Exhibit 10.1

 

EXECUTION VERSION

 

STOCK EXCHANGE AGREEMENT

 

This STOCK EXCHANGE AGREEMENT, dated as of June 30, 2016, and effective as of any Specified Termination Event (defined below) (this “Agreement”), is made by and among Lions Gate Entertainment Corp., a corporation organized and existing under the laws of British Columbia (“Lionsgate”), Orion Arm Acquisition Inc., a Delaware corporation and an indirect wholly-owned subsidiary of Lionsgate (“Purchaser”), and the stockholders listed on Schedule 1 (each a “Stockholder,” and collectively the “Stockholders”).

 

R E C I T A L S:

 

WHEREAS, concurrently with the execution and delivery of this Agreement, Lionsgate, Starz, a Delaware corporation (“Starz”) and Orion Arm Acquisition Inc., a Delaware corporation and a wholly owned Subsidiary of Lionsgate (“Merger Sub”), are entering into an Agreement and Plan of Merger, dated as of the date hereof (as the same may be amended or supplemented, the “Merger Agreement”), that provides, among other things, for the merger of Merger Sub with and into Starz, upon the terms and subject to the conditions set forth in the Merger Agreement;

 

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, Lionsgate, the Stockholders and Starz are entering into a Voting Agreement, dated as of the date hereof, with respect to Lionsgate’s and the Stockholders’ shares of Starz Common Stock (as the same may be amended or supplemented, the “Voting Agreement”);

 

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, Lionsgate, Starz, and certain stockholders of Lionsgate are entering into a series of Voting Agreements, dated as of the date hereof, with respect to such stockholders’ shares of Lionsgate Common Stock (collectively, as the same may be amended or supplemented, the “LDM Voting Agreements”);

 

WHEREAS, this Agreement shall become effective upon the termination of the Merger Agreement in accordance with (i) Section 7.1(b)(iii) of the Merger Agreement (Failure to Obtain Company Stockholder Approval), (ii) Section 7.1(c)(i) of the Merger Agreement (Company Superior Proposal) or (iii) Section 7.1(d)(i) of the Merger Agreement (Change of Recommendation by Company) (any such termination, a “Specified Termination Event”);

 

WHEREAS, as of the date of this Agreement, each Stockholder owns, and at all times prior to the Closing will own, the number of shares of Series B common stock, par value $0.01 per share (“Starz Series B Common Stock”), of Starz set forth opposite the name of such Stockholder on Schedule 1, representing in the aggregate as of the date hereof approximately 69.6% of the total voting power of the issued and outstanding shares of Starz Series B Common Stock;

 

WHEREAS, in the event of a Specified Termination Event, each Stockholder wishes to transfer the Starz Exchange Shares (as defined below) to Purchaser in exchange for the Lionsgate Exchange Consideration (as defined below), and Purchaser wishes to acquire the Starz Exchange Shares from the Stockholders in exchange for the Lionsgate Exchange Consideration, on the terms and conditions set forth in this Agreement (the “Exchange”);

 

 

NOW, THEREFORE, the Parties agree as follows:

 

Article 1

 

Effectiveness

 

Section 1.1           Effectiveness. This Agreement shall become effective only upon the occurrence of a Specified Termination Event.

 

Article 2

 

Exchange of Shares

 

Section 2.1           Exchange.  Subject to the terms and conditions hereof, at the Closing:

 

(a)          Each Stockholder shall convey, transfer and deliver to Purchaser, free and clear of any liens, pledges, charges and security interests and similar encumbrances (“Liens”) (other than transfer restrictions imposed by applicable securities laws), the shares of Starz Series B Common Stock (the “Starz Exchange Shares”), listed opposite such Stockholder’s name on Schedule 1; and

 

(b)          Purchaser shall convey, transfer and deliver to each Stockholder, free and clear of any Liens (other than transfer restrictions imposed by applicable securities laws) for each Starz Exchange Share:

 

(i)           $7.26 in cash without interest thereon (the “Lionsgate Cash Consideration”); plus

 

(ii)          1.2642 shares of common stock, without par value, of Lionsgate (“Lionsgate Common Stock”) (the “Lionsgate Exchange Shares,” together with the Lionsgate Cash Consideration, the “Lionsgate Exchange Consideration”); provided, however, that in the event that either (x) John C.  Malone sends written notice to Purchaser at least five (5) Business Days prior to the Closing that the Stockholders are irrevocably electing to receive the Lionsgate Alternate Cash Consideration (as defined below), (y) the Exchange Approval Meeting has occurred and the Stockholder Approval (as defined below) shall not have been obtained, or (z) 120 days have elapsed after the occurrence of a Specified Termination Event (such 120^th day, the “End Date”), Purchaser shall substitute $29.04 in cash without interest thereon for each Lionsgate Exchange Share (the “Lionsgate Alternate Cash Consideration” and together with the Lionsgate Cash Consideration, the “Lionsgate Alternate Exchange Consideration”).

 

Section 2.2           Closing.

