EXHIBIT 10.9
AMENDED AND RESTATED
UNANIMOUS SHAREHOLDERS AGREEMENT
OF CORPORATION CINEGROUPE
TABLE OF CONTENTS
ARTICLE 1 RECITALS, DEFINITIONS AND INTERPRETATION 4
ARTICLE 2 CONTRIBUTION OF THE SHAREHOLDERS 10
ARTICLE 3 RESTRICTIONS ON TRANSFER OF SHARES 11
ARTICLE 4 ISSUANCE OF SHARES 14
ARTICLE 5 RIGHTS OF FIRST REFUSAL 16
ARTICLE 6 RIGHTS OF ▇▇▇▇▇▇▇▇▇ AND PETTIGREW'S CORPORATION TO PURCHASE
ALL SHARES AND/OR CONVERTIBLE DEBENTURE COVERED BY AN
OFFEROR'S OFFER MADE TO CINEPIX (AND ITS SUCCESSORS) 18
ARTICLE 7 FINANCIAL REPORTING 20
ARTICLE 8 FORCED SALE OPTION 21
ARTICLE 9 DEATH OR DISABILITY OF ▇▇▇▇▇▇▇▇▇ 23
ARTICLE 10 LIFE INSURANCE AND DISABILITY INSURANCE 23
ARTICLE 11 CHANGE OF CONTROL OF CINEPIX 25
ARTICLE 12 DEFAULT 27
ARTICLE 13 VALUATION 29
ARTICLE 14 CLOSING 30
ARTICLE 15 CONDUCT OF THE AFFAIRS OF THE CORPORATION 31
ARTICLE 16 TRANSFER OF VOTING RIGHTS; CONVERSION OF SHARES; QUEBEC
CONTROL; SHARES IN TRUST 38
ARTICLE 17 FINANCING 41
ARTICLE 18 ADDITIONAL FINANCING 41
ARTICLE 19 UNDERTAKINGS OF THE CORPORATION 43
ARTICLE 20 UNDERTAKINGS IN CASE OF A PUBLIC LISTING 43
ARTICLE 21 REPRESENTATIONS AND WARRANTIES 44
ARTICLE 22 CONFIDENTIALITY 45
ARTICLE 23 NON-SOLICITATION 46
ARTICLE 24 ARBITRATION 47
ARTICLE 25 GENERAL 48
AMENDED AND RESTATED UNANIMOUS SHAREHOLDERS AGREEMENT made as of the
10th day of July, 2001
BETWEEN: ANIMATION CINEPIX INC., a body corporate, incorporated
under the Canada Business Corporations Act and
represented by Andre Link, its President, duly
authorized as he so declares;
(hereinafter referred to as "CINEPIX")
OF THE FIRST PART
AND: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, businessman, residing at ▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇-▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇;
(hereinafter referred to as "▇▇▇▇▇▇▇▇▇")
OF THE SECOND PART
AND: ▇▇▇▇▇▇ ▇▇▇▇, in his capacity as trustee of the Faire
Trust, a trust governed by the laws of the Province of
Ontario and not in his personal capacity;
(hereinafter referred to as "FAIRE TRUST")
OF THE THIRD PART
AND: FOX FAMILY WORLDWIDE, INC., a body corporate,
incorporated under the laws of the State of Delaware,
U.S.A., and represented by ▇▇▇ ▇▇▇▇▇, its President;
(hereinafter referred to as "FOX FAMILY")
OF THE FOURTH PART
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AND: FIDUCIE FAMILLE ▇▇▇▇▇▇▇▇▇, a trust created and governed
by the laws of the Province of Quebec and represented
by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, duly
authorized as they so declare;
(hereinafter referred to as "FIDUCIE ▇▇▇▇▇▇▇▇▇")
OF THE FIFTH PART
AND: SGF TECH INC., a body corporate duly incorporated under
the Companies Act (Quebec) and represented by
▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, its Vice President, Development,
and by ▇▇▇▇▇ ▇▇▇, Senior Vice President, Administration
of Societe Generale de Financement du Quebec, duly
authorized as they so declare;
(hereinafter referred to as "SGF TECH")
OF THE SIXTH PART
(Cinepix, ▇▇▇▇▇▇▇▇▇, Faire Trust, Fox Family, Fiducie
▇▇▇▇▇▇▇▇▇ and SGF Tech and any other shareholder bound
by this Amended and Restated Agreement are collectively
hereinafter referred to as the "SHAREHOLDERS" and each
one of the Shareholders may also be referred to
hereinafter as the "SHAREHOLDER")
AND AS INTERVENING PARTIES:
CORPORATION CINEGROUPE, a corporation duly incorporated
under the Companies Act (Quebec) and represented by
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, its President and by Andre Link, its
Secretary-Treasurer, duly authorized as they so
declare;
(hereinafter referred to as "CORPORATION")
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LIONS GATE ENTERTAINMENT CORP., a body corporate,
incorporated under the laws of the Province of British
Columbia and represented by ▇▇▇▇▇▇ Keep, its Senior
Vice-President, duly authorized as he so declares;
(hereinafter referred to as "LIONS GATE")
WHEREAS the articles of incorporation of the Corporation, as amended, have been
amended so as to create Class E Shares which are voting and participating Shares
ranking for some of their rights senior to Class A Shares, Class B Shares, Class
C Shares, Class D Shares, Class F Shares and Class P Shares, are retractable and
exchangeable (the "ARTICLES");
WHEREAS the authorized share capital of the Corporation now consists of an
unlimited number of Class A Shares, Class C Shares, Class D Shares, Class E
Shares and Class F Shares, a number limited to 100,000 Class B Shares and a
number limited to 100,000 Class P Shares, all without par value, of which,
206,000 Class A Shares, 22,001 Class B Shares, 84,000 Class P Shares and 168,007
Class E Shares are issued and outstanding;
WHEREAS, as of this date, the following persons are the beneficial owners of the
number and Class of issued and outstanding Shares of the share capital of the
Corporation (except in the case of Faire Trust wherein the beneficial owners of
the Shares are the beneficiaries of Faire Trust), as hereinafter set forth.
=================================================================================================================
CLASS A SHARES CLASS B SHARES CLASS P SHARES CLASS E SHARES
-----------------------------------------------------------------------------------------------------------------
Animation Cinepix Inc. 119,000 22,001
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 77,520
-----------------------------------------------------------------------------------------------------------------
Fiducie Famille ▇▇▇▇▇▇▇▇▇ 6,480
-----------------------------------------------------------------------------------------------------------------
Fox Family Worldwide, Inc. 58,000
-----------------------------------------------------------------------------------------------------------------
SGF Tech Inc. 168,007
-----------------------------------------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇, as trustee of 29,000
Faire Trust
-----------------------------------------------------------------------------------------------------------------
TOTAL 206,000 22,001 84,000 168,007
=================================================================================================================
WHEREAS the Convertible Debenture, as this expression is defined in Subsection
1.2.20 is, as of this date, of a principal amount of Two Million Eight Hundred
Ninety-Nine Thousand and Nine Hundred Fifty Canadian Dollars (CDN$2,899,950);
WHEREAS the Lions Gate Debenture, as defined in Subsection 1.2.34, is, as of
this date, of the principal amount of Four Million Canadian Dollars
(CDN$4,000,000);
WHEREAS other than as noted above and for the Option to Faire Trust and the
Option to ▇▇▇▇▇▇▇▇▇ and the anti-dilution right of SGF Tech provided by the
Articles, there are no other issued and outstanding Shares, Securities,
debentures or Convertible Securities of the Corporation;
WHEREAS the Corporation carries on the business of producing and distributing
movies, television series, mini-series, motion pictures, films, videotapes,
animated productions or other programs
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produced for television or theatrical release or for release in any other
medium, whether theatrically released or shown on network, free or cable, pay
and/or other television medium or in the home-movie market, and all ancillary
activities relating thereto, specifically within the fields of animation,
children and family, and documentary products and activities as well as numeric
studios, interactive and multi-media products (hereinafter the "BUSINESS");
WHEREAS each of the Shareholders wishes to provide for the manner in which the
affairs of the Corporation shall be conducted, their obligations with respect to
the Corporation and the disposition of their Shares in the Corporation on the
happening of certain events as well as various other issues;
WHEREAS a unanimous shareholders' agreement was entered into on June 23, 1998 by
the Shareholders, except Fiducie ▇▇▇▇▇▇▇▇▇ and SGF Tech, the Corporation, Lions
Gate, Lions Gate Films Corp., Cinepix Films Inc. and Cinepix Inc. (the "FORMER
AGREEMENT");
WHEREAS Fiducie ▇▇▇▇▇▇▇▇▇, who subsequently to June 23, 1998 became a
Shareholder, has agreed by an instrument in writing to be bound by and to
benefit of the provisions of the Former Agreement;
WHEREAS the Former Agreement was amended as of September 8, 2000 by way of
incorporating said amendments therein (the "FIRST AMENDMENT");
WHEREAS the Former Agreement was further amended on September 8, 2000 (the
"SECOND AMENDMENT");
WHEREAS the Shareholders wish to restate and amend the Former Agreement, as
amended by the First Amendment and the Second Amendment, so as to reflect the
provisions of the letter of intent executed by SGF Tech and the Corporation on
December 8, 2000, as amended on February 16, 2001, and by subsequent discussions
and the subscription made by SGF Tech under the Subscription Agreement.
Article 1 RECITALS, DEFINITIONS AND INTERPRETATION
1.1 The recitals and the following schedules form an integral part of this
Amended and Restated Agreement:
Schedule 1.2.20 : Convertible Debenture
Schedule 1.2.26 : Employment Agreement of ▇▇▇▇▇▇▇▇▇
Schedule 1.2.34 : Lions Gate Debenture
Schedule 1.2.37 : Option to Faire Trust
Schedule 1.2.38 : Option to ▇▇▇▇▇▇▇▇▇
Schedule 3.1 : Put Agreement between Lions Gate and Fox Family, as
amended, and Put Assignment Agreement, as amended
Schedule 15.1 : List of Competitors
1.2 In this Amended and Restated Agreement, unless something in the subject
matter or context is inconsistent therewith:
1.2.1 "ACCEPTABLE SECURITIES" means securities listed on an Acceptable
Stock Exchange, where, at the relevant time:
(1) such securities will be immediately freely tradeable upon
their acquisition;
(2) the market capitalization of all such securities of an
issuer shall be not less than one hundred million Canadian
dollars (CDN $100,000,000);
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(3) such securities are securities of a corporation of which not
less than twenty percent (20%) of all its outstanding
securities are so listed and freely tradeable; and
(4) the monthly weighted average trading volume of such
securities exceeds five percent (5%) of the total issued and
outstanding securities of a corporation; or
(5) securities which are immediately freely tradeable in Canada
upon their acquisition where, at the time of their
acquisition, a positive liquidity opinion as provided by
Rule 61-501 of the Ontario Securities Commission from a
member of the Acceptable Stock Exchange where the securities
are listed is given to the Corporation and its Shareholders.
1.2.2 "ACCEPTABLE STOCK EXCHANGE" means The Toronto Stock Exchange, the
New York Stock Exchange, NASDAQ or the Canadian Venture Exchange
Inc. (CDNX), or any successor thereto;
1.2.3 "AFFILIATE" has the meaning ascribed to such term in the
Securities Act (Quebec) as in effect at the date hereof;
1.2.4 "AMENDED AND RESTATED AGREEMENT" means, unless the context
otherwise requires, this Amended and Restated Unanimous
Shareholders Agreement and the schedules attached hereto;
1.2.5 "APPLICABLE FISCAL LAW" means the Income Tax Act (Canada), as
amended or replaced;
1.2.6 "APPLICABLE LAW" means any domestic or foreign statute, law,
ordinance, regulation, by-law or order that applies to the
Corporation or any of its Subsidiaries;
1.2.7 "AUDITORS" means the auditors of the Corporation and shall be
deemed to include the accountants of the Corporation where the
Corporation has not appointed auditors;
1.2.8 "BOARD" means the board of directors of the Corporation;
1.2.9 "BUSINESS" has the meaning ascribed to such term in the recitals
hereto;
1.2.10 "BUSINESS DAY" means a day which is not Saturday, Sunday or a
civic or statutory holiday in Montreal, Quebec;
1.2.11 "CANADIAN TAX CREDITS" includes any and all tax credits,
benefits, capital cost allowances, advantages, grants or
subsidies of any sort, existing or not at the date hereof, which
are or may become available to the Corporation and which relate
directly and are available exclusively to businesses that conduct
the Business (in whole or in part), including those currently
provided by, or arising from (without limitation), Sections 125.4
and 125.5 of the Income Tax Act (Canada), Regulation 1100 and
Proposed Regulation 1106 of the Income Tax Regulations, as
amended from time to time, or any replacement legislation or
regulation, as the case may be;
1.2.12 "CLASS A SHARE(S)" means one or more Class A Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
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1.2.13 "CLASS B SHARE(S)" means one or more Class B Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.14 "CLASS C SHARE(S)" means one or more Class C Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.15 "CLASS D SHARE(S)" means one or more Class D Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.16 "CLASS E SHARE(S)" means one or more Class E Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.17 "CLASS F SHARE(S)" means one or more Class F Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.18 "CLASS P SHARE(S)" means one or more Class P Share(s) in the
share capital of the Corporation as constituted at the date of
this Amended and Restated Agreement;
1.2.19 "CONTROL" (and "CONTROLLING"), whether used as a noun or verb,
means the de jure and/or de facto control of a partnership, joint
venture, corporation, trust or other entity (hereafter in this
definition the "ENTITY"), consisting of (i) the right (whether
through agreements or by law) to a majority of the votes in the
election of the board of directors of the Entity; or (ii) the
right (whether through agreements or by law) to direct the
majority of members of the board of directors of the Entity in
the exercise of their discretion and powers;
1.2.20 "CONVERTIBLE DEBENTURE" means the non-secured and convertible
debenture of a value of Two Million Eight Hundred Ninety-Nine
Thousand and Nine Hundred Fifty Canadian Dollars (CDN$2,899,950),
in capital, issued by the Corporation to Cinepix, which under
certain conditions, is convertible for each Fifty Canadian
Dollars (CDN$50) of capital into one (1) Class B Share or Class A
Share, as the case may be; copy of said Convertible Debenture is
attached hereto as Schedule 1.2.20;
1.2.21 "CONVERTIBLE SECURITY" means a security of a body corporate,
including a debt obligation, which is convertible into,
exchangeable for or which carries a right or obligation to
purchase, one or more Shares, voting securities or participating
securities of such body corporate, including, for greater
certainty, options and warrants;
1.2.22 "DIRECTOR" or "DIRECTORS" means a member or members of the Board;
1.2.23 "DISABILITY" means, in respect of ▇▇▇▇▇▇▇▇▇, (a) the physical or
mental disability of ▇▇▇▇▇▇▇▇▇, whether caused by accident,
illness or otherwise, arising during the time ▇▇▇▇▇▇▇▇▇ is an
employee of the Corporation and resulting in the fact that
▇▇▇▇▇▇▇▇▇ cannot for any consecutive period of two (2) years
perform all his then duties and responsibilities as employee of
the Corporation, as determined in
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writing by a doctor jointly retained by SGF Tech (if it is a
Shareholder), the Corporation and ▇▇▇▇▇▇▇▇▇, or (b) the fact that
a court of competent jurisdiction has declared ▇▇▇▇▇▇▇▇▇ to be
mentally incompetent or incapable of managing his affairs, or (c)
if the Corporation has disability insurance, the definition of
permanent disability as provided in such disability insurance;
1.2.24 "DISPOSE" and "DISPOSITION" means to sell, transfer, exchange,
give, dispose of or otherwise assign in any manner whatsoever
(including, without limitation, the grant of rights with respect
to property) or any attempt to perform any of the foregoing
actions;
1.2.25 "EMERGENCY LOAN" has the meaning ascribed to such terms in
Subsection 18.1.1;
1.2.26 "EMPLOYMENT AGREEMENT" means the employment agreement entered
into by the Corporation and ▇▇▇▇▇▇▇▇▇ under the agreement
reproduced in Schedule 1.2.26 as amended from time to time;
1.2.27 "ENCUMBER" means to hypothecate, mortgage, encumber with a
charge, lien, priority, appropriation or option or otherwise to
give as security or to encumber in any manner whatsoever, or any
attempt to perform any of the foregoing actions;
1.2.28 "FAIR MARKET VALUE" means the price determined in an open and
unrestricted market between informed and prudent parties, acting
at arm's length and under no compulsion to act, expressed in
terms of money; the Fair Market Value shall be determined by
reference to the aggregate price at which the Corporation (i.e.
the Corporation and its Subsidiaries, as a whole), as a going
concern, could be sold in an arm's length transaction to an
unaffiliated bona fide third party in an orderly sale without
regard to the lack of liquidity of its capital stock;
specifically, no discount or premium will be applied (including
for majority or minority stake);
1.2.29 "GAAP" means generally accepted accounting principles from time
to time approved by the Canadian Institute of Chartered
Accountants, or any successor institute, applicable as at the
date on which any calculation or determination is required to be
made in accordance with generally accepted accounting principles,
and where the Canadian Institute of Chartered Accountants
includes a recommendation in its Handbook concerning the
treatment of any accounting matter, such recommendation shall be
regarded as the only generally accepted accounting principle
applicable to the circumstances that it covers;
1.2.30 "GOOD FAITH OFFER" means:
(1) an offer which is addressed in writing by a Third Party or
any Shareholder to a Shareholder for the Disposition of all,
and not less than all, of the Shares held by such
Shareholder; or
(2) an offer which is addressed in writing by a Shareholder to a
Third Party or any other Shareholder for the Disposition of
all and not less than all of his or its Shares;
(3) in respect of which, the purchase price of the Shares, if
any, is payable as follows:
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A) not less than 75% in cash;
B) not more than 25% in Acceptable Securities; for the
purposes of the rights of first refusal pursuant to Article
5 of this Amended and Restated Agreement, such portion of
the purchase price which is payable in Acceptable Securities
shall be deemed to be payable in cash and to be equal to the
weighted average of the closing price of such Acceptable
Securities for the past twenty (20) trading days as at the
date immediately preceding the date of the Good Faith Offer;
and in respect of which there accrues to the Shareholder no
collateral benefit other than the purchase price of the
Shares; and which contains no conditions (except with
respect to the amount of the purchase price and its payment)
which one or more of the Parties, as the case may be, would
be unable to meet; or
(4) an offer which is addressed in writing by a Third Party or
any Shareholder to a Shareholder for the Disposition of all
and not less than all, of the Shares held by such
Shareholder, which offer is duly accepted by all
Shareholders.
