EXHIBIT 1
25,000,000
LIONS GATE ENTERTAINMENT CORP.
COMMON SHARES
UNDERWRITING AGREEMENT
October 8, 2003
XX XXXXX SECURITIES CORPORATION
As Representative of the several Underwriters
c/o XX Xxxxx Securities Corporation
1221 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
1. Introductory. Lions Gate Entertainment Corp., a British Columbia corporation
(the "Company"), proposes to sell, pursuant to the terms of this Agreement, to
the several underwriters named in Schedule A hereto (the "Underwriters," or
each, an "Underwriter"), an aggregate of 28,750,000 common shares, no par value
(the "Common Shares") of the Company. The aggregate of 25,000,000 Common Shares
so proposed to be sold are hereinafter referred to as the "Firm Shares". The
Company also proposes to sell to the Underwriters, upon the terms and conditions
set forth in Section 3 hereof, up to an additional 3,750,000 Common Shares (the
"Optional Shares"). The Firm Shares and the Optional Shares are hereinafter
collectively referred to as the "Shares". XX Xxxxx Securities Corporation ("XX
Xxxxx") is acting as representative of the several Underwriters and in such
capacity is hereinafter referred to as the "Representative."
2. Representations and Warranties of the Company. The Company represents and
warrants to, and agrees with, the several Underwriters that:
(a) The Company meets the requirements under the Securities Act (British
Columbia) (the "BCSA") and the rules, regulations and published policy
statements applicable in the Province of British Columbia, including the
rules and procedures established for use of a short-form shelf prospectus
with respect to the Shares pursuant to National Instrument
44-101-Short-Form Prospectus Distributions and National Instrument
44-102-Shelf Distributions (collectively, "British Columbia Securities
Laws"); a preliminary base short-form shelf prospectus (the "Canadian
Preliminary Prospectus") relating to the distribution of the Shares in the
United States has been filed with the British Columbia Securities
Commission in the Province of British Columbia (the "BCSC"); the BCSC has
issued a preliminary receipt for the Canadian Preliminary Prospectus; a
final base short-form shelf prospectus (the "Canadian Prospectus")
relating to the distribution of the Shares in the United States has been
filed with the BCSC for which a final receipt has been received from the
BCSC; the Canadian Preliminary Prospectus and the Canadian Prospectus for
which a preliminary receipt and a final receipt, respectively, were issued
by the BCSC were each in the form heretofore delivered to you and for each
of the other Underwriters (including all documents incorporated by
reference in the Canadian Preliminary Prospectus and
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the Canadian Prospectus contained therein and including, for greater
certainty, each shelf prospectus supplement thereto) and no other document
with respect to such Preliminary Canadian Prospectus or Canadian
Prospectus or document incorporated by reference therein has heretofore
been filed or transmitted for filing with the BCSC; no order having the
effect of ceasing or suspending the distribution of the Shares has been
issued by the BCSC and no proceeding for that purpose has been initiated
or, to the best of the Company's knowledge, threatened by the BCSC.
(b) A registration statement on Form S-3 (File No. 333-109101) (the
"Initial Registration Statement") in respect of the Shares has been filed
with the Securities and Exchange Commission (the "Commission"); the
Initial Registration Statement and any post-effective amendment thereto,
excluding exhibits thereto but including all documents incorporated by
reference in the prospectus contained therein, each in the form heretofore
delivered to the Representative for each of the other Underwriters, have
been declared effective by the Commission in such form; other than a
registration statement, if any, increasing the size of the offering (a
"Rule 462(b) Registration Statement"), filed pursuant to Rule 462(b) under
the Securities Act of 1933, as amended (the "Securities Act") and the
rules and regulations (the "Rules and Regulations") of the Commission
thereunder, which became effective upon filing, no other document with
respect to the Initial Registration Statement or document incorporated by
reference therein has heretofore been filed with the Commission; and no
stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for that
purpose has been initiated or, to the best of the Company's knowledge,
threatened by the Commission (any preliminary prospectus included in the
Initial Registration Statement or filed with the Commission pursuant to
Rule 424(a) of the Rules and Regulations, is hereinafter called a
"Preliminary Prospectus" and together with the Canadian Preliminary
Prospectus, the "Preliminary Prospectuses"); the various parts of the
Initial Registration Statement and the Rule 462(b) Registration Statement,
if any, including all exhibits thereto and including (i) the information
contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act and deemed by virtue of
Rule 430A under the Securities Act to be part of the Initial Registration
Statement at the time it was declared effective and (ii) the documents
incorporated by reference in the prospectus contained in the Initial
Registration Statement at the time such part of the Initial Registration
Statement became effective, each as amended at the time such part of the
Initial Registration Statement became effective or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes
effective, are hereinafter collectively called the "Registration
Statements"; such final prospectus, in the form first filed pursuant to
Rule 424(b) under the Securities Act, is hereinafter called the
"Prospectus" and any reference herein to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Securities Act, as of the date of such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
incorporated by reference in such Preliminary Prospectus or Prospectus, as
the case may be; and any reference to any amendment to the Registration
Statements shall be deemed to refer to and include any annual report of
the Company filed pursuant to Section 13(a) or 15(d) of the Exchange Act
after the effective date of the Initial Registration Statement that is
incorporated by reference in the Registration Statements. No document has
been or will be prepared or distributed in reliance on Rule 434 under the
Securities Act. No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission.
(c) The Registration Statement conforms (and the Rule 462(b) Registration
Statement, if any, the Prospectus and any amendments or supplements to
either of the Registration Statements or the
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Prospectus, when they become effective or are filed with the Commission,
as the case may be, will conform) in all material respects to the
requirements of the Securities Act and the Rules and Regulations and do
not and will not, as of the applicable effective date (as to the
Registration Statements and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that the
foregoing representations and warranties shall not apply to information
contained in or omitted from the Registration Statements or the Prospectus
or any such amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company through the
Representative by or on behalf of any Underwriter specifically for
inclusion therein, which information the parties hereto agree is limited
to the Underwriters' Information (as defined in Section 16).
(d) No order preventing or suspending the use of the Canadian Preliminary
Prospectus or Canadian Prospectus has been issued by the BCSC, and each of
the Canadian Preliminary Prospectus and Canadian Prospectus, at the time
of filing thereof, conformed in all material respects to the requirements
of the British Columbia Securities Laws, and did not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in conformity
with information furnished in writing to the Company through the
Representative by or on behalf of any Underwriter specifically for
inclusion therein, which information the parties hereto agree is limited
to the Underwriters' Information (as defined in Section 16).
(e) The documents incorporated by reference in the Canadian Prospectus and
the Prospectus (referred to collectively, as the "Prospectuses"), when
they became effective or were filed with the BCSC or the Commission, as
the case may be, conformed in all material respects to the requirements of
the British Columbia Securities Laws, the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder, and none of such documents contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and
any further documents so filed and incorporated by reference in the
Canadian Prospectus and the Prospectus, when such documents become
effective or are filed with the BCSC or the Commission, as the case may
be, will conform in all material respects to the requirements of the
British Columbia Securities Laws, or the Securities Act or the Exchange
Act, as applicable, and the rules and regulations of the Commission
thereunder and will not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading.
(f) The Company and each of its subsidiaries (as defined in Section 14)
have been duly incorporated (or, with respect to subsidiaries that are not
corporations, duly organized) and are validly existing as corporations (or
as such other entities, as applicable) in good standing under the laws of
their respective jurisdictions of incorporation (or organization, as
applicable), are duly qualified to do business and are in good standing as
foreign corporations (or other foreign entities, as applicable) in each
jurisdiction in which their respective ownership or lease of property or
the conduct of their respective businesses requires such qualification,
and have all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged, except
where the failure to so qualify or have such power or authority would not
reasonably be expected to have, singularly or in the aggregate, a material
adverse effect on the condition (financial or otherwise), results of
operations or business of the
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Company and its subsidiaries taken as a whole (a "Material Adverse
Effect"). With regard to Lions Gate Television Corp.:
(i) Xxxxx Xxxxxxx in trust (the "Trust") is, and since June 28,
1999 has been, the sole registered shareholder of Lions Gate
Television Corp.;
(ii) The Trust is, and since June 28, 1999 has been, a duly formed
and validly existing trust under the laws of the Province of
British Columbia;
(iii) Xxxxx Xxxxxxx, is, and since June 28, 1999 has been, the sole
trustee (the "Trustee") of the Trust;
(iv) The Company, Lions Gate Television Corp. and the Company's
subsidiaries are, and since June 28, 1999, have been, the sole
beneficiaries (the "Beneficiaries") of the Trust; and
(v) Pursuant to the terms of the Trust, all economic benefit
flowing from the ownership of the shares of Lions Gate
Television Corp. is to be held by the Trustee for and on
behalf of the Beneficiaries.
(g) This Agreement has been duly authorized, executed and delivered by the
Company.
(h) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and
delivered against payment therefor as provided herein (including, if
applicable, pursuant to The Depository Trust Company's standard procedures
that include the electronic delivery of share capital), will be duly and
validly issued, fully paid and non-assessable and free of any preemptive
or similar rights and will conform to the description thereof contained in
the Prospectuses.
(i) The Company has an authorized capitalization as set forth in the
Prospectuses, and all of the issued shares of equity of the Company, have
been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectuses.