 

(a)          The closing of the Exchange (the “Closing”) shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 at 10:00 a.m.  (Eastern time) on the fifth (5th) Business Day following the satisfaction or (to the extent permitted by Law) waiver by the party or parties entitled to the benefits thereof of the conditions set forth in Article 5 (other than those conditions that by their nature are to be satisfied at the

 

 

Closing, but subject to the satisfaction or (to the extent permitted by Law) waiver of those conditions), or at such other place, time and date as shall be agreed in writing among the Parties.  The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”

 

(b)          At the Closing:

 

(i)           Each Stockholder shall deliver, or cause to be delivered, to Purchaser (1) either one or more original share certificate(s), duly endorsed or with stock powers duly executed in favor of Purchaser, and with any required stock transfer stamps affixed thereto or evidence of book entry delivery, representing all of such Stockholder’s Starz Exchange Shares; (2) the certificate required by Section 5.2(b); (3) a duly executed certificate of non-foreign status, dated as of the Closing Date, substantially in the form of the sample certification set forth in U.S.  Treasury Regulations Section 1.1445-2(b)(2)(iv)(A) or (B), as applicable; and (4) all other certificates, instruments and documents executed and delivered by a Stockholder as are either necessary or as Purchaser may reasonably request in order to effectively transfer ownership and control of such Stockholder’s Starz Exchange Shares to Purchaser.

 

(ii)          Purchaser shall deliver, or cause to be delivered, to each Stockholder, (1)  the Lionsgate Cash Consideration, and, if applicable, the Lionsgate Alternate Cash Consideration, for such Stockholder’s Starz Exchange Shares pursuant to Section 2.1(b), by wire transfer of immediately available funds to one or more bank accounts designated in writing by such Stockholder (such designation to be made at least two (2) Business Days prior to the Closing Date); (2) if applicable, either one or more original share certificates issued to and registered in the name of such Stockholder and with any required stock transfer stamps affixed thereto or evidence of book entry delivery evidencing the issuance of, the number of the Lionsgate Exchange Shares to be conveyed to such Stockholder pursuant to Section 2.1(b); and (3) the certificate required by Section 5.3(b).

 

Section 2.3           Further Assurances.  If, at any time before or after the Closing, one of the Parties reasonably believes or is advised that any further instruments, deeds, assignments or assurances are reasonably necessary or desirable to consummate the Exchange or to carry out the purposes and intent of this Agreement at or after the Closing, then Lionsgate, Purchaser, each Stockholder and, as applicable, their respective trustees, officers and directors shall execute and deliver all such proper instruments, deeds, assignments or assurances and do all other things reasonably necessary or desirable to consummate the Exchange and to carry out the purposes and intent of this Agreement.

 

Section 2.4           Adjustments. Wherever in this Agreement there is a reference to a specific number of the Starz Exchange Shares or the Lionsgate Exchange Shares, then, upon the occurrence of any subdivision, combination, reclassification or share dividend of the Starz Exchange Shares or the Lionsgate Exchange Shares, the specific number of such shares so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of shares by such subdivision, combination, reclassification or share dividend.

 

 

Section 2.5           Tax. Each Party will have the right to deduct and withhold from any payment made pursuant to this Agreement such amounts as are required to be deducted or withheld with respect to the making of such payment under any applicable tax Law.   To the extent any amounts are so deducted or withheld, such amounts shall be paid to the appropriate tax authorities and treated for all purposes of this Agreement as having been paid to the Person in respect of which such deduction or withholding was made. 

 

Article 3

 

Representations and Warranties

 

Section 3.1           Representations and Warranties of Each Party.  Except as otherwise specified below, each of the Parties represents and warrants to the other Parties, severally and not jointly and severally, solely with respect to itself, as follows:

 

(a)          Due Organization and Good Standing.  If such Party is not an individual, it is duly incorporated or organized, validly existing and in good standing (to the extent that its jurisdiction of organization recognizes the concept of good standing) under the laws of its jurisdiction of incorporation or organization.

 

(b)          Authority. Other than, in the case of Lionsgate, the Stockholder Approval (as defined below), it has all necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution and delivery of this Agreement by it has been duly and validly authorized by all requisite action, and no other proceedings on its part are necessary to authorize this Agreement.  This Agreement has been duly and validly executed and delivered by it and, assuming the due authorization, execution and delivery by the other parties to this Agreement, constitutes a legal, valid and binding obligation of it, enforceable against such Party in accordance with its terms, subject, as to enforceability, to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles. It has not granted nor is it a party to any proxy, voting trust or other agreement that is inconsistent with, conflicts with or violates any provision of this Agreement.

 

(c)          Governmental Approval.  The execution and delivery by it of this Agreement and the performance of its obligations hereunder requires no action by or in respect of, or filing with, any Governmental Authority, other than (i) compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time (the “HSR Act”) and any other applicable Competition Laws outside the United States, (ii) such clearances, consents, approvals, Orders, licenses, authorizations, registrations, declarations, permits, filings and notifications as may be required under applicable securities Laws and (iii) any actions or filings under Laws (other than Competition Laws) the absence of which would not reasonably be expected, individually or in the aggregate, to materially and adversely affect its ability to timely perform its obligations and consummate the transactions contemplated hereunder or thereunder.

 

(d)          Finders’ Fees.  Except for the fee payable by the Stockholders or their Affiliates to Kern Consulting, LLC, and except for the fees payable by Parent or its Affiliates to PJT

 

 

Partners LP, J.P.  Morgan Securities LLC, and Deutsche Bank Securities Inc., there are no investment banker, broker, finder or other intermediary retained by or authorized to act on behalf of it who might be entitled to any fee or commission upon consummation of the transactions contemplated by this Agreement from such Stockholder or any of its Affiliates (in the case of a Stockholder) or Purchaser, Lionsgate or any of their respective Affiliates (in the case of Purchaser and Lionsgate).

