EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of this 12th
day of September, 2005 by and among Lions Gate Entertainment Corp., a corporation organized under
the laws of British Columbia, Canada (“Buyer”), and the sellers set forth on Schedule
1 attached hereto (each, a “Seller” and collectively, the “Sellers”).
RECITALS
A. Each Seller is the sole record and beneficial owner of that number of shares set forth
opposite such Seller’s name on Schedule 1, which in the aggregate total 571,429 shares (the
“Image Shares”) of the common stock, $.0001 par value per share (“Image Common
Stock”), of Image Entertainment, Inc., a Delaware corporation (“Image”).
B. On the terms and subject to the conditions set forth herein, Buyer desires to purchase from
each Seller, and each Seller desires to sell to Buyer, the Image Shares owned beneficially and of
record by such Seller in exchange for the issuance by Buyer to each Seller of that number of shares
of Common Shares, without par value, of Buyer (“Buyer Common Stock”) set forth opposite
such Seller’s name on Schedule 1.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and
agreements, and upon the terms and subject to the conditions, hereinafter set forth, the parties
hereby agree as follows:
ARTICLE 1
TERMS OF EXCHANGE
1.1 Issuance and Exchange of the Buyer Shares for the Image Shares. On the terms and
subject to the conditions of this Agreement:
(a) Each Seller agrees to sell, assign, transfer and convey to Buyer at the Closing (as
hereinafter defined), and Buyer agrees to purchase and accept from each Seller at the
Closing, the Image Shares, and all of such Seller’s right, title and interest in and to the
Image Shares, owned by such Seller, as set forth on Schedule 1; and
(b) Buyer agrees to issue and sell to each Seller at the Closing, in exchange for the
Image shares so owned by that Seller, that number of validly issued, fully paid and
non-assessable shares of Buyer Common Stock equal to the product of (i) the number of Image
Shares owned by that Seller as set forth on Schedule 1 multiplied by (ii) the
Exchange Ratio (as hereinafter defined), rounded up to the nearest whole share (the
“Buyer Shares”).
1
1.2 Closing.
(a) The closing of the transactions provided for herein (the “Closing”) shall
take place at the offices of Sheppard, Mullin, Xxxxxxx & Xxxxxxx LLP, 0000
Xxxxxx xx xxx Xxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000, at 9:00 a.m. Los
Angeles time on the first business day following the satisfaction or waiver of all of the
conditions to the obligations of the parties hereto set forth in Article 5, or such other
date as Buyer and Sellers may mutually agree to in writing, such date being referred to
herein as the “Closing Date”.
(b) At the Closing, Buyer shall:
(1) issue and deliver to each Seller a certificate or certificates in
definitive form, registered in the name of that Seller, evidencing the Buyer Shares
to be issued to and acquired by that Seller at the Closing in exchange for the Image
Shares owned by that Seller as set forth on Schedule 1; and
(2) execute and deliver to each Seller the registration rights agreement in the
form attached hereto as Exhibit A (the “Registration Rights
Agreement”).
(c) At the Closing, each Seller shall:
(1) deliver to Buyer a certificate or certificates in definitive form,
registered in the name of Lions Gate Entertainment Inc., a Delaware corporation and
a wholly-owned subsidiary of Buyer (“LGEI”), evidencing the Image Shares
owned by such Seller as set forth on Schedule 1; and
(2) execute and deliver to Buyer the Registration Rights Agreement.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller represents and warrants to Buyer, severally and not jointly, as follows:
2.1 Capacity. Seller has the capacity to enter into this Agreement and the right and power
to perform his, her or its obligations under this Agreement. Each Person signing on behalf of any
Seller pursuant to a power of attorney, if any, has a duly authorized, validly existing and
effective power of attorney from that Seller that authorizes such Person to execute, deliver and
perform this Agreement on behalf of that Seller.
2.2 Power and Authority; Enforceability. The execution, delivery and performance by Seller
of this Agreement and the consummation by Seller of the transactions contemplated hereby have been
duly authorized by all necessary action. This Agreement has been duly and validly executed and
delivered by Seller and constitutes a valid and binding obligation of Seller, enforceable against
Seller in accordance with
2
its terms, except to the extent that such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to creditors’
rights generally, and is subject to general principles of equity.
2.3 No Conflict. The execution, delivery and performance by Seller of this Agreement and
the consummation by Seller of the transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, violate, conflict with or constitute a default
under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of Seller pursuant to the terms of, (a) any order, judgment or decree applicable
to Seller or any of its business or properties, (b) any provision of the charter documents of
Seller, if any, or (c) any agreement or other instrument by which Seller, its affiliates or any of
its or their business or properties is bound or affected.
2.4 Litigation. There is no action, suit, proceeding, claim, arbitration or investigation
(“Action”) pending (or, to knowledge of Seller, currently threatened) against Seller, and
Seller is not a party to or subject to the provisions of any order, writ, injunction, judgment or
decree of any court or government agency or instrumentality, in each case that could reasonably be
expected to materially impair Seller’s ability to perform its obligations under this Agreement.
