Exhibit 10.4
CONTRIBUTION AGREEMENT
THIS AGREEMENT made as of the third day of December, 2003.
BETWEEN:
LIONS GATE ENTERTAINMENT INC.
(hereinafter referred to as the "Issuer")
OF THE FIRST PART
LIONS GATE ENTERTAINMENT CORP.
(hereinafter referred to as the "Parent")
OF THE SECOND PART
WHEREAS pursuant to an offering circular dated November 28, 2003 (the "Offering
Circular") the Issuer intends to sell up to US$60,000,000 convertible senior
subordinated notes due 2010 (the "Notes");
AND WHEREAS the Parent has agreed to fully and unconditionally guarantee certain
of the obligations of the Issuer under the Notes;
AND WHEREAS the initial and future holders of the Notes ("Holders") have been
granted certain rights to require the Issuer to convert the Notes into
fully-paid, non-assessable common shares ("Shares") of the Parent at a
conversion rate of 185.0944 per US$1,000 principal amount of Notes, subject to
certain adjustments and with special arrangements for fractional Shares as more
particularly set forth in the Offering Circular (the "Conversion Obligation");
AND WHEREAS the purpose of this Agreement is to make appropriate provisions and
to establish a procedure whereby the Parent will take certain actions and make
certain payments and deliveries necessary to ensure that the Issuer will be able
to deliver or cause to be delivered the Shares and pay cash in lieu of
fractional Shares in satisfaction of the obligations of the Issuer under the
Conversion Obligation;
NOW THEREFORE in consideration of the respective covenants and agreements
provided in this agreement and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the parties agree as
follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 DEFINED TERMS. Each term denoted herein by initial capital letters and not
otherwise defined herein shall have meaning ascribed thereto in the
Offering Circular, unless the context requires otherwise.
1.2 INTERPRETATION NOT AFFECTED BY HEADINGS, ETC. The division of this
agreement into articles, sections and paragraphs and the insertion of
headings are for convenience of reference only and shall not affect the
construction on interpretation of this agreement.
1.3 NUMBER, GENDER, ETC. Words importing the singular number only shall include
the plural and vice versa. Words importing the use of any gender shall
include all genders.
ARTICLE 2
COVENANTS OF THE PARENT AND THE CORPORATION
2.1 FUNDING OF THE ISSUER. If any Holder gives notice of its intention to
convert any Notes held by it into Shares, the Issuer will immediately
notify the Parent thereof and the Parent will contribute to the Issuer as
common share equity such amount (the "Contribution") as will enable the
Issuer to obtain sufficient Shares from the Parent to satisfy the
Conversion Obligation or, if requested by the Issuer, to pay cash in lieu
of fractional Shares. On making the Contribution, the Parent may elect at
its option to either receive additional common shares of the Issuer or to
allocate the Contribution to the stated capital account of the previously
issued common shares of the Issuer.
2.2 SUBSCRIPTIONS. The Issuer will, forthwith upon receipt of the Contribution
and without any further act or formality, subscribe for such number of
Shares (other than fractional Shares) as is required to fulfill the
Conversion Obligation. Upon receipt of the subscription the Parent agrees
to issue, without any further act or formality, the Shares in accordance
with Section 2.4.
2.3 RESERVATION OF PARENT COMMON SHARES. The Parent hereby represents, warrants
and covenants that it will at all times keep available such number of
Shares (or other shares or securities into which the Shares may be
reclassified or changed as contemplated by Section 3.2 hereof) as is equal
to the sum of the number of Shares issuable upon the exercise of all rights
to acquire Shares outstanding from time to time pursuant to the Notes.
2.4 DELIVERY OF SHARES. Upon notice from the Issuer of any event which requires
the Issuer to cause to be delivered Shares to any Holder, the Parent shall
deliver the requisite Shares to or to the order of the Holder of the
surrendered Notes, as the Issuer shall direct. All such Shares shall be
delivered immediately after they are issued and all Shares shall be
duly issued as fully paid and non-assessable and shall be free and
clear of any lien, claim, encumbrance, security interest or adverse
claim.
2.5 PAYMENT IN LIEU OF FRACTIONAL SHARES. The Parent shall not be required
to issue fractional Shares for delivery to any Holder and instead
Parent shall, if requested by the Issuer, contribute cash to the
Issuer in lieu of fractional shares as contemplated in Section 2.1
hereof. Issuer agrees to pay cash in lieu of fractional shares to any
Holder so entitled at the same time as such Holder receives Shares
pursuant to the Conversion Obligation.
ARTICLE 3
GENERAL
3.1 TERM. This agreement shall come into force and be effective upon the
issue by the Corporation of the Notes and shall terminate and be of no
further force and effect at such time as no Notes are held by any
party.
3.2 CHANGES IN CAPITAL OF PARENT. At all times after the occurrence of any
event, including, but not limited to Share consolidation or
sub-division, whereby the Shares are in any way changed, this
agreement shall forthwith be deemed amended and modified as necessary
in order that it shall apply with full force and effect, mutatis
mutandis, to all new securities into which the Shares are so changed
and the parties hereto shall execute and deliver an agreement in
writing giving effect to and evidencing such necessary amendments and
modifications.
3.3 SEVERABILITY. If any provision of this agreement is held invalid, such
invalidity shall not affect the other provisions hereof which can be
given effect without the invalid provision, and to this end the
provisions of this agreement are intended to be and shall be deemed
severable.
3.4 AMENDMENTS, MODIFICATIONS, ETC. This agreement may not be amended or
modified except by an agreement in writing executed by the Issuer and
the Parent.
3.5 ENUREMENT. This agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and
assigns.
3.6 NOTICES AND PARTIES. All notices and other communications between the
parties shall be in writing and shall be deemed to have been given if
delivered personally or by confirmed facsimile transmission to the
parties at the following addresses (or at such other address for
either such party as shall be specified in like notice):
(a) if to Parent at:
Xxxxx 0000, Xxxxx Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
Fax: (000) 000-0000
(b) if to the Issuer at:
0000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx xxx Xxx
Xxxxxxxxxx 00000
Fax: (000) 000-0000
Any notice or other communication given personally shall be deemed to have
been given and received upon delivery thereof and if given by facsimile
transmission shall be deemed to have been given and received on the date of
confirmed receipt thereof unless such day is not a business day in which
case it shall be deemed to have been given and received upon the
immediately following business day.
4.1 COUNTERPARTS. This agreement may be executed in counterparts, each of which
shall be deemed an original, and both of which taken together shall
continue one and the same instrument.
4.2 JURISDICTION. This agreement shall be governed by and construed and
enforced in accordance with the laws of British Columbia and the laws of
Canada applicable therein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
LIONS GATE ENTERTAINMENT INC.
BY: /s/ [illegible]
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LIONS GATE ENTERTAINMENT CORP.
BY: /s/ [illegible]
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