 

(e)          Non-Contravention. The execution, delivery and performance by it of this Agreement does not (i) violate any applicable Law, (ii) conflict with or constitute a default, breach or violation of (with or without notice or lapse of time, or both) the terms, conditions or provisions of, or result in the acceleration of (or the creation in any person of any right to cause the acceleration of) any performance of any obligation or any increase in any payment required by, or the termination, suspension, modification, impairment or forfeiture (or the creation in any person of any right to cause the termination, suspension, modification, impairment or forfeiture) of any contract, agreement or instrument to which it is subject, which would prevent it from performing any of its obligations hereunder or thereunder except where any such event would not have a material adverse effect on such Party’s ability to consummate the transactions contemplated hereby, or (iii) require any consent by or approval of or notice to any other person or entity (other than a Governmental Authority) except where the failure to obtain such consent or approval or make such notice would not have a material adverse effect on such Party’s ability to consummate the transactions contemplated hereby.

 

(f)          Investment Intent.  It is acquiring the Lionsgate Exchange Shares and the Starz Exchange Shares, as applicable, for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof.  It has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment and is capable of bearing the economic risks of such investment.  It further acknowledges that none of Stockholder or any of its Affiliates or representatives (in the case of Purchaser and Lionsgate) or Purchaser, Lionsgate or any of their respective Affiliates or representatives (in the case of a Stockholder) has rendered any investment advice or securities valuation advice to it, and that it is neither subscribing for nor acquiring any interest in reliance upon, or with the expectation of, any such advice.  In the case of a Stockholder, each Stockholder acknowledges that the Lionsgate Exchange Shares have not been registered under the Securities Act or any state or foreign securities Laws, and agrees that the Lionsgate Exchange Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act, except pursuant to an exemption from such registration available under the Securities Act, and without compliance with foreign securities Laws, in each case, to the extent applicable. In the case of Purchaser, Purchaser acknowledges that the Starz Exchange Shares have not been registered under the Securities Act or any state or foreign securities Laws, and agrees that the Starz Exchange Shares may not be sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed of without registration under the Securities Act, except pursuant to an exemption from such registration available under the Securities Act, and without compliance with foreign securities Laws, in each case, to the extent applicable.  Each Party represents that it is an “accredited investor” (as defined in Rule 501(a) of Regulation D under the Securities Act).

 

 

(g)          No Other Representations and Warranties.  It acknowledges and agrees that no other Party nor any other Party’s agents or representatives makes or has made (i) any express or implied representation or warranty on behalf of such other Party other than those expressly set forth in this Article 3 or (ii) any representations or warranties with respect to any financial projections, financial forecasts or forward-looking information provided to it.

 

Section 3.2           Additional Representations and Warranties of Stockholders.  Each Stockholder represents and warrants to Purchaser as follows:

 

(a)          Ownership; Title to Starz Series B Common Stock.  As of the date of this Agreement, such Stockholder is the sole and exclusive record (except to the extent such shares are held in the name of securities intermediaries in brokerage accounts) and beneficial owner of the Starz Series B Common Stock set forth opposite such Stockholder’s name on Schedule 1, in each case, free and clear of any Liens (other than transfer restrictions imposed by applicable securities laws), and no Stockholder “beneficially owns” (as defined in Rule 13d-3 of the Exchange Act) any Series B Common Stock of Starz other than as set forth on Schedule 1.  Upon the delivery by such Stockholder at the Closing of the Starz Exchange Shares in the manner provided in Section 2.2, Purchaser will hold good and valid title to such Starz Exchange Shares, free and clear of all Liens (other than transfer restrictions imposed by applicable securities laws).

 

(b)          No Interest in Lionsgate.  As of the date of this Agreement, except as set forth on Schedule 2, such Stockholder does not own, of record or beneficially, and at all times prior to the Closing will not so own, any shares of Lionsgate Common Stock or other share capital of, or other voting or equity interests in, Lionsgate.

 

Section 3.3           Additional Representations and Warranties of Lionsgate and Purchaser.  Lionsgate and Purchaser, jointly and severally, represent and warrant to each Stockholder as follows:

 

(a)          Purchaser. Lionsgate indirectly owns all of the outstanding shares of Purchaser.

 

(b)          Lionsgate Exchange Shares.  Subject to receipt of the applicable Stockholder Approval (as defined below), the Lionsgate Exchange Shares to be issued to each Stockholder at the Closing will be duly authorized and validly issued to the appropriate Stockholder in accordance with the terms of Lionsgate’s organizational documents as they are in effect as of the Closing Date.

 

(c)          Title. Upon the delivery to each Stockholder by Purchaser at the Closing of the Lionsgate Exchange Shares in the manner provided in Section 2.2, each Stockholder will hold good and valid title to such Lionsgate Exchange Shares, free and clear of all Liens (other than transfer restrictions imposed by applicable securities laws).

 

Article 4

 

Certain Covenants

 

Section 4.1           Confidentiality. Except as required by applicable Law, prior to and following the Closing, no Party shall make, or permit any of its agents, representatives or

 

 

advisors to make, any public announcement in respect of this Agreement or the transactions contemplated hereby without the prior written consent of each other Party.

