may require.
(v) The Issuer and the Company shall have furnished or caused to
be furnished to the Initial Purchasers such further
information, certificates and documents as the Initial
Purchasers may have reasonably requested.
19
(w) Each of the officers listed in Annex I shall have furnished to
the Initial Purchasers a letter, substantially in the form of
Exhibit I hereto (with such changes as may be approved by ▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇), pursuant to which each such person shall
have agreed not to directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of
any Common Shares, securities convertible into or exercisable
or exchangeable for Common Shares, for a period ending on the
forty-fifth (45th) day after the date of the Offering
Memorandum, without the prior written consent of each of ▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ and each such letter shall not have been
revoked, amended or modified. Each of the officers listed in
Annex II shall have furnished to the Initial Purchasers a
letter, substantially in the form of Exhibit II hereto (with
such changes as may be approved by ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇),
pursuant to which each such person shall have agreed 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 on the ninetieth (90th) day after
the date of the Offering Memorandum, without the prior written
consent of each of ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ and each such letter
shall not have been revoked, amended or modified.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and the Issuer, jointly and severally, shall
indemnify and hold harmless each Initial Purchaser, its
officers, employees, representatives and agents and each
person, if any, who controls any Initial Purchaser within the
meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act (collectively, the "Initial Purchaser
Indemnified Parties" and each, an "Initial Purchaser
Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof,
to which that Initial Purchaser Indemnified Party may become
subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, claim, damage, liability or
action arises out of or is based upon (i) any untrue statement
or alleged untrue statement of a material fact contained in
(a) the Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto (in each
case, including the documents incorporated by reference
therein) or (b) any materials or information provided to
investors by, or with the approval of, the Company in
connection with the marketing of the offering of the Notes,
including any road show or investor presentations made to
investors by the Company (whether in person or electronically,
including Net Roadshow) (the "Roadshow Materials") or (c) any
application, filing or other material filed, registered,
distributed or otherwise furnished by the Company or with the
consent of the Company in connection with the securities laws
of any state or political subdivision thereof, (ii) the
omission or alleged omission to state in the Preliminary
Offering Memorandum or the Offering Memorandum, or in any
amendment or supplement thereto, or in any Blue Sky filing or
Roadshow Materials (in each case, including the documents
incorporated by reference therein) a material fact required to
be stated therein or necessary to make the statements therein
not misleading, or (iii) any violation or alleged violation of
the Securities Act or the Exchange Act related to the Roadshow
Materials and shall reimburse each Initial Purchaser
Indemnified Party promptly upon demand for any legal or other
expenses reasonably incurred by that Initial Purchaser
Indemnified Party in connection with investigating or
preparing to defend or defending against or appearing as a
third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred;
provided, however, that the Company and the Issuer shall not
be liable in any such case to the extent that any such loss,
claim, damage, liability or action arises out of or is based
upon (i) an untrue statement or alleged untrue statement in or
omission or alleged omission from the Preliminary Offering
Memorandum or the Offering Memorandum, or any such amendment
or supplement, or in any Blue Sky filing or
20
Roadshow Materials in reliance upon and in conformity with written
information furnished to the Company by any Initial Purchaser
specifically for inclusion therein, which information the parties
hereto agree is limited to the Initial Purchasers' Information (as
defined in Section 18). This indemnity agreement is not exclusive
and will be in addition to any liability which the Company and the
Issuer might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to
each Initial Purchaser Indemnified Party.
(b) Each Initial Purchaser, severally and not jointly, shall indemnify
and hold harmless the Company and the Issuer, their respective
officers, employees, representatives, agents, directors and each
person, if any, who controls the Company or the Issuer within the
meaning of the Securities Act (collectively the "Company Indemnified
Parties" and each a "Company Indemnified Party") against any loss,
claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company Indemnified Parties may become
subject, under the Securities Act, the Exchange Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out
of or is based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or
supplement thereto or (ii) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement
or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by that
Initial Purchaser specifically for inclusion therein, and shall
reimburse the Company Indemnified Parties for any legal or other
expenses reasonably incurred by such parties in connection with
investigating or preparing to defend or defending against or
appearing as third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred;
provided that the parties hereto hereby agree that such written
information provided by the Initial Purchasers consists solely of
the Initial Purchasers' Information and that in no case shall the
Initial Purchasers be liable or responsible for any amount in excess
of the discounts and commissions received by the Initial Purchasers.
This indemnity agreement is not exclusive and will be in addition to
any liability which the Initial Purchasers might otherwise have and
shall not limit any rights or remedies which may otherwise be
available at law or in equity to the Company Indemnified Parties.