2.5 Title to Image Shares. Seller is the sole “beneficial owner” (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
which meaning will apply for all purposes of this Agreement) and record owner of, has good and
marketable title to, and, except for restrictions which might now be imposed upon the Image Shares
pursuant to Section 5(f) of the Purchase Agreements, dated as of December 20, 2004, by and between
Image Entertainment, Inc., a California corporation and predecessor to Image, and each of the
Sellers (the “Purchase Agreements”), Seller has full and unrestricted power to dispose of
and vote, the Image Shares owned by such Seller as set forth on Schedule 1, free and clear
of any and all liens, encumbrances, claims, security interests or restrictions (including any
contractual restriction on the right to vote, sell or otherwise dispose of such Image Shares), and
there are no outstanding subscriptions, options, warrants, rights, contracts, understandings or
agreements to purchase or otherwise acquire the Image Shares, except for this Agreement. Record
title to the Image Shares is held as reflected on Schedule 1 hereto. Upon the purchase of
the Image Shares owned by Seller as set forth on Schedule 1 at the Closing, Buyer shall
acquire good and marketable title to such Image Shares, and all rights and benefits which Seller
may possess with respect thereto, including, without limitation, all right, title and interest in
and to any cash dividends, stock dividends or other distributions made with respect thereto on or
after the Closing, free and clear of any and all liens, claims, encumbrances, security interests or
restrictions of any type, kind or nature, except for those restrictions referred to in Section 3 of
this Agreement. Seller has the necessary and sufficient right and authority to make the
commitments contained in this Agreement with respect to the Image Shares owned by such Seller as
set forth on Schedule 1,
3
and those Image Shares are the only shares of capital stock of
Image owned by Seller or any of its affiliates (other than any affiliate which is a party to this
Agreement).
2.6 Purchase for Own Account; Investment. Seller is acquiring the Buyer Shares for
investment, for its own account and not for the account of any other Person and not with a view to
distribution thereof in violation of applicable United States federal and state securities laws.
Seller understands that the Buyer Shares have not been registered under the Securities Act of 1933,
as amended (the “Securities Act”), by reason of a specific exemption from the registration
provisions of the Securities Act, which depends upon, among other things, the bona fide nature of
Seller’s investment intent, as expressed herein, and that the Buyer Shares
must be held indefinitely unless registered under the Securities Act or an exemption from such
registration becomes available. Seller understands that the Buyer Shares it is purchasing are
characterized as “restricted securities” under the United States federal securities laws, inasmuch
as they are being acquired from Buyer in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. Seller acknowledges that Buyer is not
required to register the Buyer Shares except in accordance with the terms and conditions of the
Registration Rights Agreement. In addition, Seller represents that it is familiar with Rule 144 of
the Securities Act, as presently in effect, and understands the resale limitations imposed thereby
and by the Securities Act and the lockup for sales in Canada for a four-month period following the
Closing as required by applicable Canadian securities laws.
2.7 Financial Matters. Seller understands that the acquisition of the Buyer Shares
involves substantial risk, and its financial condition and investments are such that it is in a
financial position to hold the Buyer Shares for an indefinite period of time and to bear the
economic risk of, and withstand a complete loss of, the Buyer Shares. In addition, by virtue of
its expertise, the advice available to it and previous investment experience, Seller has extensive
knowledge and experience in financial and business matters, investments, securities and private
placements and the capability to evaluate the merits and risks of the transactions contemplated by
this Agreement.
2.8 Access to Data. Seller has had an opportunity to discuss Buyer’s business, management
and financial affairs with its management and to obtain any additional information it may consider
to be necessary or appropriate for deciding whether or not to purchase the Buyer Shares.
2.9 No General Solicitation. At no time was Seller presented with or solicited by any
leaflet, newspaper or magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting, whether by Buyer or
any other Person (whether or not on behalf of Buyer).
4
2.10 Accredited Investor. Seller is an “accredited investor” within the meaning of
Regulation D of the rules and regulations promulgated under the Securities Act.
2.11 Brokers. Seller has not dealt with, and does not owe any compensation to, any broker,
finder, or other similar Person in connection with its purchase of the Buyer Shares or the sale of
the Image Shares or the other transactions contemplated by this Agreement.
2.12 Legend. Seller acknowledges that the certificate or certificates evidencing the Buyer
Shares will bear the legend set forth below:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), OR UNDER ANY U.S. STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION WITHOUT AN
OPINION OF COUNSEL FOR THE HOLDER, REASONABLY ACCEPTABLE TO THE
COMPANY, STATING THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
QUALIFICATION REQUIREMENTS UNDER APPLICABLE U.S. STATE SECURITIES
LAWS. THIS CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR
ITS TRANSFER AGENT AS A CONDITION PRECEDENT TO THE TRANSFER OF ANY
INTEREST IN THE SECURITIES REPRESENTED BY THIS CERTIFICATE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE
TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT
BE TRADED THROUGH THE FACILITIES OF THE TSX SINCE THEY ARE NOT
FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING
SUCH SECURITIES IS NOT ‘GOOD DELIVERY’ IN SETTLEMENT OF TRANSACTIONS
ON TSX.
THE NOTATION REQUIRED BY TSX CAN BE REMOVED FROM THE FACE OF THIS
CERTIFICATE WHEN ALL OTHER NOTATIONS THAT THE SECURITIES ARE NOT
FREELY TRANSFERABLE CAN BE LEGALLY REMOVED FROM THIS CERTIFICATE.”
5
2.13 Purchases and Sales While in Receipt of Certain Information. Seller is aware, and
will advise its Representatives who are informed of the matters that are the subject of this
Agreement, of the restrictions imposed by the United States federal securities laws, including,
without limitation, Rule 14e-3 under the Exchange Act, on the purchase or sale of securities by any
person who has received (a) material, non-public information from the issuer of such securities
and/or (b) the information described in Rule 14e-3 under the Exchange Act in the manner described
therein and on the communication of such information to any other person when it is reasonably
foreseeable that such other person is likely to purchase or sell such securities in reliance upon
such information.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
3.1 Organization; Good Standing. Buyer is a corporation duly recognized, validly existing
and in good standing under the laws of British Columbia, Canada. Buyer has all
requisite corporate power and authority to own its properties and carry on its business as now
conducted.
3.2 Power and Authority; Enforceability. The execution, delivery and performance by Buyer
of this Agreement and the consummation by Buyer of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Buyer. This Agreement has been
duly and validly executed and delivered by Buyer and constitutes a valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to creditors’ rights generally and is subject to general principles of
equity.