 

Section 4.2           Reasonable Best Efforts.

 

(a)          Governmental and Third Party Approvals.  Each of the Parties shall use its reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Exchange and the other transactions contemplated hereby, including (i) preparing and filing as soon as practicable after the date hereof all forms, registrations and notices required to be filed to consummate the transactions contemplated by this Agreement and the taking of such actions as are reasonably necessary to obtain any requisite approvals, consents, Orders, exemptions or waivers by any Governmental Authority or other third party, including filings pursuant to the HSR Act or as required by any other Governmental Authority relating to antitrust, competition, trade, pre-merger notification or other regulatory matters, (ii) obtaining all necessary consents, approvals, authorizations or waivers from, and providing notices to, third parties, including providing any further information as may be required by such third party; provided, however, that no consent of any third party (excluding Government Authorities) shall be a condition to the closing of the transactions contemplated by this Agreement pursuant to Article 5, and (iii) the execution and delivery of any additional instruments required by applicable Law necessary to consummate the transactions contemplated hereby and to fully carry out the purposes of this Agreement.  Each of the Parties shall submit any notifications required pursuant to the HSR Act no later than 10 Business Days following the date of a Specified Termination Event.  Each of the Parties hereto shall furnish to the other Parties such necessary information and reasonable assistance as such other Party may reasonably request in connection with the foregoing.  In addition, each of the Parties hereto shall consult with the other with respect to, provide any necessary information with respect to and provide the other (or its counsel) copies of, all filings made by such Party with any third party or any other information supplied by such Party to a third party in connection with this Agreement and the transactions contemplated by this Agreement.

 

(b)          Notification. Each of the Parties shall keep the others reasonably apprised of the status of matters relating to the completion of the transactions contemplated hereby.  In that regard, each Party shall without limitation use its reasonable best efforts to (i) promptly notify the other of, and if in writing, furnish the other with copies of (or, in the case of material oral communications, advise the other orally of) any material communications from or with any Governmental Authority or other third party with respect to the Exchange or any of the other transactions contemplated by this Agreement, (ii) permit the other to review and discuss in advance, and consider in good faith the views of the other in connection with, any proposed written (or any material proposed oral) communication with any such Governmental Authority or other third party with respect to the Exchange or any of the other transactions contemplated by this Agreement, (iii) to the extent reasonably practical, not participate in any meeting or teleconference with (A) any Governmental Authority with respect to the Exchange or any of the other transactions contemplated by this Agreement and (B) any third party (excluding Governmental Authorities) with respect to any material consent, approval or waiver in connection with the Exchange or any of the other transactions contemplated by this Agreement,

 

 

in each case, unless it consults with the other in advance and, to the extent permitted by such Governmental Authority or other third party, as applicable, gives the other the opportunity to attend and participate thereat, and (iv) furnish the other with such necessary information and reasonable assistance as the other Parties may reasonably request in connection with its preparation of necessary filings or submissions of information to any such third party.

 

(c)          No Divestitures.  In furtherance of the covenants set forth in Section 4.2(a), if any objections are asserted with respect to the transactions contemplated hereby under any domestic or foreign antitrust or competition Law or if any Action is instituted (or threatened to be instituted) by the Federal Trade Commission, the Department of Justice, Competition Bureau (Canada) or any other applicable Governmental Authority challenging any of the transactions contemplated hereby or which would otherwise prohibit or materially impair or delay the consummation of the transactions contemplated hereby, the Parties shall take all reasonable actions necessary to resolve any such objections or Actions (or threatened Actions) so as to permit the transactions contemplated hereby to close as soon as reasonably practicable; provided, however, that nothing in this Agreement shall obligate any Party to become subject to, consent to or agree to, or otherwise take any action with respect to, any requirement, condition, understanding, agreement or order to sell, to hold separate or otherwise dispose of, or to conduct, restrict, operate, invest or otherwise change its respective assets or business (including that of their Affiliates) in any manner.

 

Section 4.3           Certain Litigation.  The Parties shall promptly advise each other of any Action or stockholder litigation commenced after the date hereof against such Party or any of its directors or trustees relating to this Agreement, the Exchange, and the transactions contemplated hereby and shall keep the other Parties reasonably informed regarding any such Action or stockholder litigation against any such Party or any of its directors or trustees.  The Stockholders shall give Lionsgate the opportunity to consult with Stockholders regarding the defense or settlement of any such Action or stockholder litigation and shall consider Lionsgate’s views with respect to such Action or stockholder litigation and shall not settle any such Action or stockholder litigation without the prior written consent of Lionsgate (such consent not to be unreasonably withheld, conditioned or delayed).

 

Section 4.4           Listing. Subject to receipt of the Stockholder Approval (as defined below), Lionsgate shall use reasonable best efforts to cause the Lionsgate Exchange Shares to be authorized for listing on the NYSE, subject to official notice of issuance, as of immediately after the Closing.