1.2.31 "GROUP" means the Corporation and its Subsidiaries;
1.2.32 "INTER-CORPORATION ARRANGEMENTS" has the meaning ascribed to such
terms in Subsection 15.1.22;
1.2.33 "LENDING SHAREHOLDER" has the meaning ascribed to such terms in
Section 18.1;
1.2.34 "LIONS GATE DEBENTURE" means the non-secured convertible
debenture expiring no later than June 30, 2004, unless such
debenture is repaid by the Corporation, of a face value of Four
Million Canadian Dollars (CDN$4,000,000), in capital, issued by
the Corporation to Lions Gate, as amended as of the date hereof;
a copy of the Lions Gate Debenture is attached hereto as Schedule
1.2.34;
1.2.35 "MATERIAL" or "MATERIALLY" means, if convertible into an amount
of money, an event having an adverse financial consequence of at
least One Hundred Thousand Canadian Dollars (CDN$100,000) with
respect to the Corporation and, if the context does not permit an
evaluation of materiality in a monetary sense, a circumstance or
event which would reasonably be considered to adversely affect
the decision of a Third Party, acting reasonably;
1.2.36 "OFFICER" means a person holding a management or executive
position, including a position considered as such in accordance
with the then existing rules and practices applicable in the
Business of the Corporation, within the Corporation, and includes
a Senior Officer;
1.2.37 "OPTION TO FAIRE TRUST" means the option granted to Faire Trust
under the agreement, a copy of which is attached hereto as
Schedule 1.2.37;
1.2.38 "OPTION TO ▇▇▇▇▇▇▇▇▇" means the option granted to ▇▇▇▇▇▇▇▇▇ under
the agreement, a copy of which is attached hereto as Schedule
1.2.38;
1.2.39 "PARTIES" means, collectively, the Shareholders, Lions Gate and
the Corporation;
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1.2.40 "PERSON" shall be broadly interpreted and includes an
individual, body corporate, partnership, joint venture, trust,
association, unincorporated organization, the Crown, any
governmental authority or any other entity recognized by law;
1.2.41 "▇▇▇▇▇▇▇▇▇'▇ CORPORATION" has the meaning ascribed to such term
in Section 3.2;
1.2.42 "PROPORTIONAL SHARE OF THE EMERGENCY LOAN" has the meaning
ascribed to such term in Section 18.3;
1.2.43 "PRO RATA BASIS" means the proportion that the number of Class A
Shares, Class B Shares, Class P Shares and Class E Shares held
by a Shareholder bears to the total number of outstanding Class
A Shares, Class B Shares, Class P Shares and Class E Shares,
established as if Class E Shares held by SGF Tech would have
been exchanged into Class A Shares, pursuant to the Articles;
1.2.44 "PUBLIC LISTING" means an underwritten treasury initial public
offering of Class A Shares or any other event resulting in the
Class A Shares being traded on an Acceptable Stock Exchange and
having total net proceeds to the Corporation (prior to
underwriting commissions and offering expenses) of at least
CDN$10,000,000;
1.2.45 "PURCHASER", unless the context otherwise requires, means the
acquirer of Shares pursuant to this Amended and Restated
Agreement;
1.2.46 "QUEBEC OFFICER" means an Officer who is a Quebec Resident;
1.2.47 "QUEBEC RESIDENT" means a person domiciled in the Province of
Quebec who also complies with all the requirements to qualify
the Corporation and its Business for the Quebec Tax Credits and,
for greater certainty, excludes any person who is not resident
in Quebec for purposes of Section 1029.8.34 and following of the
Taxation Act (Quebec) (R.S.Q., c. I-3) and any person not
domiciled in the Province of Quebec for the prescribed periods
under the Regulation respecting the recognition of films as
Quebec films, adopted pursuant to the Cinema Act (Quebec)
(R.S.Q., c. C-18.1), as amended or replaced;
1.2.48 "QUEBEC TAX CREDITS" includes any and all tax credits, benefits,
capital cost allowances, advantages, grants or subsidies of any
sort, existing or not at the date hereof, which are or may
become available to the Corporation and its Subsidiaries
relating directly and available exclusively to the Business
conducted by each of the Corporation and its Subsidiaries (in
whole or in part), including those currently provided by, or
arising from (without limitation), Sections 1029.8.34 through
1029.8.36.0.16 (inclusive) as well as 1129.1 through 1129.4.3.17
(inclusive) of the Taxation Act (Quebec) and Regulations 130 R
55.3.1 through 130 R 55.6.1 (inclusive), 1029.8.34R1 as well as
1029.8.34R2 of the Regulation respecting the Taxation Act
(Quebec), as amended from time to time, or any replacement
legislation or regulation, as the case may be;
1.2.49 "RELATED PARTY" with respect to another Person (the "Other
Person") means (i) a Person who/which does not deal at arm's
length with the Other Person or with the Person described in
subparagraph (ii) of this definition, within the meaning of the
Applicable Fiscal Law; (ii) a Subsidiary of the Other Person;
(iii) a Person in relation to whom/which the Other Person is a
Subsidiary or (iv) a Person
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who/which is an Affiliate of the Other Person. Notwithstanding
the foregoing, a Related Party of the Corporation shall
exclude the Subsidiaries of the Corporation and their
Subsidiaries;
1.2.50 "SECURITIES" means any rights, warrants or options to acquire
Shares or other Convertible Securities of the Corporation or
which are exchangeable or convertible into Shares or Convertible
Securities of the Corporation;
1.2.51 "SENIOR OFFICER" means an Officer holding a senior position
within the Corporation, including the offices of chairman of the
board, president, chief executive officer, chief operating
officer, general manager, chief financial officer,
vice-presidents and treasurer;
1.2.52 "SHAREHOLDERS" has the meaning ascribed to it in the preamble
and any other Person bound by this Amended and Restated
Agreement which becomes a holder of Shares;
1.2.53 "SHARES" means any share or shares in the share capital of the
Corporation now or at any time hereafter owned by the
Shareholders and excludes options to buy Shares pursuant to the
Option to ▇▇▇▇▇▇▇▇▇, the Option to Faire Trust and the Stock
Option Plan;
1.2.54 "STOCK OPTION PLAN" means the stock option plan for Directors
and Senior Officers of the Corporation and its Subsidiaries
which shall be put into place on or before December 31, 2001, as
provided in Section 6.12 of the Subscription Agreement;
1.2.55 "SUBSCRIPTION AGREEMENT" means the subscription agreement
entered into by SGF Tech and the Corporation, as of the date
hereof, and to which intervened Cinepix, ▇▇▇▇▇▇▇▇▇ and Fiducie
▇▇▇▇▇▇▇▇▇ pursuant to which SGF Tech subscribed for one hundred
sixty-eight thousand and seven (168,007) Class E Shares;
1.2.56 "SUBSIDIARY" has the meaning ascribed to such term in the
Securities Act (Quebec) as in effect as the date hereof;
1.2.57 "THIRD PARTY" means any Person who is not a Shareholder, the
Corporation, an Affiliate of the Corporation or a Related Party
of a Shareholder, the Corporation or an Affiliate of the
Corporation.
Article 2 CONTRIBUTION OF THE SHAREHOLDERS
2.1 Subject to Section 2.2 in the case of Fox Family, the Shareholders of
the Corporation hereby undertake to contribute, on a reasonable basis,
to the Business of the Corporation, to enable the Corporation to have
access to their own network of contacts and markets and, subject to
execution of appropriate agreements, to allow the Corporation to benefit
from their own expertise in so far as it can be useful to the
Corporation in the operation of the Business.
2.2 Fox Family acknowledges that the Corporation has issued Shares of its
Class A capital to Fox Family in order to induce Fox Family to continue
to contract with the Corporation to produce or co-produce animated,
children and family movies, televisions series, mini-series, motion
pictures, films, videotapes, or other programs to be procured for
television exhibition or theatrical release. Fox Family and the
Corporation have entered into similar business arrangements in the past
and currently intend to explore additional productions and
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co-productions in the future, it being understood and agreed, however,
that Fox Family is under no obligation to deal with the Corporation on
an exclusive basis and that it has no obligation to enter into any
additional production or co-production whatsoever.
Article 3 RESTRICTIONS ON TRANSFER OF SHARES
3.1 Except as expressly provided in this Amended and Restated Agreement and
except (i) with respect to ▇▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇▇▇▇▇'▇ Corporation's (as
defined in Section 3.2 below) right to borrow and hypothec Shares and/or
Convertible Debenture (then held and/or to be purchased) to finance
purchases of Shares or of the Convertible Debenture, which may be
acquired by ▇▇▇▇▇▇▇▇▇ (and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation, as the case may
be) under the Option to ▇▇▇▇▇▇▇▇▇ or under Article 6, and for the
transfer of Shares or of the Convertible Debenture bought by ▇▇▇▇▇▇▇▇▇
(and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation, as the case may be) under the Option to
▇▇▇▇▇▇▇▇▇ or under Article 6 if a creditor having funded the acquisition
of the said Shares or the Convertible Debenture enforces its rights and
for the sale or transfer of the said Shares or the Convertible Debenture
by such creditor to a Third Party in case of enforcement of said
creditor's rights, (ii) with respect to Fox Family, A Faire Aujourd'hui
Inc. ("A FAIRE") and Faire Trust, for the pledge of Fox Family's Shares
pursuant to the Share Pledge Agreement entered into on June 23, 1998,
between Fox Family and A Faire of fifty-eight thousand (58,000) Class A
Shares as security for a Three Million Canadian Dollars (CDN$3,000,000)
loan made by A Faire to Fox Family, as amended (the "PLEDGED SHARES"),
for the transfer of the Pledged Shares by Fox Family to A Faire, if A
Faire enforces the Pledge Agreement or pursuant to the loan agreement
entered into by Fox Family and A Faire, for the sale or transfer of
Pledged Shares by A Faire to a Third Party or to Faire Trust, following
an enforcement of the Pledge Agreement, for the transfer of the Pledged
Shares to Lions Gate pursuant to the Put Agreement entered on June 23,
1998 by Fox Family and Lions Gate, as amended (the "PUT AGREEMENT") and
for the transfer of the Pledged Shares to Lions Gate by A Faire or Faire
Trust pursuant to the Put Agreement, as amended, which has been assigned
to A Faire by Fox Family pursuant to the Put Agreement Assignment
entered into on June 23, 1998, by Fox Family and A Faire, as amended,
(iii) except under Section 5.2 herein and Sections 6.3 and 6.4 of the
Employment Agreement and (iv) with respect to Lions Gate Debenture or
any shares acquired by Lions Gate pursuant to the Put Agreement, which
may be Encumbered in favour of Lions Gate's bankers, subject to the
provision of this Agreement, ▇▇▇▇▇▇▇▇▇ and Fiducie ▇▇▇▇▇▇▇▇▇ shall not
dispose of any Shares, Securities and/or the Convertible Debenture on or
before the earlier of (i) July 8, 2004 or (ii) the day on which occurs a
Public Listing of the Corporation, and no Shareholder (or Lions Gate
with respect to the Lions Gate Debenture) shall Encumber any Shares,
Securities and/or the Convertible Debenture and the Lions Gate
Debenture, without the prior written consent of the other Shareholders
acting reasonably, it being agreed that such consent may be withheld
unreasonably if the Encumbrance is made to a competitor of the
Corporation. Except under Section 3.2 hereunder, Shareholders and Lions
Gate may only Dispose of the totality, and not part, of their Shares,
Securities, Convertible Debenture or the Lions Gate Debenture.
12
3.2 Notwithstanding Section 3.1 above, each of the Shareholders (hereinafter
in Article 3, the "TRANSFEROR") shall, at all times, have the right to
Dispose of all or part of its Shares, Securities and/or the Convertible
Debenture pursuant to this Amended and Restated Agreement to one of its
Affiliates or Subsidiaries or, in the case of ▇▇▇▇▇▇▇▇▇, to a
corporation that he Controls and/or to Fiducie ▇▇▇▇▇▇▇▇▇ (except if
stipulated otherwise, hereinafter collectively "▇▇▇▇▇▇▇▇▇'▇
Corporation"), provided that prior to such a transfer (with respect to
transferred Shares, Securities and/or the Convertible Debenture), the
given Affiliate or Subsidiary or ▇▇▇▇▇▇▇▇▇'▇ Corporation shall be
previously required to confirm in writing to the other Shareholders its
irrevocable consent to be bound by the provisions of this Amended and
Restated Agreement relative to the Transferor (with respect to
transferred Shares, Securities and/or the Convertible Debenture) and to
succeed in all of the Transferor's rights, advantages, obligations and
liabilities hereunder (with respect to transferred Shares, Securities
and/or the Convertible Debenture) and is deemed to substitute itself for
the Transferor as if it were named in each provision of this Amended and
Restated Agreement (other than this Section 3.2) (with respect to
transferred Shares, Securities and/or the Convertible Debenture), it
being understood however that the Transferor shall remain solidarily
liable for the entire compliance with this Amended and Restated
Agreement by such an Affiliate or a Subsidiary or ▇▇▇▇▇▇▇▇▇'▇
Corporation. The Shares, Securities and/or the Convertible Debenture
will remain subject to the provisions of this Amended and Restated
Agreement within the hands of such an Affiliate or a Subsidiary or
▇▇▇▇▇▇▇▇▇'▇ Corporation. The Transferor must give notice of its
intention to effect a transfer pursuant to this Section 3.2 at least
fifteen (15) days before the transfer. Before a transfer is effected and
once a year thereafter, the other Shareholders may require from the
president of the Affiliate or Subsidiary or ▇▇▇▇▇▇▇▇▇'▇ Corporation (or
in the case of Fiducie ▇▇▇▇▇▇▇▇▇, from the trustees thereof) who is to
receive Shares, Securities and/or the Convertible Debenture from the
Transferor or, as the case may be, has been transferred Shares,
Securities and/or the Convertible Debenture of the Corporation, a sworn
affidavit as to the name of its Controlling shareholders and the
percentage of voting shares they hold in the capital of the Affiliate or
Subsidiary or ▇▇▇▇▇▇▇▇▇'▇ Corporation (or in the case of Fiducie
▇▇▇▇▇▇▇▇▇, a sworn affidavit to the effect that ▇▇▇▇▇▇▇▇▇ is one of the
trustees thereof). Any default in producing this sworn affidavit and any
loss of Control of the Affiliate or Subsidiary or ▇▇▇▇▇▇▇▇▇'▇
Corporation by the Transferor (or in the case of Fiducie ▇▇▇▇▇▇▇▇▇, any
default in producing the sworn affidavit or the fact that ▇▇▇▇▇▇▇▇▇ is
no longer a trustee of Fiducie ▇▇▇▇▇▇▇▇▇) shall be deemed to be a
default under this Amended and Restated Agreement and shall give rise to
the application of Article 12 of this Amended and Restated Agreement.
3.3 Notwithstanding any other provision hereof to the contrary, SGF Tech may
freely transfer its Shares, as part of a transfer of its investment
portfolio or any substantial part thereof such as required by law or by
the Quebec Government, to any of its Affiliates or to the Quebec
Government, any agency thereof or any other institutional investor
designated by the Quebec Government, including without limitation, any
direct or indirect Subsidiary of SOCIETE GENERALE DE FINANCEMENT DU
QUEBEC, upon notice to the other Shareholders and the Corporation but
without having to obtain their consent thereto, provided that at the
time of such transfer, the transferee shall forthwith and in writing
become a party to this Amended
13
and Restated Agreement in lieu and place of SGF and shall be assigned,
and shall assume all rights and obligations of SGF hereunder and under
the Subscription Agreement.
3.4 In the event of a Disposition of any Shares, Securities, the Convertible
Debenture and/or the Lions Gate Debenture to a person who is not a party
to this Amended and Restated Agreement, including for greater certainty
in the circumstances described in Section 3.1, as a condition precedent
to being registered as a holder of such Shares, Securities, the
Convertible Debenture and/or the Lions Gate Debenture and to the
exercise by such transferee of any rights attaching to such Shares,
Securities, the Convertible Debenture and/or the Lions Gate Debenture,
the transferee of such Shares, Securities, the Convertible Debenture
and/or the Lions Gate Debenture, deliver an agreement, in form and on
terms reasonably satisfactory to the Shareholders, whereby such
transferee agrees to be bound by the provisions hereof as if he were an
original party hereto. After the execution of such agreement and subject
to all other relevant provisions of this Amended and Restated Agreement,
except as otherwise provided herein, the transferee shall have the same
rights and obligations with respect to such Shares, Securities, the
Convertible Debenture and/or the Lions Gate Debenture as the Party from
whom it acquired such Shares, Securities, the Convertible Debenture
and/or the Lions Gate Debenture.
3.5 The Corporation shall cause all share certificates now or later
authorized or issued to have printed thereon:
"The right of the holder of this certificate to sell, transfer, assign
or otherwise dispose, mortgage, pledge, hypothecate, charge or otherwise
encumber the Shares represented by this certificate is governed by an
amended and restated unanimous shareholders' agreement, dated as July
10, 2001, as may be amended from time to time, and by the Articles, as
may be amended from time to time."
3.6 No Disposition of Shares, Securities, the Convertible Debenture and/or
the Lions Gate Debenture in violation of this Amended and Restated
Agreement shall be valid, and no such Disposition shall be recorded in
the securities register, minute book or corporate records of the
Corporation or be opposable to the Corporation and the other Parties
herein and any Person acquiring Shares, Securities, the Convertible
Debenture and/or the Lions Gate Debenture shall previously execute an
intervention to declare having taken cognizance of this Amended and
Restated Agreement and to be bound by its provisions.
3.7 The Shareholders and the Corporation expressly consent to any
Disposition of Shares, Securities, the Convertible Debenture and/or the
Lions Gate Debenture, pursuant to this Amended and Restated Agreement
and carried out in accordance with the provisions of this Amended and
Restated Agreement and any Disposition of Shares, Securities, the
Convertible Debenture and/or the Lions Gate Debenture permitted by
Sections 3.1, 3.2 and 3.3 of this Amended and Restated Agreement.
Notwithstanding anything else in this Amended and Restated Agreement,
other than the transfer of the Pledged Shares to Lions Gate by Fox
Family under the Put Agreement, the Corporation hereby undertakes not to
give effect to, any Disposition of any of the Pledged Shares without
first obtaining the written consent of A Faire to such Disposition.
3.8 Notwithstanding Section 3.1, but subject to Sections 3.2 and 6.2, and as
long as SGF Tech is a Shareholder, ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation and Fiducie ▇▇▇▇▇▇▇▇▇ undertake
14
not to dispose of any of their Shares, Securities or Convertible
Securities until the earlier of the following dates: (i) July 8, 2004;
or (ii) 180 days following the day on which occurs a Public Listing of
the Corporation or any lesser period agreed by SGF Tech.