(j) All the outstanding shares or other equity interests of each
subsidiary of the Company have been duly authorized and validly issued,
are fully paid and non-assessable and, except to the extent set forth in
the Prospectuses with respect to Lions Gate Television Corp. and its
subsidiaries (collectively, "LGTC"), are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and clear
of any claim, lien, encumbrance, security interest, restriction upon
voting or transfer or any other claim of any third party (except for
pledges of shares or other equity interests of certain subsidiaries
pursuant to the Credit, Security, Guaranty and Pledge Agreement by and
among the Company, the subsidiaries referred to therein, and the lenders
referred to therein, dated as of September 25, 2000, as amended to date).
(k) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby will
not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(ii) result in any violation of the provisions of the charter or by-laws
(or other organizational documents, as applicable) of the Company or any
of its subsidiaries or LGTC or
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(iii) result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or
assets, other than, in the case of each of clauses (i) and (iii), any such
conflict, breach, violation or default that would not, singularly or in
the aggregate, have a Material Adverse Effect.
(l) Except for the registration of the Shares under the Securities Act and
such consents, approvals, authorizations, registrations or qualifications
as may be required under the Exchange Act and applicable state securities
laws in the United States, and the British Columbia Securities Laws in
connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or filing
or registration with, any court or governmental agency or body is required
for the execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby.
(m) Each of Ernst & Young LLP and PricewaterhouseCoopers LLP, who have
expressed their opinions on the audited financial statements and related
schedules included or incorporated by reference in the Registration
Statements and the Prospectuses are independent public accountants as
required by the Securities Act and the Rules and Regulations.
(n) The consolidated financial statements, together with the related notes
and schedules, included or incorporated by reference in the Prospectuses
and in each Registration Statement fairly present the financial position
and the results of operations and changes in financial position of the
Company and its consolidated subsidiaries and other consolidated entities
at the respective dates or for the respective periods therein specified.
Such statements and related notes and schedules have been prepared in
accordance with Canadian generally accepted accounting principles applied
on a consistent basis except as may be set forth in the Prospectuses. The
financial statements, together with the related notes and schedules,
included in the Prospectuses comply as to form with all applicable
accounting requirements of the Securities Act and the Rules and
Regulations thereunder and the British Columbia Securities Laws, as the
case may be. No other financial statements or supporting schedules or
exhibits are required by the Securities Act or the Rules and Regulations,
or the British Columbia Securities Laws, as the case may be, to be
included in the Prospectuses.
(o) Neither the Company nor any of its subsidiaries has sustained, since
the date of the latest audited financial statements included or
incorporated by reference in the Prospectuses, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth in the Prospectuses; and, since such date, there has not been any
change in the share capital or long-term debt of the Company or any of its
subsidiaries or any material adverse change, or, to the Company's
knowledge, any development involving a prospective material adverse
change, in or affecting the business, general affairs, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries taken as a whole, otherwise than as set forth
in the Prospectuses.
(p) Except as set forth in the Prospectuses, there is no legal or
governmental proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company
or any of its subsidiaries is the subject which, singularly or in the
aggregate, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to have a Material Adverse
Effect or would prevent or adversely affect the ability of the Company to
perform its obligations under this Agreement; and to the best of the
Company's knowledge, no such proceedings have been threatened by
governmental authorities or others.
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(q) None of the Company or any of its subsidiaries or LGTC (i) is in
violation of its charter or by-laws (or other organizational documents, as
applicable), (ii) is in default in any respect, and no event has occurred
which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or
(iii) is in violation in any respect of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets may
be subject except, in the case of each of clauses (ii) and (iii), any
violations or defaults which, singularly or in the aggregate, would not
have a Material Adverse Effect.
(r) The Company, each of its subsidiaries and LGTC possess all licenses,
certificates, authorizations and permits issued by, and have made all
declarations and filings with, the appropriate state, federal, provincial
or foreign regulatory agencies or bodies which are necessary for the
ownership of their respective properties or the conduct of their
respective businesses as described in the Prospectuses except where any
failures to possess or make the same, singularly or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect, and
the Company has not received notification of any revocation or
modification of any such license, authorization or permit and has no
reason to believe that any such license, certificate, authorization or
permit will not be renewed except where such non-renewal, singularly or in
the aggregate, would not have a Material Adverse Effect.
(s) None of the Company, or any of its subsidiaries or LGTC is or, after
giving effect to the offering of the Shares and the application of the
proceeds thereof as described in the Prospectuses will become an
"investment company" within the meaning of the Investment Company Act of
1940, as amended and the rules and regulations of the Commission
thereunder.
(t) Neither the Company nor, to the Company's knowledge, any of its
officers, directors or affiliates has taken, directly or indirectly, any
action designed or intended to stabilize or manipulate the price of any
security of the Company, or which caused or resulted in, or which might in
the future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company.
(u) The Company, its subsidiaries and LGTC own or possess the right to use
all patents, trademarks, trademark registrations, service marks, service
xxxx registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights (including all rights to market, sell, distribute,
exhibit, commercially exploit and otherwise use all material film and
television titles) material to the conduct of their respective businesses,
singularly and in the aggregate, and the Company is not aware of any claim
to the contrary or any challenge by any other person to the rights of the
Company and its subsidiaries and LGTC with respect to the foregoing,
except any such claim or challenge that would not have a Material Adverse
Effect. The business of the Company and its subsidiaries as now conducted
and as proposed to be conducted does not and will not infringe or conflict
with any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other intellectual property or franchise right
of any person, except as would not have a Material Adverse Effect. No
claim has been made against the Company or any of its subsidiaries or LGTC
alleging the infringement by the Company or any of its subsidiaries or
LGTC of any patent, trademark, service xxxx, trade name, copyright, trade
secret, license in or other intellectual property right or franchise right
of any person, except as would not have a Material Adverse Effect.
(v) The Company and each of its subsidiaries and LGTC have good and
marketable title in fee simple to, or have valid rights to lease or
otherwise use, all items of real or personal property,
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whether tangible or intangible, which are material to the business of the
Company and its subsidiaries and LGTC taken as a whole, in each case free
and clear of all liens, encumbrances, claims and defects that would
reasonably be expected to have a Material Adverse Effect.
(w) No labor disturbance by the employees of the Company or any of its
subsidiaries or LGTC exists or, to the best of the Company's knowledge, is
imminent which would reasonably be expected to have a Material Adverse
Effect. Except as set forth in the section in the Prospectus entitled
"Risk Factors -- The loss of key personnel could adversely affect our
business", the Company is not aware that any key employee of the Company
plans to terminate employment with the Company.
(x) No "prohibited transaction" (as defined in Section 406 of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"), or Section
4975 of the Internal Revenue Code of 1986, as amended from time to time
(the "Code")) or "accumulated funding deficiency" (as defined in Section
302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice requirement
under Section 4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which would reasonably be expected to have a
Material Adverse Effect; each employee benefit plan is in compliance in
all material respects with applicable law, including ERISA and the Code;
the Company has not incurred and does not expect to incur any material
liability under Title IV of ERISA with respect to the termination of, or
withdrawal from, any "pension plan"; and each "pension plan" (as defined
in ERISA) for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could cause the loss of such qualification.
(y) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission, or other release of any kind of
toxic or other wastes or other hazardous substances by, due to, or caused
by the Company or any of its subsidiaries or LGTC (or, to the best of the
Company's knowledge, any other entity for whose acts or omissions the
Company or any of its subsidiaries or LGTC is or may be liable) upon any
of the property now or previously owned or leased by the Company or any of
its subsidiaries or LGTC, or upon any other property, in violation of any
statute or any ordinance, rule (including rule of common law), regulation,
order, judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability which would not have, singularly or in the
aggregate with all such violations and liabilities, a Material Adverse
Effect; there has been no disposal, discharge, emission or other release
of any kind onto such property or into the environment surrounding such
property of any toxic or other wastes or other hazardous substances with
respect to which the Company or any of its subsidiaries or LGTC have
knowledge, except for any such disposal, discharge, emission, or other
release of any kind which would not have, singularly or in the aggregate
with all such discharges and other releases, a Material Adverse Effect.
(z) Each of the Company and each of its Significant Subsidiaries (as
defined in Section 14) and Lions Gate Television Corp. (i) has filed all
necessary federal, state, provincial and foreign income and franchise tax
returns, (ii) has paid all material federal, state, provincial, local and
foreign taxes due and payable for which it is liable, and (iii) does not
have any tax deficiency or claims outstanding or assessed or, to the best
of the Company's knowledge, proposed against it which such deficiency or
claim could reasonably be expected to have a Material Adverse Effect. Each
of the Company's subsidiaries and the subsidiaries of Lions Gate
Television Corp. (other than the Significant Subsidiaries and Lions Gate
Television Corp.) (A) has filed all necessary federal, state, provincial
and foreign income and franchise tax returns, (B) has paid all material
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federal state, provincial, local and foreign taxes due and payable for
which it is liable, and (C) does not have any tax deficiency or claims
outstanding or assessed or, to the best of the Company's knowledge,
proposed against it which, in the case of any of (A), (B) or (C), could
reasonably be expected to have a Material Adverse Effect.
(aa) The Company and each of its subsidiaries and LGTC carry, or are
covered by, insurance in such amounts and covering such risks as is
customary for companies engaged in similar businesses in similar
industries.
(bb) The Company and each of its subsidiaries and LGTC maintains a system
of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with Canadian generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted
only in accordance with management's general or specific authorization;
and (iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) The minute books of the Company, each of the Principal U.S.