 

Section 4.5           Shareholder Approval.  If the Exchange Approval Meeting has not occurred prior to a Specified Termination Event, then, as promptly as practicable following the occurrence of a Specified Termination Event, to the extent that Lionsgate is required by applicable stock exchange rules to obtain stockholder approval of the issuance of the Lionsgate Exchange Shares, Lionsgate shall prepare and file with the SEC, an appropriate proxy statement (the “Proxy Statement”) seeking approval of the transactions contemplated by this Agreement (the “Stockholder Approval”).  Lionsgate shall use its reasonable best efforts to cause the Proxy Statement to comply with the rules and regulations promulgated by the SEC.  Each Stockholder shall furnish all information concerning it as may reasonably be requested by the other party in connection with such actions and the preparation of the Proxy Statement.  Lionsgate shall duly

 

 

give notice of, convene and hold a stockholders’ meeting (the “Stockholders’ Meeting”) as promptly as practicable following the date the Proxy Statement is filed, but no later than 120 days after the Specified Termination Event, for the purpose of seeking the Stockholder Approval (or adjournment of the Stockholders’ Meeting under certain circumstances) and shall, (a) recommend to its stockholders approval of the issuance of Lionsgate Exchange Shares and include in the Proxy Statement such recommendation and (b) use its reasonable best efforts to solicit such approval and obtain the Stockholder Approval.  Once the Stockholders’ Meeting has been called and noticed, Lionsgate may only adjourn or postpone the Stockholders’ Meeting (x) to the extent necessary to ensure that any necessary supplement or amendment to the Proxy Statement is provided to its stockholders in advance of a vote on the Stockholder Approval, or (y) if, as of the time for which the Stockholders’ Meeting is originally scheduled, there are insufficient shares of Lionsgate common stock represented (either in person or by proxy) to constitute a quorum necessary to conduct the business of such meeting and, in any such case (clause (x) or (y)), only for a minimum period of time reasonable under such circumstance.  Lionsgate shall ensure that the Stockholders’ Meeting is called, noticed, convened, held and conducted, and that all proxies solicited in connection with the Stockholders’ Meeting are solicited in compliance with applicable Law, the rules of NYSE and the organizational documents of Lionsgate.

 

Section 4.6           Termination of Irrevocable Proxies. Each applicable Stockholder and Lionsgate shall cause their Affiliates to, take all actions to revoke and terminate the irrevocable proxies, dated as of March 27, 2015, granted by LG Leopard Canada LP, a Canadian limited partnership and an indirect wholly owned subsidiary of Lionsgate, in favor of such Stockholder.

 

Article 5

 

Conditions Precedent

 

Section 5.1           Conditions to Obligations of Purchaser and Stockholder.  The obligations of Lionsgate, Purchaser and each Stockholder to consummate the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing of the following conditions (except to the extent waived in writing by Lionsgate, Purchaser and each Stockholder):

 

(a)          No Injunction, Etc.  Consummation of the transactions contemplated hereby shall not have been restrained, enjoined or otherwise prohibited or made illegal by any applicable Law, and no judgment, injunction, order or decree of any Governmental Authority having competent jurisdiction enjoining Lionsgate, Purchaser or any Stockholder from consummating the Closing shall have been entered.

 

(b)          Antitrust Waiting Periods.  Any waiting period applicable to consummation of the Exchange under the HSR Act or the Competition Laws of Germany shall have expired or been terminated.

 

(c)          Takeover Defenses.  Starz shall not have adopted any shareholder rights plan or other anti-takeover provisions which would materially and adversely affect any Stockholder, Lionsgate or Purchaser’s ability to perform its obligations and consummate the transactions

 

 

contemplated hereunder or to acquire any share capital of, or other voting or equity interests in, Starz.

 

(d)          State Takeover Statutes.  No “fair price,” “business combination,” “control share acquisition” or other state takeover statute or similar Law shall be applicable to this Agreement or any of the transactions contemplated hereby.

 

Section 5.2           Conditions to Obligations of Lionsgate and Purchaser.  The obligation of Lionsgate and Purchaser to consummate the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing of the following additional conditions (except to the extent waived in writing by Lionsgate and Purchaser):

 

(a)          Stockholder Representations and Warranties; Covenants.  The representations and warranties of each Stockholder contained in Section 3.2(a) shall be true and correct in all respects at and as of the Closing Date with the same effect as though made at and as of such time (except for representations that are as of a specific date which representations shall be true and correct in all respects as of such date).  The other representations and warranties of each Stockholder contained in Article 3 shall be true and correct in all material respects at and as of the Closing Date with the same effect as though made at and as of such time (except for representations that are as of a specific date which representations shall be true and correct in all material respects as of such date).  Each Stockholder shall have in all material respects duly performed and complied with all agreements, covenants and conditions required by this Agreement to be performed or complied with by Stockholder at or prior to the Closing.

 

(b)          Stockholder Certificate.  Each Stockholder shall have delivered to Purchaser a certificate, dated as of the Closing Date, signed by such Stockholder certifying that the conditions set forth in Section 5.2(a) above are satisfied.

 

(c)          Other Closing Deliverables.  Each Stockholder shall have delivered or shall have caused to be delivered to Purchaser the closing deliverables contemplated by Section 2.2(b)(i).

 

(d)          Stockholder Approval.  Either (i) the Exchange Approval Meeting has occurred or (ii) the End Date shall have occurred.