Article 4 ISSUANCE OF SHARES
4.1 Subject to Sections 4.7 to 4.12, no Shares of any classes, Securities or
Convertible Securities shall be issued by the Corporation, unless
Subsection 15.1.21 of this Amended and Restated Agreement was complied
with, and furthermore, when an issue of Class A Shares, Securities or
Convertible Securities directly or indirectly convertible into or
exchangeable for Class A Shares (the "CONVERTIBLE SECURITIES INTO CLASS
A SHARES") is involved, unless the Class A Shares or Convertible
Securities into Class A Shares to be issued have been first offered on
equal terms to the Shareholders holding, either Class A, Class B, Class
P and Class E Shares each of whom hold a pre-emptive right to acquire
the offered Class A Shares or Convertible Securities into Class A Shares
on a Pro Rata Basis immediately prior to the date of such offer.
4.2 The pre-emptive right provided for in Section 4.1 may be exercised by
each Shareholder holding either Class A, Class B, Class P or Class E
Shares within forty-five (45) days of receipt of a written notice by the
Corporation with respect to the said contemplated issue of Class A
Shares or Convertible Securities into Class A Shares; such notice must
inform each such Shareholder of the number of Shares Class A Shares or
Convertible Securities into Class A Shares he may acquire and all
conditions of the issue, including the issue price. Failure by a
Shareholder to notify the Corporation within the ten (10) day delay that
he accepts to exercise his pre-emptive right is deemed a refusal.
4.3 Each Shareholder may exercise his pre-emptive right by notifying the
Corporation in writing of the exercise of his pre-emptive right
acceptance and by notifying the Corporation (in the same notice) of the
maximum number of Class A Shares and/or Convertible Securities into
Class A Shares he would acquire if one (or more) Shareholder does not
exercise his pre-emptive right.
4.4 If one (or more) Shareholder refuses to exercise his pre-emptive right,
his pre-emptive right will accrue on a Pro Rata Basis in favour of those
Shareholders who have duly exercised their pre-emptive rights and have
duly notified the Corporation of their consent to acquire additional
Class A Shares and/or Convertible Securities into Class A Shares under
their accrued pre-emptive rights. If more than one Shareholder want to
exercise their accrued pre-emptive rights, the additional Class A Shares
and/or Convertible Securities into Class A Shares shall be divided
between the Shareholders exercising the said accrued pre-emptive rights
on a Pro Rata Basis.
4.5 Failure by Shareholders to accept to acquire all or part of the
contemplated issue of Class A Shares and/or Convertible Securities into
Class A Shares and to duly comply with their acceptance shall allow the
Corporation to issue the non-subscribed Class A Shares and/or
Convertible Securities into Class A Shares to Third Parties who do not
have any pre-emptive rights, at terms and conditions including the price
of issue, not more advantageous than those offered to the Shareholders
in the notice to exercise the pre-emptive rights, provided however that
such Third Parties must agree to be bound by the terms of this Amended
and Restated Agreement as provided in Section 3.3. Such issuance must
take place no sooner than fifteen
15
(15) days and no later than sixty (60) days after the expiry of the
above process provided for in Sections 4.1 to 4.3, failing which, the
provisions of these Sections shall again apply to the said issuance.
4.6 Notwithstanding the foregoing and Subsection 15.1.21, the Corporation
shall be entitled to issue the following Shares from its treasury, with
the resolution of the directors of the Corporation obtained at a board
meeting duly held to this effect or by execution of a resolution in
writing without, if applicable, having to first offer to all the
Shareholders by virtue of their pre-emptive rights:
4.6.1 such number of Shares to Faire Trust as required following any
exercise by Faire Trust of the Option to Faire Trust;
4.6.2 the Shares that may be issued pursuant to the Convertible
Debenture and the Lions Gate Debenture;
4.6.3 such number and types of Shares to ▇▇▇▇▇▇▇▇▇ as required
following any exercise by ▇▇▇▇▇▇▇▇▇ of the Option to ▇▇▇▇▇▇▇▇▇;
4.6.4 such number of Class D Shares as required by any stock option
exercise pursuant to the Stock Option Plan;
4.6.5 Shares issued following the automatic conversions provided for
in Section 16.2;
4.6.6 such number of Class C Shares that may be issued pursuant to
Sections 16.3 and 16.6;
4.6.7 such number of Class A Shares that maybe issued to SGF Tech
pursuant to the Articles and pursuant to Section 3 of the
Subscription Agreement.
4.7 No Class B Shares may be issued except upon a conversion of part or all
of the Convertible Debenture or in accordance with the automatic
conversion provided for in Section 16.2 and in the Articles.
4.8 No Class P Shares may be issued except to ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇'▇
Corporation.
4.9 No Class C Shares may be issued except to ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇'▇
Corporation, or if ▇▇▇▇▇▇▇▇▇ is no longer an Officer of the Corporation,
subject to SGF prior approval, to the highest ranking Quebec Officer of
the Corporation pursuant to the terms of the Option to ▇▇▇▇▇▇▇▇▇ or the
provisions of Section 16.3 or 16.6 of this Amended and Restated
Agreement, as the case may be.
4.10 No Class D Shares may be issued except pursuant to the Stock Option
Plan.
4.11 No Class E Shares and no Class F Shares may be issued except to SGF Tech
or its successors and assignees pursuant to Section 3.3 of the Amended
and Restated Agreement.
4.12 Except in compliance with this Amended and Restated Agreement and with
the Option to ▇▇▇▇▇▇▇▇▇ and the Option to Faire Trust and without
restricting the provisions of Article 16 of this Amended and Restated
Agreement, the Corporation hereby agrees not to issue any additional
voting Shares and not to approve any transfer of voting Shares, unless
an affirmative written unrestricted legal opinion is obtained from an
independent counsel jointly retained by the Corporation, ▇▇▇▇▇▇▇▇▇,
Cinepix and SGF Tech (or their successors and assigns), at the
Corporation's costs, which states that said issuance or transfer, as the
case may be, would not result in the loss for the Corporation of any of
the Quebec Tax Credits and Canadian Tax Credits for a given financial
year, it being provided however that this Section 4.12 shall cease to
apply (without retroactive effects) if the aggregate of the Quebec
16
Tax Credits and the Canadian Tax Credits (without taking into account
any expected loss of these credits resulting from said issue or
transfer) represent for a given financial year (of twelve (12) months)
and are expected to represent for the following financial year (of
twelve (12) months) (according to the then approved budget) less than
five percent (5%) of the Corporation's annual revenues.
It is also agreed that this Section 4.12 shall not apply to said issue
or transfer (but may apply to subsequent issues or transfers): (1) in
the case of an expected loss of the Quebec Tax Credits only, resulting
from said issue or transfer, if the Quebec Tax Credits (without taking
into account the expected loss of the Quebec Tax Credits) represent for
a given financial year (of twelve (12) months) and are expected to
represent for the following financial year (of twelve (12) months)
(according to the then approved budget) less than two percent (2%) of
the Corporation's annual revenues; or (2) in the case of an expected
loss of the Canadian Tax Credits only, resulting from said issue or
transfer, if the Canadian Tax Credits (without taking into account the
expected loss of the Canadian Tax Credits) represent for a given
financial year (of twelve (12) months) and are expected to represent for
the following financial year (of twelve (12) months) (according to the
then approved budget) less than two percent (2%) of the Corporation's
annual revenues.
Article 5 RIGHTS OF FIRST REFUSAL
5.1 Subject to Article 6 hereunder, when this Article 6 is applicable, if,
at any time for all the Shareholders, except ▇▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇'▇ Corporation and Fiducie ▇▇▇▇▇▇▇▇▇, or if at any time after
the earlier of the two (2) dates provided for in Section 3.8, for
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation and Fiducie ▇▇▇▇▇▇▇▇▇ any
Shareholder or Lions Gate with respect to the Lions Gate Debenture (the
"VENDOR") wishes to Dispose of all but not less than all of his or its
Shares or the Lions Gate Debenture pursuant to a Good Faith Offer (the
"OFFERED SHARES"), he or it first shall offer to the other Shareholders
(the "OFFEREE") an opportunity to purchase such Shares or the Lions Gate
Debenture on a Pro Rata Basis (excluding the Shares of the Vendor) at
the price and on the terms set out in the Good Faith Offer; such said
notice of the Good Faith Offer must include a copy of the Good Faith
Offer and an undertaking that the Vendor will accept the Good Faith
Offer and complete the transactions contemplated thereby, if
Shareholders do not exercise their rights of first refusal (hereinafter
in this Article and in Article 6 hereafter the "NOTICE").
In the event that Article 6 is not applicable by reasons of (A) the Good
Faith Offer is not exclusively covering the Shares and/or Convertible
Debenture of Cinepix (and its successors); or (B) if ▇▇▇▇▇▇▇▇▇ and
Pettigrew's Corporation refuse or fail to exercise their rights to
purchase under Article 6, the Shareholders (other than the Vendor but
including ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation) may accept in writing
the offer of the Vendor within (i) sixty (60) days after the receipt of
the Notice if Section 6.1 is not applicable because the Good Faith Offer
does not exclusively cover Shares and/or Convertible Debenture of
Cinepix (and its successors); or (ii) ninety (90) days after the receipt
of the Notice if ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation advise that they
do not wish, or if they fail, to exercise their rights pursuant to
Article 6 hereunder; or (iii) one hundred twenty (120) days after the
receipt of the Notice if ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation, after
having exercised their rights to purchase under Article 6 hereunder,
fail to purchase at the Closing, as outlined in Section 6.2
17
hereunder or (iv) thirty (30) days when the Notice is with respect to
only of the Lions Gate Debenture. Any acceptance must notify the Vendor
of the additional number of Shares or additional proportion of the Lions
Gate Debenture, that any accepting Shareholder is willing to purchase
pursuant to the Vendor's offer in the event one or more other
Shareholders shall not accept the Vendor's offer. Any Shareholder not
responding within the applicable delay shall be deemed to have refused
the offer of the Vendor. In the event that one or more of the other
Shareholders do not accept to purchase all of the Vendor's Shares or the
Lions Gate Debenture pursuant to the Good Faith Offer as contained in
the Notice, the Vendor shall be obliged to sell his or its Shares or the
Lions Gate Debenture, as the case may be, to the other Shareholders or
to the Third Party who made the Good Faith Offer or who received the
Good Faith Offer at the price and on the terms set out in the Good Faith
Offer within the next sixty (60) days, provided however that the Third
Party who made the Good Faith Offer agrees to be bound by the terms of
this Amended and Restated Agreement as provided in Section 3.4. In the
event that more than one Shareholder accepts the Vendor's offer as
contained in the Notice and expresses its acceptance to purchase
additional Shares, or an additional proportion of the Lions Gate
Debenture, not bought by other Shareholders, if the accepting
Shareholders offer to purchase more than one hundred percent (100%) of
the Vendor's Shares, or the Lions Gate Debenture, pursuant to this
Article 5, those Shareholders who accept such offer or any of them,
having expressed their consent to acquire an additional number of Shares
or an additional proportion of the Lions Gate Debenture, shall be
entitled to purchase the remainder of the Vendor's Shares or the
Vendor's Lions Gate Debenture on a Pro Rata Basis (excluding the Shares
of the Vendor, the Shares of any other Shareholder refusing the offer
pursuant to this Article 5 and the Shares of any other Shareholder
accepting the offer made pursuant to this Article on a Pro Rata Basis
but refusing to purchase additional Shares or an additional proportion
of the Lions Gate Debenture) at the price and on the terms set out in
the Good Faith Offer. In the event that none of the other Shareholders
accepts to purchase all of the Vendor's Shares or Vendor's Lions Gate
Debenture pursuant to the Good Faith Offer or if the Vendor's Shares or
the Vendor's Lions Gate Debenture are not sold to the Third Party who
made the Good Faith Offer within the sixty (60) days next following the
completion of the above process, the provisions of this Article 5 shall
again apply from that time forward and from time to time.
5.2 Without limiting Section 5.1 above and when Section 6.1 hereafter does
not apply or if ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation refuse or fail to
exercise their rights to purchase or refuse or fail to purchase at
Closing under Article 6, should a Shareholder holding more than fifty
percent (50%) of the votes in the issued and outstanding Shares of the
share capital of the Corporation (a "MAJORITY SHAREHOLDER") or ▇▇▇▇▇▇▇▇▇
(including ▇▇▇▇▇▇▇▇▇'▇ Corporation) receive a Good Faith Offer, all
other Shareholders, and, as the case may be, Lions Gate for the Lions
Gate Debenture, have the right (but not the obligation), under said Good
Faith Offer to sell their Shares and Securities on the same terms and
conditions as those offered to the Majority Shareholder or ▇▇▇▇▇▇▇▇▇
(including ▇▇▇▇▇▇▇▇▇'▇ Corporation), otherwise the Majority Shareholder
or ▇▇▇▇▇▇▇▇▇ (including ▇▇▇▇▇▇▇▇▇'▇ Corporation), may not accept the
Good Faith Offer. The Good Faith Offer made to the Majority Shareholder
or ▇▇▇▇▇▇▇▇▇ (including ▇▇▇▇▇▇▇▇▇'▇ Corporation) must be open for
acceptance by all other
18
Shareholders for a period of not less than one hundred twenty (120) days
from the receipt of the Notice by all other Shareholders.
Notwithstanding this Section 5.2, when ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation exercise their rights provided by Section 6.1 herein on the
sale of Shares of a Majority Shareholder, this Section 5.2 is not
applicable, unless the closing of such transaction by ▇▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇'▇ Corporation, as purchaser, does not take place.
5.3 Notwithstanding the provisions of Section 5.2 above and when Section 6.1
hereafter does not apply or if ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation
refuses or fails to exercise its rights to purchase or refuses or fails
to purchase at Closing under Article 6, it is understood that all
Shareholders will have at all times, the right to sell all their Shares
on a Pro Rata Basis, if:
(6) ▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation or one or more Shareholder(s)
holding more than thirty percent (30%) of the voting Shares of
the share capital of the Corporation agree(s) to sell his, its
or their Shares pursuant to a Good Faith Offer, provided that
the other Shareholders have refused to exercise their rights of
first refusal; or
(7) a transaction or series of transactions would result in a change
of Control of the Corporation; concurrently with the event
described in (i) and (ii) and on the same terms and conditions
as those offered to ▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation or the
Shareholder(s) holding more than thirty percent (30%) of the
voting Shares, otherwise the Shareholder(s) holding more than
thirty percent (30%) of the voting Shares, ▇▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇▇▇▇'▇ Corporation may not accept the Good Faith Offer.
Notwithstanding this Section 5.3, when ▇▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇'▇ Corporation exercises its rights under Section 6.1
with respect to the sale of Shares to Shareholder(s) holding
more than thirty percent (30%) of the voting Shares, this
Section 5.3 is not applicable, unless the closing of such
transaction by ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation, as
purchaser, does not take place.
5.4 Subject to ▇▇▇▇▇▇▇▇▇'▇ and ▇▇▇▇▇▇▇▇▇'▇ Corporation's rights outlined in
Article 6 hereafter, any Disposition of the Convertible Debenture and
Lions Gate Debenture shall be subject to this Article 5. For greater
certainty, no partial sale of the Convertible Debenture or of the Lions
Gate Debenture is permitted.
5.5 Article 5 shall cease to apply should the Corporation successfully
complete a Public Listing, except for an event giving rise to the first
refusal rights mechanism which has occurred prior to the completion of
said Public Listing and which is still existing when the Corporation
completes its Public Listing.
Article 6 RIGHTS OF ▇▇▇▇▇▇▇▇▇ AND PETTIGREW'S CORPORATION TO
PURCHASE ALL SHARES AND/OR CONVERTIBLE DEBENTURE COVERED BY AN
OFFEROR'S OFFER MADE TO CINEPIX (AND ITS SUCCESSORS)
6.1 Without restricting the provisions of Article 16 hereinafter, in the
event Cinepix (and its successors) receives a Good Faith Offer (other
than from ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇'▇ Corporation) (hereinafter in this
Article, the "OFFEROR") to purchase all of its Shares and/or the
Convertible Debenture (in its entirety) which it desires to accept,
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation (at ▇▇▇▇▇▇▇▇▇'▇ choice) shall,
notwithstanding the provisions of Section 5.1 above, have the exclusive
right to purchase all the Shares and/or the Convertible Debenture
mentioned in the Offeror's offer made to Cinepix (and its successors) at
the price
19
and on the terms set out therein. The parties agree that, provided that
a sale by Cinepix (or its successors) to a Third Party or a Shareholder
has taken place after giving rise to this Article 6, this priority right
of first refusal shall not apply thereafter and ▇▇▇▇▇▇▇▇▇ and
Pettigrew's Corporation shall only benefit from the rights of first
refusal provided in Article 5.
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation may accept in writing to
purchase all the Shares and/or the Convertible Debenture mentioned in
the Offeror's offer within sixty (60) days from receipt of the Notice by
forwarding acceptance in writing to Cinepix (or its successors) together
with (i) a letter or other documents from a bona fide financial
institution, lender or investor (or a combination thereof) approving
with or without conditions to finance such an eventual acquisition by
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation or (ii) evidence of sufficient
funding by ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation to finance such an
eventual acquisition. Failure to respond as aforesaid within this delay
shall be deemed to be a refusal of ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation to exercise their rights pursuant to this Section 6.1 and
then Cinepix (and its successors), as Vendor, shall be required to
continue the process already commenced pursuant to Article 5 above.
6.2 Notwithstanding any provision to the contrary, to finance the
acquisition of the Shares and/or the Convertible Debenture covered by an
Offeror's offer pursuant to this Article 6, ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation shall be entitled to sell its Shares to raise the sum
required for the purchase as long as ▇▇▇▇▇▇▇▇▇ and Pettigrew's
Corporation remain the owners of Shares representing at least ten
percent (10%) of equity (exclusive of votes) at closing of the
acquisition. Closing shall occur within thirty (30) days of the
forwarding of written acceptance (accompanied with appropriate documents
as provided for in the second paragraph of Section 6.1) by ▇▇▇▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation; if for any reason whatsoever ▇▇▇▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation, acting in good faith, cannot close the
transaction, Cinepix (and its successors), the other Shareholders, the
Offeror and any other party involved will have no recourse against
▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation and then, Cinepix (and its
successors), as Vendor, shall be required to continue compliance with
the provisions of Article 5 above. It is agreed that even in the cases
of failure to respond to the Notice or if, after acceptance of the
Offeror's offer contained in the Notice, a closing does not occur in
accordance with this Section 6.2, ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation
shall have the benefit of the provisions of Section 5.1.