(c) Promptly after receipt by an indemnified party under this Section 7
of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 7, notify the
indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent it has been
materially prejudiced by such failure; and, provided, further, that
the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party
otherwise than under this Section 7. If any such claim or action
shall be brought against an indemnified party, and it shall notify
the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes,
jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to
the indemnified party. After notice from the indemnifying party to
the indemnified party of its election to assume the defense of such
claim or action, the indemnifying party shall not be liable to the
indemnified party under this Section 7 for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that any indemnified party shall
have the right to employ separate counsel in any such action and to
21
participate in the defense thereof but the fees and expenses of such
counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall
have been advised by such counsel that there may be one or more
legal defenses available to it which are different from or
additional to those available to the indemnifying party and in the
reasonable judgment of such counsel it is advisable for such
indemnified party to employ separate counsel or (iii) the
indemnifying party has failed to assume the defense of such action
and employ counsel reasonably satisfactory to the indemnified party,
in which case, if such indemnified party notifies the indemnifying
party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of
such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action
or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such
indemnified parties, which firm shall be designated in writing by ▇▇
▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇, if the indemnified parties under this Section 7
consist of any Initial Purchaser Indemnified Party, or by the
Company if the indemnified parties under this Section 7 consist of
any Company Indemnified Parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 7(a) and
(b), shall use all reasonable efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent
or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section
7(a) or 7(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid
or payable by such indemnified party as a result of such loss,
claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative
benefits received by the Company and the Issuer on the one hand and
the Initial Purchasers on the other from the offering of the Notes
or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Issuer on
the one hand and the Initial Purchasers on the other with respect to
the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits
received by the Company and the Issuer on the one hand and the
Initial Purchasers on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds
from the offering of the Notes purchased under this Agreement
(before deducting expenses) received by the Company and the Issuer
bear to the total underwriting discounts and commissions received by
the Initial Purchasers with respect to the Notes purchased under
this Agreement, in each case as set forth in the table on the cover
page of the Offering Memorandum. The relative fault shall be
determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Issuer and the Company on the one hand or the
Initial Purchasers on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission; provided that the
parties hereto agree that the written information furnished to the
Company through by the Initial Purchasers for use in the Preliminary
Offering
22
Memorandum or the Offering Memorandum consists solely of the Initial
Purchasers' Information. The Company, the Issuer and the Initial
Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as
one entity for such purpose) or by any other method of allocation
which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action
in respect thereof, referred to above in this Section 7(d) shall be
deemed to include, for purposes of this Section 7(d), any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7(d), no Initial
Purchaser shall be required to contribute any amount in excess of
the amount by which the total price at which the Notes underwritten
by it and distributed to the public were offered to the public less
the amount of any damages which such Initial Purchaser has otherwise
paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
(e) The Initial Purchasers' obligations to contribute as provided in
this Section 7 are several in proportion to their respective
underwriting obligations and not joint.
8. OPTION NOTES. The Initial Purchasers may purchase all or
less than all of that number of Notes (rounded up or down, as determined by the
Initial Purchasers in their discretion, in order to avoid fractions) equal to
$25,000,000 aggregate principal amount (the "Option Notes"). The purchase price
to be paid for the Option Notes shall be the same price as the Firm Notes
purchased on the Closing Date. Each of the Company and the Issuer agrees that
the Issuer shall sell to the Initial Purchasers the number of Option Notes
specified in the written notice by ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇. The option granted
hereby may be exercised as to all or any part of the Option Notes not more than
thirteen (13) days subsequent to the date of this Agreement. No Option Notes
shall be sold and delivered unless the Firm Notes have been, or simultaneously
are, sold and delivered. The right to place the Option Notes or any portion
thereof may be surrendered and terminated at any time upon notice by ▇▇ ▇▇▇▇▇
and ▇▇ ▇▇▇▇▇▇ to the Issuer.
The option granted hereby may be exercised by written notice being given to
the Issuer by ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇ setting forth the number of Option Notes to
be purchased by the Initial Purchasers and the date and time for delivery of and
payment for the Option Notes. Each date and time for delivery of and payment for
the Option Notes (which may be the First Closing Date, but not earlier) is
herein called the "Option Closing Date" and shall in no event be earlier than
two (2) business days nor later than five (5) business days after written notice
is given. (The Option Closing Date and the First Closing Date are herein called
the "Closing Dates.") The Option Closing Date and the location of delivery of,
and the form of payment for, the Option Notes may be varied by agreement between
the Company, ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇.
9. TERMINATION.
(a) The Initial Purchasers may terminate this Agreement by giving
written notice to the Company at any time on or prior to the Closing
Date in the event that the Company shall have failed, refused or
been unable to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder at or prior thereto
or, if at or prior to the Closing Date:
(i) trading in securities of the Company or in securities
generally on the Toronto Stock Exchange, New York Stock
Exchange or the Nasdaq National Market shall have
23
been suspended or materially limited or minimum or maximum
prices shall have been established on any such exchange or
market;
(ii) a banking moratorium shall have been declared by United States
Federal or state authorities, or Canadian federal or
provincial authorities, a moratorium in foreign exchange
trading by major international banks or persons shall have
been declared, or a material disruption should have occurred
in commercial banking or securities settlement or clearance
services in the United States or Canada;
(iii) there shall have been (A) a declaration of a national
emergency or war by the United States, or an outbreak or
escalation of hostilities between the United States and any
foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or
any other national or international crisis, calamity or
emergency, or (C) any material change in the political
conditions, financial markets or economic conditions of the
United States which, in the case of (A), (B) or (C) above, in
the judgment of the Initial Purchasers, makes it impracticable
or inadvisable to proceed with the issuance, sale or the
delivery of the Notes as contemplated by the Memorandum;
(iv) any securities of the Company or the Issuer shall have been
downgraded or placed on any "watch list" for possible
downgrading by any "nationally recognized statistical rating
organization" as defined for purposes of Rule 436(g) under the
Securities Act; or
(v) there shall have occurred such a material adverse change in
general economic, political or financial conditions (or the
effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the
judgment of the Initial Purchasers, impracticable or
inadvisable to proceed with the issuance, sale or the delivery
of the Notes as contemplated in the Memorandum.
(b) Either the Initial Purchasers or the Issuer may terminate this
Agreement at any time on 10 days' prior written notice.
(c) Termination of this Agreement pursuant to this Section 9 shall be
without liability of any party to any other party except as provided
in Section 10 hereof.
10. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If (a) this Agreement
shall have been terminated pursuant to Section 9(a) or 11, (b) the Issuer shall
fail to tender the Notes for delivery to the Initial Purchasers for any reason
permitted under this Agreement, or (c) the Initial Purchasers shall decline to
purchase the Notes for any reason permitted under this Agreement, the Company
shall reimburse the Initial Purchasers for the reasonable fees and expenses of
their counsel and for such other out-of-pocket expenses as shall have been
reasonably incurred by them in connection with this Agreement and the proposed
purchase of the Notes, and upon demand the Company shall pay the full amount
thereof to the Initial Purchasers. If this Agreement is terminated pursuant to
Section 11 by reason of the default of one or more Initial Purchasers, the
Company shall not be obligated to reimburse any defaulting Initial Purchaser on
account of those expenses.
11. SUBSTITUTION OF INITIAL PURCHASERS. If any Initial Purchaser or
Initial Purchasers shall default in its or their obligations to purchase shares
of Notes hereunder and the aggregate number of shares which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed to purchase does not
exceed ten percent (10%) of the principal amount of Notes underwritten, the
other Initial Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Notes which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed to purchase. If any
Initial Purchaser or
24
Initial Purchasers shall so default and the aggregate principal amount with
respect to which such default or defaults occur is more than ten percent (10%)
of the total principal amount underwritten and arrangements satisfactory to ▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇ and the Company for the purchase of such Notes by other persons
are not made within forty-eight (48) hours after such default, this Agreement
shall terminate.
If the remaining Initial Purchasers or substituted Initial Purchasers are
required hereby or agree to take up all or part of the Notes of a defaulting
Initial Purchaser or Initial Purchasers as provided in this Section 11, (i) the
Company shall have the right to postpone the Closing Date for a period of not
more than five (5) full business days in order that the Company may effect
whatever changes may thereby be made necessary in the Offering Memorandum, or in
any other documents or arrangements, and (ii) the respective principal amount to
be purchased by the remaining Initial Purchasers or substituted Initial
Purchasers shall be taken as the basis of their underwriting obligation for all
purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Initial Purchaser of its liability to the Company or the other
Initial Purchasers for damages occasioned by its default hereunder. Any
termination of this Agreement pursuant to this Section 11 shall be without
liability on the part of any non-defaulting Initial Purchaser or the Company,
except expenses to be paid or reimbursed pursuant to Sections 5 and 10 and
except the provisions of Section 7 shall not terminate and shall remain in
effect.
12. SUCCESSORS; PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement
shall inure to the benefit of and be binding upon the several Initial
Purchasers, the Company, the Issuer and their respective successors, legal
representatives and assigns. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person other than the persons
mentioned in the preceding sentence any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein contained,
this Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person; except that the representations, warranties, covenants,
agreements and indemnities of the Company and the Issuer contained in this
Agreement shall also be for the benefit of the Initial Purchaser Indemnified
Parties, and the indemnities of the several Initial Purchasers shall also be for
the benefit of the Company Indemnified Parties.
13. SURVIVAL OF INDEMNITIES, REPRESENTATIONS, WARRANTIES, ETC. The
representations, warranties, agreements, covenants and other statements of the
Company and the Issuer and their respective officers set forth in this Agreement
or made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
any of the Initial Purchasers, any of their respective officers or directors, or
any controlling person referred to in Section 7 hereof and (ii) delivery of and
payment for the Notes to and by the Initial Purchasers, and shall be binding
upon and shall inure to the benefit of, any successors, legal representatives,
assigns, heirs, personal representatives of the Company, the Initial Purchasers
and the indemnified parties referred to herein. The indemnities of the Company
and the Issuer shall survive any termination and shall survive the Closing Date.
14. NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) if to one or more of the Initial Purchasers, shall be delivered or
sent by mail, telex or facsimile transmission to ▇▇ ▇▇▇▇▇ & Co.,
LLC, Attention: General Counsel, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇) and ▇.▇. ▇▇▇▇▇▇ Securities,
Inc., Attention: Syndicate Department, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇); and
(b) if to the Company or the Issuer shall be delivered or sent by mail,
telex or facsimile transmission to Lions Gate Entertainment Corp.,
Attention: ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇).
25
15. DEFINITION OF CERTAIN TERMS. For purposes of this Agreement, (a)
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading; (b) "subsidiary" has the meaning set forth in Rule 405 of the
Securities Act; provided, however, that solely for purposes of this Agreement
the term "subsidiary" shall include the Issuer; and (c) "Significant Subsidiary"
has the meaning set forth in Section 1-02(w) of Regulation S-X of the
Commission; provided, however, that solely for purposes of this Agreement the
term "Significant Subsidiary" shall include the Issuer.
16. INFORMATION.
(a) Each of the Company and the Issuer will provide the Initial
Purchasers with such information as the Initial Purchasers
reasonably request and believe is appropriate to their assignment,
including the Memorandum and the Incorporated Documents (all such
information so furnished, being hereinafter referred to as the
"Information").
(b) Each of the Company and the Issuer understands and agrees that
Initial Purchasers will rely on the Information and other
information available from generally recognized public sources
without having independently verified the same and that the Initial
Purchasers assume no responsibility for the accuracy or
completeness of this information.
17. DISCLOSURE. Each of the Company and the Issuer agrees that any
information or advice rendered by the Initial Purchasers or their
representatives in connection with this Agreement is solely for the confidential
use of the Company and the Issuer and, except as otherwise required by
applicable law, regulation or legal process, neither the Company nor the Issuer
will, and will not permit any third party to, disclose, reproduce, disseminate,
quote or otherwise refer to such advice or information in any manner without the
Initial Purchasers' prior written consent, which consent shall not be
unreasonably withheld.
18. INITIAL PURCHASERS' INFORMATION. The parties hereto acknowledge and
agree that, for all purposes of this Agreement, the Initial Purchasers'
Information consists solely of the statements concerning the Initial Purchasers
contained in the first and fourth paragraphs under the heading "Plan of
Distribution."