Subsidiaries and Principal Canadian Subsidiaries and Lions Gate Television
Corp. have been made available to the Underwriters and counsel for the
Underwriters, and such books (i) contain a complete summary in all
material respects of all meetings and actions of the board of directors
(including each board committee) (or comparable organizational body, as
applicable) and shareholders (or equity holders, as applicable) of the
Company and each of such subsidiaries since the time of its respective
incorporation (or other organization, as applicable) through the date of
the latest meeting and action, and (ii) accurately in all material
respects reflect all transactions referred to in such minutes. For
purposes of this Agreement, the "Principal U.S. Subsidiaries" are Lions
Gate Entertainment Inc., Lions Gate Films Inc., Lions Gate Television
Inc., and LG Pictures Inc., and the "Principal Canadian Subsidiaries" are
Lions Gate Films Corp. and 408376 BC Ltd.
(dd) There is no franchise, lease, contract, agreement or document
required by British Columbia Securities Laws, the Securities Act or by the
Rules and Regulations to be described in the Prospectuses or to be filed
as an exhibit to the Registration Statements which is not described or
filed therein as required; and all descriptions of any such franchises,
leases, contracts, agreements or documents contained in the Registration
Statements are accurate and complete descriptions of such documents in all
material respects. No such franchise, lease, contract or agreement has
been suspended or terminated for convenience or default by the Company or
any of the other parties thereto except as would not, singularly or in the
aggregate, have a Material Adverse Effect, and the Company has not
received notice and has no other knowledge of any such pending or
threatened suspension or termination, except for such pending or
threatened suspensions or terminations that would not reasonably be
expected to, singularly or in the aggregate, have a Material Adverse
Effect.
(ee) No relationship, direct or indirect, exists between or among the
Company on the one hand, and the directors, officers, shareholders,
customers or suppliers of the Company on the other hand, which is required
to be described in the Prospectuses and which is not so described.
(ff) No person or entity has the right to require registration of any
shares or other securities of the Company because of the filing or
effectiveness of the Registration Statements or otherwise, except for
persons and entities who have expressly waived such right (including, if
applicable, the right to timely and proper notice) or who have been given
timely and proper notice and have
9
failed to exercise such right within the time or times required under the
terms and conditions of such right.
(gg) None of the Company or any of its subsidiaries or LGTC own any
"margin securities" as that term is defined in Regulation U of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"),
and none of the proceeds of the sale of the Shares will be used, directly
or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which
was originally incurred to purchase or carry any margin security or for
any other purpose which might cause any of the Shares to be considered a
"purpose credit" within the meanings of Regulation T, U or X of the
Federal Reserve Board.
(hh) None of the Company or any of its subsidiaries or LGTC is a party to
any contract, agreement or understanding with any person or entity that
would give rise to a valid claim against the Company or the Underwriters
for a brokerage commission, finder's fee or like payment in connection
with the offering and sale of the Shares.
(ii) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in the
Prospectuses has been made or reaffirmed without a reasonable basis or has
been disclosed other than in good faith.
(jj) The Shares have been approved for listing subject to notice of
issuance on the American Stock Exchange (which exchange is the primary
exchange market for the Company's common shares) and on the Toronto Stock
Exchange.
(kk) The Company is in compliance with all applicable corporate governance
requirements set forth in the American Stock Exchange (AMEX) - AMEX
Company Guide.
(ll) The Company is in compliance with all applicable requirements of the
Toronto Stock Exchange, including corporate governance requirements.
(mm) The Company is in compliance with all applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations promulgated
thereunder or implementing the provisions thereof (the "Xxxxxxxx-Xxxxx
Act") that are currently in effect.
3. Purchase, Sale and Delivery of Offered Shares. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Company agrees, to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company that number of Firm Shares (rounded up or down, as determined
by XX Xxxxx in its discretion, in order to avoid fractions) obtained by
multiplying 25,000,000 Firm Shares by a fraction the numerator of which is the
number of Firm Shares set forth opposite the name of such Underwriter in
Schedule A hereto and the denominator of which is the total number of Firm
Shares.
The purchase price per share to be paid by the Underwriters to the Company
for the Shares will be $2.555 per share (the "Purchase Price").
The Company will deliver the Firm Shares to the Representative for the
respective accounts of the several Underwriters (in either (i) the form of
definitive certificates, issued in such names and in such denominations (and
including such legends as may be required pursuant to British Columbia
Securities Laws for those certificates representing any Shares sold in Canada)
as the Representative may direct by notice in writing to the Company given at or
prior to 12:00 Noon, New York time, on the second full business day preceding
the First Closing Date (as defined below) or (ii) in accordance with The
10
Depository Trust Company's standard procedures that include the electronic
delivery of share capital), against payment of the aggregate Purchase Price
therefor by wire transfer to an account at a bank acceptable to XX Xxxxx,
payable to the order of the Company, all at the offices of XX Xxxxx, 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Time shall be of the essence, and
delivery at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The time and date of
the delivery and closing shall be at 9:00 A.M., New York time, on October 15,
2003, in accordance with Rule 15c6-1 of the Exchange Act. The time and date of
such payment and delivery are herein referred to as the "First Closing Date".
The First Closing Date and the location of delivery of, and the form of payment
for, the Firm Shares may be varied by agreement between the Company and XX
Xxxxx.
If physical certificates are used, the Company shall make the certificates
for the Firm Shares available to the Representative for examination on behalf of
the Underwriters in New York, New York at least twenty-four hours prior to the
First Closing Date. If electronic delivery is used in accordance with The
Depository Trust Company's standard procedures, the Company shall make the
certificates to be deposited in the name of The Depository Trust Company's
nominee, Cede & Co., available to the Representative for examination on behalf
of the Underwriters in New York, New York at least twenty-four hours prior to
the First Closing Date.
For the purpose of covering any over-allotments in connection with the
distribution and sale of the Firm Shares as contemplated by the Prospectuses,
the Underwriters may purchase all or less than all of the Optional Shares. The
price per share to be paid for the Optional Shares shall be the Purchase Price.
The Company agrees to sell to the Underwriters the number of Optional Shares
specified in the written notice by XX Xxxxx described below and the Underwriters
agree, severally and not jointly, to purchase such Optional Shares for the
account of each Underwriter in the same proportion as the number of Firm Shares
set forth opposite such Underwriter's name bears to the total number of Firm
Shares (subject to adjustment by XX Xxxxx to eliminate fractions). The option
granted hereby may be exercised as to all or any part of the Optional Shares at
any time, and from time to time, not more than thirty (30) days subsequent to
the date of this Agreement. No Optional Shares shall be sold and delivered
unless the Firm Shares previously have been, or simultaneously are, sold and
delivered. The right to purchase the Optional Shares or any portion thereof may
be surrendered and terminated at any time upon notice by XX Xxxxx to the
Company.
The option granted hereby may be exercised by written notice being given
to the Company by XX Xxxxx setting forth the number of Optional Shares to be
purchased by the Underwriters and the date and time for delivery of and payment
for the Optional Shares. Each date and time for delivery of and payment for the
Optional Shares (which may be the First Closing Date, but not earlier) is herein
called the "Option Closing Date" and shall in no event be earlier than two (2)
business days nor later than five (5) business days after written notice is
given. (The Option Closing Date and the First Closing Date are herein called the
"Closing Dates".)
The Company will deliver the Optional Shares to the Underwriters (either
(i) in the form of definitive certificates, issued in such names and in such
denominations as the Representative may direct by notice in writing to the
Company given at or prior to 12:00 Noon, New York time, on the second full
business day preceding the Option Closing Date, or (ii) in accordance with The
Depository Trust Company's standard procedures that include the electronic
delivery of share capital,) against payment of the aggregate Purchase Price
therefor in federal (same day) funds by certified or official bank check or
checks or wire transfer to an account at a bank acceptable to XX Xxxxx payable
to the order of the Company all at the offices of XX Xxxxx, 0000 Xxxxxx xx xxx
Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000. Time shall be of the essence, and delivery
at the time and place specified pursuant to this Agreement is a further
condition of the obligations of each Underwriter hereunder. The Company shall
make the certificates for the Optional Shares available to the Representative
for examination on behalf of the
11
Underwriters in New York, New York not later than 10:00 A.M., New York Time, on
the business day preceding the Option Closing Date. The Option Closing Date and
the location of delivery of, and the form of payment for, the Optional Shares
may be varied by agreement between the Company and XX Xxxxx.
The several Underwriters propose to offer the Shares for sale upon the
terms and conditions set forth in the Prospectuses.
(4) Further Agreements of the Company. The Company agrees with the several
Underwriters that:
(a) The Company will prepare the Rule 462(b) Registration Statement, if
necessary, in a form approved by the Representative and file such Rule
462(b) Registration Statement with the Commission on the date hereof;
prepare the Prospectus in a form approved by the Representative and file
such Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the second business day following the execution and delivery of this
Agreement; make no further amendment or any supplement to the Registration
Statements or to the Prospectuses prior to the Option Closing Date to
which the Representative shall reasonably object by notice to the Company
after a reasonable period to review; advise the Representative, promptly
after it receives notice thereof, of the time when any amendment to either
Registration Statement has been filed or becomes effective or any
supplement to the Prospectuses or any amended Prospectuses have been filed
and to furnish the Representative with copies thereof; file promptly all
reports and any definitive proxy or information statements required to be
filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus
and for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Shares; advise the Representative,
promptly after it receives notice thereof, of the issuance by the BCSC or
the Commission of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectuses or the Prospectuses, of the
suspension of the qualification of the Shares for offering or sale in any
jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the BCSC or the Commission for the
amending or supplementing of the Registration Statements or the
Prospectuses or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectuses or Prospectuses or suspending any such
qualification, use promptly its best efforts to obtain its withdrawal.