6.3 The rights to purchase given to ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation
pursuant to this Article 6 shall continue to exist even if the
Corporation successfully completes a Public Listing. However, if the
sale of Shares and/or the Convertible Debenture by Cinepix (and its
successors) would not result in a loss of Control of the Corporation by
Cinepix (and its successors), these rights to purchase would only cover
the Class B Shares and the Convertible Debenture held by Cinepix (and
its successors) which are intended to be sold, if any, and not the Class
A Shares of the Corporation which are intended to be sold. For greater
certainty, if, after a Public Listing, the sale of Shares and/or
Convertible Debenture would result in a loss of Control of the
Corporation by Cinepix (and its successors), these rights to purchase
would cover all the Shares and/or Convertible Debenture which are
intended to be sold.
20
6.4 In the event Section 6.1 applies and ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation exercises the exclusive right to purchase all the Shares
and/or Convertible Debenture mentioned in the Offeror's offer, all other
Shareholders have the right (but not the obligation) to sell to
▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation, their Shares in the
Corporation on the same terms and conditions as those offered to Cinepix
(and its successors) by the Offeror. The other Shareholders will have a
period of not less than sixty (60) days from the receipt of the Notice
(as defined in Section 5.1) to exercise this option to sell. For greater
certainty, Section 6.2 shall apply mutatis mutandis when other
Shareholders exercise their option to sell hereunder.
6.5 The Shareholders agree that this Article 6 shall apply as long as
▇▇▇▇▇▇▇▇▇ (i) is a Senior Officer, subject to what is provided
hereunder in case of wrongful dismissal of ▇▇▇▇▇▇▇▇▇; and (ii) has
(considering any anti-dilution option he has under the Option to
▇▇▇▇▇▇▇▇▇, as deemed exercised) either a) at least five percent (5%) of
the equity of the Corporation (exclusive of voting rights) provided he
has at least eighty-four thousand (84,000) Shares of the Corporation,
whether in Class A, Class B and/or Class P Shares or b) at least ten
percent (10%) of equity of the Corporation (exclusive of voting rights)
if he has less than eighty-four thousand (84,000) Shares of the
Corporation, whether in Class A, Class B and/or Class P Shares. The
Shareholders agree that if ▇▇▇▇▇▇▇▇▇ alleges, in writing, within ten
(10) Business Days of his knowledge of his dismissal, to have been
wrongfully dismissed, his option pursuant to this Article 6 shall
remain in full force and effect (subject to compliance with this
paragraph) until a final arbitration award has been rendered on this
matter by the arbitration tribunal of which the members shall have been
nominated pursuant to the Employment Agreement declaring that the
dismissal of ▇▇▇▇▇▇▇▇▇ was not a wrongful dismissal or the execution of
an out of court settlement to this effect.
Article 7 FINANCIAL REPORTING
7.1 The Corporation shall provide to the Shareholders:
7.1.1 As soon as available, and in any event not more than 45 days
after the end of each fiscal quarter (other than the last
quarter) of each fiscal year of the Corporation, the unaudited
consolidated and non-consolidated Financial Statements of the
Corporation and of such Important Subsidiaries (as these terms
are defined in the Subscription Agreement) that may be
identified by any of the Shareholders;
7.1.2 as soon as available, and in any event not more than 90 days
after the end of the fiscal year of the Corporation, the audited
consolidated and non-consolidated Financial Statements of the
Corporation and of such Important Subsidiaries that may be
identified by any of the Shareholders, as at the end of each
such year;
7.1.3 as soon as available, but in any event at least 90 days before
the beginning of the Corporation's fiscal years, a business plan
and budget for the Corporation's and for such Important
Subsidiaries that may be identified by any of the Shareholders,
next fiscal year including a balance sheet forecast, operating
forecast and capital expenditures budget, and a detailed
forecast for the next year's operations;
7.1.4 within 30 days following each meeting of the Board and of such
Important Subsidiaries that may be identified by any of the
Shareholders, a copy of the minutes of such board meeting, in
draft form for comments;
21
7.1.5 promptly following the receipt thereof, a copy of any notice,
letter or other document informing the Corporation of the
institution or dispute of any Material legal proceeding
involving the Corporation and its Subsidiaries, as the case may
be;
7.1.6 promptly following the receipt thereof, a copy of all
confirmations of renewal or non-renewal, as the case may be, of
the insurance of the Corporation and its Subsidiaries, as the
case may be;
7.1.7 promptly following the receipt thereof, a copy of any notice,
letter or other document advising the Corporation and/or its
Subsidiaries, as the case may be, of the occurrence of an event
of default (not remedied or waived within five (5) days of its
occurrence) pursuant to any contract to which the Corporation or
its Subsidiaries, as the case may be, is a party or any
financial undertaking of the Corporation and/or of its
Subsidiaries;
7.1.8 promptly following the receipt thereof, a copy of any notice,
letter or other document advising the Corporation and its
Subsidiaries, as the case may be, of any potential or actual
breach of any Applicable Law applicable to the Corporation or
its Subsidiaries or to any of their operations;
7.1.9 every 6 months upon demand by any of the Shareholders, the
Corporation shall provide forthwith such data, reports,
statements, documents and other additional information
pertaining to the Business, assets, liabilities, financial
position, operating results or prospects of the Corporation and
its Important Subsidiaries as such Shareholders may request,
acting reasonably, except if the financial situation of the
Corporation is deteriorating, in which case such Shareholders
may make more than one demand at every 6 months; and
7.1.10 the Shareholders shall at all times have full access to the
Corporation and its Important Subsidiaries' books and records.
Article 8 FORCED SALE OPTION
8.1 Should the Corporation be unable to pay the retraction price of the
Class E Shares to the holders of Class E Shares, pursuant to Section F
of the Articles for more than six (6) months following the notice
requesting the retraction of Class E Shares given pursuant to Section F
of the Articles, for whatever grounds including that it fails to comply
with the provisions of the Companies Act (Quebec) after giving a thirty
(30) day prior written notice to the other Shareholders and the
Corporation, the holder of Class E Shares shall have the option of:
8.1.1 putting up for sale all issued and outstanding Shares and
Convertible Securities held in the share capital of the
Corporation and requiring forthwith that, should a Third Party
offer to purchase all of the issued and outstanding Shares and
Convertible Securities of the share capital of the Corporation
and the holder of Class E Shares choose to accept such offer,
all other Shareholders of the Corporation shall sell all Shares
and Convertible Securities they hold in the share capital of the
Corporation to such Third Party according to the same terms and
conditions as those accepted by the holder of Class E Shares;
being understood
22
by the parties that in such case the right of first refusal set
forth in Article 5 of this Amended and Restated Agreement will
not be applicable; or
8.1.2 putting up for sale all assets of the Corporation, it being
understood that all other Shareholders of the Corporation
undertake to exercise their voting rights so as to approve such
sale;
(options under Sections 8.1 and 8.2 being collectively referred
to hereinafter as the "FORCED SALE OPTION")
8.2 The Forced Sale Option shall be exercised by the holder of Class E
Shares by sending a written notice to all other Shareholders and the
Corporation setting out the contents of the offer made by the Third
Party and the identity thereof. A copy of any offer made by a Third
Party shall also be remitted to all other Shareholders and the
Corporation at the same time.
8.3 Upon receiving the above notice, the other Shareholders shall reasonably
co-operate with the holder of Class E Shares for the purposes of
completing the transfer of Shares and, where applicable, Convertible
Securities or assets, as the case may be, as soon as possible following
receipt of such notice.
8.4 The Corporation undertakes to co-operate with the holder of Class E
Shares selling its Shares and, where applicable, Convertible Securities
or assets of the Corporation pursuant to Section 8.1.1 by providing,
inter alia, any financial, accounting, technical, commercial or other
relevant information normally required by an eventual purchaser of a
business so that the holder may, in turn, send such information to any
potential purchaser (provided such potential purchaser agrees to enter
into an acceptable confidentiality agreement with the Corporation and
give a restrictive covenant in favour of the Corporation in order to
protect key-employees of the Corporation and its Subsidiaries from
direct solicitation during a reasonable lapse of time if individual and
personal information on those key-employees is required);
8.5 Where the holder of Class E Shares identifies a Third Party (or a
Shareholder) that wishes to purchase the issued and outstanding Shares
and Convertible Securities of the share capital of the Corporation or
all of the assets thereof, the Corporation shall have the option, during
a forty-five (45) day period following receipt by the Corporation from
the holders of Class E Shares of the notice provided for in Section 8.2
notifying the Corporation of the contents of the Third Party (or the
Shareholder) offer and the identity thereof, to identify a Third Party
(or a Shareholder) purchaser to purchase the Shares and Convertible
Securities of the share capital or all of the assets thereof, and the
Shareholders shall be required, upon request by the Corporation, to sell
to such Third Party (or the Shareholder) purchaser all Shares and
Convertible Securities they hold; the Corporation may, where applicable,
sell to such Third Party (or the Shareholder) purchaser all assets of
the Corporation provided that the price and terms and conditions of
purchase proposed by such Third Party (or the Shareholder) purchaser be,
for the Shareholders of the Corporation, at least equal to the price and
terms and conditions of purchase of the Third Party identified by the
holder of Class "E" Shares;
8.6 Where the holder of Class E Shares having identified a Third Party
purchaser and the Corporation failing to reach an agreement as to
whether the offer obtained by the Corporation from such other Third
Party purchaser is at least equal, for the Shareholders of the
Corporation, to the price and terms and conditions of purchase offered
by the Third Party
23
identified by the holder of Class E Shares, such matter shall be
determined by any Canadian accounting or valuation firm operating
nation-wide having a place of business in Quebec, designated jointly by
the holder of Class E Shares and the Board or, should they fail to do so
within five (5) days of the date on which the Corporation obtained the
Third Party offer, by a judge of the Superior Court of the District of
Montreal at the request of the holder of Class E Shares or the board of
directors of the Corporation (the "VALUATOR"). The decision of the
Valuator as to whether the price and terms and conditions of purchase
proposed by the Third Party purchaser identified by the Corporation is
at least equal to those proposed by the Third Party identified by the
holder of Class E Shares having requested the redemption of its Shares
shall be final and binding upon all Shareholders of the Corporation.
8.7 The holder of Class E Shares shall have the right to receive, from the
purchase price paid by the Third Party purchaser, in priority to any
other shareholder the higher of the following amounts: (i) an amount
equal to the subscription price paid for said Class E Shares plus the
declared and unpaid dividends on such Class E Shares; and (ii) the "Fair
Market Value" of each Class E Share as this expression is defined in the
Articles.
Article 9 DEATH OR DISABILITY OF ▇▇▇▇▇▇▇▇▇
9.1 ▇▇▇▇▇▇▇▇▇ and, as the case may be, ▇▇▇▇▇▇▇▇▇'▇ Corporation and
▇▇▇▇▇▇▇▇▇'▇ estate, hereby irrevocably offer to sell to the Corporation,
which irrevocably accepts to buy, at the price stipulated in Article 13
hereof and upon the terms and conditions set forth hereinafter all of
his (its) Shares and Convertible Debenture (in its entirety) then held
in the event of the death or Disability of ▇▇▇▇▇▇▇▇▇, whichever comes
first, which events are each a suspensive condition to this offer.
9.2 Article 9 shall cease to apply should the Corporation successfully
complete a Public Listing, unless the death or Disability of ▇▇▇▇▇▇▇▇▇
has occurred prior to the closing of the Public Listing.
9.3 The closing of the sale of Shares and Convertible Debenture provided for
in Section 9.1 shall occur within six (6) months of the death or
Disability of ▇▇▇▇▇▇▇▇▇.
Article 10 LIFE INSURANCE AND DISABILITY INSURANCE
10.1 In order to fulfil the Corporation's obligations in the event of
▇▇▇▇▇▇▇▇▇'▇ death or Disability pursuant to Article 9, the Corporation
shall use its best efforts to subscribe and maintain in full force and
effect throughout the term of this Amended and Restated Agreement a
policy or policies of life insurance on the life of ▇▇▇▇▇▇▇▇▇ for an
aggregate coverage amount of at least Six Million Canadian Dollars
(CDN$6,000,000) payable upon the death of ▇▇▇▇▇▇▇▇▇, and the Corporation
shall use its best efforts to subscribe and maintain in full force and
effect throughout the term of this Amended and Restated Agreement a
policy or policies on the Disability of ▇▇▇▇▇▇▇▇▇ for such reasonable
available coverage (hereinafter collectively the "POLICIES") and
▇▇▇▇▇▇▇▇▇ hereby accepts to submit himself to, as may be reasonably
required at any time and from time to time, any medical examination for
the purposes of subscribing for and maintaining in full force and
effect, the Policies. The owner of the Policies and the beneficiary
(hereinafter the "BENEFICIARY") of the proceeds of the Policies
(hereinafter the "PROCEEDS") shall be the Corporation. On a yearly
basis, subject to Subsection 10.1.2, the Corporation shall review and
increase or decrease, if necessary, the Proceeds payable under the
Policies to ensure that the amount of life insurance in such year is at
least equal to the
24
value of the Shares, Securities and the Convertible Debenture held by
▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇'▇ Corporation calculated as if the obligations to
purchase those Shares, Securities and the Convertible Debenture was
created on the first day of January of any year this Amended and
Restated Agreement is in force, starting January 1, 2002 and make the
necessary adjustments to any policies payable upon the Disability of
▇▇▇▇▇▇▇▇▇.
Notwithstanding anything to the contrary in this Amended and Restated
Agreement:
10.1.1 When upon ▇▇▇▇▇▇▇▇▇'▇ death or Disability, the Corporation must
buy Shares, Securities and the Convertible Debenture from
▇▇▇▇▇▇▇▇▇, Pettigrew's estate or ▇▇▇▇▇▇▇▇▇'▇ Corporation
(hereinafter in this Article "▇▇▇▇▇▇▇▇▇'▇ SHARES") owned by
them, the first One Million Canadian Dollars (CDN$1,000,000)
payable out of the Proceeds shall be used by the Corporation to
buy ▇▇▇▇▇▇▇▇▇'▇ Shares, Securities and Convertible Debenture,
the next One Million Two Hundred and Fifty Thousand Canadian
Dollars (CDN$1,250,000) payable out of the Proceeds shall be
kept by the Corporation and the remainder of the Proceeds shall
be used by the Corporation to fund the purchase of ▇▇▇▇▇▇▇▇▇'▇
Shares, Securities and Convertible Debenture.
10.1.2 Unless all Shareholders consent to the contrary, in any
financial year of the Corporation, the Corporation shall not
pay, as premiums excluding applicable taxes, more than Fifty
Thousand Canadian Dollars (CDN$50,000) for the Policies. If the
Corporation has to pay more than Fifty Thousand Canadian Dollars
(CDN$50,000) for the Policies, then the insurance coverage shall
be diminished to such an amount where the insurance premiums
shall not be more than Fifty Thousand Canadian Dollars
(CDN$50,000).
10.2 Upon the death of ▇▇▇▇▇▇▇▇▇ or his Disability, subject to Section 9.1
and Subsection 10.1.1, all or part of the Proceeds shall be used by the
Beneficiary to fund the purchase of ▇▇▇▇▇▇▇▇▇'▇ Shares, directly or
indirectly, held and/or controlled by ▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation
or the estate of the deceased ▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇'▇
Corporation and the estate of the deceased ▇▇▇▇▇▇▇▇▇, as the case may
be, in this Article, the "SELLING SHAREHOLDER"), so that the purchase
price payable by the Corporation to the Selling Shareholder in respect
of ▇▇▇▇▇▇▇▇▇'▇ Shares be funded by all or part of the Proceeds, as the
case may be. Notwithstanding anything to the contrary herein, in the
event that the Proceeds (distributed in accordance with Section 10.1)
are not sufficient to fund or fully fund the payment of the purchase
price, then the Corporation shall only buy and the Selling Shareholder
shall only sell to Corporation such number of ▇▇▇▇▇▇▇▇▇'▇ Shares which
may be legally paid out of the Proceeds; any part of ▇▇▇▇▇▇▇▇▇'▇ Shares
which have not been bought by the Corporation because the Proceeds were
insufficient shall be bought by the Corporation and sold by the Selling
Shareholder as follows for each financial year ended after the foregoing
purchase:
10.2.1 within three (3) months after the approval of the Corporation's
financial statements, the Auditors shall determine the
Corporation's after tax profit for that year, as determined by
the Auditors applying generally accepted accounting principles
applicable in Canada and the Board shall cause, to the extent
permitted by the Companies Act (Quebec), the Corporation to use
twenty-five percent
25
(25%) of said amount to fund purchase of additional ▇▇▇▇▇▇▇▇▇'▇
Shares from the Selling Shareholder. The purchase price of these
additional ▇▇▇▇▇▇▇▇▇'▇ Shares shall be equivalent to the
purchase price per ▇▇▇▇▇▇▇▇▇'▇ Share which had been paid out of
the Proceeds to the Selling Shareholder.
The Corporation shall make all such commercially reasonable efforts
which may be required to designate or qualify any and all part of the
purchase price paid out of the Proceeds as a "capital dividend" or such
other designation qualifying the payment of the purchase price as tax
free to the recipients to the extent available under prevailing tax laws
at the relevant time.
10.3 The premiums payable in respect of the Policies in any financial year
shall be assumed by the Corporation. In the event the Corporation fails
to maintain the Policies, any Shareholder may do so for the account of
the Corporation, and the Corporation shall consequently reimburse any
insurance premiums paid by a Shareholder.
10.4 If ▇▇▇▇▇▇▇▇▇ ceases to be a direct or indirect Shareholder of the
Corporation or if the Corporation completes a Public Listing prior to
the death or Disability of ▇▇▇▇▇▇▇▇▇, the Corporation shall relinquish
all of its interest in and under all Policies held on the life and
Disability of ▇▇▇▇▇▇▇▇▇ and shall take such steps as are necessary or
expedient to assign such interest in accordance with ▇▇▇▇▇▇▇▇▇'▇
instructions. The Corporation shall pay all premiums for said Policies
until the date such assignment is effective.
Article 11 CHANGE OF CONTROL OF CINEPIX
11.1 Without limiting the provisions of Article 16 and as long as Cinepix,
Cinepix Films and/or Cinepix Inc., directly or indirectly, Control the
Corporation, in the event of a direct or indirect change of Control of
Cinepix, Cinepix Films, Cinepix Inc. ▇▇▇▇▇▇▇▇▇ and SGF Tech, on a Pro
Rata Basis, shall each have, in their sole discretion, the option to
purchase, directly or through ▇▇▇▇▇▇▇▇▇'▇ Corporation for ▇▇▇▇▇▇▇▇▇'
portion, all but not less than all of the issued and outstanding Shares
and the Convertible Debenture of the Corporation held by Cinepix (and
its successors pursuant to Section 3.2) (the Shares and the Convertible
Debenture are collectively designated in this Article the "PURCHASED
SHARES AND DEBENTURE").