19. AMENDMENTS. This Agreement may not be waived, amended, modified or
assigned, in any way, in whole or in part, including by operation of law,
without the prior written consent of the Company and the Issuer and the Initial
Purchasers.
20. GOVERNING LAW AND JURISDICTION. This letter and any claim or dispute
of any kind or nature whatsoever arising out of or in any way relating to this
Agreement, directly or indirectly (including any claim concerning advice
provided pursuant to this Agreement), shall be governed by and construed in
accordance with the laws of the State of New York. ANY RIGHTS TO TRIAL BY JURY
WITH RESPECT TO ANY CLAIM OR PROCEEDING RELATED TO, OR ARISING OUT OF, THIS
AGREEMENT ARE WAIVED BY THE INITIAL PURCHASERS, THE COMPANY AND THE ISSUER.
21. PARTIAL UNENFORCEABILITY. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity
or enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
22. GENERAL. This Agreement (together with the schedules, exhibits and
annexes attached hereto and incorporated by reference herein) constitutes the
entire agreement of the parties to this Agreement and supersedes all prior
written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. In this Agreement, the
masculine, feminine and neuter genders and the singular and the plural include
one another. The section headings in this Agreement are for the convenience of
the parties only and will not affect the construction or interpretation of this
Agreement.
26
23. COUNTERPARTS. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
27
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement between the Company and the
Issuer, on the one hand, and the Initial Purchasers, on the other hand.
Very truly yours,
LIONS GATE ENTERTAINMENT CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Executive VP, General
Counsel
LIONS GATE ENTERTAINMENT INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary, General
Counsel
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
The foregoing Agreement is hereby confirmed and accepted by the Initial
Purchasers as of the date first above written.
▇▇ ▇▇▇▇▇ & CO., LLC
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: M.D.
J.P. ▇▇▇▇▇▇ SECURITIES INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
JEFFERIES & CO.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Executive ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Partner
▇▇▇▇▇▇▇▇▇▇▇ & CO.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Managing Director
▇▇▇▇▇ PARTNERS
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
[SIGNATURE PAGE TO PURCHASE AGREEMENT]
SCHEDULE A
Initial Purchasers
Purchaser Principal Amount of Notes
--------- -------------------------
▇▇ ▇▇▇▇▇ & Co., LLC $60,456,000.00
▇.▇. ▇▇▇▇▇▇ Securities Inc. $60,456,000.00
Jefferies & Co. $12,726,000.00
▇▇▇▇▇▇ ▇▇▇▇▇▇ Partners LLC $ 9,090,000.00
▇▇▇▇▇▇▇▇▇▇▇ & Co. $ 3,636,000.00
▇▇▇▇▇ Partners $ 1,818,000.00
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ $ 1,818,000.00
1
EXHIBIT I
[Form of Lock-Up Agreement for Officers Listed in Annex I]
[Date]
▇▇ ▇▇▇▇▇ & Co., LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Lions Gate Entertainment Inc. 3.625% Convertible Senior Subordinated Notes
Due 2025
Ladies and Gentlemen:
In order to induce ▇▇ ▇▇▇▇▇ & Co., LLC ("▇▇ ▇▇▇▇▇") and ▇.▇. ▇▇▇▇▇▇
Securities Inc. ("▇▇ ▇▇▇▇▇▇") to enter in to a certain Purchase Agreement with
Lions Gate Entertainment Corp., a British Columbia corporation (the "Company"),
and Lions Gate Entertainment Inc., a Delaware corporation (the "Issuer"), with
respect to the private placement of 3.625% Convertible Senior Subordinated Notes
due 2025 (the "Notes") issued by the Issuer (the "Private Placement"), the
undersigned hereby agrees that, prior to the forty-fifth (45th) day after the
date of the Offering Memorandum, the undersigned will not, without the prior
written consent of ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇, directly or indirectly, (i) offer,
sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any
common shares, no par value ("Common Shares") of the Company (including, without
limitation, Common Shares which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act, as the same may be amended or supplemented from time to time
(such shares, the "Beneficially Owned Shares")) or securities convertible into
or exercisable or exchangeable in Common Shares (such securities, together with
the Common Shares and Beneficially Owned Shares, the "Relevant Securities"),
(ii) enter into any swap, hedge or similar agreement or arrangement that
transfers in whole or in part, the economic risk of ownership of the Relevant
Securities or (iii) engage in any short selling of the Common Shares
(collectively, the "Lock-Up").
Notwithstanding the foregoing, the undersigned may transfer Relevant
Securities (i) by bona fide gift, (ii) by will or intestate succession, and
(iii) to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided as to each of (ii) and (iii)
above, each resulting transferee of Relevant Securities executes and delivers to
you an agreement certifying that such transferee is bound by the terms of this
letter agreement, and provided further that any such transfer not involve a
disposition for value. For the purposes of this letter agreement, "immediate
family" means any relationship by blood, marriage or adoptions, not more remote
than first cousin.
In addition, the undersigned hereby waives, from the date hereof until the
forty-fifth (45th) day after the date of the Offering Memorandum, any and all
rights, if any, to request or demand registration pursuant to the Securities Act
of any Common Shares that are registered in the name of the undersigned or that
are Beneficially Owned Shares. In order to enable the aforesaid covenants to be
enforced, the undersigned hereby consents to the placing of stop-transfer orders
with the transfer agent of the Common Shares with respect to any Common Shares
or Beneficially Owned Shares.
In the event that the Purchase Agreement is terminated prior to the time
of purchase of the Notes by the Initial Purchasers, the undersigned shall no
longer be subject to the Lock-Up set forth in this letter agreement and such
Lock-Up shall immediately terminate.