3.3 No Conflict. The execution, delivery and performance by Buyer of this Agreement and
the consummation by Buyer of the transactions contemplated hereby will not, with or without the
giving of notice or the lapse of time, or both, violate, conflict with or constitute a default
under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the
property or assets of Buyer pursuant to the terms of, (a) any provision of law, rule or regulation
to which Buyer or any of its business or properties is subject, (b) any order, judgment or decree
applicable to Buyer or any of its business or properties, (c) any provision of the charter
documents or bylaws of Buyer or (d) any agreement or other instrument by which Buyer or any of its
business or properties is bound or attached.
6
3.4 Valid Issuance of Buyer Shares. The Buyer Shares, when issued and delivered in
accordance with the terms of this Agreement, will be duly and validly issued, fully paid and
nonassessable, and free and clear of all liens, encumbrances, claims, security interests or
restrictions (other than restrictions imposed by applicable securities law and other than those set
forth or referred to in Section 3.12 hereof).
3.5 Litigation. There is no Action pending (or, to knowledge of Buyer, currently
threatened) against Buyer or its significant subsidiaries, and Buyer and its significant
subsidiaries are not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or government agency or instrumentality, that in each case could
reasonably be expected to materially impair Buyer’s ability to perform its obligations under this
Agreement.
3.6 SEC Documents; Financial Statements.
(a) Buyer has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the U.S. Securities and Exchange Commission
(“SEC”) pursuant to the reporting requirements of the Exchange Act and any other
material reports or documents required to be filed with the SEC. As of their respective
dates, all documents filed by Buyer with the SEC (the “SEC Documents”) complied in
all material respects with the requirements of the Exchange Act and the rules and
regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of
the SEC Documents, at the time they were filed with the SEC, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein, or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(b) As of their respective dates, the financial statements of Buyer included in the SEC
Documents complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect thereto. Such
financial statements have been prepared in accordance with United States generally accepted
accounting principles (“GAAP”), consistently applied, during the periods involved
(except (1) as may be otherwise indicated in such financial statements or the notes thereto,
or (2) in the case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed or summary statements) and fairly present in all material
respects the consolidated financial position of Buyer and its consolidated subsidiaries as
of the dates thereof and the consolidated results of their operations and cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). The unaudited pro forma combined financial statements filed with the SEC
comply in all material respects with the requirements of Article 11 of Regulation S-X under
the Securities Act.
7
3.7 Purchase for Own Account; Investment. Buyer is acquiring the Image Shares for
investment, for its own account and not for the account of any other Person and not with a view to
distribution thereof in violation of applicable United States federal and state securities laws.
Buyer understands that the Image Shares have not been registered under the Securities Act by reason
of a specific exemption from the registration provisions of the Securities Act which depends upon,
among other things, the bona fide nature of Buyer’s investment intent, as expressed herein, and
that the Image Shares must be held indefinitely unless registered under the Securities Act or an
exemption from such registration becomes available. Buyer understands that the Image Shares it is
purchasing may be characterized as “restricted securities” under the United States federal
securities laws, inasmuch as they are being acquired from Sellers in a transaction not involving a
public offering and that under such laws and applicable regulations such securities may be resold
without registration under the Securities Act only in certain limited circumstances. Buyer
acknowledges that neither any Seller nor Image is required to register the Image Shares. In
addition, Buyer represents that it is familiar with Rule 144 of the Securities Act, as presently in
effect, and understands the resale limitations imposed thereby, by the Securities Act.
3.8 Financial Matters. Buyer understands that the acquisition of the Image Shares involves
substantial risk and that its financial condition and investments are such that it is in a
financial position to hold the Image Shares for an indefinite period of time and to bear the
economic risk of, and withstand a complete loss of, the Image Shares. In addition, by virtue of
its expertise, the advice available to it and previous investment experience, Buyer has extensive
knowledge and experience in financial and business matters, investments, securities and private
placements and the capability to evaluate the merits and risks of the transactions contemplated by
this Agreement.
3.9 Access to Data. Buyer has had an opportunity to obtain any additional information it
may consider to be necessary or appropriate for deciding whether or not to purchase the Image
Shares.
3.10 No General Solicitation. At no time was Buyer presented with or solicited by any
leaflet, newspaper or magazine article, radio or television advertisement, or any other form of
general advertising or solicited or invited to attend a promotional meeting, whether by any Seller
or any other Person (whether or not on behalf of any Seller).
3.11 Accredited Investor. Buyer is an “accredited investor” within the meaning of
Regulation D of the rules and regulations promulgated under the Securities Act.
3.12 Legend. Buyer acknowledges that the certificate or certificates evidencing the Image
Shares may bear a legend substantially in the form set forth below:
8
“The Securities evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended (the
“Securities Act”), or the securities laws of any state or other
jurisdiction. The Securities may not be offered, sold, pledged or
otherwise transferred except (1) pursuant to an exemption from
registration under the Securities Act or (2) pursuant to an
effective registration statement under the Securities Act, in each
case in accordance with all applicable securities laws of the states
and other jurisdictions, and in the case of a transaction exempt
from registration, unless the Company has received an opinion of
counsel reasonably satisfactory to it that such transaction does not
require registration under the Securities Act and such other
applicable laws.”