▇▇▇▇▇▇▇▇▇ and SGF Tech must exercise this option forty-five (45) days
following the earlier of (a) their receipt of a notice containing all
relevant details of such a transaction or (b) their knowledge of the
occurrence of the transaction with all relevant details of such
transaction by sending to the owner of the Purchased Shares and the
Debenture a notice stating that ▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation or
SGF Tech exercises their option under this Section 11.1. ▇▇▇▇▇▇▇▇▇ and
SGF Tech together may, at their discretion, but without any obligation
to do so, renounce, in writing, to the term provided above in (a) or
(b), and exercise this option even if they have not received a notice of
the transaction or all relevant details of such a transaction.
▇▇▇▇▇▇▇▇▇ and SGF Tech shall have an additional ten (10) days after the
Fair Market Value of the Purchased Shares and Debenture has been
determined in accordance with Article 13 (which Article 13 shall be
applicable in its entirety except that the delay of thirty (30) days
within which ▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation or SGF Tech (as the
Purchaser as defined in Article 13) and the Vendor (as defined in
Article 13) shall try to reach an agreement as to the purchase price
shall start from the occurrence of the earlier of either of the events
26
described in (a) or (b) above in this Section 11.1 and the renunciation
of both ▇▇▇▇▇▇▇▇▇ and SGF Tech together to the term provided above in
(a) or (b)) to obtain the requisite financing to buy the Purchased
Shares and Debenture. The terms of payment for the Purchased Shares and
Debenture (as the case may be) shall be those stated in Subsection
14.2.3 of this Agreement. If for any reason whatsoever ▇▇▇▇▇▇▇▇▇,
Pettigrew's Corporation and/or SGF Tech, together, acting in good faith,
cannot close the transaction after having exercised their option, the
Shareholders and any other party involved will have no recourse against
▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation and SGF Tech, however, in such a
case, this Article will cease to receive application for the future
unless SGF Tech or ▇▇▇▇▇▇▇▇▇ agrees to close the transaction without SGF
Tech, ▇▇▇▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇▇'▇ Corporation or any of them.
Section 6.2 of this Agreement shall apply mutatis mutandis in favour of
▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation to finance an acquisition pursuant
to this Section 11.1.
This Section 11.1 applies whether or not the change of Control
contemplated herein would result in the loss for the Corporation of the
Quebec Tax Credits and/or Canadian Tax Credits, or would have a negative
impact thereon.
The Shareholders agree that Section 11.1 shall apply as long as
▇▇▇▇▇▇▇▇▇ (i) is a Senior Officer of the Corporation, subject to what is
provided hereunder in case of a dismissal of ▇▇▇▇▇▇▇▇▇ without Cause, as
this term is defined in the Employment Agreement; and (ii) has
(considering any anti-dilution option he has under the Option to
▇▇▇▇▇▇▇▇▇, as deemed exercised) either (a) at least five percent (5%) of
the equity of the Corporation (exclusive of voting rights) provided he
has at least eighty-four thousand (84,000) Shares of the Corporation,
whether in Class A, Class B and/or Class P Shares; or (b) at least ten
percent (10%) of equity of the Corporation (exclusive of voting rights)
if he has less than eighty-four thousand (84,000) Shares of the
Corporation, whether in Class A, Class B and/or Class P Shares.
The Shareholders agree that if ▇▇▇▇▇▇▇▇▇ alleges, in writing, within ten
(10) Business Days of his knowledge of his dismissal, to have been
dismissed without Cause as this term is defined in the Employment
Agreement, his option pursuant to this Section 11.1 shall remain in full
force and effect (subject to compliance with the above paragraph) until
a final arbitration award has been rendered on this matter by the
arbitration tribunal of which the members shall have been nominated
pursuant to the Employment Agreement declaring that the dismissal of
▇▇▇▇▇▇▇▇▇ was not a dismissal without Cause, as this term is defined in
the Employment Agreement or the execution of an out of court settlement
to this effect.
This Section 11.1 applies even after the Corporation successfully
completes a Public Listing if the option provided in this Section 11.1,
prior to such Public Listing, has been exercised and not waived and
applies regardless of the fact that the change of Control may have
resulted into conversion of Class P Shares into Class B Shares.
27
Article 12 DEFAULT
12.1 The occurrence of any of the following events shall constitute an event
of default (an "EVENT OF DEFAULT") hereunder on the part of the
Shareholder with respect to whom such event occurs (the "DEFAULTER"),
if, within the number of Business Days, provided in the notice of such
default sent by any other party in the manner set forth in this Article
12, following receipt of said notice, the Defaulter fails to cure the
default; provided, however, that the occurrence of any event described
in Subsections 12.1.1 to 12.1.4, 12.1.7 and 12.1.9 shall constitute an
Event of Default immediately upon such occurrence without any
requirement of notice or passage of time, except as specifically set
forth in any such Subsections:
12.1.1 the institution by a Shareholder of proceedings of any nature
under any laws of Canada, of any province of Canada, of the
United States of America or of any American State for the relief
of debtors wherein such Shareholder is seeking relief as debtor
including the taking of any action by a Shareholder to
participate in, or commence any proceeding relating to,
insolvency or bankruptcy or the seeking of reorganisation,
arrangement, protection, relief or composition of a Shareholder
or any of his or its property or debt or the making of a
proposal under any law relating to bankruptcy, insolvency,
reorganisation or compromise of debt;
12.1.2 a general assignment by a Shareholder for the benefit of its
creditors in general;
12.1.3 the institution against a Shareholder of a petition of
bankruptcy under any section of the Bankruptcy and Insolvency
Act (Canada) or any similar act under the U.S. or any American
State laws, which proceeding is not dismissed, stayed or
discharged within a period of sixty (60) days after the filing
thereof or, if stayed, which stay is thereafter lifted without a
contemporaneous discharge or dismissal of such proceeding;
12.1.4 any admission by a Shareholder in writing of its inability to
pay its debts as they become due or any acknowledgement of
insolvency;
12.1.5 any material breach or violation of this Amended and Restated
Agreement by a Shareholder;
12.1.6 except as provided for in Section 3.1 of this Amended and
Restated Agreement, the registration of any legal hypothec on
all or part of the Shares, Convertible Debenture or Securities
held by a Shareholder where such hypothec remains registered for
a period of more than twenty (20) days after the registration
thereof or the rendering of any judgment against any Shareholder
as a result of any action taken by any Third Party, which
condemns the Shareholder to the payment of an amount of One
Hundred Thousand Dollars ($100,000) or more unless an appeal is
taken therefrom within the period of time permitted by law to
appeal from such judgment, and as long as said appeal is not
partly or fully dismissed, or the amount payable under such
judgment (as modified by an out of court settlement) is paid and
discharged in full and evidence of such appeal or of such
payment and discharge is provided to all the other parties
hereto within the aforesaid period of time or if no appeal may
be taken from such judgment unless the amount payable under such
judgment is paid and discharged in full and evidence of such
payment
28
and discharge is provided to all the other parties hereto within
a period of thirty (30) days following the date such judgment is
rendered;
12.1.7 private appointment of a receiver, trustee or similar official
for a Shareholder's property and assets or any part thereof,
which appointment is not dismissed, stayed or discharged within
a period of sixty (60) days after the filing thereof or, if
stayed, which stay is thereafter lifted without a
contemporaneous discharge or dismissal of such appointment;
12.1.8 seizure of his or its Shares, Securities or Convertible
Debenture, including execution, distress or other enforcement
process (in this Subsection 12.1.8, the "SEIZURE"), not opposed
within five (5) days of such Seizure or if after such opposition
the Seizure is not quashed and the seizing party could become
owner of the Shares, Securities or Convertible Debenture; or
12.1.9 any Shareholder or any of its directors and officers commits a
fraud against the Corporation or one of its Subsidiaries.
12.2 Should any of the events described in Subsection 12.1.5, 12.1.6 or
12.1.8 occur, any Shareholder may send a notice to the Defaulter and to
all the other Shareholders hereto, setting forth the details of the
default, and, if any, the manner in which such default may be cured by
the Defaulter within a fifteen (15) Business Days delay of sending of
said notice to the Defaulter.
12.3 If a default under Subsections 12.1.1 to 12.1.4, 12.1.7 and 12.1.9
arises or if a default arises under Subsection 12.1.5, 12.1.6 or 12.1.8
which is not cured following the notice of default sent pursuant to
Section 12.2 within the delay therein stipulated, which default is a
suspensive condition of this offer, then the Defaulter irrevocably
offers to sell to other Shareholders at the price stipulated in Article
13 his or its Shares and Convertible Debenture as determined at the
occurrence of the condition of this offer.
12.4 In the event that any Shareholder wants to accept the offer made
pursuant to Section 12.3 within thirty (30) days of his knowledge of an
Event of Default, he shall send a notice of his acceptance to the other
Shareholders, the Defaulter and the Corporation. After receipt of this
notice, if one or more of the other Shareholders also want to accept the
offer made pursuant to Section 12.3, within thirty (30) days of receipt
of the acceptance of the offer from the first accepting Shareholder,
said other Shareholders shall give notice of their acceptance to the
Defaulter, the Corporation and all other Shareholders, including the
first accepting Shareholder, failing which all other Shareholders are
deemed not to have accepted the offer. If more than one Shareholder
accepts the offer made pursuant to Section 12.3, the accepting
Shareholders shall acquire the Shares of the Defaulter on a Pro Rata
Basis (excluding the Shares of all other Shareholders and of the
Defaulter).
12.5 The closing of the sale provided for in this Article must occur within
sixty (60) days of the last acceptance of the offer by the other
Shareholders.
12.6 The Shareholders and the Corporation hereby renounce to Article 1392 of
the Civil Code of the Province of Quebec.
12.7 Any Event of Default by ▇▇▇▇▇▇▇▇▇ shall be deemed to be an Event of
Default by ▇▇▇▇▇▇▇▇▇'▇ Corporation and vice versa.
29
Article 13 VALUATION
13.1 The value (or purchase price) of the Shares and the Convertible
Debenture pursuant to Article 9 and Article 12 of this Amended and
Restated Agreement shall be the amount agreed to by the Purchaser
acquiring the Shares and the Convertible Debenture and the vendor of
said Shares and the Convertible Debenture (hereinafter the "VENDOR")
within the thirty (30) day period following request by the Purchaser or
the Vendor to establish the purchase price. In the event agreement is
not reached within such thirty (30) day period, each of the Vendor and
the Purchaser shall, within fifteen (15) days following the expiry of
such thirty (30) day period, appoint a business valuator member of the
Canadian Institute of Chartered Business Valuators and having experience
in the Business to determine the Fair Market Value of the Shares and the
Convertible Debenture as at the date of the event giving rise to the
sale. Each such valuator (the "ORIGINAL VALUATORS") shall be instructed
to deliver its valuation as soon as practicable, and in any event within
thirty (30) days of his appointment. Each party to valuation and the
Corporation (when the Corporation is not the Purchaser) must collaborate
to promptly give all relevant information to the Original Valuators. If
a party to valuation does not so appoint such a valuator, then the
valuation determined by the valuator appointed by the other party shall
be the purchase price for the Shares and Convertible Debenture. For
greater certainty, the costs and expenses of each Original Valuator
shall be paid by the party retaining such valuator. For the purposes of
this Article 13, ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation (if such a
corporation is a Vendor) shall be deemed to be one party to valuation
and if more than a Person is the Purchaser, said Persons shall be deemed
to be one party to valuation.
13.2 If the lowest of the two (2) valuations of the Original Valuators is at
least ninety percent (90%) of the highest valuation of the Original
Valuators, the purchase price for the Shares and Convertible Debenture
shall be equal to the mid-point of the two (2) original valuations. If
the lowest of the two (2) valuations is less than ninety percent (90%)
of the highest valuation, the Original Valuators shall, within ten (10)
days of the delivery of the last of the valuations, mutually agree upon
a third valuator having experience in the Business (the "THIRD
VALUATOR") who shall determine the Fair Market Value of the Shares and
the Convertible Debenture as aforesaid which valuation shall be the
purchase price for the Shares and the Convertible Debenture and which
shall be final and binding upon the Purchaser and the Vendor, unless the
valuation of the Third Valuator is lower than the lower of the two (2)
valuations of the Original Valuators, in which case the lowest valuation
of the Original Valuators shall be deemed to be the Fair Market Value of
the Shares and Convertible Debenture and shall be final and binding upon
the Purchaser and the Vendor. If the Original Valuators fail to appoint
a Third Valuator within such ten (10) day period, the Third Valuator
shall be appointed by the Auditors of the Corporation. The Third
Valuator shall be instructed to deliver its valuation as soon as
practicable, and in any event within thirty (30) days of his
appointment. Each party and the Corporation (when the Corporation is not
the Purchaser) must collaborate to promptly give all relevant
information to the Third Valuator. The costs of the Third Valuator shall
be paid by the party whose Original Valuator provided a valuation which
is furthest from the valuation determined by the Third Valuator.
13.3 For the purposes of valuation under Article 11, the Original Valuators
and the Third Valuator should not consider that ▇▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇'▇ Corporation (if such a Corporation is
30
a Vendor) have exercised any option under the Option to ▇▇▇▇▇▇▇▇▇ or the
Stock Option Plan except to the extent ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation have exercised such options.
Article 14 CLOSING
14.1 Unless otherwise agreed by the Purchaser and the vendor of the Shares
(hereinafter in this Article the "VENDOR"), the closing of any sale and
purchase contemplated in this Amended and Restated Agreement shall be at
a place (in Montreal, Quebec) and time as determined by the Purchaser;
provided, however, the date is within the time limit set for the sale,
purchase and payment of the purchase price for the first part thereof.
14.2 Unless otherwise agreed by the Purchaser and the Vendor, the Purchaser
shall deliver to the Vendor:
14.2.1 In the circumstances contemplated by Section 9.1, when
▇▇▇▇▇▇▇▇▇, Pettigrew's Corporation and/or ▇▇▇▇▇▇▇▇▇'▇ estate is
the Vendor, in the case of Proceeds being payable to the
Corporation in respect of the death of ▇▇▇▇▇▇▇▇▇ or his
Disability, the Corporation (acting as Purchaser) shall, subject
to Section 10.1, remit to the Vendor the lesser of (i) the
purchase price for such Shares and (ii) up to the amount of life
insurance Proceeds paid to the Corporation, a certified cheque
for the full amount payable under Section 9.1;
14.2.2 In the circumstances contemplated by Article 12 and also subject
to the provisions set forth in the Articles:
(1) a certified cheque in an amount equal to forty percent
(40%) of the purchase price, except in case of
bankruptcy where the amount of certified cheque shall be
limited to ten percent (10%) of the purchase price; and
(2) a Promissory Note of the Purchaser of the balance of the
purchase price, payable over three (3) years in equal
annual instalments of principal and interest with
interest at the prime commercial lending rate of the
Corporation's bankers determined as at the Closing,
except in case of bankruptcy where the purchase price
shall be payable over seven (7) years in equal annual
instalments of principal and interest at the prime
commercial lending rate of the Corporation's bankers
determined as at the Closing.
14.2.3 In all other circumstances, including without limitation, a sale
of shares pursuant to Section 11.1, one hundred percent (100%)
of the purchase price shall be paid at closing;
14.2.4 In the case where a Promissory Note is issued by the Purchaser,
a hypothecation, of the Shares or Convertible Debenture which
are the subject matter of the sale and purchase, to the
Corporation's legal counsel in each case to be held in trust for
the Vendor and the given Purchaser as their interests appear
under the terms of this Amended and Restated Agreement;
14.2.5 Any on demand or no term indebtedness owing by the Corporation
to the Vendor shall be repaid by the Corporation to the Vendor
within a one (1) year period of the closing of the sale of the
Shares or Convertible Debenture, it being understood that this
term of payment is in favour of the Corporation;
31
14.2.6 A release of all guarantees given by the Vendor (including
▇▇▇▇▇▇▇▇▇'▇ wife, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, if ▇▇▇▇▇▇▇▇▇ is the Vendor
and including ▇▇▇▇▇▇▇▇▇ and his wife ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, if the
Vendor is ▇▇▇▇▇▇▇▇▇'▇ Corporation) in respect of the
Corporation's indebtedness and all collateral security relating
thereto. If the Purchaser is unable to obtain such releases by
Closing, the Purchaser shall indemnify, in writing, the Vendor
(and ▇▇▇▇▇▇▇▇▇ if the Vendor is ▇▇▇▇▇▇▇▇▇'▇ Corporation) against
all claims on such guarantees and shall continue to use best
efforts to obtain the release of such guarantees.
14.3 Unless otherwise agreed by the Purchaser and the Vendor, at the Closing,
the Vendor shall deliver to the Purchaser the following:
14.3.1 Share certificates for all Vendor's Shares duly endorsed for
transfer in blank;
14.3.2 Resignation of Vendor's nominee directors from the board of
directors of the Corporation.
14.4 Unless otherwise agreed by the Purchaser and the Vendor and subject to
Subsection 14.2.4, after closing provided in Article 14, the Vendor
shall not, thereafter, be entitled to any dividends or other
distributions which may be declared and become payable on those Shares
being sold and in the event that such Shares are hypothecated, such
dividends or other distribution shall be paid by the Corporation to its
legal counsel, who shall in turn apply such dividends or other
distributions in payment of the purchase price to the extent that such
dividends or other distributions are in cash. To the extent that such
dividends or other distributions are not in cash, they shall be held by
the legal counsel of the Corporation on the same terms and subject to
the same conditions as those on which the Shares on which the dividends
or other distributions have been made are held.
Article 15 CONDUCT OF THE AFFAIRS OF THE CORPORATION
15.1 Notwithstanding any other provision of this Amended and Restated
Agreement, no obligation of the Corporation will be binding on it, and
no action will be taken by or with respect to the Corporation in respect
of any of the matters set forth below, without the prior written consent
of Shareholders holding not less than eighty percent (80%) in aggregate
of the voting rights in issued Shares and also, without the specific
prior written consent of SGF Tech (provided that such specific veto
right of SGF Tech shall cease to apply if more than 50% of the Class "E"
shares issued and outstanding are transferred to a Person identified in
Schedule 15.1); the powers of the Board are removed and exercised by the
Shareholders accordingly; this Section 15.1 constitutes a Unanimous
Shareholders' Agreement in accordance with Sections 123.91 to 123.93 of
the Companies Act (Quebec).