1
Delivery of a signed copy of this letter agreement by facsimile
transmission shall be effective as delivery of the original hereof.
__________________________
Name:
2
EXHIBIT II
[Form of Lock-Up Agreement for Officers Listed in Annex II]
[Date]
▇▇ ▇▇▇▇▇ & Co., LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Lions Gate Entertainment Inc. 3.625% Convertible Senior Subordinated Notes
Due 2025
Ladies and Gentlemen:
In order to induce ▇▇ ▇▇▇▇▇ & Co., LLC ("▇▇ ▇▇▇▇▇") and ▇.▇. ▇▇▇▇▇▇
Securities Inc. ("▇▇ ▇▇▇▇▇▇") to enter in to a certain Purchase Agreement with
Lions Gate Entertainment Corp., a British Columbia corporation (the "Company"),
and Lions Gate Entertainment Inc., a Delaware corporation (the "Issuer"), with
respect to the private placement of 3.625% Convertible Senior Subordinated Notes
due 2025 (the "Notes") issued by the Issuer (the "Private Placement"), the
undersigned hereby agrees that, prior to the ninetieth (90th) day after the date
of the Offering Memorandum, the undersigned will not, without the prior written
consent of ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇, directly or indirectly, (i) offer, sell,
assign, transfer, pledge, contract to sell, or otherwise dispose of, any common
shares, no par value ("Common Shares") of the Company (including, without
limitation, Common Shares which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act, as the same may be amended or supplemented from time to time
(such shares, the "Beneficially Owned Shares")) or securities convertible into
or exercisable or exchangeable in Common Shares (such securities, together with
the Common Shares and Beneficially Owned Shares, the "Relevant Securities"),
(ii) enter into any swap, hedge or similar agreement or arrangement that
transfers in whole or in part, the economic risk of ownership of the Relevant
Securities or (iii) engage in any short selling of the Common Shares
(collectively, the "Lock-Up").
Notwithstanding the foregoing, the undersigned may transfer Relevant
Securities (i) by bona fide gift, (ii) by will or intestate succession, and
(iii) to any trust for the direct or indirect benefit of the undersigned or the
immediate family of the undersigned, provided as to each of (ii) and (iii)
above, each resulting transferee of Relevant Securities executes and delivers to
you an agreement certifying that such transferee is bound by the terms of this
letter agreement, and provided further that any such transfer not involve a
disposition for value. For the purposes of this letter agreement, "immediate
family" means any relationship by blood, marriage or adoptions, not more remote
than first cousin. In addition, the undersigned may sell up to 125,000 Common
Shares during the 90 day period described in this letter without the prior
written consent of ▇▇ ▇▇▇▇▇ and ▇▇ ▇▇▇▇▇▇.
In addition, the undersigned hereby waives, from the date hereof until the
ninetieth (90th) day after the date of the Offering Memorandum, any and all
rights, if any, to request or demand registration pursuant to the Securities Act
of any Common Shares that are registered in the name of the undersigned or that
are Beneficially Owned Shares. In order to enable the aforesaid covenants to be
enforced, the undersigned hereby consents to the placing of stop-transfer orders
with the transfer agent of the Common Shares with respect to any Common Shares
or Beneficially Owned Shares.
In the event that the Purchase Agreement is terminated prior to the time
of purchase of the Notes by the Initial Purchasers, the undersigned shall no
longer be subject to the Lock-Up set forth in this letter agreement and such
Lock-Up shall immediately terminate.
1
Delivery of a signed copy of this letter agreement by facsimile
transmission shall be effective as delivery of the original hereof.
______________________
Name:
2
ANNEX I
Officers
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇
1
ANNEX II
Officers
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
2
ANNEX III
[Form of opinion of U.S. counsel]
1. Each of Lions Gate Entertainment Inc., (the "Issuer"), and Lions
Gate Films Inc., Lions Gate Television Inc., LG Pictures Inc.,
Artisan Home Entertainment Inc., Artisan Pictures Inc. and Artisan
Releasing Inc. has been duly incorporated and is a corporation
validly existing under the laws of the State of Delaware, with
corporate power to own its properties and assets and to carry on its
business as described in the Memorandum.
2. Based solely on a review of good standing certificates, each of the
Issuer, Lions Gate Films Inc., Lions Gate Television Inc., LG
Pictures Inc., Film Holdings Co., Artisan Home Entertainment Inc.,
Artisan Pictures Inc. and Artisan Releasing Inc. are qualified as
foreign corporations to do business in the State of California, and
are in good standing in the State of California, and Lions Gate
Films Inc. is qualified as a foreign corporation to do business in
the State of New York, and is in good standing in the State of New
York.
3. The outstanding shares of capital stock of the Issuer have been duly
authorized by all necessary corporate action on the part of the
Issuer, are validly issued, fully paid and non-assessable. Based
solely on a review of records certified to such counsel as the
Certificate of Incorporation and Bylaws of the Issuer and its
corporate minute books, to the best of such counsel's knowledge, the
shares of capital stock are owned free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity,
except under 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.
4. The execution and delivery by the Issuer of the Agreement do not,
and the performance of its obligations under the Agreement will not,
(a) violate its Certificate of Incorporation or Bylaws, (b) violate,
breach, or result in a default under, any existing obligation of or
restriction on it under any other agreement identified in Exhibit A
to the opinion (the "Other Agreements"), or (c) breach or otherwise
violate any existing obligation of or restriction on it under any
order, judgment or decree of any California, New York or U.S.
federal court or governmental authority binding on the Issuer (as
identified in a certificate provided by the Company). Such counsel
need express no opinion as to the effect of the Issuer's performance
of its obligations in the Agreement on the its compliance with
financial covenants in the Other Agreements.