(b) If at any time prior to the expiration of nine months after the
effective date of the Initial Registration Statement when a prospectus
relating to the Shares is required to be delivered any event occurs as a
result of which the Prospectuses as then amended or supplemented would
include any untrue statement of a material fact, or omit to state any
material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectuses or to file under the
Exchange Act any document incorporated by reference in the Prospectuses to
comply with the Securities Act or the Exchange Act, the Company will
promptly notify the Representative thereof and upon their request will
prepare an amended or supplemented Prospectuses or make an appropriate
filing pursuant to Section 13 or 14 of the Exchange Act which will correct
such statement or omission or effect such compliance. The Company will
furnish without charge to each Underwriter and to any dealer in securities
as many copies as the Representative may from time to time reasonably
request of such amended or supplemented Prospectuses; and in case any
Underwriter is required to deliver a prospectus relating to the Shares
nine months or more after the effective date of the Initial Registration
Statement, the Company upon the request of the Representative and at the
expense of such Underwriter will prepare promptly amended or
12
supplemented Prospectuses as may be necessary to permit compliance with
the requirements of Section 10(a)(3) of the Securities Act.
(c) To furnish promptly to the Representative and to counsel for the
Underwriters a signed copy of each of the Registration Statements as
originally filed with the Commission, and each amendment thereto filed
with the Commission or the BCSC, including all consents and exhibits filed
therewith.
(d) To deliver promptly to the Representative in New York City such number
of the following documents as the Representative shall reasonably request:
(i) conformed copies of the Registration Statements as originally filed
with the Commission and each amendment thereto (in each case excluding
exhibits), (ii) the Preliminary Prospectuses, (iii) the Prospectuses (not
later than 10:00 A.M., New York time, of the business day following the
execution and delivery of this Agreement) and any amended or supplemented
Prospectuses (not later than 10:00 A.M., New York City time, on the
business day following the date of such amendment or supplement) and (iv)
any document incorporated by reference in the Prospectuses (excluding
exhibits thereto).
(e) To make generally available to its shareholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Securities Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option
of the Company, Rule 158).
(f) The Company will promptly take from time to time such actions as the
Representative may reasonably request to qualify the Shares for offering
and sale under the securities or Blue Sky laws of such jurisdictions as
the Representative may designate and to continue such qualifications in
effect for so long as required for the distribution of the Shares;
provided that the Company and its subsidiaries shall not be obligated to
qualify as foreign corporations (or other foreign entities) in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(g) During the period of three years from the date hereof, the Company
will deliver to the Representative and, upon request, to each of the other
Underwriters, (i) as soon as they are available, copies of all reports or
other communications furnished to shareholders and (ii) as soon as they
are available, copies of any reports and financial statements furnished or
filed with the Commission pursuant to the Exchange Act, furnished or filed
in Canada through the System for Electronic Document Analysis and
Retrieval (SEDAR), or furnished or filed with any national securities
exchange or automatic quotation system on which the Shares are listed or
quoted.
(h) The Company will not directly or indirectly offer, sell, assign,
transfer, pledge, contract to sell, or otherwise dispose of any Common
Shares or securities convertible into or exercisable or exchangeable for
Common Shares for a period of 90 days from the date of the Prospectus
without the prior written consent of XX Xxxxx other than the Company's
sale of the Shares hereunder and the issuance of shares pursuant to
employee benefit plans, qualified option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights. The Company will cause each
officer listed in Schedule B to furnish to the Representative, prior to
the First Closing Date, a letter, substantially in the form of Exhibit I
hereto, pursuant to which each such person shall agree not to directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or
otherwise dispose of any Common Shares or securities convertible into or
exercisable or exchangeable for Common Shares for a period of 90 days from
the date of the Prospectus, without the prior written consent of XX Xxxxx.
The agreement by the Company contained in Section 4(h) of that certain
Underwriting
13
Agreement dated June 3, 2003 among the Company, Xxxx Xxxx and the
Representative is hereby waived solely with respect to the Shares being
sold pursuant to this Agreement.
(i) The Company will supply the Representative with copies of all
correspondence to and from, and all documents issued to and by, the
Commission in connection with the registration of the Shares under the
Securities Act, or the BCSC in connection with the filing of the Canadian
Prospectus.
(j) Prior to each of the Closing Dates the Company will furnish to the
Representative, as soon as they have been prepared, copies of any
unaudited interim consolidated financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing, or incorporated by reference, in the Registration Statements
and the Prospectuses.
(k) Prior to each of the Closing Dates, except for routine communications
in the ordinary course of business and consistent with the past practices
of the Company, the Company will not issue any press release or other
communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or
earnings, business affairs or business prospects, without the prior
written consent of the Representative, unless in the judgment of the
Company and its counsel, and after notification to the Representative,
such press release or communication is required by law or by an applicable
stock exchange.
(l) In connection with the offering of the Shares, until XX Xxxxx shall
have notified the Company of the completion of the resale of the Shares,
the Company will not, and will cause its affiliated purchasers (as defined
in Regulation M under the Exchange Act) not to, either alone or with one
or more other persons, bid for or purchase, for any account in which it or
any of its affiliated purchasers has a beneficial interest, any Shares, or
attempt to induce any person to purchase any Shares; and not to, and to
cause its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of raising
the price of the Shares.
(m) The Company shall comply with all applicable provisions of the
Xxxxxxxx-Xxxxx Act at all times after the effectiveness of such
provisions.
(n) The Company will apply the net proceeds from the sale of the Shares as
set forth in the Prospectuses under the heading "Use of Proceeds".
(o) The Company will use its best efforts to ensure that the Common Shares
remain listed on the Toronto Stock Exchange and the American Stock
Exchange.
5. Payment of Expenses. The Company agrees with the Underwriter to pay (a) the
costs incident to the authorization, issuance, sale, preparation and delivery
(including electronic delivery) of the Shares and any taxes payable in that
connection; (b) the costs incident to the Registration of the Shares under the
Securities Act; (c) the costs incident to the preparation, printing and
distribution of the Registration Statement, Preliminary Prospectuses,
Prospectuses any amendments, supplements and exhibits thereto or any document
incorporated by reference therein, and the costs of printing, reproducing and
distributing, the "Agreement Among Underwriters" between the Representative and
the Underwriters, the Master Selected Dealers' Agreement, the Underwriters'
Questionnaire and this Agreement by mail, telex or other means of communications
and the costs of preparing, printing, reproducing and distributing the
additional Canadian supplement prepared in connection with the offering of the
Shares in Canada on a private placement basis; (d) the fees and expenses
(including related fees and expenses of counsel for the Underwriters) incurred
in connection with filings made with the National Association of Securities
14
Dealers; (e) any applicable listing or other fees; (f) the fees and expenses of
qualifying the Shares under the securities laws of the several jurisdictions as
provided in Section 4(f) and of preparing, printing and distributing Blue Sky
Memoranda and Legal Investment Surveys (including related fees and expenses of
counsel to the Underwriters); (g) all fees and expenses of the registrar and
transfer agent of the Shares; and (h) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement
(including, without limitation, the fees and expenses of the Company's counsel
and the Company's independent accountants); provided that, except as otherwise
provided in this Section 5 and in Section 10, the Underwriters shall pay their
own costs and expenses, including the fees and expenses of their counsel, any
transfer taxes on the Shares which they may sell and the expenses of advertising
any offering of the Shares made by the Underwriters.
6. Conditions of Underwriters' Obligations. The respective obligations of the
several Underwriters hereunder are subject to the accuracy, when made and on
each of the Closing Dates, of the representations and warranties of the Company
contained herein, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of their obligations hereunder, and to each of the following additional
terms and conditions:
(a) No stop order suspending the effectiveness of the Registration
Statements or the Canadian Prospectus shall have been issued and no
proceedings for that purpose shall have been initiated or threatened by
the Commission or the BCSC, and any request for additional information on
the part of the Commission or the BCSC (to be included in the Registration
Statements or the Prospectuses or otherwise) shall have been complied with
to the reasonable satisfaction of the Representative. The Rule 462(b)
Registration Statement, if any, and the Prospectuses shall have been
timely filed with the Commission in accordance with Section 4(a) and a
shelf prospectus supplement relating to the distribution of the Shares in
the United States shall have been timely filed with the BCSC for which a
final receipt shall have been received from the BCSC.
(b) None of the Underwriters shall have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement or
the Prospectuses or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of counsel for the Underwriters,
is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of each of this Agreement, the Shares,
the Registration Statement and the Prospectuses and all other legal
matters relating to this Agreement and the transactions contemplated
hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to
enable them to pass upon such matters.
(d) O'Melveny & Xxxxx LLP (the Company's United States counsel) shall have
furnished to the Representative such counsel's written opinion, as counsel
to the Company, addressed to the Underwriters and dated the Closing Date,
in form and substance reasonably satisfactory to the Representative, to
the effect that:
(i) Lions Gate Entertainment Inc., Lions Gate Films Inc., Lions
Gate Television Inc. and LG Pictures Inc. (the "Principal U.S.
Subsidiaries") have each been duly incorporated and each is a
corporation validly existing under the laws of the State of
Delaware, with corporate power to own its properties and
assets and to carry on its business as described in the
Prospectus.
15
(ii) Based solely on a review of good standing certificates, each
of Lions Gate Entertainment Inc., Lions Gate Films Inc. and
Lions Gate Television Inc. are qualified as foreign
corporations to do business in the State of California, and
are in good standing in the State of California, and Lions
Gate Films Inc. is qualified as a foreign corporation to do
business in the State of New York, and is in good standing in
the State of New York.
(iii) The outstanding shares of capital stock of each Principal U.S.