15.1.1 Subject to the provisions of this Article 15 and Section 16.4 of
this Amended and Restated Agreement, any change in the number of
directors and any action which would impair the rights of any
Shareholder to nominate their representatives to the Board;
15.1.2 the salary, bonuses or other compensation to be paid by the
Corporation to the President and Chief Executive Officer, except
as agreed in the Employment Agreement or in the Stock Option
Plan or bonus plan to be put in place by the Corporation for its
Senior Officers;
32
15.1.3 the adoption, replacement, repeal or modification of any
remuneration policy and the payment of any remuneration which is
not in accordance with such policy;
15.1.4 subject to the provisions of this Article 15 and Section 16.4 of
this Amended and Restated Agreement, any change of the quorum of
the meetings of the Board and of Shareholders;
15.1.5 the approval of the annual audited consolidated and
non-consolidated financial statements of the Corporation;
15.1.6 any change in the Auditors of the Corporation;
15.1.7 the appointment of the President and the determination of the
conditions hereof;
15.1.8 any change to the nature of the Corporation or of the Business,
as currently carried on by the Corporation, except as set out in
the business plan of the Corporation, as may be modified
pursuant to this Article 15 (the "BUSINESS Plan");
15.1.9 the approval of the annual Business Plan;
15.1.10 any change in the head office and principal place of business of
the Corporation outside the Metropolitan Region of Montreal;
15.1.11 the adoption or modification of annual comprehensive operating
budgets and capital expenditure budgets of the Corporation and
of its Subsidiaries, including, without limitation, all
inter-corporation charges among the Corporation, its
Subsidiaries and its Affiliates, and the authorization of any
derogations from such budgets which, in the case of the
operating or capital expenditure budget, as the case may be,
exceed individually or in the aggregate ten percent (10%) of the
amounts provided under the main headings of the operating budget
or globally under the capital expenditure budget, as the case
may be;
15.1.12 the adoption or material modification of the annual marketing
plan of the Corporation;
15.1.13 the establishment of any committee of the Board;
15.1.14 any acceptance and go-ahead on a production of the Corporation
which exceeds One Million Canadian Dollars (CDN$1,000,000) in
budget (excluding direct and indirect producer and
administrative fees and profits of Corporation's Subsidiaries),
except:
(1) when the total budget production is between One Million
Canadian Dollars (CDN$1,000,000) and Five Million
Canadian Dollars (CDN$5,000,000) if at least eighty
percent (80%) of the production budget (excluding direct
and indirect producer and administrative fees and
profits of Corporation's Subsidiaries) is covered by
financings, commitments, agreements, tax credits and tax
advantages, by among others, co-producers, distributors,
sponsors, bankers, lenders, financial partners,
governments and/or other parties; and
(2) when the total budget production is more than Five
Million Canadian Dollars (CDN$5,000,000), if at least
ninety percent (90%) of the production budget (excluding
direct and indirect producer and administrative fees and
profits of Corporation's Subsidiaries) is covered
33
by financings, commitments, agreements, tax credits and
tax advantages by, among others, co-producers,
distributors, sponsors, bankers, lenders, financial
partners, governments and/or other parties.
For the purposes of this Subsection 15.1.14 deferred payments
may be considered as financings when said differed payments
shall be made out of the production revenues.
15.1.15 The voluntary liquidation, dissolution, winding-up of the
Corporation, its consolidation, amalgamation, reorganization or
merger with another Person, or the creation of a Subsidiary of
the Corporation, except a Subsidiary created for the purposes of
developing, producing or co-producing a project.
15.1.16 Any assignment of the assets of the Corporation in bankruptcy,
deposit of a proposal in bankruptcy and any other recourse for
the protection of debtors.
15.1.17 The approval of transactions out of the ordinary course of
business of the Corporation including, without limiting the
generality of the foregoing, the following:
(1) any sale, acquisition or lease of immovable property of
more than One Hundred Thousand Canadian Dollars
(CDN$100,000);
(2) the borrowing of money or the giving of security where
the total amount, in each case, exceeds, singly or in
the aggregate, Five Hundred Thousand Dollars ($500,000)
in any one year, except if already in the Corporation's
budgets or Business Plans approved by the Board;
(3) the granting of a loan or other financial aid of more
than Twenty-Five Thousand Canadian Dollars (CDN$25,000)
to or the guaranteeing of more than Twenty-Five Thousand
Canadian Dollars (CDN$25,000) of a debt of a Shareholder
or an Affiliate of a Shareholder;
(4) any acquisition or Disposition by the Corporation,
including by way of license of any asset of the
Corporation worth more than One Hundred Thousand
Canadian Dollars (CDN$100,000) if not already in the
Corporation's budgets or Business Plans approved by the
Board or the granting by the Corporation of an option to
the same effect;
(5) the acquisition of capital assets not provided for in
the annual budget when the total amount, in each case,
exceeds, singly or in the aggregate or one hundred
thousand Canadian Dollars ($100,000) in any one year;
(6) any sale of shares of any Subsidiaries, except in the
normal course of business to a co-producer of a project;
(7) the sale of all or substantially all of the assets of
the Corporation;
(8) the acquisition of an interest in another corporation,
partnership, firm or business for an amount of more than
One Hundred Thousand Canadian Dollars (CDN$100,000);
(9) the entering into or modification of a contract where
the term of such contract, including any renewal options
in favour of the other party, exceeds one (1) year or
where the total consideration thereunder exceeds Two
Hundred and Fifty Thousand Canadian Dollars
(CDN$250,000); and
34
(10) any licensing agreement where the total consideration
hereunder exceeds CDN$250,000.
15.1.18 Any change in the Articles or By-Laws of the Corporation and of
its Subsidiaries.
15.1.19 Except as provided in the Articles, any matters relating to the
payment of dividends, distribution of surplus, repurchase or
redemption of Shares of the Corporation, except as provided in
this Amended and Restated Agreement or the Employment Agreement.
15.1.20 Any sale, transfer, assignment or other disposal of Shares of
the Corporation, except if made in accordance with the
provisions of this Amended and Restated Agreement, the Option to
▇▇▇▇▇▇▇▇▇, the Convertible Debenture, the Lions Gate Debenture
or the Stock Option Plan.
15.1.21 The allotment, issue, redemption or repurchase of Shares,
Securities or the entering into of any agreement or the making
of an offeror, the granting of any right or option which may
constitute an undertaking to do any of the foregoing
transactions or any amendment to the Stock Option Plan, any
issuance of Shares and options and other Securities of the
Corporation, except for those issued under:
(1) the Option to ▇▇▇▇▇▇▇▇▇;
(2) the Option to Faire Trust;
(3) the Stock Option Plan;
(4) the Convertible Debenture;
(5) if in the reasonable opinion of a majority of members of
the Board of the Corporation and subject to pre-emptive
rights herein an issue of Shares is necessary because
the Corporation has a cash balance of Five Hundred
Thousand Canadian Dollars (CDN$500,000) or less after
reserving cash to meet the Corporation's short-term then
outstanding obligations, debts and liabilities and no
other source of financing is reasonably acceptable and
available (including without limitation issues of Shares
to Shareholders), at standard business terms;
(6) Shares issued following the automatic conversions
provided for in Section 16.2 and Shares issued pursuant
to Sections 16.3 and 16.6;
(7) the Lions Gate Debenture;
(8) adjustment mechanism, as provided in Article 3 of the
Subscription Agreement; and
(9) the privilege of exchange of SGF Tech, the automatic
exchange of Class E shares and the adjustments to the
exchange ratio, the public listing exchange ratio and
the issuance of Class F shares as described in the
Articles of Amendment of the Corporation dated July 9,
2001.
15.1.22 Any Material transaction between the Corporation and a Related
Party of the Corporation, any Shareholder of the Corporation or
any of their Affiliates or their Subsidiaries (the
"INTER-CORPORATION ARRANGEMENTS"); all Inter-corporation
Arrangements must be reflected in writing;
35
15.1.23 The institution of any legal proceeding material to the Business
and operations of the Corporation or the settlement of any such
legal proceeding (excluding, in both cases, actions on accounts
and lawsuits in respect of the rights and obligations of the
Parties pursuant to this Amended and Restated Agreement or
otherwise as well as any emergency recourse of the nature of an
injunction such as the Anton Pillar remedy and Mareva
injunction) when the amount in question exceeds Fifty Thousand
Canadian Dollars (CDN$50,000).
In addition, the parties hereto covenant and agree that any change in
the name of the Corporation shall require the consent of ▇▇▇▇▇▇▇▇▇ as
long as ▇▇▇▇▇▇▇▇▇ shall be the President and Chief Executive Officer of
the Corporation or hold (directly and/or through ▇▇▇▇▇▇▇▇▇'▇
Corporation) more than ten percent (10%) of the aggregate of Class A,
Class B and Class P Shares and that a Public Listing shall require the
specific prior consent of SGF Tech or any listing or posting of the
Shares on any stock market.
15.2 Subject to the terms of the Employment Agreement, the parties hereto
covenant and agree that the President and Chief Executive Officer of the
Corporation choses and dismisses senior executives (excluding the
president, chief executive officer, vice-presidents, secretary,
assistant-secretary and treasurer who are appointed by the Board) and
employees of the Corporation and its Subsidiaries and establishes their
remuneration.
15.3 The Shareholders hereto covenant and agree that there shall be nine (9)
members to be elected to the Board; a majority of said directors must be
Quebec Residents, except if Section 16.7 becomes applicable.
15.4 The parties here covenant and agree that each of the Shareholders shall
be entitled to nominate Directors to the Board as follows and each
Shareholder covenant and agree to exercise his or its voting rights
consequently:
15.4.1 As long as Cinepix shall own fifty percent (50%) or more of the
voting rights in issued Class A, Class B, Class E and Class P
Shares of the Corporation, it may elect five (5) directors to
the Board;
15.4.2 If Cinepix shall own between twenty percent (20%) and fifty
percent (50%) of the voting rights in issued Class A, Class B,
Class E and Class P Shares of the Corporation, it may elect two
(2) directors to the Board;
15.4.3 If Cinepix shall own between five percent (5%) and twenty
percent (20%) of the voting rights in issued Class A, Class B,
Class E and Class P Shares of the Corporation, it may elect one
(1) director to the Board;
15.4.4 If ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation shall own fifty
percent (50%) or more of the voting rights in issued Class A,
Class B, Class E and Class P Shares of the Corporation, he/it
may elect five (5) directors to the Board;
15.4.5 If ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation shall own between
twenty percent (20%) and fifty percent (50%) of the voting
rights in issued Class A, Class B, Class E and Class P Shares of
the Corporation, he/it may elect two (2) directors to the Board;
15.4.6 As long as ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation shall own
between three percent (3%) and twenty percent (20%) of the
voting rights in issued Class A, Class B, Class E and Class P
Shares of the Corporation or as long as ▇▇▇▇▇▇▇▇▇
36
is a Senior Officer of the Corporation, he/it may elect one (1)
director to the Board;
15.4.7 If Faire Trust shall own six percent (6%) or more of the voting
rights in issued Class A, Class B, Class E and Class P Shares of
the Corporation, it may elect one (1) director to the Board. As
long as Faire Trust shall own Shares with voting rights, if
Faire Trust does not have the right to nominate a director, it
shall have the right to appoint a non-voting observer on the
Board;
15.4.8 As long as Fox Family shall own six percent (6%) or more of the
voting rights in issued Class A, Class B, Class E and Class P
Shares of the Corporation, it may elect one (1) director to the
Board. As long as Fox Family shall own Shares with voting
rights, if Fox Family does not have the right to nominate a
director, it shall have the right to appoint a non-voting
observer on the Board;
15.4.9 As long as SGF Tech shall own thirty five percent (35%) or more
of the voting rights in issued Class A, Class B, Class E and
Class P Shares of the Corporation, it may elect two (2)
directors and appoint one (1) non-voting observer to the Board;
15.4.10 If SGF Tech shall own five percent (5%) or more, but less than
thirty five percent (35%) of the voting rights in issued Class
A, Class B, Class E and Class P Shares of the Corporation, it
may elect one (1) director to the Board.
For greater certainty, subject to Section 15.5, only the Shareholder
having appointed his or its Director to the Board may remove him from
office and in the event of a vacancy to the board of directors, the
Shareholder who appointed the director may only fill the vacancy and all
the other Shareholders agree to vote in favour of the appointment of
such new nominee.
15.5 In the event that a Shareholder loses the right to nominate a Director
on the Board, such Shareholder shall cause his Director or one of its
Directors, as the case may be, to resign in a timely manner.
15.6 Prior to the making of any Material Inter-corporation Arrangement out of
the normal course of business, except an Inter-Corporation Arrangement
involving the Corporation and one of the Subsidiaries or involving two
direct or indirect Subsidiaries of the Corporation, the nature of the
contract, the parties thereto and any Person receiving any commission or
consideration in respect of the proposed contract shall be fully
disclosed to the Shareholders and each Party shall disclose to all the
other Shareholders any Material interest in the proposed contract or the
identity of any Related Party or any Third Party who would receive any
commission or consideration in respect thereof. The consents of the
Shareholder with an interest in any such Related Party shall not be
required in respect of any resolution relating thereto, and no
representative of any such interested Shareholder on a Board shall be
entitled to vote in respect of any resolution relating thereto. The
determination of the rights to be asserted and course of action to be
taken by the Corporation, if any, with respect to a Material
Inter-corporation Arrangement out of the ordinary course of business,
shall be made without the participation, approval or consent of any
Shareholder having a direct or indirect interest in such Related Party,
and the Directors and other Shareholder in making any determination with
respect thereto shall act strictly in the best interests of the
Corporation.
37
15.7 A report listing all inter-corporation charges among, on the one part,
the Corporation and its Subsidiaries and, on the other part, their
Related Parties for the immediately preceding financial year shall be
presented annually to the Board for ratification no later than the 60th
day following the end of the financial year. Such report shall include
(i) the description of services who provided to or by a Related Party of
the Corporation and a description of the nature and extent of such
services and charges therefor, and (ii) details of all transfers of
funds between the Corporation and Persons who/which are Related Parties
thereto, including their purpose and amounts.
15.8 The Board shall hold meetings not less than four (4) times in each
fiscal year, which quarterly meetings shall take place within forty-five
(45) days of the end of each quarter of the financial year, except the
fourth quarter which shall take place within seventy-five (75) days of
the year end. Each Director and any observer appointed by Faire Trust
pursuant to Section 15.4.7 shall be reimbursed his out-of-pocket
expenses to attend each meeting of the Board and outside Directors will
have the right to receive a reasonable Director's fee.
15.9 Notices of meetings of the Board shall be sent not less than ten (10)
days in advance. They shall be accompanied by a brief but complete
summary of all business on the agenda of the meeting. Not later than
five (5) days prior to the date of the meeting, each director shall have
received copies of all documents necessary or useful to allow the
directors to make an informed decision.
15.10 The parties covenant and agree that the quorum for meetings of the Board
shall require a majority of the Directors to be present and that, within
that majority, at least one (1) representative of each of Cinepix,
▇▇▇▇▇▇▇▇▇ and SGF Tech, if any at all relevant time, must be present. In
the event that the absence of one representative of Cinepix, ▇▇▇▇▇▇▇▇▇
or SGF Tech causes a meeting of the Board to be adjourned to a date
which may not be earlier than five (5) Business Days (or not to be
earlier than two (2) Business Days in case of urgency) or later than ten
(10) Business Days after the originally convened meeting, quorum for
such adjourned meeting shall only require a majority of the directors to
be present.
15.11 A Director of the Corporation may participate at a meeting of the Board
by means of conference call or other telecommunication means allowing
all participants to the meeting to communicate between themselves. Such
a Director is deemed to be present at such a meeting as any other
Director present physically.
15.12 Each Party hereto shall at all times carry out and use its best efforts
to cause the Corporation and, to the extent permitted by Applicable Law,
its nominees on the Board to carry out the provisions of this Amended
and Restated Agreement. Each Party hereto shall duly and punctually do,
or cause to be done, all such things, including without limitation,
voting or causing to be voted all the Shares held by such Party as shall
be necessary or desirable to give effect to this Amended and Restated
Agreement.
15.13 The Parties covenant and agree that the quorum for meetings of
Shareholders shall be a majority in votes of the Shareholders present
personally or by proxy including the vote of Cinepix, ▇▇▇▇▇▇▇▇▇, Fiducie
▇▇▇▇▇▇▇▇▇ and SGF Tech. In the event that the absence of Cinepix,
▇▇▇▇▇▇▇▇▇, Fiducie ▇▇▇▇▇▇▇▇▇ and SGF Tech causes a meeting of the
Shareholders to be adjourned to a date which may not be earlier than
five (5) Business Days (or not to be earlier than two (2) Business Days
in case of urgency) or later than ten (10) Business Days
38
after the originally convened meeting, quorum for such adjourned meeting
shall only require a majority (in number of the Shareholders to be
present personally or by proxy). The quorum for special meetings of
class of shareholders shall require a majority in votes of the
shareholders of said class to be present personally or by proxy, except
as otherwise provided in the Articles.
15.14 Unless otherwise stipulated in this Amended and Restated Agreement or in
the Articles, the parties covenant and agree that questions to be
decided by any meeting of Shareholders or the Board shall be decided by
a majority vote.
15.15 No Shareholder or Director, whether chairman of a Shareholders' meeting
or chairman of the Board or otherwise shall exercise a casting vote.
15.16 Unless otherwise decided by the Board and subject to ▇▇▇▇▇▇▇▇▇'▇ rights
provided for in the Employment Agreement, ▇▇▇▇▇▇▇▇▇ is the President and
Chief Executive Officer. The vice-presidents, the secretary and the
treasurer as well as an assistant-secretary of the Corporation shall be
nominated by resolutions of the Board.
15.17 Until replaced by decision of the Shareholders pursuant to ▇▇▇▇▇▇▇ ▇▇.▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ Deloitte & Touche of Montreal are chosen as Auditors of
the Corporation and its Subsidiaries.
15.18 The parties covenant and agree that unless decided otherwise by the
Board, the President shall exercise the voting rights of the
Corporation as shareholder of any of its Subsidiaries or any other
company and shall be authorized signatory of the Corporation for such
purposes in accordance with the instructions of the Board.