5. The execution and delivery by the Issuer of the Agreement do not,
and the performance of its obligations under the Agreement will not,
violate the current Delaware General Corporation Law or any current
California, New York or U.S. federal statute, rule or regulation
that such counsel has, in the exercise of customary professional
diligence, recognized as applicable to the Company or to
transactions of the type contemplated by the Agreement. However,
such counsel need express no opinion with respect to any anti-fraud
provisions of federal securities laws or with respect to any
anti-fraud provisions of Blue Sky or state securities laws, and
further, such counsel need express no opinion with respect to
Section 7 of the Agreement except as otherwise expressly stated
herein.
6. Assuming the accuracy of the Initial Purchasers' representations in
the Agreement executed by each of them as of the Closing Date, it is
not necessary in connection with the sale of the Notes under the
circumstances contemplated by the Agreement to register the Notes
under
1
the 1933 Act, as amended, or to qualify an indenture in
respect thereof under the Trust Indenture Act of 1939, as amended.
7. No order, consent, permit or approval of, or filing or registration
with, any California, New York or U.S. federal governmental
authority is required on the part of the Company or the Issuer for
the execution and delivery of the Agreement or for the issuance and
sale of the Notes, except such as have been obtained under the Act
and such as may be required under applicable Blue Sky or state
securities laws.
8. The execution, delivery and performance of the Indenture have been
duly authorized by all necessary corporate action on the part of the
Issuer, and the Indenture has been duly executed and delivered by
the Issuer. Assuming due authorization, execution and delivery by
the Trustee and the Issuer, the Indenture constitutes the legally
valid and binding obligation of the Issuer, enforceable against the
Issuer in accordance with its terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to or affecting creditors' rights generally (including,
without limitation, fraudulent conveyance laws) and by general
principles of equity, including, without limitation, concepts of
materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive
relief, regardless of whether considered in a proceeding in equity
or at law.
9. The execution, delivery and performance of the Registration Rights
Agreement have been duly authorized by all necessary corporate
action on the part of the Issuer, and the Registration Rights
Agreement has been duly executed and delivered by the Issuer.
Assuming due authorization, execution and delivery by the Initial
Purchasers and the Company, the Registration Rights Agreement
constitutes the legally valid and binding obligation of the Issuer,
enforceable against the Issuer in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity, including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless of whether considered
in a proceeding in equity or at law. The execution and delivery by
the Issuer of the Registration Rights Agreement do not, and the
Issuer's performance of its obligations under the Registration
Rights Agreement will not, violate the current Delaware General
Corporation Law or any current California, New York or federal
statute, rule or regulation that such counsel has, in the exercise
of customary professional diligence, recognized as applicable to the
Issuer or to transactions of the type contemplated by the
Registration Rights Agreement except that such counsel need express
no opinion regarding any federal securities laws, or Blue Sky or
state securities laws, or Section 7 of the Registration Rights
Agreement except as otherwise expressly stated herein.
10. The Notes have been duly authorized by all necessary corporate
action on the part of the Issuer, and when executed and
authenticated in accordance with the terms of the Indenture and
delivered to and paid for by the Issuer, will constitute the legally
valid and binding obligation of the Issuer, and be enforceable
against the Issuer in accordance with their terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws relating to or affecting creditors' rights generally
(including, without limitation, fraudulent conveyance laws) and by
general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing
and the possible unavailability of specific performance or
injunctive relief, regardless of whether considered in a proceeding
in equity or at law.
2
11. The statements in the Offering Memorandum under the caption
"Taxation," insofar as they summarize provisions of U.S. federal
law, fairly summarize the matters described therein in all material
respects.
12. There are no actions, suits or proceedings pending or threatened
against the Company or the Issuer or any of their respective
subsidiaries, with respect to which such counsel has given
substantive attention on behalf of the Company or the Issuer or any
of their respective subsidiaries.
13. The documents incorporated by reference in the Offering Memorandum
(the "Incorporated Documents"), on the respective dates they were
filed, appeared on their face to comply in all material respects
with the requirements as to form for reports on Form 10-K, Form 10-Q
and Form 8-K, as the case may be, under the Exchange Act, as
amended, and the related rules and regulations in effect at the
respective dates of their filing, except that such counsel need
express no opinion concerning the financial statements and other
financial information contained or incorporated by reference
therein.
14. The Indenture complies in all material respects with the
requirements as to form under the Trust Indenture Act, as amended.
15. The Issuer is not an "investment company" required to register under
the Investment Company Act of 1940, as amended.
In addition, such counsel will state that such counsel has participated in
conferences in connection with the preparation of the Offering Memorandum. Such
counsel has also reviewed the Offering Memorandum and the Incorporated
Documents, but has not independently verified the accuracy, completeness or
fairness of the statements contained or incorporated in those documents. The
limitations inherent in such counsel's participation and review, and in the
knowledge available to such counsel, are such that it is unable to assume, and
does not assume, any responsibility for such accuracy, completeness or fairness
of the Offering Memorandum (except as otherwise specifically stated in paragraph
11 above). However, on the basis of such participation and review, such counsel
does not believe that the Offering Memorandum and the Incorporated Documents,
considered as a whole as of the date of the Offering Memorandum and as of the
date hereof, contain any untrue statement of a material fact or omitted to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. Such counsel need
express no opinion or belief as to any document filed by the Issuer under the
Exchange Act whether before or after the date of the Offering Memorandum, except
to the extent that any such document is an Incorporated Document read together
with the Offering Memorandum and considered as a whole, nor does such counsel
need express any opinion or belief as to the financial statements contained in
the Offering Memorandum or the Incorporated Documents.