Subsidiary have been duly authorized by all necessary
corporate action on the part of such corporation, are validly
issued, fully paid and non-assessable. Based solely on a
review of records certified to such counsel as the charter
documents of the Principal U.S. Subsidiaries and their
respective corporate minute books, to the best of such
counsel's knowledge, the shares of capital stock are owned
free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity, except under the Credit,
Security, Guaranty and Pledge Agreement by and among the
Company, the subsidiaries referred to therein, and the lenders
referred to therein, dated as of September 25, 2000, as
amended to date.
(iv) The execution and delivery by the Principal U.S. Subsidiaries
of the Agreement do not, and the Principal U.S. Subsidiaries'
performance of their obligations under the Agreement will not,
(x) violate the Principal U.S. Subsidiaries' Certificates of
Incorporation or Bylaws, (y) violate, breach, or result in a
default under, any existing obligation of or restriction on
the Principal U.S. Subsidiaries under any other agreement
identified in Exhibit A to the opinion, which Exhibit A shall
list all agreements listed in Item 16 of the Registration
Statements and which are governed by California, New York or
U.S. federal law (the "Other Agreements"), or (z) breach or
otherwise violate any existing obligation of or restriction on
the Principal U.S. Subsidiaries under any order, judgment or
decree of any California, New York or U.S. federal court or
governmental authority binding on the Principal U.S.
Subsidiaries (as identified in a certificate provided by the
Company). Such counsel need express no opinion as to the
effect of the Principal U.S. Subsidiaries' performance of
their obligations in the Agreement on the Principal U.S.
Subsidiaries' compliance with financial covenants in the Other
Agreements.
(v) The execution and delivery by the Principal U.S. Subsidiaries
of the Agreement do not, and the Principal U.S. Subsidiaries'
performance of their obligations under the Agreement will not,
violate the current Delaware General Corporation Law or any
current California, New York or U.S. federal statute, rule or
regulation that such counsel has, in the exercise of customary
professional diligence, recognized as applicable to the
Company or to transactions of the type contemplated by the
Agreement.
(vi) No order, consent, permit or approval of, or filing or
registration with, any California, New York or U.S. federal
governmental authority is required on the part of the Company
for the execution and delivery of the Agreement or for the
issuance and sale of the Shares, except such as have been
obtained under the Securities Act and such as may be required
under applicable Blue Sky or state securities laws.
(vii) The statements in the Prospectus under the caption "Taxation,"
insofar as they summarize provisions of U.S. federal law,
fairly present the information required
16
by Form S-3 and fairly summarize the matters described therein
in all material respects.
(viii) There are no actions, suits or proceedings pending or
threatened against the Company or any of its subsidiaries,
with respect to which such counsel has given substantive
attention on behalf of the Company or any of its subsidiaries.
(ix) The Registration Statement was declared effective under the
Securities Act as of the date and time specified in such
opinion and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has
been issued or threatened by the Commission.
(x) The Registration Statement, and each amendment thereto, the
462(b) Registration Statement, if any, each as of their
respective filing dates, and the Prospectus, and any further
amendments or supplements thereto, appeared on their face to
comply in all material respects with the requirements as to
form for registration statements on Form S-3 and prospectuses
under the Securities Act the Rules and Regulations in effect
at the date of filing, except that such counsel need express
no opinion concerning the financial statements and other
financial information contained or incorporated by reference
therein.
(xi) The documents incorporated by reference in the Prospectus (the
"Incorporated Documents"), on the respective dates they were
filed, appeared on their face to comply in all material
respects with the requirements as to form for reports on Form
10-K, Form 10-Q and Form 8-K, as the case may be, under the
Exchange Act, as amended, and the related rules and
regulations in effect at the respective dates of their filing,
except that such counsel need express no opinion concerning
the financial statements and other financial information
contained or incorporated by reference therein.
(xii) The Company is not an "investment company" required to
register under the Investment Company Act of 1940, as amended.
Such counsel shall also have furnished to the Representative a
written statement, addressed to the Underwriters and dated the Closing
Date, in form and substance satisfactory to the Representative, to the
effect that (x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statements, (y) such
counsel has participated in conferences in connection with the preparation
of the Registration Statements and the Prospectuses, and has also reviewed
such documents and the Incorporated Documents but has not independently
verified the accuracy, completeness or fairness of the statements
contained or incorporated in those documents, and although such counsel is
unable to assume, and does not assume, any responsibility for such
accuracy, completeness or fairness (except as otherwise specifically
stated in paragraph (vii) above), on the basis of such participation and
review, such counsel does not believe that the Registration Statements and
the Incorporated Documents, considered as a whole as of the effective date
of the applicable Registration Statements, contained any untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and does not believe that the Prospectuses and the Incorporated Documents,
considered as a whole on the Closing Date, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and (z) such counsel expresses no opinion
or belief as to any document filed by the Company under the Exchange Act,
whether before or after the effective date of the applicable
17
Registration Statements, except to the extent that any such document is an
Incorporated Document read together with the Registration Statements or
the Prospectuses and considered as a whole and as specifically stated in
paragraph (vii) above, nor does such counsel express any opinion or belief
as to the financial statements and other financial information contained
or incorporated by reference in the Registration Statements, the
Prospectuses or the Incorporated Documents.
(e) Xxxxxx Xxxxxxx LLP (the Company's Canadian counsel) shall have
furnished to the Representative such counsel's written opinion, as counsel
to the Company, addressed to the Underwriters and dated the Closing Date,
in form and substance reasonably satisfactory to the Representative, to
the effect that:
(i) The Company, Lions Gate Television Corp. and each of the
Principal Canadian Subsidiaries have been duly incorporated
and are validly existing in good standing under the laws of
their respective jurisdictions of incorporation, are duly
qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective
ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have
all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which
they are engaged, except where the failure to so qualify or
have such power or authority would not have, singularly or in
the aggregate, a Material Adverse Effect.
(ii) The Company has an authorized capitalization as set forth in
the Prospectuses, and all of the outstanding shares of the
Company, including the Shares being delivered on the Closing
Date, have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description
thereof contained in the Prospectuses.
(iii) All the outstanding shares of Lions Gate Television Corp. and
each Principal Canadian Subsidiary have been duly authorized
and validly issued, are fully paid and non-assessable and,
except to the extent set forth in the Prospectuses, are owned
by the Company directly or indirectly through one or more
wholly-owned subsidiaries, free and clear of any claim, lien,
encumbrance, security interest, restriction upon voting or
transfer or any other claim of any third party.
(iv) All of the outstanding shares of Lions Gate Television Corp.
were validly transferred to and registered in the name of
Xxxxx Xxxxxxx in trust, and the proxy has not been revoked.
The shares of Lions Gate Television Corp. are held by Xxxxx
Xxxxxxx in trust for Lions Gate Television Corp., the Company
and its subsidiaries.
(v) The Company is a reporting issuer or the equivalent in each of
the provinces of British Columbia and Ontario and is not on
the list of defaulting issuers maintained by any securities
regulatory authorities in any such jurisdiction.
(vi) To the best of such counsel's knowledge and other than as set
forth in the Prospectuses, there are no Canadian federal or
provincial legal or governmental proceedings pending to which
the Company or any of its subsidiaries or LGTC is a party or
of which any property or asset of the Company or any of its
subsidiaries or LGTC is the subject which, singularly or in
the aggregate, if determined adversely to the Company or any
of its subsidiaries or LGTC, might
18
have a Material Adverse Effect or would prevent or adversely
affect the ability of the Company to perform its obligations
under this Agreement; and, to the best of such counsel's
knowledge, no such proceedings have been threatened by
governmental authorities or others.
(vii) To the best of such counsel's knowledge, none of the Company,
Lions Gate Television Corp. or any of the Principal Canadian
Subsidiaries (a) is in violation of its charter or by-laws,
(b) is in default, and no event has occurred, which, with
notice or lapse of time or both, would constitute a default,
in the due performance or observance of any term, covenant or
condition contained in any agreement or instrument to which it
is a party or by which it is bound or to which any of its
properties or assets is subject or (c) is in violation of any
law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject or has
failed to obtain any license, permit, certificate, franchise
or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business
except, in the case of clauses (b) and (c), for those
defaults, violations or failures which, either singularly or
in the aggregate, would not have a Material Adverse Effect.
(viii) There are no preemptive or other rights to subscribe for or
to purchase, nor any restriction upon the voting or transfer
of, any Shares pursuant to the Company's charter or by-laws or
any agreement or other instrument known to such counsel.
(ix) There are no restrictions of the corporate power and capacity
of the Company to enter into this Agreement or to carry out
its obligations under this Agreement; and this Agreement has
been duly authorized, and executed and delivered by the
Company.
(x) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby by
the Company, Lions Gate Television Corp. and the Principal
Canadian Subsidiaries will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under, any of the Other Agreements, nor
will such actions result in any violation of the charter or
by-laws of the Company or the charter or by-laws of Lions Gate
Television Corp. or any of the Principal Canadian Subsidiaries
or any statute or any order, rule or regulation of any
Canadian federal or provincial court or governmental agency or
body or court having jurisdiction over the Company, Lions Gate
Television Corp. or any of the Principal Canadian Subsidiaries
or any of their properties or assets.
(xi) Except for consents, approvals, authorizations, registrations
or qualifications as may be required under British Columbia
Securities Laws and the Toronto Stock Exchange with the
purchase and distribution of the Shares by the Underwriters,
no consent, approval, authorization or order of, or filing or
registration with, any Canadian federal or provincial court or
governmental agency or body is required for the execution,
delivery and performance of this Agreement by the Company and
the consummation of the transactions contemplated hereby.