Article 16 TRANSFER OF VOTING RIGHTS; CONVERSION OF SHARES;
QUEBEC CONTROL; SHARES IN TRUST
16.1 In the event of any transaction or agreement of any sort whatsoever
(including a transfer of Shares) to which either or both Cinepix Films,
Cinepix (and their successors or assigns) or their direct or indirect
shareholders are party, that but for the provisions of this Article 16,
would result in the loss of the Quebec Tax Credits and/or Canadian Tax
Credits by the Corporation, the Shareholders and the Corporation agree
that a voting trust with respect to Cinepix's Shares in the Corporation
and its successors' or assigns' Shares in the Corporation will be
granted to ▇▇▇▇▇▇▇▇▇ (or, if he is no longer an Officer of the
Corporation, to the highest ranking Quebec Officer of the Corporation)
and this voting trust will automatically become effective immediately
prior to the occurrence of such event and shall remain in effect for a
period of ninety (90) days from the earliest of a) the receipt of any
notice of such a possible transfer, transaction or other agreement to
the Corporation and to ▇▇▇▇▇▇▇▇▇ (or to said highest ranking Quebec
Officer) or b) the day the Corporation and/or ▇▇▇▇▇▇▇▇▇ (or said highest
ranking Quebec Officer) finds out about such possible transfer,
transaction or other agreement by any other means. During the period of
the voting trust, Cinepix and Cinepix Films shall be entitled (but not
obliged) to take such steps as each of them determines necessary or
advisable to ensure that the Corporation continues to be eligible for
the Quebec Tax Credits and/or Canadian Tax Credits (as applicable). The
Shareholders and the Corporation hereby undertake and agree to do all
reasonable acts and to provide such assistance as may be requested of
them by Cinepix in this regard. The Corporation's eligibility for such
tax credits will be determined pursuant to an affirmative written
39
unrestricted legal opinion obtained from an independent Quebec legal
counsel retained jointly by the Corporation, ▇▇▇▇▇▇▇▇▇, (or the highest
ranking Quebec Officer, if ▇▇▇▇▇▇▇▇▇ is no longer an Officer of the
Corporation), SGF Tech and Cinepix at the Corporation's costs. Provided
such an affirmative written unrestricted legal opinion is obtained
within the said 90-day period, the voting trust will terminate.
16.2 If at the end of such 90-day period while the voting trust is in force,
no such affirmative written unrestricted legal opinion has been obtained
or the then shareholder(s) of Cinepix Films and/or Cinepix (or its
successors and assigns), as the case may be, has (have) not rectified
or, as the case may be, may not rectify, the situation to the
satisfaction of the independent Quebec legal counsel (as confirmed by
such counsel in a written unrestricted legal opinion) in such a way that
the Corporation will not lose the benefit of the Quebec Tax Credits
and/or the Canadian Tax Credits, then all of the following events will
occur simultaneously:
16.2.1 all Class P Shares held by ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation
and their successors or assigns in the Corporation will be
automatically converted into Class B Shares;
16.2.2 thereafter, the Convertible Debenture, if still held by Cinepix
or any other person (other than ▇▇▇▇▇▇▇▇▇ and Pettigrew's
Corporation or their successors or assigns), automatically
ceases to be convertible into Class B Shares and can only be
converted into Class A Shares; and
16.2.3 all Class B Shares of the Corporation (except for the Class B
Shares held by ▇▇▇▇▇▇▇▇▇ and Pettigrew's Corporation or their
successors or assigns following the conversion of the Class P
Shares into Class B Shares which are being converted
simultaneously) will be automatically converted into Class A
Shares.
16.3 In addition to the provisions of Section 16.2 above, if ▇▇▇▇▇▇▇▇▇ and/or
▇▇▇▇▇▇▇▇▇'▇ Corporation does not own enough Shares to obtain (with other
holders who are Quebec Residents) a 51% voting Control of the
Corporation (or such control of the Corporation by Quebec Residents as
is necessary for the Corporation to remain eligible for the Quebec Tax
Credits and/or Canadian Tax Credits), (or if ▇▇▇▇▇▇▇▇▇ is no longer an
Officer of the Corporation, if the highest ranking Quebec Officer of the
Corporation does not have with other holders who are Quebec Residents
such a fifty-one percent (51%) voting Control of the Corporation (or
such control of the Corporation by Quebec Residents as is necessary for
the Corporation to remain eligible for the Quebec Tax Credits and/or
Canadian Tax Credits)), ▇▇▇▇▇▇▇▇▇ or the highest ranking Quebec Officer
of the Corporation, as the case may be, shall have the right to receive,
at no cost, except a nominal value of One Dollar ($1.00) (and without
tax consequences), a sufficient number of Class C Shares to achieve the
required control, it being understood that such Class C Shares will be
redeemed by the Corporation if holders who are Quebec Residents
eventually come to achieve the required control . Any tax consequences
will be borne by the Corporation.
16.4 When the voting trust mechanism provided in this Article 16 is
triggered, ▇▇▇▇▇▇▇▇▇ (or the highest ranking Quebec Officer of the
Corporation, if ▇▇▇▇▇▇▇▇▇ is no longer an Officer of the Corporation) is
automatically granted the right to appoint such number of Directors to
obtain a majority in Board members (if necessary, the number of
Directors will be increased
40
to such number required, notwithstanding the provisions of Section15.3),
it being understood that the Shareholders (except ▇▇▇▇▇▇▇▇▇ and
Pettigrew's Corporation if ▇▇▇▇▇▇▇▇▇ is benefiting of the voting trust
mechanism provided for in this Article 16) shall maintain their rights
to appoint the same number of directors they had the right to appoint as
of the date of beginning of the voting trust mechanism, as outlined in
Section 15.4.
16.5 Given the fact that eligibility of the Corporation for the Quebec Tax
Credits is based on a Control of the Corporation by Quebec Residents,
the Shareholders, the Corporation, Cinepix Inc. and Cinepix Films agree
that the Shares owned by Cinepix in the Corporation as well as Shares
owned by Cinepix Films in Cinepix from time to time (collectively the
"VOTING TRUST Shares") may not be directly or indirectly transferred or
agreements with respect to exercise of voting rights of the Voting Trust
Shares cannot be entered into before a 45-day prior written notice has
been given to the Chief Executive Officer of the Corporation. This
Section 16.5 will cease to apply if ▇▇▇▇▇▇▇▇▇ and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation have Control of the Corporation.
16.6 Any issuance of voting Shares (to Persons other than to SGF Tech)
occurring after Article 16 has given voting Control to ▇▇▇▇▇▇▇▇▇ or to
the highest ranking Quebec Officer of the Corporation shall require
additional and simultaneous issues of Class C Shares to ▇▇▇▇▇▇▇▇▇ or, as
the case may be, the highest ranking Quebec Officer of the Corporation,
to the extent necessary to ensure that the Control of the Corporation be
preserved in the hands of Quebec Residents. Such additional issues of
Class C Shares shall be made at nominal value and without tax
consequences for their holder.
16.7 This Article 16 shall cease to apply (without retroactive effects) if
the aggregate of the Quebec Tax Credits and the Canadian Tax Credits
(without taking into account any expected loss of these credits
resulting from any transaction or agreement contemplated in Section
16.1) represent for a given financial year (of twelve (12) months) and
are expected to represent for the following financial year (of twelve
(12) months) (according to the then approved budget) less than five
percent (5%) of the Corporation's annual revenues.
16.8 It is also agreed that this Article 16 shall not apply to said
transaction or agreement (but may apply to subsequent transactions or
agreements): (1) in the case of an expected loss of the Quebec Tax
Credits only, resulting from said transaction or agreement, if the
Quebec Tax Credits (without taking into account the expected loss of the
Quebec Tax Credits) represent for a given financial year (of twelve (12)
months) and are expected to represent for the following financial year
(of twelve (12) months) (according to the then approved budget) less
than two percent (2%) of the Corporation's annual revenues; or (2) in
the case of an expected loss of the Canadian Tax Credits only, resulting
from said transaction or agreement, if the Canadian Tax Credits (without
taking into account the expected loss of the Canadian Tax Credits)
represent for a given financial year (of twelve (12) months) and are
expected to represent for the following financial year (of twelve (12)
months) (according to the then approved budget) less than two percent
(2%) of the Corporation's annual revenues.
16.9 The Shareholders and the Corporation agree that the spirit of the
provisions of Article 16 should be preserved in as much as possible
after the Corporation has successfully completed a Public Listing and,
in this respect, to execute any agreement or other instrument reasonably
required for such purpose.
41
Article 17 FINANCING
17.1 Except for existing investments, loans or guarantees by the Shareholders
with respect to the Corporation, none of the Shareholders shall have any
obligation to provide, or to arrange for or to cause others to provide,
any financing to the Corporation, whether by way of subscription for
Shares, the making of loans, the giving of guarantees or otherwise.
17.2 Except as provided for in Subsection 15.1.21(e), nothing contained in
this Amended and Restated Agreement restricts the right of the
Corporation to obtain financing through loans and other financial
instruments.
17.3 Without restricting Section 17.1, and except as provided in Article 18
or in any agreement duly accepted by the Corporation, any loans and
advances made by a Shareholder to the Corporation (and its Subsidiaries
or Affiliates) shall bear from the date of execution of this Amended and
Restated Agreement an annual rate of interest equal to the prime
commercial lending rate of the Corporation's banker plus one percent
(1%).
17.4 Without restricting Section 17.1, any Shareholder who guarantees the
debts or obligations of the Corporation (and its Subsidiaries and
Affiliates) shall have a right to receive from the Corporation (or, as
the case may be, its Subsidiaries and Affiliates): a) upon execution of
any guarantee, a fee equivalent to one percent (1%) of the amount of
guarantee plus the reimbursement by the Corporation of any reasonable
bank fees as accepted by the Corporation; and b) from April 1st 2000 an
annual fee equivalent to one percent (1%) of the averaged yearly amount
of guarantees which is in place during each financial year of the
Corporation (or, as the case may be, its Subsidiaries and Affiliates'
financial year). For greater certainty, for purposes of Section 17.4,
guarantees of Corporation's debts and obligations by a Shareholder,
existing as of April 1st 2000 shall be deemed to be executed as of the
date of this Amended and Restated Agreement. Notwithstanding anything to
the contrary herein, this Section is not applicable, and shall not
modify the terms and conditions of that certain Guarantee and
Acknowledgement executed on December 22, 2000 by the Corporation,
Cinegroupe SaGwa Inc., ▇▇▇▇▇▇▇▇▇ and Faire Trust.
Article 18 ADDITIONAL FINANCING
18.1 In the event an injection of funds in the Corporation becomes necessary
in order to prevent cessation or material curtailment of its
consolidated activities, including, without limitation, in order to
prevent the Corporation being in default under its Material agreements
(including pursuant to financial covenants), to prevent a petition in
bankruptcy being filed against the Corporation or to prevent a seizure
of a substantive portion of its assets, and provided the Corporation has
exhausted all other avenues and recourses and no sources of conventional
financing are reasonably available, should additional funds be required
by the Corporation, upon reasonable conditions, any Shareholder shall be
entitled, in his or its sole discretion, to contribute the funds
required by the Corporation by way of a loan made by such Shareholder
(the "LENDING SHAREHOLDER"), which loan the Corporation shall be
required to accept, subject to the terms and conditions set out below:
18.1.1 the loan made by the Lending Shareholder shall be repayable on
demand and shall bear interest at an annual rate equal to the
prime rate of the principal banker financing the ongoing
operations of the Corporation, plus a four percent (4%)
42
premium computed daily, payable monthly on the first day of each
month following disbursement (the "EMERGENCY LOAN");
18.1.2 the repayment of the Emergency Loan shall be secured, as of
disbursement, by a first-ranking mortgage on all the property of
the Corporation or its Subsidiaries, as the case may be, or a
mortgage having the then best-available rank for each class of
property; provided that such security shall also enure to the
benefit of all Shareholders having contributed their
Proportional Share of the Emergency Loan, as defined below;
18.1.3 the Lending Shareholder may, in this respect, pay a creditor of
the Corporation or its Subsidiaries, as the case may be,
directly, for and on behalf, and to the discharge, of the
Corporation or its Subsidiaries.
18.2 The Corporation shall notify the other Shareholders in writing as soon
as it shall have been granted the Emergency Loan, indicating the
identity of the Lending Shareholder and the amount of the Emergency
Loan.
18.3 Within thirty (30) days following receipt of notice from the Corporation
pursuant to the preceding Section, each other Shareholder shall have the
option of making an additional contribution of funds in an amount equal
to his or its proportional share of the Emergency Loan, computed on a
Pro Rata Basis (the "PROPORTIONAL SHARE OF THE EMERGENCY LOAN"). Such
additional contribution of funds to the Corporation shall be used to
repay unto the Lending Shareholder loan to the latter's Proportional
Share of the Emergency Loan.
18.4 Should a Shareholder refuse to contribute to the Corporation his or its
whole Proportional Share of the Emergency Loan within said 30-day time
period, he or it shall be deemed to have refused to exercise the option
of contributing funds to the Corporation equal to his or its
Proportional Share of the Emergency Loan; such Shareholder shall not be
deemed in default hereunder for his refusal to contribute to the
Emergency Loan.
18.5 If, upon expiry of the time limit set out in Section 18.3, a Shareholder
has not exercised, or is deemed to have refused to exercise, his or its
option to contribute his or its Proportional Share of the Emergency Loan
in its entirety, the Corporation shall then notify forthwith the other
Shareholders who sent the notice referred to in Section 18.3 and the
latter shall have fifteen (15) Business Days following receipt of the
notice of the Corporation, in order to confirm their intention to
contribute funds in excess of their respective Proportional Share of the
Emergency Loan according to the same conditions and pro rata to the
number of Shares held by each of the Shareholders having contributed his
or its entire Proportional Share of the Emergency Loan.
18.6 Should a Shareholder refuse to contribute his or its Proportional Share
of the Emergency Loan in full to the Corporation, and, as a result, one
or several of the Shareholders (including the Lending Shareholder)
agrees to assume more than their Proportional Share of the Emergency
Loan, then such Shareholders shall each, at any time, within three (3)
years following disbursement of the Emergency Loan, in their discretion,
be entitled to request the conversion of all or part of the funds
contributed by them by way of Emergency Loan, both in principal and
interest, into Class E Shares for SGF Tech and Class A Shares to the
other Shareholders, at a conversion price equal to the Fair Market Value
of the Class E Shares or the Class A Shares of the Corporation, as the
case may be, at the time of disbursement of the
43
Emergency Loan, as determined in accordance with Section 18.7 hereof,
notwithstanding the effective date of the conversion.
18.7 Where any option to contribute granted pursuant to Article 18 is
exercised by one or several Shareholders, or where a Shareholder
exercises his or its right of conversion in accordance with Section
18.6, the parties involved shall close the transaction within thirty
(30) days following expiry of all the time limits set out in Section
18.5, or following the request for conversion of the loan into Shares of
the Corporation, as provided for in Section 18.6 hereof.
Article 19 UNDERTAKINGS OF THE CORPORATION
19.1 The Corporation undertakes not to directly or indirectly encumber or
grant any hypothec in or to its Securities issued or to be issued by it.
19.2 For the purpose of Section 19.1, hypothec shall mean any hypothec,
charge, pledge, lien or other encumbrance of any nature however arising,
but excluding rights of set-off or compensation (other than rights of
set-off or compensation in respect of cash or other assets deposited or
pledged for the purpose of securing any liability) in favour of any bank
or any other person arising in the ordinary course of business whether
by operation of law or by contract as regards cash management, netting
or derivative products (including swaps) arrangements of the Corporation
or any of its Subsidiaries.
19.3 For so long as SGF Tech holds at least ten percent (10%) of the issued
and outstanding Shares of the share capital of the Corporation, each of
the Corporation and its Subsidiaries (except foreign Subsidiaries
created in the normal course of business, with the consent of SGF Tech,
and CINE-GROUP U.S. Inc., ANIMATOON CO. Ltd. and CHILIANIMACION
LIMITADA) undertakes to keep its head office and principal place of
business in Quebec and to provide SGF Tech with financial information on
a timely and regular basis as provided in Sections 6.9 and 6.10 of the
Subscription Agreement.
Article 20 UNDERTAKINGS IN CASE OF A PUBLIC LISTING
20.1 In the case of Public Listing, the Shareholders (other than ▇▇▇▇▇▇▇▇▇
and/or ▇▇▇▇▇▇▇▇▇'▇ Corporation and SGF Tech) covenant and agree that
they will consent in favour of ▇▇▇▇▇▇▇▇▇ (and/or ▇▇▇▇▇▇▇▇▇'▇
Corporation) that the latter may sell, if the underwriter or lead agent
so accepts, in priority to all other Shareholders up to an aggregate
value of One Million Canadian Dollars (CDN$1,000,000) of value of Shares
in all such public offering(s) (including the Public Listing).
20.2 In the case of Public Listing, the Shareholders (other than Fox Family
and Faire Trust) covenant and agree that they consent in favour of Fox
Family and Faire Trust that Fox Family and Faire Trust may sell, if the
underwriter or lead agent so accepts, in priority to all other
Shareholders, but after the priority right provided for in Section 20.1,
up to an aggregate value equivalent to, on a Pro Rata Basis between Fox
Family and Faire Trust:
20.2.1 in the case of Fox Family, Three Million Canadian Dollars
(CDN$3,000,000) plus interest paid or payable pursuant to the
loan agreement entered into between Faire Trust and Fox Family
on June 23, 1998, as amended, referred to in Section 3.1; and
20.2.2 in the case of Faire Trust, one half (1/2) the amount provided
above in Subsection 20.2.1 plus, the amount provided in
Subsection 20.2.1 if Faire Trust acquires all of Fox Family's
Shares, directly or indirectly, by any means whatsoever;
in all such offering(s) (including the Public Listing).
44
Article 21 REPRESENTATIONS AND WARRANTIES
21.1 Each Shareholder hereby represents and warrants the following to the
other Shareholders, as of the date hereof:
21.1.1 except in the case of ▇▇▇▇▇▇▇▇▇ who is an individual, and in the
cases of Faire Trust and Fiducie ▇▇▇▇▇▇▇▇▇ which are trusts, it
is a corporation duly organized, validly existing and in good
standing under the laws pertaining to its incorporation;
21.1.2 it (he) has all requisite power and authority to own and operate
its assets, properties and business and to carry on its business
as now conducted;
21.1.3 it (he) has all requisite power, authority and approval required
to enter into, execute and deliver this Amended and Restated
Agreement and to perform fully its obligations hereunder;
21.1.4 it (he) has taken all actions necessary to authorize it to enter
into and perform its obligations under this Amended and Restated
Agreement and this Amended and Restated Agreement is a legal,
valid and binding obligation of it (him); and
21.1.5 neither the execution and delivery of this Amended and Restated
Agreement by it (him), nor the performance of its (his)
obligations hereunder, will conflict with, or result in a breach
of, or constitute a default under any provision of its
constating documents or its by-laws, if applicable, or any law,
judgment, order or decree of any Court or of any contract,
agreement or other instrument to which it (he) is a party or by
which it (he) is bound.
21.2 Other representations and warranties:
21.2.1 Faire Trust represents and warrants to the other Shareholders
that it is a duly organized, validly existing and a good
standing trust under the laws of Ontario and ▇▇▇▇▇▇ ▇▇▇▇ is its
sole trustee;
21.2.2 Fiducie ▇▇▇▇▇▇▇▇▇ represents and warrants to the other
Shareholders that it is a duly organized, validly existing and a
good standing trust under the laws of Quebec and ▇▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ are its sole trustees, and as long as
▇▇▇▇▇▇▇▇▇ shall remain a trustee of Fiducie ▇▇▇▇▇▇▇▇▇, there
shall be only Two (2) trustees of Fiducie ▇▇▇▇▇▇▇▇▇.