3
ANNEX IV
[Form of opinion of Canadian counsel]
1. The Company and the Principal Canadian Subsidiary have been duly
incorporated and are validly existing under the laws of their respective
jurisdictions of incorporation, are duly qualified to do business as foreign
corporations 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
have, singularly or in the aggregate, a Material Adverse Effect.
2. The Company has an authorized share structure as set forth in the
Memorandum, and all of the outstanding shares of the Company have been duly and
validly authorized and issued, are fully paid and non-assessable and conform to
the description thereof contained in the Memorandum.
3. The Common Shares issuable by the Company to the Issuer in
connection with the conversion of the Notes have been reserved by the Company
for issuance.
4. When the Common Shares issuable by the Company to the Issuer in
connection with the conversion of the Notes are issued in accordance with the
terms of the Notes and the Contribution Agreement, such Common Shares will be
duly authorized and validly issued will be fully paid, non-assessable and free
of any pre-emptive or similar rights.
5. All the outstanding shares of the Principal Canadian Subsidiary have
been duly authorized and validly issued, are fully paid and non-assessable and
are owned by the Company directly, free and clear of any claim, lien,
encumbrance, security interest (except for those granted under existing credit
facilities referred to in the Memorandum), restriction upon voting or transfer
or any other claim of any third party.
6. The shares of the Principal Canadian Subsidiary previously held by
▇▇▇▇▇ ▇▇▇▇▇▇▇ in trust for the Principal Canadian Subsidiary, the Company and
its subsidiaries have been validly transferred to the Company.
7. The Company is a reporting issuer in each of the provinces of
British Columbia and Ontario and is not on the list of defaulting issuers
maintained by the securities regulatory authorities in such jurisdictions.
8. To the best of such counsel's knowledge and other than as set forth
in the Memorandum, there are no Canadian federal or provincial legal or
governmental proceedings pending to which the Company or any of its subsidiaries
is a party or of which any property or asset of the Company or any of its
subsidiaries is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, might have a Material
Adverse Effect or would prevent or adversely affect the ability of the Company
to perform its obligations under the Purchase Agreement; and, to the best of
such counsel's knowledge, no such proceedings have been threatened by
governmental authorities or others.
9. To the best of such counsel's knowledge, neither the Company nor the
Principal Canadian Subsidiary (a) is in violation of its constating documents,
(b) is in default, and no event has occurred, which, with notice or lapse of
time or both, would constitute a default, in the due performance or observance
of any term, covenant or condition contained in any agreement or instrument to
which it is a party or by which it is bound or to which any of its properties or
assets is subject or (c) is in
4
violation of any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject or has failed to obtain any
license, permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of its
business except, in the case of clauses (b) and (c), for those defaults,
violations or failures which, either singularly or in the aggregate, would not
have a Material Adverse Effect.
10. There are no preemptive or other rights to subscribe for or to
purchase, nor any restriction upon the voting or transfer of, any Common Shares
pursuant to the Company's constating documents or any agreement or other
instrument known to such counsel.
11. There are no restrictions of the corporate power and capacity of the
Company to enter into the Purchase Agreement or to carry out its obligations
under the Purchase Agreement; and the Purchase Agreement has been duly
authorized, and executed and delivered by the Company.
12. The execution, delivery and performance of the Purchase Agreement
and the consummation of the transactions contemplated hereby by the Company will
not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material agreements to which
the Company is a party, nor will such actions result in any violation of the
constating documents of the Company or the constating documents of the Principal
Canadian Subsidiary or any statute or any order, rule or regulation of any
Canadian federal or provincial court or governmental agency or body or court
having jurisdiction over the Company or the Principal Canadian Subsidiary or any
of their properties or assets.
13. Except for consents, approvals, authorizations, registrations or
qualifications as may be required by the Toronto Stock Exchange in connection
with the issuance and sale of the Notes and the issuance of the Common Shares in
connection with the conversion of the Notes, no consent, approval, authorization
or order of, or filing or registration with, any Canadian federal or provincial
court or governmental agency or body is required for the execution, delivery and
performance of the Purchase Agreement by the Company and the consummation of the
transactions contemplated hereby.
14. The form of share certificate for the Common Shares issuable upon
conversion of the Notes has been duly approved by the Company and complies with
the provisions of the constating documents of the Company and the Business
Corporations Act (British Columbia).
15. The statements in the Memorandum under the heading "Certain Canadian
Federal Income Tax Considerations" to the extent that they constitute summaries
of matters of Canadian federal or provincial law or regulation or legal
conclusions, have been reviewed by such counsel and fairly summarize the matters
described therein in all material respects.
16. The statements contained in the Memorandum under the caption "Risk
Factors - We may lose certain benefits by failing to meet certain regulatory
requirements" insofar as such statements purport to summarize the laws of the
Provinces of Ontario or British Columbia and the federal laws of Canada
applicable therein, are fair descriptions of those laws.
17. The Toronto Stock Exchange has conditionally approved the listing of
the Common Shares in accordance with the requirements of such exchange on or
before ____________, 2005.
18. The granting by the Company to the Issuer pursuant to the
Contribution Agreement of the right to receive Common Shares in connection with
the conversion of the Notes is exempt from, or not subject to, the prospectus
requirements of the securities laws of the Provinces of British Columbia and
Ontario (the "Provinces") and no proceedings, consents, approvals, permits,
registrations or filings are required under the securities laws of the Provinces
in order to permit such
5
offering, issue and sale, except for the filing together with the appropriate
fee of a report on Form 45-103F4 with the British Columbia Securities
Commission.