(xii) The form of share certificate for the Shares has been duly
approved by the Company and complies with the provisions of
the charter and by-laws of the Company and the Company Act
(British Columbia).
19
(xiii) The statements in the Prospectuses under the heading
"Canadian Income Taxation" to the extent that they constitute
summaries of matters of Canadian federal or provincial law or
regulation or legal conclusions, have been reviewed by such
counsel and fairly summarize the matters described therein in
all material respects.
(xiv) The statements contained in the Prospectuses under the caption
"Risk Factors - We may lose certain benefits by failing to
meet certain regulatory requirements"; and in Part II of the
Registration Statement - Information Not Required in
Prospectus - Item 15 - "Indemnification of Directors and
Officers"; insofar as such statements purport to summarize the
laws of the Provinces of Ontario or British Columbia and the
federal laws of Canada applicable therein, are fair
descriptions of those laws.
(xv) The Toronto Stock Exchange has conditionally approved the
listing of the Shares in accordance with the requirements of
such exchange on or before October 10, 2003.
(xvi) The Registration Statements, as of the respective effective
dates and the Prospectuses, as of their respective dates, and
any further amendments or supplements thereto, as of their
respective dates, made by the Company prior to the Closing
Date (other than the financial statements and other financial
data contained therein, as to which such counsel need express
no opinion) complied as to form in all material respects with
the requirements of the British Columbia Securities Laws; and
the documents incorporated by reference in the Prospectuses
(other than the financial statements and related schedules
therein, as to which such counsel need express no opinion),
when they were filed with the BCSC complied as to form in all
material respects with the requirements of applicable
securities laws of Canada and the rules and regulations of the
BCSC.
(xvii) To the best of such counsel's knowledge, except as set forth
in the Prospectuses under the caption "Description of Common
Shares and Preferred Shares - Registration Rights Agreements",
no person or entity has the right to require registration of
any Common Shares or other securities of the Company because
of the filing or effectiveness of the Registration Statements
or otherwise, except for persons and entities who have
expressly waived such right or who have been given proper
notice and have failed to exercise such right within the time
or times required under the terms and conditions of such
right.
(xviii) The choice of the laws of the State of New York ("New York
Law") as the governing law of this Agreement will be upheld as
a valid choice of law by a court of competent jurisdiction of
the Province of Ontario (an "Ontario Court") and by a court of
competent jurisdiction of the Province of British Columbia (a
"British Columbia Court", and together with an Ontario Court,
the "Relevant Canadian Courts") provided that such choice of
law is bona fide (in the sense that it was not made with a
view to avoiding the consequences of the law of any other
jurisdiction) and is not contrary to public policy as this
term is understood under the laws of the Province of Ontario
("Ontario Law") or the laws of British Columbia ("British
Columbia Law"), as the case may be. Such counsel has no reason
to believe that the choice of New York Law in this Agreement
is not bona fide or is contrary to public policy under Ontario
Law or British Columbia Law.
20
(xix) In the event that this Agreement is sought to be enforced in
either an Ontario court or a British Columbia court, those
courts would, subject to subparagraph (xviii) above, apply New
York Law, upon proper proof of those laws, except to the
extent that the provisions of this Agreement or New York Law
are contrary to public policy as that term is understood under
Ontario Law or BC Law, as the case may be, or those laws are
foreign revenue, expropriatory or penal laws; provided,
however, that:
(a) a Relevant Canadian Court would not apply New York Law
in matters of procedure or applicable laws in force
which are applicable by reason of their particular
object; and
(b) a Relevant Canadian Court may not enforce an obligation
enforceable under New York Law where performance of the
obligation would be illegal by the laws of the place of
performance.
(xx) A final and conclusive civil judgment for a sum certain
obtained in a court of competent jurisdiction of the State of
New York ("a New York Court") against the parties hereto in
connection with any action arising out of or relating to this
Agreement would be recognized and could be sued upon in a
Relevant Canadian Court and such court would grant a judgment
which would be enforceable against the parties hereto in the
Province of Ontario or the Province of British Columbia, as
the case may be, provided that:
(a) the New York Court had jurisdiction over the judgment
debtor in the action according to the applicable law in
the Relevant Canadian Court;
(b) such judgment was not obtained by fraud on the New York
Court or in any manner contrary to natural justice and
the enforcement thereof would not be inconsistent with
public policy as such term is understood under the
applicable law in the Relevant Canadian Court;
(c) enforcement of such judgment would not be inconsistent
with public policy as such term is understood under the
applicable law in the Relevant Canadian Court and, in
particular, would not constitute, directly or
indirectly, the enforcement of foreign revenue,
expropriatory or penal laws;
(d) a dispute between the same parties based on the same
subject matter has not given rise to a decision rendered
by a Relevant Canadian Court or been decided by a
foreign authority and that decision meets the necessary
conditions for recognition under the applicable law in
the Relevant Canadian Court;
(e) no new admissible evidence is discovered after the New
York Court has rendered judgment which could not have
been discovered by the exercise of due diligence prior
to the New York Court rendering judgment and no new
facts have arisen which once presented before a Relevant
Canadian Court would give rise to a finding in the
Relevant Canadian Court contrary to subparagraphs (a),
(b) or (c) above;
21
(f) a judgment of a Relevant Canadian Court will be
denominated in Canadian currency in accordance with, in
the case of the Province of Ontario, the Courts of
Justice Act (Ontario), and in the case of the Province
of British Columbia, the Foreign Money Claims Act
(British Columbia); and
(g) the action in the Relevant Canadian Court commenced
within the time limits set out in the Limitations Act
(Ontario) or the Limitation Act (British Columbia), as
the case may be.
Such counsel shall also have furnished to the Representative a
written opinion in form acceptable to the Representative with respect to
the formation and operation of the Trust, the ownership by the Trust of
all shares of Lions Gate Television Corp. for the Beneficiaries, and such
other matters as may be requested by the Representative.
Such counsel shall also have furnished to the Representatives a
written statement, addressed to the Underwriters and dated the Closing
Date, in form and substance satisfactory to the Representative, to the
effect that (x) such counsel has acted as counsel to the Company in
connection with the preparation of the Registration Statements and (y)
based on such counsel's examination of the Registration Statements and
such counsel's investigations made in connection with the preparation of
the Registration Statements and "conferences with certain officers and
employees of and with auditors for and counsel to the Company", such
counsel has no reason to believe that (I) the Registration Statements, as
of the respective effective dates, contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading, or that the Prospectuses contain any untrue statement of a
material fact or omit to state any 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, or (II) any
document incorporated by reference in the Prospectuses or any further
amendment or supplement to any such incorporated document made by the
Company prior to the Closing Date, when they became effective or were
filed with the Commission, as the case may be, contained, in the case of a
registration statement which became effective under the Securities Act,
any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading, or, in the case of other documents
which were filed under the Exchange Act with the Commission, any untrue
statement of a material fact or omitted to state any material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statement
or the Prospectuses.
The foregoing opinion and statement may be qualified by a statement
to the effect that such counsel has not independently verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectuses and takes no responsibility
therefor except to the extent set forth in the opinion described in
clauses (xii) and (xiii) above.
(f) The Representatives shall have received from Paul, Hastings, Xxxxxxxx
& Xxxxxx LLP and Osler, Xxxxxx & Harcourt LLP, counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with
respect to such matters as the Underwriters may reasonably require, and
the Company shall have furnished to such counsel such documents as they
request for enabling them to pass upon such matters.
22
(g) At the time of the execution of this Agreement, the Representative
shall have received from each of Ernst & Young LLP and
PricewaterhouseCoopers LLP a letter, addressed to the Underwriters and
dated such date, in form and substance satisfactory to the Representative
(i) confirming that they are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Act and the Rules and Regulations and (ii) stating the
conclusions and findings of such firm with respect to the financial
statements and certain financial information contained or incorporated by
reference in the Prospectuses.
(h) On the Closing Date, the Representative shall have received a letter
(the "bring-down letter") from each of Ernst & Young LLP and
PricewaterhouseCoopers LLP addressed to the Underwriters and dated the
Closing Date confirming, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectuses as of a date not more than three business days prior to the
date of the bring-down letter), the conclusions and findings of such firm
with respect to the financial information and other matters covered by its
letter delivered to the Representatives concurrently with the execution of
this Agreement pursuant to Section 6(g).
(i) The Company shall have furnished to the Representative a certificate,
dated the Closing Date, of its Chairman of the Board, its President or a
Vice President and its Chief Financial Officer stating that (i) such
officers have carefully examined the Registration Statements and the
Prospectuses and, in their opinion, the Registration Statements as of
their respective effective dates and the Prospectuses, as of each such
effective date, did not include any untrue statement of a material fact
and did not omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) since the
effective date of the Initial Registration Statement no event has occurred
which should have been set forth in a supplement or amendment to the
Registration Statements or the Prospectuses, (iii) to the best of their
knowledge after reasonable investigation, as of the Closing Date, the
representations and warranties of the Company in this Agreement are true
and correct and the Company has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date, and (iv) subsequent to the date of the most
recent financial statements included or incorporated by reference in the
Prospectuses, there has been no material adverse change in the financial
position or results of operation of the Company and its subsidiaries, or
any change, or, to the knowledge of the Company, any development including
a prospective change, in or affecting the condition (financial or
otherwise), results of operations or business of the Company and its
subsidiaries taken as a whole, except as set forth in the Prospectuses.