45
21.3 Each of the Shareholders hereby covenants and agrees to do, and to use
its (his) best efforts in order to cause to be done by any other person,
all things or acts necessary or desirable so that its (his)
representations and warranties contained in this Article remain in full
force and effect at any time hereafter during the term of this
Agreement.
Article 22 CONFIDENTIALITY
22.1 All confidential records, material and information and copies thereof,
and all trade secrets (and without restricting the generality of the
foregoing, including all confidential information and documentation
relating to the products in which the Corporation and all its
Subsidiaries have an interest and all intellectual property of the
Corporation and all its Subsidiaries) concerning the Business of the
Corporation and of all its Subsidiaries obtained by any of the
Shareholders of the Corporation shall remain the exclusive property of
the Corporation or of its Subsidiaries, as the case may be. During the
term of this Amended and Restated Agreement, or at any time thereafter,
each such persons shall not divulge the contents of such confidential
records or any of such confidential information or trade secrets to any
person other than to the Corporation or the Corporation's qualified
employees, except as may be required by law or otherwise in the proper
discharge of their duties for the Corporation and for the Corporation's
Subsidiaries, and each such persons shall not, following the termination
of this Amended and Restated Agreement and for a period of three (3)
years thereafter, for any reason, use the contents of such confidential
records or such confidential information or trade secrets for any
purpose whatsoever. Under no circumstances shall any such persons remove
any books, records or documents or copies thereof (whether or not
confidential) from the offices of the Corporation or of the
Subsidiaries, nor shall they make any copies of any such books, records
or documents or copies thereof for use outside the offices of the
Corporation or of the Subsidiaries, except as specifically authorized by
the Board or into the Subscription Agreement or except in the proper
discharge of their duties for the Corporation and for the Subsidiaries.
22.2 For the purposes hereof, confidential records, material and information
include confidential or proprietary information known or used by the
Corporation and/or its Subsidiaries in connection with the Corporation's
and the Subsidiaries' Business, including but not limited to any matters
relating to products owned by or in which the Corporation or its
Subsidiaries has any interest including any scripts, all intellectual
property owned by the Corporation or its Subsidiaries or in which it has
an interest, information and documentation relating to output and/or
distribution arrangements, compilation of information, data, program,
code, method, technique or process, information about or relating to
suppliers or customers of the Corporation and of its Subsidiaries and
markets and marketing plans of the Corporation and of its Subsidiaries,
present and future, information about or relating to potential business
ventures of the Corporation and/or its Subsidiaries, financial
information of all kinds relating to the Corporation and to its
Subsidiaries and its activities, all inventions, ideas, and related
material, but does not include any of the foregoing which is not of a
confidential or proprietary nature or becomes a matter of public
knowledge through no fault of any such persons concerned by this
Article.
22.3 Without intending to limit the remedies available to the Corporation and
to its Subsidiaries, the Shareholders of the Corporation acknowledge
that damages at law will be an insufficient
46
remedy to the Corporation and its Subsidiaries in view of the
irreparable harm which will be suffered if the terms of Article 22 are
violated by any of them, as the case may be, and agree that the
Corporation and its Subsidiaries may apply for and have injunctive
relief in any court of competent jurisdiction specifically to enforce
any such covenants upon the breach or threatened breach of any such
provisions, or otherwise specifically to enforce any such covenants and
hereby waives all defences to the strict enforcement thereof by the
Corporation and its Subsidiaries.
22.4 In the event that any provision, clause or covenant herein, or part
thereof, shall be deemed void or invalid or unenforceable by a court of
competent jurisdiction, the remaining provisions, clauses and covenants,
and parts thereof, shall be and remain in full force and effect. If, in
any judicial proceeding, any provision, clause or covenant of this
Amended and Restated Agreement is found to be so broad as to be
unenforceable, it is hereby agreed that such provision, clause or
covenant shall be interpreted to be only so broad as it may be to be
enforceable.
22.5 Notwithstanding Section 22.1, Shareholders are entitled to disclose to
any potential buyer of their Shares and Convertible Debentures all
relevant information in order to give to such potential buyer the
opportunity to estimate the relevancy to acquire such Shares and
Convertible Debenture subject to the fact that such potential buyer
shall previously enter into a confidentiality agreement in favour of the
Corporation and its Subsidiaries and copy of same is remitted to the
Corporation.
22.6 Notwithstanding any provision to the contrary and any confidentiality
undertaking or fiduciary duty, the Parties recognize that directors
designated by SGF Tech to the Board shall be authorized to disclose
information to the SOCIETE GENERALE DE FINANCEMENT as long as this
information is used in good faith and not disclosed to a direct
competitor of the Corporation and or any of its Subsidiaries.
Article 23 NON-SOLICITATION
23.1 Each of the Shareholders, except for SGF Tech, undertakes in favour of
the other Shareholders, the Corporation and its Subsidiaries for so long
as they or any Person which is a Related Party of any of them remains a
Shareholder of the Corporation and for a period of at least three (3)
years hereafter whether directly or indirectly, alone or in partnership
or in association or jointly with any other Person, as principal, agent,
shareholder, lender, guarantor, employee, partner, consultant or
subcontractor or in any other manner, not to:
23.1.1 except for Lions Gate, Fox Family and Faire Trust, solicit,
interfere or endeavour to direct or entice away from the
Corporation or its Subsidiaries any customer, client, supplier
or any Persons in the habit of dealing with the Corporation or
its Subsidiaries or other customers, clients, suppliers or
Person, approached by the Corporation or its Subsidiaries during
the year preceding the end of such Shareholder's relationship
with the Corporation or its Subsidiaries; or
23.1.2 encourage any employee, consultant, officer or Director of the
Corporation or its Subsidiaries or of a Person offering
management services to the Corporation or its Subsidiaries to
leave the Corporation or employ or solicit for employment any
employee, consultant, officer or Director who is at the time of
employment
47
or solicitation employed or rendered services to the
Corporation, its Subsidiaries or to a Person offering management
services to the Corporation or its Subsidiaries.
23.2 Each of the Shareholders acknowledges that its failure to respect its
commitments and obligations set out in Section 23.1 would cause the
Corporation and its Subsidiaries sufficient prejudice to justify, in
addition to the consequences contemplated in Article 23, recourse to the
remedies of injunction and seizure before judgment.
23.3 Each of the Shareholders recognizes that the restrictions contemplated
in Section 23.1 are reasonable and valid, particularly with regard to
their duration, their extent and the Persons contemplated thereby, and
that these restrictions are essential in order to enable the Corporation
and its Subsidiaries to protect their position adequately in the field
where they carry on business, operate or pursue their activities and
therefore exempts the Shareholders, the Corporation and its Subsidiaries
from establishing the validity of these restrictions before any
arbitration board or other court.
23.4 The Parties acknowledge that if the extent of any restriction contained
in this Article 23, is judged to be unreasonable, which is not the
opinion of the Parties on the date hereof, such a restriction shall then
be applicable up to the maximum permitted by the Applicable Law and the
Parties hereby agree and accept that the extent of this restriction may
be modified accordingly by any arbitration board or other court within
the context of any procedure to enforce and give effect to such
restriction.
Article 24 ARBITRATION
24.1 In the event of any dispute between the parties (including the
intervening parties) relating to this Amended and Restated Agreement,
whether such dispute is relating to the interpretation or application of
its provisions or to the existence of any of their respective rights and
obligations hereunder or to the nature or the amount of the obligations
and responsibilities resulting from this Amended and Restated Agreement,
such dispute shall be submitted to arbitration, to the exclusion of any
court of law having otherwise competent jurisdiction, in accordance with
the provisions of the Code of Civil Procedure of the Province of Quebec,
modified as follows, it being understood that this Article 24 shall
constitute an arbitration agreement within the meaning of the Civil Code
of the Province of Quebec:
24.1.1 the dispute shall be submitted to the arbitration of three
arbitrators, the party requiring the arbitration designating the
first arbitrator and the other party or the other parties to the
dispute having a conflicting interest with the requiring party
designating the second arbitrator and the third arbitrator being
designated jointly by the two first arbitrators so designated.
All arbitrators must be lawyers qualified to practise law within
the Province of Quebec;
24.1.2 a party requiring arbitration shall give notice thereof to the
other party or the other parties to the dispute having a
conflicting interest and shall provide in such notice the name
and address of the arbitrator for the purposes of this Amended
and Restated Agreement as well as the details of the dispute;
24.1.3 within ten (10) Business Days after a notice of arbitration has
been sent pursuant to Subsection 24.1.2 above, all of the other
parties to the dispute having a conflicting interest with the
party submitting the issue to arbitration shall agree on the
name of the second arbitrator and shall give notice of the name
and
48
address of such second arbitrator to the requesting party and
the first arbitrator within such ten (10) Business Days period,
failing which all of such other parties shall be deemed to have
waived their rights to designate an arbitrator, and the
arbitration shall be held by one arbitrator only, namely the
arbitrator designated pursuant to 24.1.2 above;
24.1.4 subject to the provisions of the preceding paragraph relating to
the resolution of the dispute by one arbitrator, the third
arbitrator shall be designated by the other two arbitrators
within five (5) Business Days following receipt by the requiring
party and the first arbitrator of the notice described in 24.1.3
above in respect of the designation of a second arbitrator;
24.1.5 the hearing of the arbitration shall be held on the territory of
the Metropolitan Region of Montreal, at such place and at such
time as shall be determined jointly by the arbitrators and
within a delay of ten (10) Business Days of the nomination of
the third arbitrator or sole arbitrator, as the case may be;
24.1.6 the arbitrators are authorized to determine their own procedure
and shall render their decision in writing in such form as they
shall decide; the arbitrators shall allocate the expenses
relating to the arbitration in the manner which they shall see
fit which for such purposes shall take into account, inter alia,
the relative success of the arguments of each of the parties to
the arbitration;
24.1.7 the arbitrators shall, to the extent possible, render their
decision and give notice thereof to the parties within a period
of ten (10) Business Days following the hearing of the parties
involved in the arbitration or, as the case may be, such period
of time (which shall not be more than five (5) Business Days)
which they shall grant to the parties involved to the
arbitration to submit in writing their arguments following the
hearing;
24.1.8 the decision of the arbitrators shall be final and binding on
the parties to the arbitration and the provisions of Sections
946 to 946.6 inclusively of the Code of Civil Procedure of the
Province of Quebec relating to the homologation of arbitration
decisions shall apply;
24.1.9 the arbitrators shall resolve the dispute in accordance with the
rules of law and shall not act as "aimables compositeurs";
24.1.10 the English and French languages shall be the languages of
arbitration, as requested by the parties to arbitration; and
24.1.11 nothing in this Article 24 shall be interpreted or construed so
as to affect or limit the rights of any parties hereto of
seeking any injunction, constraining order, or other mandatory
relief available to them under the law from any court having
jurisdiction with respect to any breach or violation or
anticipated breach or violation of any of the covenants provided
in this Amended and Restated Agreement.
Article 25 GENERAL
25.1 A copy of this Amended and Restated Agreement shall be filed with the
Corporate Records of the Corporation at the office of the Corporation.
25.2 Time shall be of the essence of this Amended and Restated Agreement.
49
25.3 Any notices, demand or other communication required or permitted to be
given to any party or intervening party hereunder shall be in writing
and shall be either:
25.3.1 personally delivered;
25.3.2 sent by same-day or next-day courier; or
25.3.3 sent by facsimile
Any notice so given shall be sent to the parties or intervening parties
at their respective addresses set out below:
25.3.4 If to Cinepix:
ANIMATION CINEPIX INC. ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇-▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: The President
25.3.5 if to ▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇-▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
25.3.6 if to Faire Trust:
FAIRE TRUST ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
FOLEY, BRODERICK, C.A. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
25.3.7 If to Fox Family:
FOX FAMILY WORLDWIDE, INC. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America 90024
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: The President
25.3.8 if to Fiducie ▇▇▇▇▇▇▇▇▇:
FIDUCIE FAMILLE ▇▇▇▇▇▇▇▇▇ 1835 du Sommet Trinite Street
St-Bruno, Quebec Canada J3V 6E4
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Trustees
25.3.9 If to SGF Tech:
SGF TECH INC. c/o Societe generale de financement du Quebec
▇▇▇ ▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: The President Fax: (▇▇▇) ▇▇▇-▇▇▇▇
25.3.10 if to the Corporation:
CORPORATION CINEGROUPE ▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: The President
25.3.11 if to Lions Gate:
LIONS GATE ENTERTAINMENT CORP. Suite 3123, Three Bentall Centre
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Attention: The Senior Vice President
Either party and intervening party may from time to time change its
address by written notice to the other party and intervening party given
in accordance with the provisions
50
hereof. Any notice or communication shall be deemed to have been
received on the next Business Day after which it was delivered, if
personally delivered or sent by courier, or on the next Business Day
after it was sent by facsimile, if it was so sent.
25.4 The provisions of this Amended and Restated Agreement shall apply to any
Shares issued pursuant to an option granted by the Corporation, to
Shares issued pursuant to a convertible debenture, to any Shares
resulting from the reclassification, subdivision, consolidation or
corporate reorganization and to any Shares of the Corporation received
by the holders as a stock dividend and to any Shares or other securities
of the Corporation which may be received by the holder of such Shares on
amalgamation, reorganization or reconstruction of the Corporation or to
any other Shares which may hereafter be issued to the Shareholders.
25.5 Subject to the Articles and By-Laws of the Corporation, this Amended and
Restated Agreement constitutes the entire agreement between the Parties
hereto with respect to the subject matters herein contained and
supersedes and replaces any provisions of any other document heretofore
entered into by them with respect to the subject matters herein,
including the Former Agreement, the First Amendment, the Second
Amendment and the Letter of Intent.
25.6 Unless otherwise stipulated, all amounts expressed in this Amended and
Restated Agreement are in the Canadian currency. If any of the
provisions of this Amended and Restated Agreement are ever held illegal
or invalid for any reason, such illegality or invalidity shall not
affect the remaining parts of the Amended and Restated Agreement, and
the Amended and Restated Agreement shall be construed and enforced as if
such illegal and invalid provisions had never been inserted therein. If,
in any judicial proceeding, any provision, clause or covenant of this
Amended and Restated Agreement is found to be so broad as to be
unenforceable, it is hereby agreed that such provision, clause or
covenant shall be interpreted to be only so broad as it may be to be
enforceable.
25.7 This Amended and Restated Agreement may be executed in counterparts,
each of which, when so executed and delivered to all other parties and
intervening parties, shall be deemed to be an original and when taken
together shall be deemed to be one and the same agreement.
25.8 The Shareholders, the Corporation and the other intervening parties
agree to do all things and execute any and all documents, upon the
request of any of the other, to better effect complete consummation of
the transactions contemplated by this Amended and Restated Agreement as
well as the true intent and purposes of this Amended and Restated
Agreement including to vote Shares which any one of them may hold or
have Control over and to use its best efforts so as to cause to be done,
executed, acknowledged or delivered by any other person, all such
further acts or other things, deeds, documents, assignments, transfers,
conveyances, powers of attorney and assurances as may be reasonably
necessary or desirable.
25.9 Section 15.1 of this Amended and Restated Agreement is an unanimous
shareholders' agreement within the meaning of Sections 123.91 and
following of the Companies Act (Quebec) and must be interpreted as such.
No by-law or resolution of the Board and of the Shareholders of the
Corporation or Articles (with respect to transfer of shares only)
51
may contradict or modify the provisions of this Amended and Restated
Agreement and, should this occur, this Amended and Restated Agreement
shall prevail. This Amended and Restated Agreement is governed by the
laws of the Province of Quebec, Canada.
25.10 The preamble forms an integral part of this Amended and Restated
Agreement.
25.11 This Amended and Restated Agreement has been drawn up and executed in
the English language at the request of the Parties. La presente
convention a ete redigee et executee dans la langue anglaise a la
demande des parties. This Agreement shall be prepared and executed in
French version if requested by SGF Tech. The parties hereto expressly
agree that in the event of any misunderstanding, dispute or controversy,
among them with respect to any of the provisions of this Agreement, the
executed French version, if it exists, shall prevail.
25.12 The trustee of Faire Trust incurs no personal liability under this
Amended and Restated Agreement and his liability is limited to the
assets of Faire Trust. The trustees of Fiducie ▇▇▇▇▇▇▇▇▇ incur no
personal liability under this Amended and Restated Agreement and their
liability is limited to the assets of Fiducie ▇▇▇▇▇▇▇▇▇.
25.13 This Agreement shall enure to the benefit of and be binding upon the
parties and intervening parties, their respective heirs, executors,
administrators, successors and permitted assigns as the case may be.
IN WITNESS WHEREOF THE PARTIES HERETO HAVE DULY EXECUTED THIS AGREEMENT
ANIMATION CINEPIX INC.
Per: ___________________________________
Andre Link
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
FAIRE TRUST
Per: ___________________________________
▇▇▇▇▇▇ ▇▇▇▇, in his capacity as
trustee, without personal liability
FOX FAMILY WORLDWIDE, INC.
Per: ___________________________________
▇▇▇ ▇▇▇▇▇
FIDUCIE FAMILLE ▇▇▇▇▇▇▇▇▇
Per: ___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in his capacity
as Trustee, without personal
liability
Per: ___________________________________
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in her
capacity as Trustee, without
personal liability
SGF TECH INC.
Per: ___________________________________
▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Per: ___________________________________
▇▇▇▇▇ ▇▇▇
52
AND INTERVENING HERETO CORPORATION CINEGROUPE
Per: ___________________________________
Andre Link
Per: ___________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
LIONS GATE ENTERTAINMENT CORP.
Per: ___________________________________
▇▇▇▇▇▇ Keep
1
SCHEDULE 1.2.20
CONVERTIBLE DEBENTURE
1
SCHEDULE 1.2.26
EMPLOYMENT AGREEMENT OF ▇▇▇▇▇▇▇▇▇
1
SCHEDULE 1.2.34
LIONS GATE DEBENTURE
1
SCHEDULE 1.2.37
OPTION TO FAIRE TRUST
1
SCHEDULE 1.2.38
OPTION TO ▇▇▇▇▇▇▇▇▇
1
SCHEDULE 3.1
PUT AGREEMENT BETWEEN LIONS GATE ENTERTAINMENT CORP.
AND FOX FAMILY, AS AMENDED,
AND PUT ASSIGNMENT AGREEMENT BETWEEN A FAIRE D'AUJOURD'HUI INC.,
FOX FAMILY AND LIONS GATE, AS AMENDED
2
SCHEDULE 15.1
LIST OF COMPETITORS