 

Section 5.3           Conditions to Obligations of Stockholders.  The obligation of each Stockholder to consummate the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing of the following additional conditions (except to the extent waived in writing by such Stockholder):

 

(a)          Lionsgate and Purchaser Representations and Warranties; Covenants. The representations and warranties of Lionsgate and Purchaser contained in Article 3 shall be true and correct in all material respects at and as of the Closing Date with the same effect as though made at and as of such time (except for representations that are as of a specific date which representations shall be true and correct in all material respects as of such date).  Lionsgate and Purchaser shall have in all material respects duly performed and complied with all agreements, covenants and conditions required by this Agreement to be performed or complied with by Lionsgate and Purchaser at or prior to the Closing.

 

 

(b)          Officer Certificate.  Purchaser shall have delivered to Stockholders a certificate, dated as of the Closing Date, signed by a duly authorized officer of Purchaser certifying that the conditions set forth in Section 5.3(a) are satisfied.

 

(c)          Other Closing Deliverables.  Purchaser shall have delivered to Stockholder the closing deliverables contemplated by Section 2.2(b)(ii).

 

Article 6

 

Termination

 

Section 6.1           Termination. This Agreement may be terminated at any time prior to the Closing:

 

(a)          by the written agreement of Purchaser and each Stockholder;

 

(b)          by Purchaser by written notice to the Stockholders, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of any Stockholder set forth in this Agreement shall have occurred that would cause the condition set forth in Section 5.2(a) not to be satisfied and such breach is uncurable or has not been cured within ten (10) days following written notice thereof to the Stockholders;

 

(c)          by any Stockholder by written notice to Purchaser, if a breach of any representation or warranty or failure to perform any covenant or agreement on the part of Purchaser or Lionsgate set forth in this Agreement shall have occurred that would cause the condition set forth in Section 5.3(a) not to be satisfied and such breach is uncurable or has not been cured within ten (10) days following written notice thereof to Purchaser;

 

(d)          by either Purchaser or any Stockholder if (A) there shall be any Law that makes consummation of the Closing illegal or otherwise prohibited or (B) any judgment, injunction, order or decree of any Governmental Authority having competent jurisdiction enjoining the Parties from consummating the Closing is entered and such judgment, injunction, order or decree shall have become final and nonappealable; or

 

(e)          by either Purchaser or any Stockholder if the Closing shall not have occurred by the date that is six months after the occurrence of a Specified Termination Event; provided, however, that if the Closing shall not have occurred by such date solely because the conditions set forth in Section 5.1(b) have not been satisfied by such date, either the Stockholders or Lionsgate may extend such date for a period not to exceed ninety (90) days by written notice to the other (such date, as may be so extended, the “Outside Date”); provided, further, that the right to terminate this Agreement under this Section 6.1(e) or extend the Outside Date shall not be available to any Party if the failure of the Closing to occur by the Outside Date shall have been caused by, or resulted from, the failure of such Party to perform or observe the covenants and agreements of such Party set forth in this Agreement or a breach of such Party’s representations and warranties set forth in this Agreement.

 

 

Section 6.2           Effect of Termination.

 

(a)          If this Agreement is terminated pursuant to Section 6.1, this Agreement shall become void and of no effect without liability of any Party (or any of its directors, officers, employees, stockholders, Affiliates, agents, successors or assigns) to the other Parties, provided that no such termination (nor any provision of this Agreement) shall relieve any Party from liability for any damages for fraud or for intentional breach of any covenant or agreement hereunder.  The provisions of this Section 6.2, Section 4.1, Article 7 and Article 8 shall survive any termination hereof pursuant to Section 6.1.

 

Article 7

 

Definitions

 

Section 7.1           Certain Terms.  The following terms have the meanings given to them below:

 

“Action” means any claim, action, suit, proceeding, arbitration, mediation or investigation by or before any Governmental Authority.

 

“Affiliate” means with respect to any Person, another Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person, where “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that, except as otherwise specified in this Agreement, none of Starz, Liberty Media Corporation, Liberty Interactive Corporation, Liberty TripAdvisor Holdings, Inc., Liberty Broadband Corporation, Liberty Global PLC, Discovery Communications, Inc.  or any of their respective Affiliates will be treated as Affiliates of any Stockholder or any Affiliate of any Stockholder for any purpose hereunder; and provided, further, that none of MHR Advisors LLC, MHR Institutional Advisors II LLC, MHR Institutional Advisors III LLC, MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR Institutional Partners II LP, MHR Institutional Partners IIA LP, MHR Institutional Partners III LP, MHRC LLC, MHRC II LLC, MHR Fund Management LLC, MHR Holdings LLC, Mark H.  Rachesky, M.D.  or any of their respective Affiliates will be treated as Affiliates of Lionsgate or Purchaser or any of their Subsidiaries or any of their respective Affiliates for any purpose hereunder. In the case of individual Stockholder, such Stockholder’s Affiliates shall include members of such Stockholder’s immediate family.

 

“Business Day” means any day that is not (i) a Saturday, (ii) a Sunday or (iii) any other day on which commercial banks are authorized or required by law to be closed in the City of New York.

 

“Competition Laws” means Laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or lessening of competition through merger or acquisition or restraint of trade.

 

 

“Exchange Approval Meeting” means the Parent Stockholders’ Meeting as defined in the Merger Agreement or, if the Parent Stockholders’ Meeting is not held, the Stockholders’ Meeting.

 

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, any court, tribunal or arbitrator and any self-regulatory organization.

 

“Laws” means any statute, law, ordinance, rule or regulation (domestic or foreign) issued, promulgated or entered into by or with any Governmental Authority.