ARTICLE 4
FURTHER COVENANTS OF THE PARTIES
4.1 Cooperation; Further Assurances. At any time and from time to time from and after the
Closing, any party shall, at the request of any other party, execute, acknowledge and deliver to
such other party, without further consideration, all such additional agreements, assignments,
conveyances, endorsements, certificates and other documents, and take such other actions, as such
other party may reasonably request, in order to carry out the purposes of, and consummate the
transactions contemplated by, this Agreement. From and after execution and delivery of this
Agreement, Sellers shall use their respective best efforts to cause Image to issue physical
certificates registered in the name of LGEI evidencing in the aggregate record ownership by Buyer
of the Image Shares as reflected on Schedule 1 (and, if required, to deliver to Image any opinion
of counsel as may be required by Image pursuant to the Purchase Agreement). In addition, if
requested by Buyer, at any time from and after the Closing, Sellers shall use their respective best
efforts to obtain from Image its consent to the transfer to Buyer of all of each Seller’s rights
with respect to registration of Image Shares set forth in Section 7 of the Purchase Agreement, and,
upon obtaining such consent, Sellers shall transfer such rights to Buyer.
4.2 [Intentionally Deleted].
4.3 Price Adjustment. If on or prior to September 9, 2006, there occurs a Buyer
Acquisition (as defined herein), then:
(a) if the Buyer Acquisition is an All—Stock Buyer Acquisition, and if the Acquisition
Exchange Ratio is greater than the Exchange Ratio, Buyer shall deliver to each Seller, as
additional consideration for the Image Shares sold by such Seller to Buyer, within 15
business days after the consummation of the Buyer Acquisition, that number of shares of
Buyer Common Stock equal to the lesser of (x) number of shares equal to the quotient
obtained by dividing (A) the number of Image Shares sold by such Seller hereunder by (B) the
Buyer Share Price, with such number to be adjusted for any stock dividends, distributions,
combinations, splits, recapitalizations or the like that took effect
9
after the Closing Date
and (y) that number of shares of Buyer Common Stock equal to (A) the number of Image Shares
sold by such Seller hereunder, multiplied by (B) the Acquisition Exchange Ratio,
less (C) the number of shares of Buyer Common Stock delivered to such Seller at the
Closing [(A X B) — C], in the case of a fraction of a share, rounded up to the next whole
share; and
(b) if the Buyer Acquisition is other than an All—Stock Buyer Acquisition, and if the
Per—Share Acquisition Price is greater than $4.00 per share, then Buyer shall pay to each
Seller, as additional consideration for the Image Shares, within 2 business days after the
consummation of the Buyer Acquisition, by wire transfer in immediately available funds, an
amount equal to the lesser of (x) an amount equal to (A) the number of Image Shares sold by
such Seller hereunder multiplied by (B) $1.00, and (y) that amount equal to (A) the
number of Image Shares to be sold by such Seller hereunder, multiplied by (B) the
Per—Share Acquisition Price, less (C) the deemed aggregate purchase price paid to
such Seller at the Closing, which for purposes of this Section 4.3(b) shall be equal to the
number of Image Shares sold by such Seller hereunder multiplied by $4.00 [(A X B) — C].
(c) The price adjustment provisions in this Section 4.3 shall have no effect on the
Closing or the passing of title to any of the Image Shares to Buyer at Closing.
4.4 Indemnification.
(a) Agreement of Each Seller to Indemnify Buyer. From and after the Closing
and subject to the terms and conditions of this Section 4.4, each Seller shall defend,
indemnify and hold harmless Buyer and its affiliates and their respective Representatives,
successors and permitted assigns (the “Buyer Indemnitees”) from and against, and pay
or reimburse the Buyer Indemnitees for, any and all Damages resulting from, arising out of
or in connection with any of the following: (i) any breach or inaccuracy of any
representation or warranty made by such Seller in this Agreement and (ii) any breach by such
Seller of any of its covenants or agreements made or contained herein or in any instrument,
certificate or agreement delivered by such Seller in connection herewith; provided,
however, that no Buyer Indemnitee shall be entitled to indemnification under this
Section 4.4 to the extent the Damages relate to any inaccuracy or misrepresentation in, or
breach of, or failure to perform, any representation, warranty,
covenant or agreement made in this Agreement by Buyer. Notwithstanding anything herein
to the contrary, in no case shall any Seller be responsible for any amount in excess of the
aggregate purchase price assigned to the Image Shares purchased by Buyer from such Seller
hereunder.
(b) Agreement of Buyer to Indemnify Sellers. From and after the Closing and
subject to the terms and conditions of this Section 4.4, Buyer shall defend, indemnify and
hold harmless each Seller and its affiliates and their respective Representatives,
successors and permitted assigns (the “Seller Indemnitees”) from and
10
against, and
pay or reimburse the Seller Indemnitees for, any and all Damages resulting from, arising out
of or in connection with any of the following: (i) any breach or inaccuracy of any
representation or warranty made by Buyer in this Agreement and (ii) any breach by Buyer of
any of its covenants or agreements made or contained herein or in any instrument,
certificate or agreement delivered by Buyer in connection herewith; provided,
however, that no Seller Indemnitee shall be entitled to indemnification under this
Section 4.4 to the extent the Damages relate to any inaccuracy or misrepresentation in, or
breach of, or failure to perform, any representation, warranty, covenant or agreement made
in this Agreement by such Seller. Notwithstanding anything herein to the contrary, in no
case shall Buyer be responsible for any amount in excess of the aggregate purchase price
assigned to the Buyer Shares purchased by Seller from Buyer hereunder.
(c) Survival of Representations, Warranties and Covenants. All representations
and warranties of each party contained herein shall survive the Closing forever. All
covenants and agreements set forth in this Agreement shall survive for so long as
performance is required thereunder. So long as any Buyer Indemnitee or Seller Indemnitee
(each, an “Indemnitee”) asserts a valid claim for indemnification before the first
to occur of (i) the expiration of any applicable survival period and (ii) the date which is
six months after the Indemnitee’s discovery of the facts or circumstances giving rise to the
claim or receipt of notice of a third party claim, such Indemnitee shall be deemed to have
preserved its rights to indemnification pursuant to this Section 4.4 regardless of when such
claim is ultimately liquidated or an arbitration has commenced with respect thereto.