19. The issuance and delivery of the Common Shares by the Company to the
Issuer pursuant to the Contribution Agreement in connection with the conversion
of the Notes, is exempt from, or not subject to, the prospectus requirements of
the securities laws of the Provinces and no proceedings, consents, approvals,
permits, registrations or filings are required under the securities laws of the
Provinces in order to permit such issuance and delivery. Any Common Shares
issued to the Issuer in connection with the conversion of the Notes prior to the
earlier of: (a) four months and one day following the date of the Contribution
Agreement and (b) the issuance of a final receipt for a prospectus in connection
with the qualification of the Common Shares under applicable securities laws of
the Provinces (the "Canadian Prospectus") would be subject to a four month hold
period from the date of the issuance of the Notes and may not be sold in the
Provinces, including through the facilities of the Toronto Stock Exchange, until
the expiry of such hold period. We note that any Common Shares delivered by the
Issuer to holders of the Notes on conversion thereof during such hold period
must have the required legends specified on the certificates representing such
Common Shares pursuant to section 2.5 of Multilateral Instrument 45-102, Resale
of Securities and section 607.1 of the Toronto Stock Exchange Company Manual.
20. The Indenture has been duly authorized, executed and delivered by
the Company, and, assuming due authorization, execution and delivery by the
Trustee and the Issuer, is the legal, valid and binding agreement of the Company
enforceable in accordance with its terms, except as (a) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (b) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability.
21. The Guarantee has been duly authorized and delivered by the Company,
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (b) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
22. The Contribution Agreement has been duly authorized by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as (a) the
enforceability thereof may be limited by bankruptcy, insolvency or similar laws
affecting creditors' rights generally and (b) rights of acceleration and the
availability of equitable remedies may be limited by equitable principles of
general applicability.
23. The choice of the laws of the State of New York ("New York Law") as
the governing law of the Purchase Agreement will be upheld as a valid choice of
law by a court of competent jurisdiction of the Province of Ontario (an "Ontario
Court") and by a court of competent jurisdiction of the Province of British
Columbia (a "British Columbia Court", and together with an Ontario Court, the
"Relevant Canadian Courts") provided that such choice of law is bona fide (in
the sense that it was not made with a view to avoiding the consequences of the
law of any other jurisdiction) and is not contrary to public policy as this term
is understood under the laws of the Province of Ontario ("Ontario Law") or the
laws of British Columbia ("British Columbia Law"), as the case may be. Such
counsel has no reason to believe that the choice of New York Law in the Purchase
Agreement is not bona fide or is contrary to public policy under Ontario Law or
British Columbia Law.
24. In the event that the Purchase Agreement is sought to be enforced in
either an Ontario court or a British Columbia court, those courts would, subject
to subparagraph (23) above, apply New York Law, upon proper proof of those laws,
except to the extent that the provisions of the Purchase Agreement or New York
Law are contrary to public policy as that term is understood
6
under Ontario Law or BC Law, as the case may be, or those laws are foreign
revenue, expropriatory or penal laws; provided, however, that:
(a) a Relevant Canadian Court would not apply New York Law in matters of
procedure or applicable laws in force which are applicable by reason of
their particular object; and
(b) a Relevant Canadian Court may not enforce an obligation enforceable under
New York Law where performance of the obligation would be illegal by the
laws of the place of performance.
25. A final and conclusive civil judgment for a sum certain obtained in a
court of competent jurisdiction of the State of New York ("a New York Court")
against the parties hereto in connection with any action arising out of or
relating to the Purchase Agreement would be recognized and could be sued upon in
a Relevant Canadian Court and such court would grant a judgment which would be
enforceable against the parties hereto in the Province of Ontario or the
Province of British Columbia, as the case may be, provided that:
(a) the New York Court had jurisdiction over the judgment debtor in the action
according to the applicable law in the Relevant Canadian Court;
(b) such judgment was not obtained by fraud on the New York Court or in any
manner contrary to natural justice and the enforcement thereof would not
be inconsistent with public policy as such term is understood under the
applicable law in the Relevant Canadian Court;
(c) enforcement of such judgment would not be inconsistent with public policy
as such term is understood under the applicable law in the Relevant
Canadian Court and, in particular, would not constitute, directly or
indirectly, the enforcement of foreign revenue, expropriatory or penal
laws;
(d) a dispute between the same parties based on the same subject matter has
not given rise to a decision rendered by a Relevant Canadian Court or been
decided by a foreign authority and that decision meets the necessary
conditions for recognition under the applicable law in the Relevant
Canadian Court;
(e) no new admissible evidence is discovered after the New York Court has
rendered judgment which could not have been discovered by the exercise of
due diligence prior to the New York Court rendering judgment and no new
facts have arisen which once presented before a Relevant Canadian Court
would give rise to a finding in the Relevant Canadian Court contrary to
subparagraphs (a), (b) or (c) above;
(f) a judgment of a Relevant Canadian Court will be denominated in Canadian
currency in accordance with, in the case of the Province of Ontario, the
Courts of Justice Act (Ontario), and in the case of the Province of
British Columbia, the Foreign Money Claims Act (British Columbia); and
(g) the action in the Relevant Canadian Court commenced within the time limits
set out in the Limitations Act (Ontario) or the Limitation Act (British
Columbia), as the case may be.
In addition, such counsel will state that such counsel did not prepare the
Offering Memorandum, and such counsel has not independently verified its
accuracy, completeness or fairness. Accordingly, such counsel is unable to
assume, and such counsel does not assume, any responsibility for the accuracy,
completeness or fairness of the Offering Memorandum (except as otherwise
specifically stated in paragraphs 15 and 16 above). However, subject to the
foregoing, such counsel does not believe that the Offering Memorandum and the
7
Incorporated Documents, considered as a whole as of the date hereof, contain any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. Such counsel need express no opinion
or belief as to the financial statements and other financial information and
projections contained in the Offering Memorandum or the Incorporated Documents.
8