 

“NYSE” means the New York Stock Exchange.

 

“Order” means any judgment, order, writ, award, preliminary or permanent injunction or decree of any Governmental Authority.

 

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

 

“SEC” means the Securities and Exchange Commission.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder.

 

“Third Party” means, with respect to Purchaser, any Person who is not an Affiliate of such Purchaser.

 

“Transfer” means to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any Starz Exchange Shares or Lionsgate Exchange Shares, as applicable, owned by a Person or any interest (including but not limited to a beneficial interest) in any Starz Exchange Shares or Lionsgate Exchange Shares, as applicable, owned by a Person.

 

Section 7.2           Construction. The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  The words “Party” or “Parties” shall refer to parties to this Agreement.  The headings of Articles and Sections in this Agreement and the captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections and Exhibits are to Articles, Sections and Exhibits of this Agreement unless otherwise specified. All Exhibits annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein.  Any capitalized term used in any Exhibit but not otherwise defined therein shall have the meaning given to such term in this Agreement.  Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,”

 

 

“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import.  Unless the context otherwise requires (i) “or” is disjunctive but not necessarily exclusive and (ii) the use in this Agreement of a pronoun in reference to a party hereto includes the masculine, feminine or neuter, as the context may require.  “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form.  References to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof.  References to any Person include the successors and permitted assigns of that Person.  References from or through any date mean, unless otherwise specified, from and including or through and including, respectively.  Any reference in this Agreement to Dollars or $ shall mean U.S.  dollars.  Any reference to “days” means calendar days unless Business Days are expressly specified.  If any action under this Agreement is required to be done or taken on a day that is not a Business Day, then such action shall be required to be done or taken not on such day but on the first succeeding Business Day thereafter. The language used in this Agreement is the language chosen by the parties to express their mutual intent, and no rule of strict construction shall be applied against any party.

 

Article 8

 

Miscellaneous

 

Section 8.1           Notices. All notices, requests, claims, demands and other communications under this Agreement shall be in writing and shall be deemed given (a) on the date of delivery if delivered personally or sent via facsimile or e-mail or (b) on the first Business Day following the date of dispatch if sent by a nationally recognized overnight courier (providing proof of delivery), in each case to the parties at the following addresses (or at such other address for a party as shall be specified by like notice); provided, that should any such delivery be made by facsimile or e-mail, the sender shall also send a copy of the information so delivered on or before the next Business Day by a nationally recognized overnight courier:

 

if to a Stockholder: at the address of such Stockholder set forth on Schedule 1

 

with a copy to (which shall not constitute notice):

 

Sherman & Howard L.L.C.
633 17^th Street, Suite 3000
Denver, CO 80202

Facsimile:	303 298-0940
Attention:	Steven D.  Miller

 

 

if to Lionsgate or Purchaser:

 

Lions Gate Entertainment Corp.
2700 Colorado Avenue
Santa Monica, California 90404

Facsimile:	310-496-1359
Attention:	Wayne Levin
Email:	wlevin@lionsgate.com

 

with a copy to (which shall not constitute notice):

 

Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019

Facsimile:	212 403-2000
Attention:	David E.  Shapiro
	Gordon S.  Moodie
Email:	DEShapiro@wlrk.com
	GSMoodie@wlrk.com

 

Section 8.2           Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart.  The exchange of copies of this Agreement and of signature pages by facsimile or e-mail shall constitute effective execution and delivery of this Agreement as to the parties and may be used in lieu of the original Agreement for all purposes.  Signatures of the parties transmitted by facsimile or e-mail shall be deemed to be their original signatures for all purposes.

 

Section 8.3           Amendment; Waiver.  This Agreement may be amended or supplemented at any time by additional written agreements signed by, or on behalf of each of the Parties and by Starz provided that, in the case of Starz, such amendment will be subject to approval by a majority of the independent directors of Starz (as independence is determined under the rules of The Nasdaq Stock Market).  This Agreement may not be amended, modified or supplemented in any manner, and waivers of or consents to departures from the provisions hereof may not be given, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of (i) each of the Parties and (ii) Starz provided that, in the case of Starz, such amendment will be subject to approval by a majority of the independent directors of Starz (as independence is determined under the rules of The Nasdaq Stock Market).  No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies provided herein shall be cumulative and not exclusive of any rights or remedies provided by Law.

 

 

Section 8.4           Expenses. Purchaser shall pay (i) up to an amount equal to $1,600,000.00, minus all amounts reimbursed pursuant to Section 8(j) of the Voting Agreement, for reasonable out-of-pocket costs and expenses incurred by the Stockholders, including the reasonable fees, charges and disbursements of counsel for the Stockholders in connection with the preparation, negotiation, execution and delivery of this Agreement and (ii) any required filing fee in connection with the filings described in Section 4.2(a)(i).  Except as otherwise provided herein, all costs, fees and expenses incurred in connection with this Agreement and the transactions contemplated hereby, whether or not consummated, shall be paid by the party incurring such cost or expense.

 

Section 8.5           Governing Law.  All disputes, claims or controversies arising out of or relating to this Agreement, or the negotiation, validity or performance of this Agreement, or the transactions contemplated hereby shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its rules of conflict of laws.