(d) Claims for Indemnification. If any Indemnitee shall believe in good faith
that it is entitled to indemnification pursuant to this Section 4.4, such Indemnitee shall
promptly give Buyer or the applicable Seller, as applicable (the “Indemnitor”)
notice of such claim (a “Notice of Claim”) before the expiration of the relevant
time period specified in Section 4.4(c), and no notice of a claim for indemnification may be
made thereafter. Any such Notice of Claim shall set forth in reasonable detail and to the
extent then known the basis for such claim for indemnification and the amount of the claim,
to the extent specified or otherwise known. As long as the Notice of Claim is delivered
within the time period specified in Section 4.4(c), the failure of such Indemnitee to give
the Notice of Claim for indemnification promptly shall not adversely affect such
Indemnitee’s right to indemnification hereunder, except to the extent that the rights of
Indemnitor or its defense of any claim are actually prejudiced by such failure.
(e) Defense of Claims. In connection with any claim that may give rise to
indemnity under this Section 4.4 resulting from or arising out of any claim against an
Indemnitee by a Person that is not a party hereto (a “Third Party Claim”),
Indemnitor will have the right, but not the obligation, to assume the defense, compromise
and settlement of such claim through counsel of its own choosing, by notifying the
Indemnitee within 15 calendar days after Indemnitor’s receipt of the applicable Notice of
Claim; provided, however, that (i) the counsel for Indemnitor who shall
conduct the defense, compromise and settlement of such claims shall be reasonably
satisfactory to the
11
Indemnitee, (ii) the Indemnitee shall have the right, at its own
expense, to participate in the defense of such claim and to employ counsel, separate from
the counsel employed by Indemnitor, (iii) the Indemnitee shall cooperate in all reasonable
respects with Indemnitor in connection with the defense, compromise and settlement of such
claim, (iv) Indemnitor shall not consent to the entry of a judgment or enter into a
compromise or settlement of any such claim which is subject to indemnification by Indemnitor
hereunder, except with the prior written consent of the Indemnitee (which consent shall not
be unreasonably withheld) and the inclusion of an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding and (v) if
the named parties to any Action (including any impleaded parties) include both Indemnitor
and the Indemnitee, and the Indemnitee has been advised in writing by counsel that there may
be one or more legal defenses available to such Indemnitee that are different from or
additional to those available to Indemnitor, the Indemnitee shall be entitled, at the
expense of Indemnitor, to separate counsel of its own choosing (provided further that the
Indemnitee shall not consent to the entry of a judgment or enter into a compromise or
settlement of any such claim, except with the prior written consent of Indemnitor, which
consent shall not be unreasonably withheld). If Indemnitor fails to assume the defense,
compromise and settlement of such claim within 15 calendar days after Indemnitor’s receipt
of the applicable Notice of Claim, the Indemnitee (upon delivering written notice to
Indemnitor to such effect) shall have the right to undertake, at Indemnitor’s expense, the
defense, compromise or settlement of such claim on behalf of Indemnitor; provided,
however, that the Indemnitee shall not consent to the entry of a judgment or enter
into a compromise or settlement of any such claim, except with the prior written consent of
Indemnitor (which shall not be unreasonably withheld). In the event that the Indemnitee
assumes that defense, compromise and settlement of such claim, the Indemnitee shall keep
Indemnitor reasonably informed of the progress of any such defense, compromise or
settlement. Indemnitor shall be liable for any compromise or settlement of any claim
effected pursuant to and in accordance with this Section 4.4 and for any final judgment
(subject to any right of appeal) and Indemnitor agrees to indemnify and hold harmless
(subject to the terms and conditions of Section 4.4(a) or 4.4(b) above, as applicable) the
Indemnitee from and against any Damages by reason of such compromise, settlement or
judgment. Nothing contained in this Section 4.4(e) shall affect or otherwise modify the
terms and conditions of Sections 4.4(a) or 4.4(b).
4.5 Transfer of Buyer Shares. Each Seller hereby covenants and agrees that neither the
Buyer Shares nor any interest or participation therein may be reoffered, sold, assigned,
transferred, pledged, encumbered or otherwise disposed of in the absence of (i) their registration
under the Securities Act or (ii) an opinion of counsel for such Seller, reasonably acceptable to
Buyer, stating that such sale, transfer or assignment is exempt from the registration
requirements of the Securities Act and qualification requirements under applicable U.S. state
securities laws. The certificate or certificates representing the Buyer Shares must be surrendered
to Buyer or its transfer agent as a condition precedent to the transfer of any interest in the
Buyer Shares represented by such certificate or certificates.
12
ARTICLE 5
CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
5.1 Conditions Precedent to Buyer’s Obligation to Close. Buyer’s obligation to purchase
the Image Shares from Sellers and to issue and sell the Buyer Shares to Sellers and to take the
other actions required to be taken by Buyer at the Closing is subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (any of which may be waived by Buyer, in
whole or in part):
(a) Accuracy of Representations and Warranties. The representations and
warranties of Sellers set forth in this Agreement shall be true and correct as of the date
of this Agreement and as of the Closing Date as though made on the Closing Date.
(b) Issuance of Certificates for Image Shares in Buyer’s Name. Certificates
shall have been issued by Image registered in the name of LGEI evidencing in the aggregate
record ownership of the Image Shares by Buyer, and satisfactory evidence of same shall have
been presented to Buyer.
(c) No Actions. No Action shall be pending or threatened before any court of
competent jurisdiction or other governmental authority or before any arbitrator wherein an
unfavorable judgment, order, award, decree or injunction or ruling or award would (i)
prevent consummation of the transactions contemplated by this Agreement, (ii) cause any of
the transactions contemplated by this Agreement to be rescinded following consummation,
(iii) adversely affect the ability of Buyer to own the Image Shares or (iv) cause Buyer or
any of its affiliates to suffer any material adverse consequences.