(j) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectuses any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectuses (ii) since such date there shall
not have been any change in the equity or long-term debt of the Company or
any of its subsidiaries or any change, or to the knowledge of the Company,
any development involving a prospective change, in or affecting the
business, general affairs, management, financial position, shareholders'
equity or results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectuses, the
effect of which, in any such case described in clause (i) or (ii), is, in
the judgment of the Representative, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of the
Shares on the terms and in the manner contemplated in the Prospectuses.
(k) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental
agency or body or any stock exchange in Canada
23
or the United States which would, as of the Closing Date, prevent the
issuance or sale of the Shares or materially and adversely affect or
potentially materially and adversely affect the business or operations of
the Company; and no injunction, restraining order or order of any other
nature by any United States federal or state court or Canadian federal or
provincial court of competent jurisdiction shall have been issued as of
the Closing Date which would prevent the issuance or sale of the Shares or
materially and adversely affect or potentially materially and adversely
affect the business or operations of the Company.
(l) Subsequent to the execution and delivery of this Agreement there shall
not have occurred or be existing any of the following: (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or the Toronto Stock Exchange or in the over-the-counter market,
or trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum or maximum
prices or maximum range for prices shall have been established on any such
exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by United States Federal or
state authorities, or Canadian federal or provincial authorities, or a
material disruption has occurred in commercial banking or securities
settlement or clearance services in the United States or Canada, (iii) (A)
a declaration of a national emergency or war by the United States, or an
outbreak or escalation of hostilities between the United States and any
foreign power, (B) an outbreak or escalation of any other insurrection or
armed conflict, or act of terrorism involving the United States, or any
other national or international crisis, calamity or emergency or (C) any
material change in the political conditions, financial markets or economic
conditions in the United States which, in the case of (A), (B) or (C)
above, in the sole judgment of the Representative, makes it impracticable
or inadvisable to proceed with the sale or the delivery of the Shares on
the terms and in the manner contemplated in the Prospectuses, or (iv)
there shall have occurred such a material adverse change in general
economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the sale or delivery of the
Shares on the terms and in the manner contemplated in the Prospectuses.
(m) The American Stock Exchange, Inc. and the Toronto Stock Exchange shall
have each approved the Shares for listing, subject only to official notice
of issuance.
(n) XX Xxxxx shall have received the written agreements, substantially in
the form of Exhibit I hereto, of the officers of the Company listed in
Schedule B to this Agreement.
(o) XX Xxxxx shall have received an officer's certificate of the General
Counsel of the Company, certifying as to the following:
(i) To the best of such officer's knowledge, neither the Company
nor any of its subsidiaries (A) is in violation of its charter
or by-laws, (B) is in default, and no event has occurred,
which, with notice or lapse of time or both, would constitute
a default, in the due performance or observance of any term,
covenant or condition contained in any agreement or instrument
to which it is a party or by which it is bound or to which any
of its properties or assets is subject or (C) is in violation
of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or
has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit
necessary to the ownership of its property or to the conduct
of its business except, in the case of clauses (B) and (C),
for those defaults, violations or failures
24
which, either individually or in the aggregate, would not have
a Material Adverse Effect.
(ii) To the best of such counsel's knowledge and other than as set
forth in the Prospectuses, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or asset of
the Company or any of its subsidiaries is the subject which,
singularly or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, would reasonably be
expected to have a Material Adverse Effect or would prevent or
adversely affect the ability of the Company to perform its
obligations under this Agreement; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(iii) For purposes of such certificate, "subsidiary" shall not
include any of CinemaNow, Inc., Xxxxxxxx Films Distribution
Inc. or CineGroupe Inc.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) The Company and the Principal U.S. Subsidiaries and the Principal
Canadian Subsidiaries (collectively, the "Principal Subsidiaries"),
jointly and severally, shall indemnify and hold harmless each Underwriter,
its officers, employees, representatives and agents and each person, if
any, who controls any Underwriter within the meaning of the Securities Act
(collectively, the "Underwriter Indemnified Parties" and each, an
"Underwriter Indemnified Party") against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
that Underwriter Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of or is based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
of the Preliminary Prospectuses, any of the Registration Statements or the
Prospectuses or in any amendments or supplements thereto or (ii) the
omission or alleged omission to state in any of the Preliminary
Prospectuses, any of the Registration Statements or the Prospectuses or in
any amendments or supplements thereto a material fact required to be
stated therein or necessary to make the statements therein not misleading,
and shall reimburse each Underwriter Indemnified Party promptly upon
demand for any legal or other expenses reasonably incurred by that
Underwriter Indemnified Party in connection with investigating or
preparing to defend or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the Company
and the Principal Subsidiaries shall not be liable in any such case to the
extent that any such loss, claim, damage, liability or action arises out
of or is based upon (i) an untrue statement or alleged untrue statement in
or omission or alleged omission from any of the Preliminary Prospectuses,
any of the Registration Statements or the Prospectuses or any such
amendments or supplements in reliance upon and in conformity with written
information furnished to the Company through the Representative by or on
behalf of any Underwriter specifically for use therein, which information
the parties hereto agree is limited to the Underwriters' Information (as
defined in Section 16). This indemnity agreement is not exclusive and will
be in addition to any liability which the Company and Principal
Subsidiaries might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to each
Underwriter Indemnified Party.
25
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless the Company its officers, employees, representatives and agents,
each of its directors and each person, if any, who controls the Company
within the meaning of the Securities Act (collectively the "Company
Indemnified Parties" and each a "Company Indemnified Party") against any
loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company Indemnified Parties may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of or is based upon (i) any
untrue statement or alleged untrue statement of a material fact contained
in any of the Preliminary Prospectuses, any of the Registration Statements
or the Prospectuses or in any amendments or supplements thereto or (ii)
the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue statement
or alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to the
Company through the Representative by or on behalf of that Underwriter
specifically for use therein, and shall reimburse the Company Indemnified
Parties for any legal or other expenses reasonably incurred by such
parties in connection with investigating or preparing to defend or
defending against or appearing as third party witness in connection with
any such loss, claim, damage, liability or action as such expenses are
incurred; provided that the parties hereto hereby agree that such written
information provided by the Underwriters consists solely of the
Underwriters' Information. This indemnity agreement is not exclusive and
will be in addition to any liability which the Underwriters might
otherwise have and shall not limit any rights or remedies which may
otherwise be available at law or in equity to the Company Indemnified
Parties.
(c) Promptly after receipt by an indemnified party under this Section 7 of
notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 7
except to the extent it has been materially prejudiced by such failure;
and, provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 7. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 7 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any indemnified
party shall have the right to employ separate counsel in any such action
and to participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i)
the employment thereof has been specifically authorized by the
indemnifying party in writing, (ii) such indemnified party shall have been
advised in writing by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party and in the reasonable judgment of such
counsel it is advisable for such indemnified party to employ separate
counsel or (iii) the indemnifying party has failed to assume the defense
of such action and employ counsel reasonably satisfactory to the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at
the expense of the indemnifying party, the indemnifying party shall not
have the right to assume the defense of such action on behalf of such
indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or
26
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys at any time for all
such indemnified parties, which firm shall be designated in writing by XX
Xxxxx, if the indemnified parties under this Section 7 consist of any
Underwriter Indemnified Party, or by the Company if the indemnified
parties under this Section 7 consist of any Company Indemnified Parties.
Each indemnified party, as a condition of the indemnity agreements
contained in Sections 7(a) and 7(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any
such action effected without its written consent (which consent shall not
be unreasonably withheld), but if settled with its written consent or if
there be a final judgment for the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement
or judgment.
(d) If the indemnification provided for in this Section 7 is unavailable
or insufficient to hold harmless an indemnified party under Section 7(a)
or 7(b), then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company the Principal
Subsidiaries on the one hand and the Underwriters on the other from the
offering of the Shares or if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Principal Subsidiaries
on the one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and the Principal Subsidiaries on the one hand and the Underwriters on the
other with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Shares
purchased under this Agreement (before deducting expenses) received by the
Company and the Principal Subsidiaries bear to the total underwriting
discounts and commissions received by the Underwriters with respect to the
Shares purchased under this Agreement, in each case as set forth in the
table on the cover page of the Prospectuses. The relative fault shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Company and the Principal Subsidiaries on the one hand or the Underwriters
on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission; provided that the parties hereto agree that the
written information furnished to the Company through the Representative by
or on behalf of the Underwriters for use in any Preliminary Prospectuses,
any of the Registration Statements or the Prospectuses consists solely of
the Underwriters' Information. The Company, the Principal Subsidiaries and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount
paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in
this Section 7(d) shall be deemed to include, for purposes of this Section
7(d), any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 7(e), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Shares underwritten by it and
distributed to the public were offered to the public less the amount of
any damages which such Underwriter has otherwise paid or become
27
liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation.
The Underwriters' obligations to contribute as provided in this Section
7(d) are several in proportion to their respective underwriting
obligations and not joint.
8. Termination. The obligations of the Underwriters hereunder may be terminated
by XX Xxxxx, in its absolute discretion by notice given to and received by the
Company prior to delivery (including electronic delivery) of and payment for the
Firm Shares if, prior to that time, any of the events described in Sections
6(j), 6(k) or 6(l) have occurred or if the Underwriters shall decline to
purchase the Shares for any reason permitted under this Agreement.
9. Reimbursement of Underwriters' Expenses. If (a) this Agreement shall have
been terminated pursuant to Section 8, (b) the Company shall fail to tender the
Shares for delivery (including electronic delivery) to the Underwriters for any
reason not permitted under this Agreement, or (c) the Underwriters shall decline
to purchase the Shares for any reason permitted under this Agreement the Company
shall reimburse the Underwriters for the fees and expenses of their counsel and
for such other out-of-pocket expenses as shall have been reasonably incurred by
them in connection with this Agreement and the proposed purchase of the Shares,
and within thirty (30) days of demand the Company shall pay the full amount
thereof to the XX Xxxxx.