 

Section 8.6           Entire Agreement; Third Party Beneficiaries.  This Agreement (including the schedules and exhibits thereto and other documents and the instruments referred to herein) constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof and neither party is relying on any other oral or written representation, agreement or understanding and no party makes any express or implied representation or warranty in connection with the transactions contemplated by this Agreement other than as set forth in this Agreement.  This Agreement is not intended to confer upon any Person other than the parties hereto and Starz, any rights or remedies.  The Parties hereby acknowledge and agree that Starz is an express third party beneficiary of this Agreement, including, without limitation, Section 8.3, this Section 8.6, and the definition of Specified Termination Event, and the Parties shall not waive or amend such provisions without the express written consent of Starz, which may be withheld in Starz’s sole discretion (as determined by the act of a majority of the independent directors of the Company (as independence is determined under the rules of The Nasdaq Stock Market)).

 

Section 8.7           Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect, insofar as the foregoing can be accomplished without materially affecting the economic benefits anticipated by the parties to this Agreement. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible to the fullest extent permitted by applicable Law in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the greatest extent possible.

 

Section 8.8           Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of Law or otherwise by any of the Parties hereto without the prior written consent of the other Parties; provided that this Agreement and the obligations hereunder shall be binding upon any Person to whom record or beneficial ownership of any Starz Exchange Shares shall pass by operation of law or otherwise, including to the extent applicable, any Stockholder’s heirs, guardians, administrators or successors (and any such Person shall agree to be bound by this Agreement).

 

 

Any assignment in violation of the preceding sentence shall be void.  Subject to the preceding two sentences, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.

 

Section 8.9           Specific Performance.  The Parties agree that irreparable damage would occur to the Parties hereto, as well as Starz as an express third party beneficiary hereof, if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties, as well as Starz as an express third party beneficiary hereof, shall be entitled to an injunction or injunctions to prevent breaches of this Agreement or to enforce specifically the performance of the terms and provisions hereof in any court specified in Section 8.12, in addition to any other remedy to which they are entitled at law or in equity.

 

Section 8.10         Failure or Delay Not Waiver; Remedies Cumulative.  No failure or delay on the part of any Party hereto in the exercise of any right hereunder shall impair such right or be construed to be a waiver of, or acquiescence in, any breach of any representation, warranty or agreement herein, nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or of any other right.  All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

Section 8.11         Waiver of Jury Trial.  EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HERBY OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.

 

Section 8.12         Consent to Jurisdiction.  Each of the parties hereto (a) consents to submit itself to the personal jurisdiction of the Court of Chancery of the State of Delaware (or, if under applicable Law exclusive jurisdiction over such matter is vested in the federal courts, any court of the United States located in the State of Delaware) in the event any dispute arises out of this Agreement or any of the transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such court, and (c) agrees that it will not bring any action relating to this Agreement or any of the transactions contemplated by this Agreement in any court other than such court.

 

 

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first above written.

 

	LIONS GATE ENTERTAINMENT CORP.
	By:	/s/ Wayne Levin
		Name: Wayne Levin
		Title: General Counsel and Chief Strategic Officer
	ORION ARM ACQUISITION INC.
	By:	/s/  Wayne Levin
		Name: Wayne Levin
		Title: President, General Counsel and Secretary

 

[Signature Page to Stock Exchange Agreement]

 

 

	JOHN C. MALONE
		/s/ John C. Malone
		John C. Malone
	LESLIE MALONE
		/s/ Leslie Malone
		Leslie Malone

 

[Signature Page to Stock Exchange Agreement]

 

 

	THE TRACY L. NEAL TRUST A
	By:	/s/ David Thomas III
		Name: David Thomas III
		Title: Trustee
	THE EVAN D. MALONE TRUST A
	By:	/s/ David Thomas III
		Name:  David Thomas III
		Title:  Trustee

 

[Signature Page to Stock Exchange Agreement]

 

 

	ROBERT R. BENNETT
	/s/ Robert R. Bennett
	Robert R. Bennett
	DEBORAH J. BENNETT
	/s/ Deborah J. Bennett
	Deborah J. Bennett

 

	HILLTOP INVESTMENTS, LLC
	By:	/s/ Robert R. Bennett
		Name:  Robert R. Bennett
		Title:  Manager

 

[Signature Page to Stock Exchange Agreement]

 

 

Schedule 1

 

Stockholder		Starz Series B Common Stock
John C. Malone 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			5,832,020
Leslie Malone 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			230,564
The Tracy L. Neal Trust A Attn: David Thomas, III, Trustee 8400 East Prentice Avenue, Suite 1500 Greenwood Village, CO 80111			52,508
The Evan D. Malone Trust A Attn: David Thomas, III, Trustee 8400 East Prentice Avenue, Suite 1500 Greenwood Village, CO 80111			71,637
Robert R.  and Deborah J. Bennett 10900 Hilltop Road Parker, CO 80134			658,392
Hilltop Investments, LLC 10900 Hilltop Road Parker, CO 80134			19,623

 

 

Schedule 2

 

Stockholder		Lionsgate Common Stock
The Malone Family Land Preservation Foundation 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			250,000
The Malone Family Foundation 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			306,500
The John C. Malone June 2003 Charitable Remainder Unitrust 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			539,657
Malone Starz 2015 Charitable Remainder Unitrust 12300 Liberty Blvd., 2nd Floor Englewood, CO  80112			3,871,538