5.2 Conditions Precedent to Sellers’ Obligation to Close. Sellers’ obligation to purchase
the Buyer Shares from Buyer and to sell the Image Shares to Buyer and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by Sellers, in whole or in
part):
(a) Accuracy of Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on the Closing Date, except to the
extent such representations and warranties expressly relate to an earlier date (in which
case such representations and warranties shall be true and correct on and as of such earlier
date).
(b) No Actions. No Action shall be pending or threatened before any court of
competent jurisdiction or other governmental authority or before any arbitrator wherein an
unfavorable judgment, order, award, decree or injunction or ruling or award
would (i) prevent consummation of the transactions contemplated by this Agreement, (ii)
cause any of the transactions contemplated by this Agreement to be rescinded following
consummation, (iii) adversely affect the ability of Sellers to own the Buyer Shares or (iv)
cause Sellers to suffer any material adverse consequences.
13
ARTICLE 6
TERMINATION
6.1 Termination. This Agreement may be terminated at any time prior to the Closing:
(a) by mutual written consent of Buyer and Sellers; or
(b) by either Buyer or by Sellers, acting together, if the Closing does not occur on or
prior to March 31, 2006 (the “Outside Date”), unless the failure to close is the
result of a willful and material breach of this Agreement by the party seeking to terminate
this Agreement.
6.2 Effect of Termination. In the event of termination of this Agreement by either Buyer
or Sellers as provided in Section 6.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Buyer or Sellers, other than Section
4.4, this Section 6.2 and Article 7, which provisions shall survive such termination, and except to
the extent that such termination results from the willful and material breach by a party of any
representation, warranty, covenant or agreement set forth in this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 Definitions. As used in this Agreement, the following terms shall have the meanings
set forth below:
(a) “20-Day Average Price” shall mean, with respect to any date, the average
(rounded to nearest 1/10,000), of the volume weighted averages (rounded to the nearest
1/10,000), of the trading prices of Buyer Common Stock on the New York Stock Exchange, Inc.
(the “NYSE”) as reported by Bloomberg Financial Markets (or such other source as the
parties shall agree in writing) for each of the 20 consecutive trading days ending on and
including the second trading day prior to the first public announcement of an agreement or
letter of intent with respect to a Buyer Acquisition, or, if subsequent to such date, the
terms of such transaction are substantively changed, the date of the first public
announcement of such changed terms.
(b) “Acquisition Exchange Ratio” means the ratio of the number of shares of
Buyer Common Stock (or fraction thereof) received or to be received by each shareholder of
Image (other than Buyer and its Controlled Affiliates) in consideration for each share of
Image Common Stock acquired for Buyer Common Stock in an All—Stock Buyer Acquisition from
such shareholder.
14
(c) “All–Cash Buyer Acquisition” means a Buyer Acquisition in which cash is
the sole consideration.
(d) “All–Stock Buyer Acquisition” means a Buyer Acquisition in which shares of
Buyer Common Stock constitute the consideration for at least 80% of the shares acquired in
the Buyer Acquisition (other than from Buyer and its Controlled Affiliates).
(e) “Buyer Acquisition” means any: (i) acquisition by Buyer and/or its
Controlled Affiliates of “beneficial ownership” (as that term is defined in Rule 13d-3 of
the Exchange Act) after the Closing Date of all or greater than 80% of the combined voting
power of Image’s then outstanding securities or (ii) merger, consolidation, business
combination or similar transaction involving Image following which Buyer and/or its
Controlled Affiliates have beneficial ownership of all or greater than 80% of the combined
voting power of the surviving corporation’s then outstanding securities.
(f) “Buyer Share Price” means $10.45, the closing price of the Buyer Common
Stock on the NYSE on September 8, 2005; provided, that if a lower price for Buyer
Common Stock is used by Buyer in any acquisition of Image Common Stock being negotiated
concurrently with this Agreement, the Buyer Share Price shall be such lower price for
purposes of calculating the Exchange Ratio and Section 4.3(a).
(g) “Controlled Affiliate” means, with respect to any Person, such Person’s
subsidiaries and all affiliates of such Person over which such Person, directly or
indirectly, has the power to direct or cause the direction of the management and policies,
whether through the ownership of voting securities, by contract, or otherwise.
(h) “Damages” means any and all losses, damages, costs, obligations, fines,
expenses and liabilities of any kind (whether or not resulting from third party claims),
including out-of-pocket expenses and reasonable attorneys’, accountants’ and other
professional advisors’ fees incurred in the investigation or defense of any of the same or
in asserting any rights in connection therewith; provided, however, that
Damages shall not include consequential, incidental, special or punitive damages (unless any
of the foregoing are required to be paid to a third party), or any diminution in value.
(i) “Exchange Ratio” means the quotient obtained by dividing (i) $4.00 by (ii)
the Buyer Share Price and rounding to the nearest 1/10,000.
(j) “Mixed Cash–Stock Buyer Acquisition” means a Buyer Acquisition which is
not an All–Stock Buyer Acquisition, and in which both cash and shares of Buyer Common Stock
are the consideration.
(k) “Per–Share Acquisition Price” means: (i) with respect to an All–Cash
Buyer Acquisition, the gross per-share cash consideration received or to be received by
Image’s shareholders (other than Buyer and its Controlled Affiliates) in consideration of shares of Image Common Stock; and (ii) with respect to a Mixed Cash–Stock Buyer
Acquisition, (A) the aggregate cash consideration received by Image’s shareholders (other
than Buyer and its Controlled Affiliates) in the Buyer Acquisition, plus (B) the
15
aggregate number of shares of Buyer Common Stock received by Image’s shareholders
(other than Buyer and its Controlled Affiliates) in the Buyer Acquisition, divided by the
20-Day Average Price, divided by (C) the aggregate number of shares of Image Common
Stock acquired by Buyer and its Controlled Affiliates (other than from Buyer and its
Controlled Affiliates) in the Buyer Acquisition [(A + B) / C].
(l) “Person” means any individual, firm, corporation, partnership, company,
limited liability company, trust, joint venture, association, governmental entity or other
entity.
(m) “Representatives” shall mean, as to the referenced party or Person, the
directors, officers, employees and agents of such Person and its Controlled Affiliates and
shall also include the legal, accounting and financial advisors of such Person and its
Controlled Affiliates.
7.2 Expenses and Attorneys’ Fees. Except as otherwise provided herein, each party shall
pay all costs and expenses incurred by or on behalf of such party in connection with the
negotiation of this Agreement and the performance of the transactions contemplated hereby,
including, without limiting the generality of the foregoing, fees and expenses of consultants,
accountants and legal counsel. In the event that any Action is instituted concerning or arising
out of this Agreement, the prevailing party shall recover all of such party’s costs and attorneys’
fees incurred in each every such Action, including any and all petitions and appeals therefrom. As
used herein, “attorneys’ fees” shall mean the full and actual costs of any legal services actually
rendered in connection with the matters involved, calculated on the basis of the usual fee charged
by the attorneys performing such services, and shall not be limited to “reasonably attorneys’ fees”
as defined by any statute or rule of court.
7.3 Notices. Except as may be otherwise provided herein, all notices, requests, waivers
and other communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other party, (b) when
received when sent by facsimile to the facsimile number set forth below, (c) when received when
sent by electronic mail to the electronic mail address set forth below, (d) three business days
after deposit in the U.S. mail with first class certified mail receipt requested postage prepaid
and addressed to the other party as set forth below or (e) the next business day after deposit with
a national overnight delivery service, postage prepaid, addressed to the parties as set forth below
with next-business-day delivery guaranteed, provided that the sending party receives a confirmation
of delivery from the delivery service provider:
16
| (a) | if to Buyer, to: | ||||||
| Lions Gate Entertainment Corp. | |||||||
| 0000 Xxxxxxxx Xxxxxx, Xxxxx 000 | |||||||
| Xxxxx Xxxxxx, Xxxxxxxxxx 00000 | |||||||
| Attention: Xxxxx Xxxxx, General Counsel | |||||||
| Telephone Number: (000) 000-0000 | |||||||
| Facsimile Number: (000) 000-0000 | |||||||
| Electronic Mail: xxxxxx@xxx.xxx | |||||||
with a copy (which shall not constitute notice to Buyer) to:
| Sheppard, Mullin, Xxxxxxx & Hampton LLP | |||||||
| 1901 Avenue of the Stars, 00xx Xxxxx | |||||||
| Xxx Xxxxxxx, Xxxxxxxxxx 00000 | |||||||
| Attention: Xxxxxxx X. Troop, Esq. | |||||||
| Xxxxx X. Xxxxxxxxxx, Esq. | |||||||
| Telephone Number: (000) 000-0000 | |||||||
| Facsimile Number: (000) 000-0000 | |||||||
| Electronic Mail: | xxxxxx@xxxxxxxxxxxxxx.xxx | ||||||
| xxxxxxxxxxx@xxxxxxxxxxxxxx.xxx | |||||||
(b) If to any Seller, to such Seller at the address, facsimile number or email address
set forth on Schedule 1;
or to such other address or addresses for a party as may have been furnished by such party in like
manner to the other party.
7.4 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE WITHIN, AND TO BE PERFORMED WITHIN,
SUCH STATE, EXCLUDING CHOICE OF LAW PRINCIPLES OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF
LAWS OF A JURISDICTION OTHER THAN SUCH STATE.
7.5 Entire Agreement; Third Party Beneficiaries. This Agreement constitutes the sole and
entire agreement of the parties with respect to the subject matter hereof and supersedes any and
all prior or contemporaneous agreements, discussions, representations, warranties or other
communications. No party to this Agreement makes any representation or warranty except as
expressly set forth herein. No party to this Agreement has relied on any statement,
representation, or warranty other than the written contents of this Agreement. This Agreement is
not intended to confer upon any Person other than the parties hereto any rights or remedies, except
that LGEI is hereby expressly made a third party beneficiary of this Agreement.
7.6 Counterparts; Facsimile. This Agreement may be executed in counterparts and via
facsimile, each of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
17
7.7 Amendments and Waivers. This Agreement may not be amended or modified without the
written consent of all parties hereto, nor shall any waiver be effective against any party unless
in a writing executed on behalf of such party. No delay or omission to exercise any right, power
or remedy accruing to any party hereto shall impair any such right, power or remedy of such party
nor be construed to be a waiver of any such right, power or remedy nor constitute any course of
dealing or performance hereunder.
7.8 Severability. If one or more provisions of this Agreement shall be declared void or
unenforceable by any judicial or administrative authority, the validity of any other provision and
of the entire Agreement shall not be affected thereby and such provision or
provisions shall be excluded from the Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforced in accordance with its
terms.
7.9 Titles and Subtitles. The titles and subtitles used in this Agreement are for
convenience only and are not to be considered in construing or interpreting any term or provision
of this Agreement.
7.10 Successors and Assigns. This Agreement may not be assigned by any party hereto
without the prior written consent of the other party hereto; provided, however, that Buyer may upon
prior written notice to Sellers assign its rights under this Agreement to any Controlled Affiliate
of Buyer. The terms and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors, executors, beneficiaries and permitted assigns of the parties
hereto.
7.11 Enforcement; Jurisdiction and Forum. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement in the Court of Chancery of the
State of Delaware or any federal court located in the State of Delaware, this being in addition to
any other remedy to which they are entitled at law or in equity. In addition, each of the parties
hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the
State of Delaware and any federal court located in the State of Delaware in the event any dispute
arises out of this Agreement, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not
bring any Action relating to this Agreement in any court other than the Court of Chancery of the
State of Delaware or any federal court sitting in the State of Delaware and (d) waives any right to
trial by jury with respect to any Action related to or arising out of this Agreement.
18
7.12 Public Announcements. Except as otherwise provided in this Section 7.12, no party to
this Agreement, nor any of its Controlled Affiliates or Representatives, shall make any public
announcement or statement with respect to this Agreement or its subject matter without the prior
written approval of the other party to this Agreement, not to be unreasonably withheld; provided,
however, that (a) neither party shall be prohibited from making any disclosure to the extent that
disclosure is required in connection with the filing of governmental reports or documents,
including without limitation filings with federal and state securities authorities, or in
connection with the preparation of financial statements of a party or its Controlled Affiliates,
notwithstanding that such reports or statements may become public or be distributed to others in
the ordinary course of business; (b) neither party shall be prohibited from making any disclosure
to the extent necessary to enforce that party’s rights under this Agreement in any Action
instituted in connection with this Agreement or the performance by the parties of their obligations
hereunder; and (c) each Seller acknowledges and agrees that Buyer will file a Schedule 13D and a
Form 3 with the Securities and Exchange Commission following the execution and delivery of this
Agreement.
7.13 Time of Essence. Time is of the essence with respect to each and every date and time
period set forth or referred to in this Agreement.
[Signature Page Follows]
19
IN WITNESS WHEREOF, Buyer and Sellers have caused this Exchange Agreement to be executed and
delivered as of the day and year first above written.
| “BUYER”: | ||||||
| LIONS GATE ENTERTAINMENT CORP., | ||||||
| a British Columbia corporation | ||||||
| By: | /s/ Xxxxx Xxxxx | |||||
| Name: | Xxxxx Xxxxx | |||||
| Its: | Exec. VP & General Counsel | |||||
| Business & Legal Affairs | ||||||
S-20
| “SELLERS”: | ||||||
| LAGUNITAS PARTNERS | ||||||
| By: | Xxxxxx & XxXxxxx | |||||
| Capital Management, LLC, | ||||||
| its General Partner | ||||||
| By: | /s/ X. Xxxxxxxxx McBaine | |||||
| Name: | X. Xxxxxxxxx XxXxxxx | |||||
| Its: | Managing Member | |||||
| XXXXXXX FOUNDATION | ||||||
| By: | /s/ X. Xxxxxxxxx XxXxxxx | |||||
| X. Xxxxxxxxx McBaine, | ||||||
| as Managing Member of | ||||||
| Xxxxxx & XxXxxxx Capital Management, LLC, | ||||||
| its investment advisor with | ||||||
| power of attorney | ||||||
| XXXXXXXX COLLEGE | ||||||
| By: | /s/ X. Xxxxxxxxx XxXxxxx | |||||
| X. Xxxxxxxxx McBaine, | ||||||
| as Managing Member of | ||||||
| Xxxxxx & XxXxxxx Capital Management, LLC, | ||||||
| its investment advisor with | ||||||
| power of attorney | ||||||
| XXXXXX & MCBAINE INTERNATIONAL | ||||||
| By: | /s/ X. Xxxxxxxxx XxXxxxx | |||||
| X. Xxxxxxxxx McBaine, | ||||||
| as Managing Member of | ||||||
| Xxxxxx & XxXxxxx Capital Management, LLC, | ||||||
| its investment advisor with | ||||||
| power of attorney | ||||||
S-21
“SELLERS”:
(continued)
| /s/ Xxx X. Xxxxxx /s/ Xxxxx X. Xxxxxx | ||||||
| XXX X. XXXXXX & XXXXX X. XXXXXX, | ||||||
| by Xxx X. Xxxxxx in his individual capacity | ||||||
| and for Xxxxx X. Xxxxxx by power of attorney | ||||||
| /s/ X. Xxxxxxxxx McBaine | ||||||
| X. XXXXXXXXX XXXXXXX, | ||||||
| an individual |
S-22
SCHEDULE 1
SELLERS AND OWNERSHIP OF IMAGE SHARES
Legal Name and Notice Address
for Record and Beneficial Owner (1) |
Number of Image | Number of Buyer Shares | ||||||||||
| Shares Owned of | ||||||||||||
| Record and | ||||||||||||
| Beneficially | ||||||||||||
Lagunitas Partners |
323,810 | 123,955 | ||||||||||
Xxxxxx & McBaine International |
85,714 | 32,812 | ||||||||||
Xxxxxxxx College |
47,619 | 18,229 | ||||||||||
Xxx X. Xxxxxx & Xxxxx X Xxxxxx |
47,619 | 18,229 | ||||||||||
X. Xxxxxxxxx McBaine |
47,619 | 18,229 | ||||||||||
Xxxxxxx Foundation |
19,048 | 7,292 | ||||||||||
(1)
|
Notice address for each Seller is as follows: | |||
| c/o Gruber & McBaine Capital Management, LLC | ||||
| 00 Xxxxxx Xxxxx — Xxxxxxxxx | ||||
| Xxx Xxxxxxxxx, XX 00000 | ||||
| Telephone: (000) 000-0000 | ||||
| Facsimile: (000) 000-0000 |
Schedule 1-Page 23
SCHEDULE 2
RESTRICTIONS ON IMAGE SHARES
Those restrictions, if any, pursuant to Section 5(f) of the Purchase Agreements.
Schedule 2 - Page 24
EXHIBIT A
FORM OF REGISTRATION RIGHTS AGREEMENT