10. Substitution of Underwriters. If any Underwriter or Underwriters shall
default in its or their obligations to purchase Shares hereunder and the
aggregate number of shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of shares underwritten, the other Underwriters shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the shares which such defaulting Underwriter or Underwriters agreed but failed
to purchase. If any Underwriter or Underwriters shall so default and the
aggregate number of shares with respect to which such default or defaults occur
is more than ten percent (10%) of the total number of shares underwritten and
arrangements satisfactory to the Representative and the Company for the purchase
of such shares by other persons are not made within forty-eight (48) hours after
such default, this Agreement shall terminate.
If the remaining Underwriters or substituted Underwriters are required
hereby or agree to take up all or part of the Shares of a defaulting Underwriter
or Underwriters as provided in this Section 10, (i) the Company shall have the
right to postpone the Closing Dates for a period of not more than five (5) full
business days in order that the Company may effect whatever changes may thereby
be made necessary in the Registration Statement or the Prospectuses, or in any
other documents or arrangements, and the Company agrees promptly to file any
amendments to the Registration Statement or amendments or supplements to the
Prospectuses which may thereby be made necessary, and (ii) the respective
numbers of shares to be purchased by the remaining Underwriters or substituted
Underwriters shall be taken as the basis of their underwriting obligation for
all purposes of this Agreement. Nothing herein contained shall relieve any
defaulting Underwriter of its liability to the Company or the other Underwriters
for damages occasioned by its default hereunder. Any termination of this
Agreement pursuant to this Section 10 shall be without liability on the part of
any non-defaulting Underwriter or the Company, except expenses to be paid or
reimbursed pursuant to Sections 5 and 9 and except the provisions of Section 7
shall not terminate and shall remain in effect.
11. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the several Underwriters, the
Company and their respective successors. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person
28
other than the persons mentioned in the preceding sentence any legal or
equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person; except that the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the Underwriter Indemnified
Parties, and the indemnities of the several Underwriters shall also be for the
benefit of the Company Indemnified Parties. It is understood that the
Underwriters' responsibility to the Company is solely contractual in nature and
the Underwriters do not owe the Company, or any other party, any fiduciary duty
as a result of this Agreement.
12. Survival of Indemnities, Representations, Warranties, etc. The respective
indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Underwriters, as set forth in this
Agreement or made by them respectively, pursuant to this Agreement, shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter, the Company or any person controlling any of them and shall
survive delivery (including electronic delivery) of and payment for the Shares.
13. Notices. All statements, requests, notices and agreements hereunder shall be
in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail, telex or
facsimile transmission to XX Xxxxx Securities Corporation Attention:
General Counsel, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000
(Fax: 000-000-0000);
(b) if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to Lions Gate Entertainment Corp., Attention: Xxxxx
Xxxxx, 0000 Xxxxxxx Xxx., Xxxxx 000, Xxxxxx xxx Xxx, Xxxxxxxxxx 00000
(Fax: 000-000-0000);
(c) provided, however, that any notice to an Underwriter pursuant to
Section 7 shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its
acceptance telex to the Representative, which address will be supplied to
any other party hereto by the Representative upon request.
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
14. Definition of Certain Terms. For purposes of this Agreement, (a) "business
day" means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations; provided, however, that solely for purposes of this Agreement
the term "subsidiary" shall include LGTC; and (c) "Significant Subsidiary" has
the meaning set forth in Section 1-02(w) of Regulation S-X of the Commission.
15. GOVERNING LAW AND SUBMISSION TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ANY CONFLICTS OF LAWS PRINCIPLES THAT WOULD RESULT IN THE
APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION. EACH OF THE PARTIES HERETO
WAIVES THE RIGHT TO TRIAL BY JURY.
16. Underwriters' Information. The parties hereto acknowledge and agree that,
for all purposes of this Agreement, the term "Underwriters' Information"
consists solely of the following information in the Prospectus: (i) the last
paragraph on the front cover page concerning the terms of the offering by the
Underwriters; and (ii) the statements concerning the Underwriters contained in
table below the first paragraph and contained in the third paragraph of the
supplement to the Prospectus under the heading "Underwriting."
29
17. Authority of the Representative. In connection with this Agreement, you will
act for and on behalf of the several Underwriters, and any action taken under
this Agreement by the Representative, will be binding on all the Underwriters.
18. Partial Unenforceability. The invalidity or unenforceability of any Section,
paragraph or provision of this Agreement shall not affect the validity or
enforceability of any other Section, paragraph or provision hereof. If any
Section, paragraph or provision of this Agreement is for any reason determined
to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and
enforceable.
19. General. This Agreement constitutes the entire agreement of the parties to
this Agreement and supersedes all prior written or oral and all contemporaneous
oral agreements, understandings and negotiations with respect to the subject
matter hereof. In this Agreement, the masculine, feminine and neuter genders and
the singular and the plural include one another. The section headings in this
Agreement are for the convenience of the parties only and will not affect the
construction or interpretation of this Agreement. This Agreement may be amended
or modified, and the observance of any term of this Agreement may be waived,
only by a writing signed by the Company and the Representative.
20. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
[SIGNATURE PAGE FOLLOWS]
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If the foregoing is in accordance with your understanding of the agreement
between the Company and the several Underwriters, kindly indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
LIONS GATE ENTERTAINMENT CORP.
By: /s/ Xxxxx Xxxxx
-----------------------------------
Name: Xxxxx Xxxxx
Title: Executive Vice President &
General Counsel, Legal & Business
Affairs
Accepted as of the date first above written:
XX XXXXX SECURITIES CORPORATION
Acting on its own behalf
and as Representative of several
Underwriters referred to in the
foregoing Agreement.
By: XX XXXXX SECURITIES CORPORATION
By: /s/ Grahmn Powrs
------------------------------------
Name: Grahmn Powrs
Title: Managing Director
31
SCHEDULE A
Number Number of
of Firm Optional
Shares Shares
to be to be
Name Purchased Purchased
---- ---------- ---------
XX Xxxxx Securities Corporation 17,000,000 2,550,000
Natexis Bleichroeder Inc. 5,000,000 750,000
Xxxxxx Xxxxxx Partners LLC 3,000,000 450,000
Total 25,000,000 3,750,000
32
SCHEDULE B
List of officers subject to Section 4(h):
Xxx Xxxxxxxxxx
Xxxxxxx Xxxxx
Xxxxx Xxxxx
Xxxxx Xxxxxx
33
EXHIBIT I
[Form of Lock-Up Agreement]
[Date]
XX Xxxxx Securities Corporation
As representative of the
several Underwriters
c/o XX Xxxxx Securities Corporation
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Lions Gate Entertainment Corp. 25,000,000 Common Shares
Ladies and Gentlemen:
In order to induce XX Xxxxx Securities Corporation ("XX Xxxxx" or the
"Representative"), to enter in to a certain underwriting agreement with Lions
Gate Entertainment Corp., a British Columbia corporation (the "Company"), with
respect to the public offering of comon shares, no par value ("Common Shares")
of the Company, the undersigned hereby agrees that for a period of 90 days
following the date of the final prospectus filed by the Company with the
Securities and Exchange Commission in connection with such public offering (the
"Offering"), the undersigned will not, without the prior written consent of XX
Xxxxx, directly or indirectly, (i) offer, sell, assign, transfer, pledge,
contract to sell, or otherwise dispose of, any Common Shares (including, without
limitation, Common Shares which may be deemed to be beneficially owned by the
undersigned in accordance with the rules and regulations promulgated under the
Securities Act, as the same may be amended or supplemented from time to time
(such shares, the "Beneficially Owned Shares")) or securities convertible into
or exercisable or exchangeable in Common Shares (such securities, together with
the Common Shares and Beneficially Owned Shares, the "Relevant Securities"),
(ii) enter into any swap, hedge or similar agreement or arrangement that
transfers in whole or in part, the economic risk of ownership of the Relevant
Securities or (iii) engage in any short selling of the Common Shares
(collectively, the "Lock-Up").
Notwithstanding the foregoing, the undersigned may transfer Relevant
Securities (i) by bona fide gift, will or intestate succession and (ii) to any
trust for the direct or indirect benefit of the undersigned or the immediate
family of the undersigned, provided as to each of (i) and (ii) above, each
resulting transferee of Relevant Securities executes and delivers to you an
agreement certifying that such transferee is bound by the terms of this letter
agreement, and provided further that any such transfer not involve a disposition
for value. For the purposes of this letter agreement, "immediate family" means
any relationship by blood, marriage or adoptions, not more remote than first
cousin.
In addition, the undersigned hereby waives, from the date hereof until the
expiration of the 90 day period following the date of the Company's final
supplement to prospectus, any and all rights, if any, to request or demand
registration pursuant to the Securities Act of any Common Shares that are
registered in the name of the undersigned or that are Beneficially Owned Shares.
In order to enable the aforesaid covenants to be enforced, the undersigned
hereby consents to the placing of stop-transfer orders with the transfer agent
of the Common Shares with respect to any Common Shares or Beneficially Owned
Shares.
In the event that the Company makes a public announcement that it has
withdrawn the Offering, the undersigned shall no longer be subject to Lock-Up
set forth in this letter agreement and such Lock-Up shall immediately terminate.
34
Delivery of a signed copy of this letter agreement by facsimile
transmission shall be effective as delivery of the original hereof.
[Signatory]
By:_______________________________
Name:
Title: