S-1/A
Table of Contents
S-1/Atrue000205295900-0000000Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 11).Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 12).Amounts primarily represent production related advances due to certain of its equity method investees. 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As filed with the Securities and Exchange Commission on July 2
4
, 2025
Registration No. 333-286041
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
Amendment No. 2
to
FORM 
S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
 
LIONSGATE STUDIOS CORP.*
(Exact Name of Registrant as Specified in its Charter)
 
 
 
British Columbia, Canada
  
7812
  
N/A
(State or Other Jurisdiction of
Incorporation or Organization)
  
(Primary Standard Industrial
Classification Code Number)
  
(I.R.S. Employer
Identification Number)
250 Howe Street, 20th Floor
Vancouver, British Columbia V6C 3R8
and
2700 Colorado Avenue
Santa Monica, California 90404
(877)
848-3866
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
 
Bruce Tobey
Executive Vice President and General Counsel
Lionsgate Studios Corp.
2700 Colorado Avenue
Santa Monica, California 90404
(877)
848-3866
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
 
 
Mark A. Stagliano
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
(212)
403-1000
  
Kimberly Burns
Dentons Canada LLP
250 Howe Street, 20th Floor
Vancouver, British Columbia
Canada, V6C 3R8
Approximate Date of Commencement of
Proposed
Sale of the Securities to the Public: As soon as practicable after this Registration Statement is declared effective.
 
 
If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the securities act of 1933, check the following box. ☒
If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule
12b-2
of the Exchange Act of 1934, as amended. (Check one):
 
Large Accelerated filer ☒
    
Accelerated filer ☐
   
Non-accelerated filer ☐
  
Smaller reporting company ☐
        
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
 
 
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment that specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.
 
 
 
*
The Registrant was formerly named Lionsgate Studios Holding Corp. In connection with the Transactions described in the prospectus included in this Registration Statement, Lionsgate Studios Holding Corp. changed its name to “Lionsgate Studios Corp.”
 
 
 

Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

 

PRELIMINARY AND SUBJECT TO COMPLETION, DATED JULY 24, 2025

 

LOGO

The 208,122 shares of common stock, without par value, of Lionsgate Studios Corp. (“New Lionsgate,” “we,” “us,” “our,” or the “Company”) (f/k/a Lionsgate Studios Holding Corp.), an entity formed under the laws of the Province of British Columbia and previously a wholly-owned subsidiary of Lions Gate Entertainment Corp. (“Lionsgate” or “LGEC”), covered by this prospectus include options (“stock options”) and stock appreciation rights (“SARs”) to acquire common shares of New Lionsgate that are held by former employees of LGEC and its subsidiaries (including New Lionsgate), who are not current employees or consultants of New Lionsgate or Starz Entertainment Corp. (“Starz”), and any such individuals’ donees, pledgees, permitted transferees, assignees, successors and others who come to hold any such equity award. The stock options and SARs are outstanding under the Lionsgate Studios Corp. 2025 Performance Incentive Plan (the “New Lionsgate 2025 Plan”) and were converted from stock options to purchase Class A voting shares and Class B non-voting shares of LGEC (“LGEC common shares”) and SARs to acquire LGEC common shares in connection with the separation of the businesses of Lionsgate Studios Holding Corp. (f/k/a Lionsgate Studios Corp.), a British Columbia corporation (“LG Studios”), which encompasses the motion picture and television studio operations (the “LG Studios Business”), from the other businesses of Lionsgate, including the STARZ-branded premium subscription platforms (the “Starz Business”). Any proceeds received by New Lionsgate from the exercise of stock options and SARs covered by the Plan (and issued pursuant to the offering described in this prospectus) will be used for general corporate purposes. In connection with the Transactions (as defined below), Lionsgate was renamed to Starz Entertainment Corp. References in this prospectus to “LGEC” or “Lionsgate” refer to the entity as it existed prior to the Transactions.

As a result of the Transactions, New Lionsgate new common shares trade on the New York Stock Exchange (“NYSE”) under the symbol “LION.” Prior to the completion of the Transactions, New Lionsgate was a wholly-owned subsidiary of LGEC. Trading of New Lionsgate new common shares under the symbol “LION” began on the first trading day following the completion of the Transactions. On July 23, 2025, the closing price of New Lionsgate new common shares as reported on NYSE was $6.56 per share.

In reviewing this prospectus, we urge you to read carefully the section entitled “Risk Factors” beginning on page 20 of this prospectus.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

Prospectus dated [   ], 2025

 

Table of Contents

TABLE OF CONTENTS

 

CERTAIN DEFINITIONS

      iv  

PROSPECTUS SUMMARY

      1  

Overview and History

      1  

Summary of Risk Factors

      1  

The Transactions

      5  

Treatment of Lionsgate Equity Awards

      10  

Conditions to the Transactions

      13  

The Plan of Arrangement

      13  

Summary Historical and Unaudited Pro Forma Financial Information

      15  

THE OFFERING

      19  

RISK FACTORS

      20  

Risks Related to New Lionsgate and the LG Studios Business

      20  

Risks Related to New Lionsgate’s Indebtedness

      34  

Risks Related to Tax Rules and Regulations

      37  

Risks Related to the Transactions

      39  

Risks Related to New Lionsgate New Common Shares

      44  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

      47  

THE TRANSACTIONS

      49  

Structure of the Transactions

      49  

Reasons for the Transactions

      50  

Treatment of Lionsgate Equity Awards

      52  

Results of the Transactions

      54  

Transferability of New Lionsgate New Common Shares

      54  

Markets for New Lionsgate New Common Shares

      55  

Conditions to the Transactions

      55  

Accounting Treatment

      56  

Listing of New Lionsgate New Common Shares

      56  

Regulatory Requirements Related to the Transactions

      56  

Post-Closing Governance and Management

      56  

DIVIDEND POLICY

      57  

NEW LIONSGATE CAPITALIZATION

      58  

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF NEW LIONSGATE

      59  

BUSINESS

      75  

Overview

      75  

Segment Information

      75  

Corporate Strategy

      76  

Specialized Skill and Knowledge

      84  

Competitive Conditions

      84  

Intellectual Property

      84  

Seasonality (Business Cycles)

      85  

Dependence on Key Customer Contracts

      85  

Changes to Contracts

      85  

Environmental Protection

      85  

Employees

      85  

Environmental and Social Responsibility and Human Capital Management

      85  

Legal Proceedings and Regulatory Actions

      85  

Interest of Informed Persons in Material Transactions

      86  

Insurance

      86  

Properties

      86  

 

i

Table of Contents

Material Contracts

      87  

Auditors

      87  

Environmental, Social and Governance

      87  

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

      90  

Critical Accounting Policies and Estimates

      95  

Results of Operations

      101  

Consolidated Results of Operations

      101  

Segment Results of Operations and Non-GAAP Measures

      107  

Motion Picture

      109  

Television Production

      111  

Liquidity and Capital Resources

      112  

Corporate Debt

      113  

Film Related Obligations

      114  

Currency and Interest Rate Risk Management

      120  

DESCRIPTION OF CAPITAL STOCK

      123  

General

      123  

Participation Rights

      123  

Preemptive Rights

      123  

Share Distributions

      124  

Voting Rights

      124  

Preferred Stock

      124  

Rights Agreement

     124  

Limitation on Liability of Directors and Indemnification of Directors and Officers

      126  

Anti-Takeover Provisions and Other Shareholder Protections

      126  

Listing

      129  

Sale of Unregistered Securities

      129  

Transfer Agent and Registrar

      129  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      130  

DIRECTORS AND EXECUTIVE OFFICERS

      133  

Management of New Lionsgate

      133  

Directors of New Lionsgate

      134  

Corporate Governance

      144  

EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

      148  

Compensation Discussion and Analysis

     148  

Named Executive Officers

      148  

Executive Summary

      149  

Shareholder Engagement

      154  

Key Features of Our Executive Compensation Program

      156  

Program Objectives

      157  

Compensation Practices

      157  

Process for Determining Executive Compensation

      158  

Compensation Components

      162  

Executive Compensation Information

      180  

Summary Compensation Table

      180  

Description of Employment Agreements

      181  

Grants of Plan-Based Awards

      184  

Option Exercises and Stock Vested

      189  

Non-Qualified Deferred Compensation

      189  

Estimated Severance and Change in Control Benefits

      195  

Pay Ratio Disclosure

      196  

Director Compensation

      198  

 

ii

Table of Contents

Director Onboarding and Education

      199  

Fiscal 2025 Director Compensation

     199  

Climate Risk Exposure and Awareness

     200  

Use of Non-GAAP Financial Measures

      201  

NEW LIONSGATE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

      206  

PLAN OF DISTRIBUTION

      207  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

      208  

Arrangement Agreement

      211  

Separation Agreement

      212  

Employee Matters Agreement

      216  

Tax Matters Agreement

      216  

Transition Services Agreement

      217  

Other Commercial Arrangements

      217  

DESCRIPTION OF MATERIAL INDEBTEDNESS AND FILM RELATED OBLIGATIONS

      219  

EXPERTS

      224  

LEGAL MATTERS

      224  

WHERE YOU CAN FIND MORE INFORMATION

      225  

ANNEX A — CONSOLIDATED FINANCIAL STATEMENTS

      F-1  

 

iii

Table of Contents

CERTAIN DEFINITIONS

Unless otherwise indicated or as the context otherwise requires, all references in this prospectus to:

“Arrangement” refers to an arrangement proposed by Lionsgate to the holders of the LGEC Class A shares and to the holders of the LGEC Class B shares, and by LG Studios to the shareholders of the LG Studios common shares, in each case under Part 9, Division 5 of the BC Act and completed on May 6, 2025 on the terms and subject to the conditions set forth in the Plan of Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of the Arrangement Agreement or the provisions of the Plan of Arrangement or made at the direction of the BC Court in the Interim Orders or Final Order with the prior written consent of Lionsgate and LG Studios, as applicable;

“Arrangement Agreement” refers to that certain Arrangement Agreement, dated January 29, 2025, as amended by an amending agreement, dated March 12, 2025, and may be further amended from time to time, by and among Lionsgate, New Lionsgate, LG Studios, and LG Sirius, which agreement and amending agreement are attached hereto as Exhibit 2.1 and Exhibit 2.2, respectively;

“BC Act” refers to the Business Corporations Act (British Columbia);

“BC Court” refers to the Supreme Court of British Columbia;

“Competition Act” refers to the Competition Act (Canada) and the regulations made thereunder;

“Computershare” refers to Computershare Investor Services Inc. with offices located at 510 Burrard Street, 3rd Floor, Vancouver, British Columbia V6C 3B9, Canada;

“Employee Matters Agreement” refers to the employee matters agreement, by and among, LG Studios, New Lionsgate, LG Sirius and Starz, dated as of May 6, 2025, which is attached hereto as Exhibit 10.4;

“Interim Orders” refers to the LGEC Interim Order with respect to the Arrangement for LGEC and the LG Studios Interim Order with respect to the Arrangement for LG Studios, in each case pursuant to the Arrangement Agreement;

“Investment Canada Act” refers to the Investment Canada Act (Canada) and the regulations made thereunder;

“LG Sirius” refers to LG Sirius Holdings ULC, a British Columbia unlimited liability corporation that was voluntarily dissolved on May 6, 2025, in accordance with Section 314 of the Business Corporations Act (British Columbia) and the regulations made thereunder;

“LG Sirius Owned Shares” refers to all of the LG Studios common shares owned by LG Sirius at the Arrangement Effective Time;

“LG Studios” refers to Lionsgate Studios Holding Corp. (f/k/a Lionsgate Studios Corp.), a British Columbia corporation;

“LG Studios Board” refers to the board of directors of LG Studios prior to the completion of the Transactions;

“LG Studios Business” refers to the business held by LG Studios prior to the completion of the Transactions;

“LG Studios common shares” refers to the common shares, without par value, of LG Studios;

 

iv

Table of Contents

“LG Studios Interim Order” refers to the interim order of the BC Court with respect to the Arrangement for LG Studios made pursuant to section 291 of the BC Act, providing for, among other things, the calling and holding of the LG Studios Special Meeting;

“LG Studios Reorganization Proposal” refers to a special resolution of the holders of LG Studios common shares adopting a statutory plan of arrangement pursuant to Section 288 of the BC Act among Lionsgate, the shareholders of Lionsgate, LG Studios, the shareholders of LG Studios, and New Lionsgate, pursuant to which, among other things, LG Studios shareholders received, for each LG Studios common share they held, a number of New Lionsgate new common shares equal to the LG Studios Reorganization Ratio, as more fully described in this prospectus;

“LGEC common shares” refers to LGEC Class A shares and LGEC Class B shares;

“LGEC Class A shares” refers to the Class A voting shares, without par value, of Lionsgate;

“LGEC Class B shares” refers to the Class B non-voting shares, without par value, of Lionsgate;

“LGEC Interim Articles” refers to the interim articles of LGEC;

“LGEC Interim Order” refers to the interim order of the BC Court with respect to the Arrangement for LGEC made pursuant to section 291 of the BC Act, providing for, among other things, the calling and holding of the Lionsgate Annual General and Special Meeting;

“Lionsgate” or “LGEC” refers to Lions Gate Entertainment Corp., a British Columbia corporation, as it existed prior to the completion of the Transactions and which, as part of the Transactions, changed its name to “Starz Entertainment Corp.”;

“Lionsgate Board” refers to the board of directors of Lionsgate prior to the completion of the Transactions;

“Lionsgate Transactions Proposal” refers to a special resolution of the holders of LGEC Class A shares and a special resolution of the holders of LGEC Class B shares, in each case adopting a statutory plan of arrangement pursuant to Section 288 of the BC Act among Lionsgate, the shareholders of Lionsgate, LG Studios, the shareholders of LG Studios, and New Lionsgate, pursuant to which, among other things, (a) New Lionsgate was separated from Lionsgate and holds the LG Studios Business, (b) Starz (formerly LGEC) holds the Starz Business, (c) LGEC shareholders received (i) in exchange for each LGEC Class A Share, one (1) New Lionsgate Class A share and one (1) New Lionsgate Class C preferred share, and in exchange for each New Lionsgate Class A share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class A Share, one and twelve one-hundredths (1.12) New Lionsgate new common shares and one and twelve one-hundredths (1.12) Starz common shares, (ii) in exchange for each LGEC Class B Share, one (1) New Lionsgate Class B share and one (1) New Lionsgate Class C preferred share, and in exchange for each New Lionsgate Class B share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class B share, one (1) New Lionsgate new common share and one (1) Starz common share and (d) LG Studios shareholders, other than New Lionsgate and dissenting shareholders, received, for each LG Studios common share they held, a number of New Lionsgate new common shares equal to the LG Studios Reorganization Ratio, all as more fully described in this prospectus;

“New Lionsgate” refers to Lionsgate Studios Corp. (f/k/a Lionsgate Studios Holding Corp.), a British Columbia corporation;

“New Lionsgate 2025 Plan” refers to the Lionsgate Studios Corp. 2025 Performance Incentive Plan, which is attached hereto as Exhibit 10.5;

“New Lionsgate Articles” refers to the articles of New Lionsgate which became effective upon completion of the Transactions, as amended from time to time, the form of which are attached hereto as Exhibit 3.2;

 

v

Table of Contents

“New Lionsgate Board” refers to the board of directors of New Lionsgate;

“New Lionsgate Class A shares” refers to the Class A shares, without par value, of New Lionsgate having substantially the same powers, preferences and rights as LGEC Class A shares;

“New Lionsgate Class B shares” refers to the Class B shares, without par value, of New Lionsgate having substantially the same powers, preferences and rights as LGEC Class B shares;

“New Lionsgate Class C preferred shares” refers to the Class C preferred shares, with one-half (1/2) of a vote per share, without par value, with a redemption price of $0.01 per share, of New Lionsgate;

“New Lionsgate Interim Articles” refers to the interim articles of New Lionsgate, which are attached hereto as Exhibit 3.1;

“New Lionsgate new common shares” refers to the common shares, without par value, of New Lionsgate, following the Initial Share Exchange;

“New Lionsgate preference shares” refers to the preference shares, without par value, of New Lionsgate, following the Initial Share Exchange;

“Plan of Arrangement” refers to the Plan of Arrangement in respect of the Arrangement, which is attached hereto as Exhibit 2.3, and became effective on May 6, 2025, subject to any amendments or variations to such plan made in accordance with the Arrangement Agreement and the Plan of Arrangement or made at the direction of the BC Court in the Interim Orders or Final Order with the prior written consent of Lionsgate and Studios, as applicable;

“Prior Plans” refers to the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan, the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan, the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan and the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan;

“Separation Agreement” refers to the separation agreement by and among New Lionsgate, LG Studios, LG Sirius and Lionsgate, dated as of May 6, 2025 and which was entered into prior to the Arrangement Effective Time and which is attached hereto as Exhibit 2.4;

“Starz” refers to LGEC following its name change to Starz Entertainment Corp. in connection with the Transactions;

“Starz 2025 Plan” refers to the Starz Entertainment Corp. 2025 Performance Incentive Plan;

“Starz Articles” refers to the articles of Starz which became effective upon completion of the Transactions, as may be amended from time to time;

“Starz Board” refers to the board of directors of Starz;

“Starz Business” refers to the businesses of Lionsgate, other than the LG Studios Business, as in existence prior to the Transactions;

“Starz common shares” refers to voting common shares, each without par value, of Starz (formerly LGEC);

“Tax Matters Agreement” refers to the tax matters agreement, by and between LGEC and LG Studios, dated as of May 9, 2024 and entered into in connection with the Business Combination, which is attached hereto as

 

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Exhibit 10.1 and to which New Lionsgate was made a party prior to the Arrangement Effective Time, pursuant to an amendment to the Tax Matters Agreement, which is attached hereto as Exhibit 10.2 (the “Tax Matters Agreement Amendment”); and

“Transition Services Agreement” refers to the transition services agreement, by and between New Lionsgate and Starz, dated as of May 6, 2025 and which was entered into prior to the Arrangement Effective Time and which is attached hereto as Exhibit 10.3.

 

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PROSPECTUS SUMMARY

This summary highlights selected information included in this prospectus and does not contain all of the information that may be important to you. To fully understand the Transactions you should read carefully this entire prospectus, including the annexes, as well as the documents incorporated by reference into this prospectus, and the other documents to which you are referred. Please see the section entitled “Where You Can Find More Information” elsewhere in this prospectus.

Except as otherwise indicated or unless the context otherwise requires, the information included in this prospectus about New Lionsgate assumes the completion of all of the transactions referred to in this prospectus in connection with the Transactions. Unless the context otherwise requires, references in this prospectus to “New Lionsgate” or the “Company” refer to Lionsgate Studios Corp. (f/k/a Lionsgate Studios Holding Corp.), a British Columbia corporation, which was previously a wholly-owned subsidiary of Lions Gate Entertainment Corp. and was formed to hold, upon consummation of the Transactions, the LG Studios Business, including a substantial portion of Lionsgate’s corporate general and administrative functions and costs. Unless the context otherwise requires, references in this prospectus to “LGEC” or “Lionsgate” and its historical business and operations refer to Lions Gate Entertainment Corp., a British Columbia corporation that was renamed Starz Entertainment Corp. in connection with the Transactions, as it existed prior to the Transactions. References in this prospectus to New Lionsgate’s historical business and operations, and to LG Studios, refer to the LG Studios Business of LGEC prior to the Transactions and that transferred to New Lionsgate in connection with the Transactions. References in this prospectus to the “Transactions” refer to the series of transactions that resulted in the pre-transaction shareholders of Lionsgate owning shares in two separate public companies as follows: (i) the Starz Business is held by Starz Entertainment Corp. (“Starz”), formerly LGEC and which was owned immediately following the Transactions by LGEC shareholders as of immediately before the Transactions and operated through the same wholly owned subsidiaries of LGEC prior to the Transactions, and (ii) the LG Studios Business is held by New Lionsgate, which was owned immediately following the Transactions by LGEC shareholders and LG Studios shareholders, each as of immediately before the Transactions.

Lionsgate Studios Corp.

Overview and History

Lionsgate Studios Corp. (f/k/a Lionsgate Studios Holding Corp.) is incorporated under the laws of the Province of British Columbia and was previously a direct, wholly owned subsidiary of Lionsgate (“New Lionsgate”). Following the completion of the Transactions, New Lionsgate holds the LG Studios Business.

New Lionsgate was incorporated under the BC Act using the name Lionsgate Studios Holding Corp. on January 10, 2025. New Lionsgate’s head office address is located at 250 Howe Street, 20th Floor, Vancouver, British Columbia V6C 3R8.

As a result of the Transactions, the New Lionsgate new common shares trade under the symbol “LION” on the New York Stock Exchange.

Summary of Risk Factors

An investment in New Lionsgate new common shares is subject to a number of risks. Set forth below are some, but not all, of these risks. Please read the information in the section entitled “Risk Factors,” beginning on page 20, for a more thorough description of these and other risks.

 

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Risks Related to New Lionsgate

 

  •  

New Lionsgate faces substantial capital requirements and financial risks.

 

  •  

The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain New Lionsgate’s resources, divert management’s attention, and affect New Lionsgate’s ability to attract and retain executive management and qualified board members.

 

  •  

New Lionsgate may incur significant write-offs if its projects do not perform well enough to recoup costs.

 

  •  

Changes in New Lionsgate’s business strategy, plans for growth or restructuring may increase its costs or otherwise affect its profitability.

 

  •  

New Lionsgate’s revenues and results of operations may fluctuate significantly.

 

  •  

New Lionsgate’s content licensing arrangements, primarily those relating to the distribution of films in foreign territories, may include minimum guarantee arrangements which, absent such arrangements, could adversely affect our results of operations.

 

  •  

New Lionsgate does not have long-term arrangements with many of its production or co-financing partners and, as a result, New Lionsgate may not have certain derivative rights related thereto.

 

  •  

The LG Studios Business relies on a few major retailers and distributors and the loss of any of those could reduce New Lionsgate’s revenues and operating results.

 

  •  

A significant portion of New Lionsgate’s library revenues is expected to come from a small number of titles.

 

  •  

Changes in consumer behavior, as well as evolving technologies (such as artificial intelligence) and distribution models, may negatively affect New Lionsgate’s business, financial condition or results of operations.

 

  •  

New Lionsgate faces substantial competition in all aspects of its business.

 

  •  

New Lionsgate will face economic, political, regulatory, and other risks from doing business internationally.

 

  •  

New Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures.

 

  •  

If Entertainment One Canada Ltd. loses its Canadian status, it could lose licenses, incentives and tax credits.

 

  •  

New Lionsgate’s success depends on attracting and retaining key personnel and artistic talent.

 

  •  

Global economic turmoil and regional economic conditions could adversely affect New Lionsgate’s business.

 

  •  

New Lionsgate could be adversely affected by labor disputes, strikes or other union job actions.

 

  •  

Business interruptions from circumstances or events out of New Lionsgate’s control could adversely affect New Lionsgate’s operations.

 

  •  

New Lionsgate’s business is dependent on the maintenance and protection of its intellectual property and pursuing and defending against intellectual property claims may have a material adverse effect on New Lionsgate’s business.

 

  •  

New Lionsgate’s business involves risks of claims for content of material, which could adversely affect New Lionsgate’s business, results of operations and financial condition.

 

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  •  

New Lionsgate may become subject to litigation and other legal proceedings, which could adversely impact its business, financial condition and results of operations.

 

  •  

Piracy of films and television programs could adversely affect New Lionsgate’s business over time.

 

  •  

New Lionsgate relies upon cloud computing services to operate certain aspects of its service and any disruption of or interference with its use of its cloud computing servicer could adversely impact its operations and its business.

 

  •  

New Lionsgate’s activities are subject to stringent and evolving obligations which may adversely impact its operations. New Lionsgate’s actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of its business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.

 

  •  

Service disruptions or failures, or security incidents impacting New Lionsgate or its third-party service providers’ information systems, data and networks may disrupt its businesses, damage its reputation, expose it to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on its results of operations including but not limited to loss of revenue or profit, loss of customers or sales and other adverse consequences.

 

  •  

Purported noteholders have instituted suit against Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.

 

  •  

Some provisions of the BC Act and the adoption of the rights plan may delay or prevent a change in control and may discourage bids for our common stock that shareholders consider favorable.

Risks Related to New Lionsgate’s Indebtedness

 

  •  

New Lionsgate has incurred significant indebtedness that could adversely affect its business and profitability and its ability to meet other obligations.

 

  •  

New Lionsgate may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

 

  •  

Despite its current level of indebtedness, New Lionsgate and its subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to New Lionsgate’s financial condition described above.

 

  •  

The terms of New Lionsgate’s corporate indebtedness restrict Lionsgate’s current and future operations, particularly New Lionsgate’s ability to respond to changes or to take certain actions.

 

  •  

Lionsgate’s variable rate indebtedness subjects it to interest rate risk, which could cause its debt service obligations to increase significantly.

Risks Related to Tax Rules and Regulations

 

  •  

The Internal Revenue Service may not agree that New Lionsgate should be treated as a non-U.S. corporation for U.S. federal tax purposes and may not agree that its U.S. affiliates should not be subject to certain adverse U.S. federal income tax rules.

 

  •  

Future changes to U.S. and non-U.S. tax laws could adversely affect New Lionsgate.

 

  •  

Changes in foreign, state and local tax incentives may increase the cost of original programming content to such an extent that they are no longer feasible.

 

  •  

New Lionsgate’s tax rate is uncertain and may vary from expectations.

 

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  •  

Legislative or other governmental action in the U.S. could adversely affect New Lionsgate’s business.

 

  •  

Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results, may adversely affect New Lionsgate’s effective tax rates.

Risks Related to the Transactions

 

  •  

New Lionsgate may be unable to achieve some or all of the benefits that it expects to achieve through the Transactions.

 

  •  

Challenges in the commercial and credit environment may adversely affect the expected benefits of the Transactions and future access to capital on favorable terms.

 

  •  

The historical financial information of the LG Studios Business and pro forma financial information of New Lionsgate included in this prospectus is not necessarily representative of the results that New Lionsgate would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.

 

  •  

Following the completion of the Transactions, New Lionsgate is a smaller, less diversified company than Lionsgate prior to the Transactions, with a different financial profile.

 

  •  

Substantial sales of New Lionsgate new common shares, or the perception that such sales might occur, could depress the market prices of New Lionsgate new common shares.

 

  •  

Starz may fail to perform under the agreements that were executed as part of the Transactions, and such failure to perform could have a material adverse effect on New Lionsgate’s operations.

 

  •  

New Lionsgate may be held liable to Starz if it fails to perform under its agreements, and the performance of such services may negatively affect New Lionsgate’s business and operations.

 

  •  

Certain of the transaction agreements between New Lionsgate and Starz may be on terms that differ from the terms New Lionsgate may have otherwise received from unaffiliated third parties.

 

  •  

The transfer to New Lionsgate of certain contracts, permits and other assets and rights may require or may have required the consents or approvals of, or provide other rights to, third parties and governmental authorities. If such consents or approvals are not or were not obtained, New Lionsgate may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance.

 

  •  

The Transactions may result in litigation and/or regulatory inquiries and investigations, which would harm New Lionsgate’s business, financial condition and operating results and could divert management attention.

 

  •  

The Transactions have involved significant time and expense, which could disrupt or adversely affect the business of New Lionsgate following the Transactions.

 

  •  

Actual or potential conflicts of interest may develop between the management and directors of Starz, on the one hand, and the management and directors of New Lionsgate, on the other hand.

 

  •  

New Lionsgate and its respective shareholders could suffer material adverse tax consequences as a result of the Transactions.

 

  •  

The executive officers and directors of Lionsgate and the executive officers and directors of LG Studios have interests in the Transactions that may be different from, or in addition to, the interests of Lionsgate’s shareholders and LG Studios’ shareholders.

 

  •  

The allocation of intellectual property rights between Starz and New Lionsgate as part of the Transactions could adversely affect New Lionsgate’s competitive position and/or ability to develop and commercialize certain content and services.

 

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Risks Related to New Lionsgate New Common Shares

 

  •  

New Lionsgate cannot be certain that an active trading market for its common shares will develop or be sustained and its share price may fluctuate significantly.

 

  •  

New Lionsgate does not expect to pay any cash dividends for the foreseeable future.

 

  •  

Your percentage ownership in New Lionsgate may be diluted in the future.

 

  •  

If securities or industry analysts do not publish research or publish misleading or unfavorable research about New Lionsgate’s business, New Lionsgate’s share price and/or trading volume, as applicable, could decline.

The Transactions

Structure of the Transactions

The Transactions resulted in the separation of the LG Studios Business from the Starz Business through a series of steps that resulted in the pre-transaction shareholders of LGEC owning shares in two separate public companies: (1) LGEC, which has been renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business, and (2) New Lionsgate, which has been renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the LG Studios Business.

The Transactions consisted of elements of a typical Canadian “spinoff” and were completed through a British Columbia Plan of Arrangement, which is a British Columbia statutory procedure providing for approval with respect to fairness and supervision with respect to procedure by the BC Court. The Plan of Arrangement was subject to approval by the shareholders of LGEC, the shareholders of LG Studios and the BC Court. The Transactions occurred on a taxable basis to the shareholders of LGEC under the Canadian Tax Act, with non-residents of Canada expected to have been exempt from Canadian income tax on any gains realized. Holders of LG Studios common shares who held such shares as capital property for purposes of the Canadian Tax Act would generally not realize either a capital gain or a capital loss on the exchange of LG Studios common shares for New Lionsgate new common shares.

With respect to dissent rights, under the Interim Orders, registered shareholders of Lionsgate as of the Record Date were granted the right to dissent in respect of the Lionsgate Transactions Proposal, and registered shareholders of LG Studios as of the Record Date were granted dissent rights in respect of the LG Studios Reorganization Proposal (collectively, the “dissent rights”), provided they strictly followed the procedures specified in Section 237 through Section 247 of the BC Act, as modified by the Plan of Arrangement, the applicable Interim Order, and any other order of the BC Court. None of the registered shareholders who were granted dissent rights exercised such rights.

In connection with the completion of the Transactions, among other things:

 

  •  

LGEC shareholders first received in exchange for each outstanding LGEC Class A share that they held:

 

  ○   

One (1) New Lionsgate Class A share; and

 

  ○   

One (1) New Lionsgate Class C preferred share;

 

  •  

LGEC shareholders first received, in exchange for each outstanding LGEC Class B share that they held:

 

  ○   

One (1) New Lionsgate Class B share; and

 

  ○   

One (1) New Lionsgate Class C preferred share.

 

  •  

LGEC changed its name to Starz Entertainment Corp. and created a new class of voting common shares, the Starz common shares.

 

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  •  

New Lionsgate created a new class of common shares without par value (the “New Lionsgate new common shares”) and New Lionsgate shareholders (formerly LGEC shareholders) received, in exchange for each:

 

  •  

New Lionsgate Class A share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class A share in the Initial Share Exchange, one and twelve one-hundredths (1.12) New Lionsgate new common shares and one and twelve one-hundredths (1.12) Starz common shares;

 

  •  

New Lionsgate Class B share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class B share in the Initial Share Exchange, one (1) New Lionsgate new common share and one (1) Starz common share.

 

  •  

Such exchange transactions by LGEC shareholders are collectively referred to as the “Second Share Exchange.”

 

  •  

As a result of the steps described above, each of New Lionsgate and Starz has a single class of “one share, one vote” common shares.

 

  •  

Following the Second Share Exchange, pursuant to the Reverse Stock Split, the Starz common shares were consolidated on a 15-to-1 basis, such that every fifteen (15) Starz common shares were consolidated into one (1) Starz common share.

 

  •  

LG Studios shareholders, other than New Lionsgate and dissenting shareholders, transferred to New Lionsgate each LG Studios common share, without par value (“LG Studios common shares”), they held and such shareholders received, in exchange for each such LG Studios common share so transferred, a number of New Lionsgate new common shares equal to the product of the LG Studios Consideration Shares divided by the LG Studios Flip Shares (the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equaled the aggregate number of LG Studios common shares obtained when the LG Studios Flip Percentage was multiplied by the quotient of (a) the aggregate number of New Lionsgate new common shares issued to New Lionsgate shareholders (formerly LGEC shareholders) in the Second Share Exchange divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equaled the quotient, expressed as a percentage, of (1) LG Studios Flip Shares divided by (2) the total number of LG Studios common shares issued and outstanding immediately prior to the Arrangement Effective Time. Such transactions by LG Studios shareholders are collectively referred to as the “LG Studios Flip.” The LG Studios Reorganization Ratio was determined to be 0.989632 and approximately 34,880,006 New Lionsgate new common shares were issued to LG Studios shareholders in connection with the Transactions. The LG Studios common shares were delisted from Nasdaq and deregistered under the Exchange Act.

 

  •  

New Lionsgate changed its name to “Lionsgate Studios Corp.”

 

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The following diagram depicts Lionsgate’s simplified organizational and ownership structures prior to completion of the Transactions.

 

 

LOGO

The following diagram depicts LG Studios’ simplified organizational and ownership structures prior to completion of the Transactions.

 

 

LOGO

 

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The following diagrams depict New Lionsgate’s and Starz’s simplified organizational and ownership structures immediately following the completion of the Transactions.

 

 

LOGO

Results of the Transactions

Following the Transactions, each of New Lionsgate and Starz became a separate, publicly traded company. Approximately 285,688,670 New Lionsgate new common shares were issued in the Transactions, which reflects any exercise of stock options (“stock options”) or share appreciation rights (“SARs”) relating to LGEC common shares prior to the Arrangement Effective Time.

In connection with the Transactions, New Lionsgate, Lionsgate and LG Studios entered into an Arrangement Agreement, an amendment to the Arrangement Agreement, and a Separation Agreement, as well as other related agreements that effected the Transactions and provide a framework for the relationship of the parties thereto after the Transactions, including a Transition Services Agreement, a Tax Matters Agreement Amendment, an Employee Matters Agreement, and agreements governing other commercial licensing arrangements. The Separation Agreement, together with other related transaction agreements, provides for, among other things, the allocation between New Lionsgate and Starz of the assets, employees, liabilities and obligations (including, among others, investments, property, intellectual property and employee benefits and tax-related assets and liabilities) of Lionsgate and its subsidiaries attributable to periods prior to, at and after New Lionsgate’s separation from Lionsgate and governs the relationship between New Lionsgate and Starz subsequent to the completion of the Transactions. For additional information regarding the Separation Agreement and other transaction agreements, see the sections entitled “Risk Factors—Risks Related to the Transactions” and “Certain Relationships and Related Party Transactions.”

Reasons for the Transactions

The Lionsgate Board and the LG Studios Board believed that the separation of the LG Studios Business and the Starz Business into two independent, publicly traded companies was in the best interests of Lionsgate and its shareholders for a number of reasons, including:

 

  •  

Enhanced Focus on Strategic, Operational Drivers to Accelerate Revenue and Profit Growth. The Transactions allow New Lionsgate and Starz to more effectively pursue their own distinct operating

 

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priorities and strategies, and enable the management teams of each of the two companies to focus on strengthening their core businesses and pursue distinct and targeted opportunities to accelerate revenue and profitability.

 

  •  

The Transactions allow New Lionsgate to better highlight opportunities and value in its diversified theatrical wide release and multi-platform motion picture business and its television production and distribution business, and continue to drive growth of its film and television library.

 

  •  

The Transactions allow Starz to focus on areas where it can scale its business cost-effectively, to take advantage of bundling and packaging opportunities and to efficiently grow its operations on a standalone basis.

 

  •  

More Efficient Resource and Capital Allocation to Pursue Each Company’s Strategic Goals. The Transactions allow each of New Lionsgate and Starz to allocate its financial resources to meet the unique needs of its own business, enabling each company to sharpen its focus on distinct strategic priorities. The Transactions also allow each business to more effectively pursue its own distinct capital structures and capital allocation strategy.

 

  •  

The Transactions allow New Lionsgate to re-invest positive free cash flow exclusively into the continued growth of its content business.

 

  •  

The Transactions allow Starz to focus its cash flow on subscriber growth and retention, increased profitability and content development, production and acquisition.

 

  •  

Targeted Investment Opportunity. The Transactions allow each of New Lionsgate and Starz to more effectively articulate its own clear investment thesis for its business as a pure-play content studio and platform, respectively, operating in a world of vertically integrated conglomerates, in order to attract a long-term investor base suited to its business, and facilitate each company’s access to capital by providing investors with two distinct and targeted investment opportunities.

 

  •  

The Transactions allow New Lionsgate to become one of the only pure-play publicly traded content studios.

 

  •  

The Transactions allow Starz to become one of the only pure-play premium subscriber platforms, with a focused content strategy targeting two valuable and scalable core demographics, offering premium original programming that complements other streaming offerings.

 

  •  

Creation of Independent Equity Currencies. The Transactions create fully independent equity securities, including affording the Starz Business direct access to the capital markets, enabling each of New Lionsgate and Starz to use its capital stock to consummate future transactions. As a result, New Lionsgate and Starz have more flexibility to capitalize on their unique strategic opportunities.

 

  •  

Employee Recruitment, Incentives and Retention. The Transactions allow each of New Lionsgate and Starz to more effectively attract, incentivize and retain employees through the use of stock-based compensation that more closely reflects and aligns management and employee incentives with specific growth objectives, financial goals and business performance. In addition, the Transactions allow incentive structures and targets at each company to be better aligned with each underlying business.

 

  •  

Stronger Corporate Governance. The Lionsgate Board also believed that a one (1) share, one (1) vote capital structure at Starz and New Lionsgate was in the best interests of Starz, New Lionsgate and their respective shareholders as it strengthens corporate governance by aligning the voting power and economic interests of all shareholders, streamlines Starz’s and New Lionsgate’s capital structures, reducing complexity and potentially making Starz and New Lionsgate more attractive to retail and institutional investors, who may not prefer or may be unable to invest in dual-class structures, and may appeal to a broader range of investors by providing a more straightforward investment opportunity, enhancing liquidity and improving long-term shareholder value.

 

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The Lionsgate Board and the LG Studios Board also considered a number of potentially negative factors in evaluating the Transactions, including:

 

  •  

Risk of Failure to Achieve Anticipated Benefits of the Transactions. New Lionsgate and Starz may not achieve the anticipated benefits of the Transactions on the expected timeframe or at all for a variety of reasons, including, among others, fluctuating market conditions and the demand of the Transactions on each of their respective management’s time, effort and resources.

 

  •  

Loss of Scale and Increased Administrative Costs. The LG Studios Business and the Starz Business benefited from certain economies of scale operating within the broader corporate organization that are no longer available after the Transactions. As standalone companies, New Lionsgate and Starz have reduced purchasing power with respect to vendor relationships. In addition, the transition to two standalone public companies has and will continue to result in incremental accounting, tax, legal, information system, recruiting and executive hiring costs as each of New Lionsgate and Starz require corporate general and administrative functions.

 

  •  

Working Capital Requirements and Cost of Capital. Generally, the working capital requirements and capital for general corporate purposes for each of the Starz Business and the LG Studios Business, including capital expenditures and acquisitions, were historically satisfied as part of the corporate-wide cash management policies of Lionsgate, including the other business. Following the completion of the Transactions, New Lionsgate’s and/or Starz’s results of operations and cash flows may be more volatile, and each of them may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, through strategic relationships or through other arrangements, which may or may not be available on terms acceptable to New Lionsgate or Starz, as applicable, and may be more costly.

In determining to pursue the Transactions, the Lionsgate Board and the LG Studios Board each concluded the potential benefits of the Transactions outweighed the foregoing factors. See “Risk Factors—Risks Related to the Transactions” included elsewhere in this prospectus.

Treatment of Lionsgate Equity Awards

Background. Lionsgate previously maintained four equity compensation plans: the Lionsgate 2023 Plan, the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (the “Lionsgate 2019 Plan”), the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan (the “Lionsgate 2017 Plan”) and the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan (together with the Lionsgate 2023 Plan, the Lionsgate 2019 Plan and the Lionsgate 2017 Plan, the “Prior Plans”). New Lionsgate assumed the Lionsgate 2023 Plan and amended and restated the Lionsgate 2023 Plan as the New Lionsgate 2025 Plan as approved prior to the Transactions by the New Lionsgate Board, by the holders of LGEC Class A shares, and by LGEC, as the sole shareholder of New Lionsgate, which became effective as of the date of the completion of the Transactions. Awards outstanding under the equity plans of Lionsgate including awards outstanding under the Prior Plans immediately prior to the completion of the Transactions held by a Lionsgate employee who became a New Lionsgate employee after the Transactions (a “New Lionsgate Employee”) or by a former employee of Lionsgate (regardless of the division in which such former employee served), were converted into awards of New Lionsgate under the New Lionsgate 2025 Plan, which is attached hereto as Exhibit 10.5. Starz adopted the Starz 2025 Plan as approved prior to the Transactions by the Lionsgate Board and the holders of LGEC Class A shares, which became effective as of the date of the Transactions. Awards outstanding under the equity plans of Lionsgate immediately prior to the Transactions held by a Lionsgate employee who became an employee of Starz (a “Starz Employee”), were converted into awards of Starz immediately after the Transactions and assumed under the Starz 2025 Plan. Each Lionsgate equity award that was outstanding immediately prior to the Transactions was adjusted to reflect the impact of the Transactions, as described below.

 

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Stock Options

Stock Options Held by Starz Employees. Each award of Lionsgate stock options held by a Starz Employee was converted into an award of stock options with respect to the Starz common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Stock Options Held by New Lionsgate Employees and Former Employees. Each award of Lionsgate stock options held by a New Lionsgate Employee or by a former employee of Lionsgate was converted into an award of stock options with respect to New Lionsgate new common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Stock Appreciation Rights

Stock Appreciation Rights Held by Starz Employees. Each award of Lionsgate stock appreciation rights held by a Starz Employee was converted into an award of stock appreciation rights with respect to Starz common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Stock Appreciation Rights Held by New Lionsgate Employees and Former Employees. Each award of Lionsgate stock appreciation rights held by a New Lionsgate Employee or by a former employee was converted into an award of stock appreciation rights with respect to the New Lionsgate new common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Time-Vesting Restricted Share Units

Time-Vesting Restricted Share Units Held by Starz Employees and Starz Directors. Each award of Lionsgate time-vesting restricted share units held by a Starz Employee or a non-employee director of Lionsgate who became a non-employee director of Starz but not a non-employee director of New Lionsgate immediately following the Transactions was converted into an award of time-vesting restricted share units with respect to Starz common shares. The number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

 

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Time-Vesting Restricted Share Units Held by New Lionsgate Employees, New Lionsgate Directors and Former Lionsgate Employees. Each award of Lionsgate time-vesting restricted share units held by a New Lionsgate Employee, by a non-employee director of Lionsgate who became a non-employee director of New Lionsgate but not a non-employee director of Starz immediately following the Transactions or by a former employee of Lionsgate was converted into an award of time-vesting restricted share units with respect to the New Lionsgate new common shares. The number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Time-Vesting Restricted Share Units Held by Dual Directors. Each award of Lionsgate time-vesting restricted share units held by a non-employee director of Lionsgate who became a non-employee director on both the Starz Board and the New Lionsgate Board immediately following the Transactions (a “Dual Director”) was converted into an award of time-vesting restricted share units with respect to Starz common shares and an award of time-vesting restricted share units with respect to New Lionsgate new common shares. The number of shares subject to such Starz award and the number of shares subject to such New Lionsgate award was the number of Starz common shares and the number of New Lionsgate new common shares, respectively, that would have been received pursuant to the Plan of Arrangement had such Dual Director held the number of LGEC common shares subject to such Lionsgate time-vesting restricted share units immediately prior to the Arrangement Effective Time.

Performance-Based Restricted Share Units

Performance-Vesting Restricted Share Units Held by Starz Employees. Each award of Lionsgate performance-based restricted share units held by a Starz Employee was converted into an award of restricted share units with respect to Starz common shares, provided that the number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions, subject to any modifications to applicable performance-based vesting conditions determined by the Lionsgate Compensation Committee prior to the Arrangement Effective Time, or by the Starz Compensation Committee after the Arrangement Effective Time, in order to reflect the impact of the Transactions.

Performance-Vesting Restricted Share Units Held by New Lionsgate Employees. Each award of Lionsgate performance-based restricted share units held by a New Lionsgate Employee was converted into an award of restricted share units with respect to New Lionsgate new common shares, provided that the number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions, subject to any modifications to applicable performance-based vesting conditions determined by the Lionsgate Compensation Committee prior to the Arrangement Effective Time, or by the New Lionsgate Compensation Committee after the Arrangement Effective Time, in order to reflect the impact of the Transactions.

 

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Conditions to the Transactions

The Transactions were completed on May 6, 2025, beginning at the Arrangement Effective Time in accordance with the Plan of Arrangement, and the conditions set forth in the Separation Agreement have been satisfied (or waived by Lionsgate in its sole and absolute discretion), including, among others:

 

  •  

the Transactions having been duly approved by the Lionsgate Board;

 

  •  

the Transactions having been duly approved by the LG Studios Board;

 

  •  

the approval by Lionsgate’s shareholders of the Lionsgate Transactions Proposal at the Lionsgate Annual General and Special Meeting;

 

  •  

the approval by LG Studios’ shareholders of the LG Studios Reorganization Proposal at the LG Studios Special Meeting;

 

  •  

the SEC declaring effective Lionsgate’s and New Liongate’s registration statement on Form S-4 and such registration statement not being the subject of any order suspending the effectiveness of the registration statement; and there being no proceedings for such purposes having been instituted or threatened by the SEC;

 

  •  

the internal reorganization having been completed in accordance with the Separation Agreement;

 

  •  

the receipt by Lionsgate Entertainment Inc., a subsidiary of New Lionsgate, of an opinion from Lionsgate Entertainment Inc.’s outside tax advisor to the effect that the requirements for tax-free treatment under Section 355 of the Internal Revenue Code should be satisfied;

 

  •  

an independent appraisal firm acceptable to the Lionsgate Board having delivered an opinion to the Lionsgate Board confirming the solvency and financial viability of Starz after giving effect to the Transactions, in a form and substance acceptable to the Lionsgate Board in its sole and absolute discretion;

 

  •  

all actions necessary or appropriate under applicable Canadian and U.S. federal, state, provincial or other securities or blue sky laws and the rule and regulations thereunder having been taken or made and, where applicable, having become effective or been accepted;

 

  •  

the execution of certain agreements contemplated by the Separation Agreement;

 

  •  

no order, injunction or decree issued by any government authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions being in effect;

 

  •  

the New Lionsgate new common shares that were issued having been accepted for listing on the NYSE, subject to official notice of issuance; and

 

  •  

no other event or development existing or having occurred that, in the judgment of the Lionsgate Board or the LG Studios Board, having made it inadvisable to effect the Transactions.

The Plan of Arrangement

The Arrangement was approved and implemented at the Arrangement Effective Time and the following transactions were effected:

 

  (a)

each LGEC common share outstanding immediately prior to the Arrangement Effective Time held by an LGEC shareholder in respect of which dissent rights have been validly exercised was transferred free and clear of all liens by the shareholder to New Lionsgate.

 

  (b)

New Lionsgate amended its notice of articles to remove all of the existing directors and to name the following individuals as directors of New Lionsgate: 

 

  a.

Michael Burns;

 

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  b.

Mignon Clyburn;

 

  c.

Gordon Crawford;

 

  d.

Jon Feltheimer;

 

  e.

Emily Fine;

 

  f.

Michael T Fries;

 

  g.

John D. Harkey, Jr.;

 

  h.

Susan McCaw;

 

  i.

Yvette Ostolaza;

 

  j.

Mark H. Rachesky, M.D.;

 

  k.

Hardwick Simmons; and

 

  l.

Harry E. Sloan.

 

  (c)

each outstanding LGEC Class A share was transferred to New Lionsgate in exchange for one New Lionsgate Class A share and one New Lionsgate Class C preferred share, and each outstanding LGEC Class B share was transferred to New Lionsgate in exchange for one New Lionsgate Class B share and one New Lionsgate Class C preferred share. Such exchange transactions by LGEC shareholders are collectively referred to as the “Initial Share Exchange.”

 

  (d)

LG Sirius was voluntarily dissolved under Section 314 of the BC Act. LG Sirius transferred and assigned all of its property to LGEC, and LGEC assumed all of the liabilities and obligations of LG Sirius.

 

  (e)

LGEC changed its name to Starz Entertainment Corp. and created the Starz common shares. LGEC’s notice of articles was amended to reflect the change of name and the alterations to LGEC’s capital, and LGEC adopted the LGEC Interim Articles.

 

  (f)

all of the outstanding LGEC common shares were transferred by New Lionsgate to LGEC in exchange for an initial number of Starz common shares and all of the LG Sirius Owned Shares. Approximately 250,808,664 initial Starz common shares were issued (prior to the Reverse Stock Split).

 

  (g)

the authorized capital of LGEC was altered to eliminate LGEC Class A shares and LGEC Class B shares and LGEC’s notice of articles was amended to reflect the alterations to LGEC’s capital, and LGEC adopted the Starz Articles.

 

  (h)

New Lionsgate created the New Lionsgate new common shares and New Lionsgate’s notice of articles was amended to reflect the alterations to New Lionsgate’s capital.

 

  (i)

New Lionsgate shareholders (formerly LGEC shareholders) received, in exchange for each New Lionsgate Class A share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class A share in the Initial Share Exchange, one and twelve one-hundredths (1.12) New Lionsgate new common shares and one and twelve one-hundredths (1.12) Starz common shares; and in exchange for each New Lionsgate Class B share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class B share in the Initial Share Exchange, one (1) New Lionsgate new common share and one (1) Starz common share.

 

  (j)

the authorized capital of New Lionsgate was altered to eliminate the New Lionsgate Class A shares, the New Lionsgate Class B shares and the New Lionsgate Class C preferred shares, and New Lionsgate’s notice of articles was amended to reflect the alterations to New Lionsgate’s capital, and New Lionsgate adopted the New Lionsgate Interim Articles.

 

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  (k)

pursuant to the Reverse Stock Split, the Starz common shares were consolidated on a 15-to-1 basis, such that every fifteen (15) Starz common shares were consolidated into one (1) Starz common share.

 

  (l)

each LG Studios common share outstanding immediately prior to the Arrangement Effective Time held by a LG Studios shareholder in respect of which dissent rights were validly exercised was transferred to New Lionsgate.

 

  (m)

LG Studios shareholders, other than New Lionsgate and dissenting shareholders, transferred to New Lionsgate each LG Studios common share, without par value (“LG Studios common shares”), they held and such shareholders received, in exchange for each such LG Studios common share so transferred, a number of New Lionsgate new common shares equal to the product of the LG Studios Consideration Shares divided by the LG Studios Flip Shares (the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equaled the aggregate number of LG Studios common shares obtained when the LG Studios Flip Percentage is multiplied by the quotient of (a) the aggregate number of New Lionsgate new common shares issued to New Lionsgate shareholders (formerly LGEC shareholders) in the Second Share Exchange divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equaled the quotient, expressed as a percentage, of (1) the LG Studios Flip Shares divided by (2) the total number of LG Studios common shares issued and outstanding immediately prior to the Arrangement Effective Time. Such transactions by LG Studios shareholders are collectively referred to as the “LG Studios Flip.” The LG Studios Reorganization Ratio was determined to be 0.989632 and approximately 34,880,006 New Lionsgate new common shares were issued to LG Studios shareholders in connection with the Transactions.

 

  (n)

LG Studios changed its name to “Lionsgate Studios Holding Corp.” and the sole director of LG Studios became Bruce Tobey. New Lionsgate changed its name to “Lionsgate Studios Corp.”, New Lionsgate adopted the New Lionsgate Articles, and the directors of New Lionsgate became Gordon Crawford, Jon Feltheimer, Emily Fine, Michael T. Fries, John D. Harkey, Jr., Susan McCaw, Yvette Ostolaza, Mark H. Rachesky, M.D., Richard Rosenblatt and Harry E. Sloan. The directors of LGEC (now named Starz) became Michael Burns, Mignon Clyburn, Emily Fine, Lisa Gersh, Marc Graboff, Jeffrey A. Hirsch, Bruce Mann, Mark H. Rachesky, M.D., Joshua W. Sapan, Hardwick Simmons and Harry E. Sloan.

Summary Historical and Unaudited Pro Forma Financial Information

As more fully described elsewhere in this prospectus, New Lionsgate has retained certain existing indebtedness of Lionsgate and incurred certain additional indebtedness in connection with the Transactions, the estimated impacts of which are summarized below and reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate.

The New Lionsgate indebtedness includes:

 

  •  

IP credit facilities of $1.3 billion in aggregate principal amount (prior to debt issuance costs), which were entered into in anticipation of the Transactions and remained outstanding with New Lionsgate following the completion of the Transactions.

 

  •  

Exchange Notes of $389.9 million aggregate principal amount, which became obligations of New Lionsgate upon consummation of the Transactions.

 

  •  

A new revolving credit facility providing for $800.0 million of commitments.

The following tables set forth summary historical consolidated financial data of Lionsgate Studios Corp. and unaudited pro forma financial information of New Lionsgate. This information is presented for illustrative purposes only to reflect the current anticipated changes and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the dates

 

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indicated, nor is it indicative of future operating results. The assumptions used and pro forma adjustments derived from such assumptions are based on currently available information and we believe such assumptions are reasonable under the circumstances.

This information is derived from and should be read in conjunction with the information under “Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate” and accompanying notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the audited consolidated financial statements of LG Studios and Lionsgate, both of which are included in this prospectus.

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS OF NEW LIONSGATE AND CONSOLIDATED STATEMENTS OF OPERATIONS DATA OF LIONSGATE STUDIOS CORP.

 

     Pro Forma New
Lionsgate		     Historical Legacy Lionsgate Studios
Corp.		  
     Year Ended
March 31,		     Year Ended March 31,  
     2025     2025     2024     2023  

Revenues

    $ 3,204.4     $ 3,195.5     $ 2,986.4     $ 3,083.8  

Expenses:

         

Direct operating

      2,216.7       2,210.0       1,886.7       2,207.9  

Distribution and marketing

      398.7       395.9       462.3       304.2  

General and administration

      347.5       344.6       349.2       387.0  

Depreciation and amortization

      17.8       17.8       15.6       17.9  

Restructuring and other

      81.5       102.6       132.9       27.2  

Goodwill impairment

      —        —        —        —   
  

 

 

    

 

 

    

 

 

    

 

 

  

Total expenses

      3,062.2       3,070.9       2,846.7       2,944.2  
  

 

 

    

 

 

    

 

 

    

 

 

  

Operating income

      142.2       124.6       139.7       139.6  

Interest expense

      (259.7 )      (242.5 )      (222.5 )      (162.6 ) 

Interest and other income

      14.9       14.8       19.2       6.4  

Other expense

      (11.9 )      (11.8 )      (20.0 )      (21.2 ) 

Gain (loss) on extinguishment of debt

      (15.2 )      (1.8 )      (1.3 )      (1.3 ) 

Gain (loss) on investments

      —        —        3.5       44.0  

Equity interests income

      4.3       4.3       8.7       0.5  
  

 

 

    

 

 

    

 

 

    

 

 

  

Income (loss) from continuing operations before income taxes

      (125.4 )      (112.4 )      (72.7 )      5.4  

Income tax benefit (provision)

      (14.5 )      (14.5 )      (34.2 )      (14.3 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Loss from continuing operations

      (139.9 )      (126.9 )      (106.9 )      (8.9 ) 

Less: Net loss (income) attributable to noncontrolling interests

      (1.6 )      (1.6 )      13.4       8.6  
  

 

 

    

 

 

    

 

 

    

 

 

  

Net loss from continuing operations attributable to controlling interest

    $ (141.5 )    $ (128.5 )    $ (93.5 )    $ (0.3 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Per share information attributable to shareholders:

         

Basic net loss from continuing operations per common share

    $ (0.51 )    $ (0.43 )    $ (0.42 )    $ (0.00 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Diluted net loss from continuing operations per common share

    $ (0.51 )    $ (0.43 )    $ (0.42 )    $ (0.00 ) 
  

 

 

    

 

 

    

 

 

    

 

 

  

Weighted average number of common shares outstanding:

         

Basic

      279.8       284.6       253.4       253.4  

Diluted

      279.8       284.6       253.4       253.4  

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AND CONSOLIDATED BALANCE SHEET DATA

 

     Pro Forma New
Lionsgate		     Historical Legacy
Lionsgate Studios Corp.		  
     As of March 31,     As of March 31,  
     2025     2025     2024  
     (Amounts in millions)  

Balance Sheet Data:

       

Cash and cash equivalents

    $ 179.4     $ 205.7     $ 277.0  

Investment in films and television programs and program rights, net

      1,994.1       1,992.6       1,929.0  

Total assets

      5,098.5       5,115.2       5,103.0  

Corporate debt

      1,653.2       1,673.0       1,783.3  

Film related obligations

      1,983.1       1,983.1       1,938.0  

Total liabilities

      6,019.3       6,038.1       6,129.9  

Redeemable noncontrolling interest

      93.7       93.7       123.3  

Total equity (deficit)

      (1,014.5 )      (1,016.6 )      (1,150.2 ) 

 

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THE OFFERING

 

Common stock offered:

208,122 New Lionsgate new common shares

 

Use of Proceeds:

Any proceeds received by New Lionsgate from the exercise of New Lionsgate stock options or SARs covered by the Plans (and issued pursuant to the offering described in this prospectus) are expected to be used for general corporate purposes. These proceeds represent the exercise prices for the New Lionsgate stock options and SARs.

 

Risk Factors:

For a discussion of risks and uncertainties involved with an investment in New Lionsgate new common shares, see “Risk Factors” included elsewhere in this prospectus and any risk factors described in any accompanying prospectus supplement.

 

Listing:

Prior to the completion of the Transactions, there was no established public trading market for New Lionsgate new common shares. New Lionsgate new common shares trade under the symbol “LION” following the completion of the Transactions.

 

 

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RISK FACTORS

Shareholders should carefully consider each of the following risks and uncertainties associated with the Transactions, New Lionsgate and the ownership of New Lionsgate securities. In addition, for more information shareholders should review the specific descriptions of New Lionsgate’s businesses under “Business” in this prospectus as well as other information incorporated by reference into this prospectus. The following list of significant risk factors is not all-inclusive or necessarily in order of importance. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may materially adversely affect us in future periods.

Risks Related to New Lionsgate

New Lionsgate faces substantial capital requirements and financial risks.

The production, acquisition and distribution of motion picture and television content requires substantial capital. A significant amount of time may elapse between expenditure of funds and the receipt of revenues after release or distribution of such content. New Lionsgate cannot assure shareholders that it will be able to successfully implement arrangements to reduce the risks of production exposure such as tax credit, government or industry programs. Moreover, New Lionsgate may experience delays and increased costs due to disruptions or events beyond its control and if production incurs substantial budget overruns, New Lionsgate may have to seek additional financing or fund the overrun itself. New Lionsgate cannot make assurances regarding the availability of such additional financing on terms acceptable to it, or that it will recoup these costs. Increased costs or budget overruns incurred with respect to a particular film may prevent its completion or release or may result in a delayed release and the postponement to a potentially less favorable date. This could adversely affect box office performance and the overall financial success of such film. Any of the foregoing could have a material adverse effect on New Lionsgate’s business, financial condition, operating results, liquidity and prospects.

The requirements of being a public company, including maintaining adequate internal control over financial and management systems, may strain New Lionsgate’s resources, divert management’s attention, and affect New Lionsgate’s ability to attract and retain executive management and qualified board members.

As a public company, New Lionsgate is subject to reporting requirements of the Exchange Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the rules subsequently implemented by the SEC, the Canadian Securities Administrators, the rules and regulations of the listing standards of U.S. and Canadian exchanges, and other applicable securities rules and regulations. Compliance with these rules and regulations may strain its financial and management systems, internal controls, and employees.

The Exchange Act requires, among other things, that New Lionsgate file annual, quarterly, and current reports with respect to its business and operating results. Moreover, the Sarbanes-Oxley Act requires, among other things, that New Lionsgate maintain effective disclosure controls and procedures, and internal control, over financial reporting. In order to maintain and, if required, improve disclosure controls and procedures, and internal control over, financial reporting to meet this standard, significant resources and management oversight are required. If New Lionsgate has material weaknesses or deficiencies in its internal control over financial reporting, New Lionsgate may not detect errors on a timely basis and its consolidated financial statements may be materially misstated. Effective internal control is necessary for New Lionsgate to produce reliable financial reports and is important to prevent fraud.

In addition, New Lionsgate is required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. New Lionsgate may incur significant expenses and devote substantial management effort toward ensuring compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. As a result of the complexity involved in complying with the rules and regulations applicable to public companies, New Lionsgate management’s attention may be diverted from other business concerns, which could harm New Lionsgate’s business, operating results, and financial condition.

 

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New Lionsgate may incur significant write-offs if its projects do not perform well enough to recoup costs.

New Lionsgate is required to amortize capitalized production costs over the expected revenue streams as it recognizes revenue from films or other projects. The amount of production costs that will be amortized each quarter depends on, among other things, how much future revenue New Lionsgate expects to receive from each project. Unamortized production costs are evaluated for impairment each reporting period on a project-by-project basis when events or changes in circumstances indicate that the fair value of a film is less than its unamortized cost. These events and changes in circumstances include, among others, an adverse change in the expected performance of a film prior to its release, actual costs substantially in excess of budgeted cost for the film, delays or changes in release plans and actual performance subsequent to the film’s release being less than previously expected performance estimates. In any given quarter, if New Lionsgate lowers its previous forecast with respect to total anticipated revenue from any film or other project or increases its previous forecast of cost of making or distribution of the film, New Lionsgate may be required to accelerate amortization or record impairment charges with respect to the unamortized costs, even if it previously recorded impairment charges for such film or other project. Such impairment charges could adversely impact New Lionsgate’s business, operating results and financial condition.

Changes in New Lionsgate’s business strategy, plans for growth or restructuring may increase its costs or otherwise affect its profitability.

As changes in New Lionsgate’s business environment occur, it may adjust its business strategies to meet these changes, which may include growing a particular area of business or restructuring a particular business or asset. In addition, external events including changing technology, changing consumer patterns, acceptance of theatrical and television offerings and changes in macroeconomic conditions may impair the value of New Lionsgate’s assets. When these occur, New Lionsgate may incur costs to adjust its business strategy and may need to write down the value of assets. New Lionsgate may also invest in existing or new businesses. Some of these investments may have negative or low short-term returns and the ultimate prospects of the businesses may be uncertain or may not develop at a rate that supports its level of investment. In any of these events, New Lionsgate’s costs may increase, it may have significant charges associated with the write-down of assets, or returns on new investments may be lower than prior to the change in strategy, plans for growth or restructuring.

New Lionsgate’s revenues and results of operations fluctuate significantly.

New Lionsgate’s results of operations depend significantly upon the commercial success of the motion picture, television and other content that it sells, licenses or distributes, which cannot be predicted with certainty. Viewer preferences and audience acceptance are difficult to predict and may be subject to influences beyond New Lionsgate’s control, such as the critical acclaim of its content, the format in which content is released, the talent involved, the genre and specific subject matter of its content, audience reaction to its content, the quality and acceptance of content that its competitors release into the marketplace, and the availability of alternative forms of entertainment (including user-generated content) and leisure activities, general economic conditions and other tangible and intangible factors. New Lionsgate may not be able to anticipate and react effectively to shifts in tastes and interests. In particular, if one or more motion pictures underperforms at the box office in any given period, New Lionsgate’s revenue and earnings results for that period (and potentially, subsequent periods) may be less than anticipated. New Lionsgate’s results of operations may also fluctuate due to the timing, mix, number and availability of theatrical motion picture and home entertainment releases, as well as license periods for content. Moreover, low ratings for television programming produced by New Lionsgate may lead to the cancellation of a program which may result in significant programming impairments in a given period, and can negatively affect license fees for the cancelled program in future periods. Other than non-renewals or cancellation of television programs or series that may occur from time to time, New Lionsgate is not aware of any current material cancellation of television programming releases or of content that New Lionsgate sells, licenses or distributes. In addition, the comparability of results may be affected by changes in accounting guidance or changes in New Lionsgate’s ownership of certain assets and businesses. As a result of the factors above, New Lionsgate’s results of operations may fluctuate and differ from period to period, and therefore, may not be indicative of the results for any future periods or directly comparable to prior reporting periods.

 

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New Lionsgate’s content licensing arrangements, primarily those relating to the distribution of films in foreign territories, may include minimum guarantee arrangements which, absent such arrangements, could adversely affect our results of operations.

New Lionsgate generates revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international marketplaces. Certain of such content licensing arrangements, primarily those relating to the distribution of films by third parties in foreign territories, may include a minimum guarantee. New Lionsgate’s revenue from these minimum guarantee arrangements amounted to approximately $110.5 million, $151.0 million and $101.3 million for the years ended March 31, 2025, 2024 and 2023 respectively. To the extent that receipts generated by such foreign distributor from distribution of the film in the territory exceed a formula-based threshold, the distributor will pay New Lionsgate an amount in addition to the minimum guarantee (the “overage”). Absent these arrangements, the revenues derived by New Lionsgate may be determined as a function of a revenue-sharing formulation that calculates the licensee fee payable to New Lionsgate solely based on the actual performance of the film in the territory. In these situations, content that is not favorably received or underperforms may not achieve the level of revenues that New Lionsgate would have received from a minimum guarantee arrangement, which could adversely impact New Lionsgate’s business, operating results and financial condition.

New Lionsgate does not have long-term arrangements with many of its production or co-financing partners and, as a result, New Lionsgate may not have certain derivative rights related thereto.

New Lionsgate typically does not enter into long-term production contracts with the creative producers of motion picture and television content that it produces, acquires or distributes. Moreover, New Lionsgate generally has certain derivative rights that provide it with distribution rights to, for example, prequels, sequels and remakes of certain content it produces, acquires or distributes. There is no guarantee that New Lionsgate will produce, acquire or distribute future content by any creative producer or co-financing partner, and a failure to do so could adversely affect its business, financial condition, operating results, liquidity and prospects.

New Lionsgate relies on a few major retailers and distributors and the loss of any of those could reduce New Lionsgate’s revenues and operating results.

A small number of retailers and distributors account for a material percentage of the revenues in home entertainment for the Motion Picture segment of New Lionsgate. New Lionsgate does not have long-term agreements with retailers. In addition, in fiscal 2025, 2024 and 2023, the LG Studios Business generated approximately 19%, 18% and 25%, respectively, of its revenue from the Starz Business, and in fiscal 2025, 2024 and 2023, the LG Studios Business generated approximately 16%, 14% and 11%, respectively, of its revenue from Amazon.com, Inc. and its subsidiaries. New Lionsgate cannot assure shareholders that it will maintain favorable relationships with its retailers and distributors (including with Starz) or that it or they will not be adversely affected by economic conditions, including as a result of global pandemics, such as wars, such as Russia’s invasion of Ukraine (including sanctions therefrom, though New Lionsgate and, to the knowledge of New Lionsgate, its directors and executive officers have not been, and are not expected to be, subject to any sanctions related to Russia’s invasion of Ukraine), bank failures, ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, United States political developments, geopolitical events and other sources of instability, inflation or a recession. For additional information, see Note 17 to the consolidated financial statements of the LG Studios Business in this prospectus.

A significant portion of New Lionsgate’s library revenues comes from a small number of titles.

New Lionsgate depends on a limited number of titles in any given fiscal quarter for the majority of the revenues to be generated by its library. In addition, many of the titles in its library are not presently distributed and generate substantially no revenue. Moreover, the rights to the titles in its library vary; in some cases, New Lionsgate only holds the right to distribute titles in certain media and territories for a limited term; in other cases, certain rights may be reserved and/or granted to third parties or otherwise only granted to it for a limited period.

 

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If New Lionsgate cannot acquire new product and the rights to popular titles through production, distribution agreements, acquisitions, mergers, joint ventures or other strategic alliances, or renew expiring rights to titles generating a significant portion of its revenue on acceptable terms, any such failure could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects. New Lionsgate has not entered into any agreements regarding material acquisitions of titles, renewals, business combinations, joint ventures or sales that have not yet closed.

Changes in consumer behavior, as well as evolving technologies (such as artificial intelligence) and distribution models, may negatively affect New Lionsgate’s business, financial condition or results of operations.

New Lionsgate’s success, in part, depends on its ability to anticipate and adapt to shifting content consumption patterns and technological development. The ways in which viewers consume content, and technology and business models in its industry, continue to evolve, and new distribution platforms, as well as increased competition from new entrants and emerging technologies, have added to the complexity of maintaining predictable revenues. Developments in technology and new content delivery products and services have also led to an increased amount of video content, as well as changes in consumers’ expectations regarding the availability of video content and their willingness to pay for access to such content. These changes include the increase in the number of advertising-based video on demand services or free, ad-supported streaming linear channels (also known as FAST channels) or increased cord-cutting.

Evolving technology, such as artificial intelligence (“AI”), may be used in ways that increase access to publicly available free or relatively inexpensive content that may reduce demand for New Lionsgate’s products and services. Regulations governing new technological developments, such as developments in AI, remain unsettled, and these developments may affect aspects of New Lionsgate’s existing business model, including revenue streams for the use of New Lionsgate’s intellectual property and how it creates and distributes its content. If New Lionsgate fails to successfully leverage emerging technologies and effectively anticipate or adapt to emerging competitors, content distribution platforms, changes in consumer behavior and shifting business models, this could have a material adverse effect on its competitive position, business, financial condition and results of operations.

In particular, the use of AI, including generative AI, machine learning, and large language models (collectively, “AI/ML technologies”), is evolving rapidly and becoming more prevalent in business operations, and New Lionsgate’s ability to compete could be adversely affected if its competitors gain an advantage by using such technologies. New Lionsgate has begun adopting certain AI/ML technologies into its daily operations. The use of AI/ML technologies is relatively new, and may lead to challenges, concerns and risks that are significant or that New Lionsgate may not be able to predict, especially if its use of these technologies in its operations become more important over time.

New Lionsgate faces substantial competition in all aspects of its business.

New Lionsgate is an independent distributor and producer. Most of the major U.S. studios are part of large diversified corporate groups with a variety of other operations that can provide both the means of distributing their products and stable sources of earnings that may allow them to better offset fluctuations in the financial performance of their motion picture operations and television production operations. If New Lionsgate is unable to successfully or profitably compete with current and new competitors, its business will be adversely affected.

New Lionsgate faces economic, political, regulatory, and other risks from doing business internationally

New Lionsgate has operations and distributes content outside the U.S. and derives revenue from international sources. As a result, its business is subject to certain risks inherent in international business, many of which are beyond its control. These risks include:

 

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difficulties in understanding and complying with local laws, regulations and customs in foreign jurisdictions;

 

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laws and policies adversely affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;

 

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sanctions imposed on countries, entities and individuals with whom it conducts business (such as those imposed due to Russia’s invasion of Ukraine);

 

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the impact of trade disputes;

 

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anti-corruption laws and regulations such as the Foreign Corrupt Practices Act and the U.K. Bribery Act that impose strict requirements on how New Lionsgate may conduct its foreign operations and changes in these laws and regulations;

 

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changes in local regulatory requirements including regulations designed to stimulate local productions, promote and preserve local culture and economic activity (including local content quotas, investment obligations, local ownership requirements, and levies to support local film funds);

 

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differing degrees of consumer protection laws, data privacy and cybersecurity laws, and changes in these laws;

 

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differing degrees of employee or labor laws and changes in these laws that may impact our ability to hire and retain foreign employees;

 

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strikes or other employment actions that may make it difficult to produce and/or localize content;

 

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censorship requirements that may cause New Lionsgate to remove or edit popular content, leading to consumer disappointment, brand tarnishment or consumer dissatisfaction;

 

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inability to adapt New Lionsgate’s offerings successfully to differing languages, cultural tastes, and preferences in international markets;

 

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international jurisdictions where laws are less protective of intellectual property and varying attitudes towards the piracy of intellectual property;

 

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establishing and protecting a new brand identity in competitive markets;

 

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the instability of foreign economies and governments;

 

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currency exchange restrictions, export controls and currency devaluation risks in some foreign countries;

 

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war and acts of terrorism; and

 

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the spread of communicable diseases, which may impact business in such jurisdictions.

New Lionsgate’s actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, disruptions of its business operations, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.

New Lionsgate is subject to risks associated with possible acquisitions, dispositions, business combinations, or joint ventures.

From time to time, New Lionsgate may engage in discussions and activities with respect to possible acquisitions, sale of assets, business combinations, joint ventures intended to complement or expand its business or other transactions. However, New Lionsgate may not realize the anticipated benefit from the transactions it pursues; there may be liabilities assumed that it did not discover or that it underestimated in the course of performing its due diligence; the negotiation of the transaction and the integration of the acquired business could require New Lionsgate to incur significant costs and cause diversion of management’s time and resources; the transaction could result in impairment of goodwill and other intangibles, development write-offs and other related expenses; the transaction may pose challenges in the consolidation and integration of information technology, accounting systems, personnel and operations; and New Lionsgate may have difficulty managing the

 

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combined entity in the short term if it experiences a significant loss of management personnel during the transition period after a significant acquisition. No assurance can be given that expansion, acquisition or other opportunities will be successful, completed on time, or that New Lionsgate will realize expected operating efficiencies, cost savings, revenue enhancements, synergies or other benefits. Any of the foregoing could have a material adverse effect on New Lionsgate’s business, financial condition, operating results, liquidity and prospects. If New Lionsgate determines to sell individual properties, libraries or other assets or businesses, it will benefit from the net proceeds realized from such sales. However, New Lionsgate’s revenues may be affected in the long-term due to the loss of revenue-generating assets, and poor timing of such disposals may result in unrealized asset value, all of which may diminish its ability to service its indebtedness and repay its notes and its other indebtedness at maturity. Furthermore, New Lionsgate’s future growth may be inhibited if the disposed asset contributed in a significant way to the diversification of its business platform. In addition, for risks relating the Transactions, see “–Risks Related to the Transactions” below.

If Entertainment One Canada Ltd. loses Canadian status, it could lose licenses, incentives and tax credits.

Through Lionsgate’s acquisition of eOne in December 2023, it acquired the economic interests in Entertainment One Canada Ltd., a Canadian corporation (“EOCL”). EOCL is able to benefit from a number of licenses, incentive programs and Canadian government tax credits as a result of it being “Canadian controlled” as defined in the Investment Canada Act. Lionsgate has taken measures to ensure that EOCL’s Canadian status is maintained. There can be no assurance, however, that EOCL will be able to continue to maintain its Canadian status. The loss of EOCL’s Canadian status could harm New Lionsgate’s business, including the possible loss of future incentive programs and clawback of funding previously provided to EOCL.

New Lionsgate’s success depends on attracting and retaining key personnel and artistic talent.

New Lionsgate’s success depends upon the continued efforts, abilities and expertise of its executive teams and other key employees, including production, creative and technical personnel, including, in turn, on its ability to identify, attract, hire, train and retain such personnel. New Lionsgate has employment agreements with top executive officers and production executives but does not expect to have significant “key person” life insurance policies for any employee. Although it is standard in the industry to rely on employment agreements as a method of retaining the services of key employees, these agreements cannot assure New Lionsgate of the continued services of such employees. In addition, New Lionsgate depends on the availability of a number of actors, writers, directors and producers of third-party production companies who create its original programming. New Lionsgate cannot assure shareholders that it will be successful in identifying, attracting, hiring, training and retaining such personnel in the future, and New Lionsgate’s inability to do so could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects.

Global economic turmoil and regional economic conditions could adversely affect New Lionsgate’s business.

Global economic turmoil resulting from such events as global pandemics, wars, inflation, bank failures or a recession, may cause a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, levels of intervention from U.S. federal government and other foreign governments, decreased consumer confidence, overall slower economic activity and extreme volatility in credit, equity and fixed income markets, ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, United States political developments, geopolitical events and other sources of instability. A decrease in economic activity in the U.S. or in other regions of the world in which New Lionsgate does business could adversely affect demand for its content, thus reducing its revenues and earnings. A decline in economic conditions could reduce performance of theatrical, television and home entertainment releases. In addition, an increase in price levels generally could result in a shift in consumer demand away from the entertainment offered, which could also adversely affect New Lionsgate revenues and, at the same time, increase costs. Moreover, financial institution failures may make it more difficult to finance any future acquisitions, or engage in other financing activities.

 

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New Lionsgate could be adversely affected by labor disputes, strikes or other union job actions.

New Lionsgate is directly or indirectly dependent upon highly specialized union members who are essential to the production of motion pictures and television content including writers, directors, actors and other talent as well as trade employees and others who are subject to collective bargaining agreements. In general, a labor dispute, work stoppage, work slowdown, strike by, or a lockout of, one or more of the unions that provide personnel essential to the production of motion pictures or television content could delay or halt New Lionsgate’s ongoing development and/or production activities, or could cause a delay or interruption in release of new motion pictures and television content. Labor disputes have in the past, such as the industry-wide strike by the Writers Guild of America in May 2023 and Screen Actors Guild in July 2023, and may in the future, restrict access to content, result in work stoppages, and may result in increased costs and decreased revenue, which could have a material adverse effect on New Lionsgate’s business, financial condition, operating results, liquidity and prospects.

Business interruptions from circumstances or events outside of New Lionsgate’s control could adversely affect New Lionsgate’s operations.

New Lionsgate’s operations are vulnerable to outages and interruptions due to fire, floods, power loss, telecommunications failures, software or hardware failures, loss of data, security breaches, cyberattacks, personnel misconduct or error, war or acts of terrorism, global pandemics, work stoppages and strikes, and similar events beyond its control. New Lionsgate’s headquarters is located in Southern California, which is subject to natural disasters such as earthquakes, wildfires and flooding. Although New Lionsgate has developed certain plans to respond in the event of a disaster, there can be no assurance that such plans will be effective in the event of a specific disaster. A long-term power outage, however, could disrupt its operations.

Although New Lionsgate carries business interruption insurance for potential losses (including earthquake-related losses), there can be no assurance that such insurance will be sufficient to compensate for losses that may occur or that such insurance may continue to be available on affordable terms. Any losses or damages incurred by New Lionsgate could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects.

New Lionsgate’s business is dependent on the maintenance and protection of its intellectual property and pursuing and defending against intellectual property claims may have a material adverse effect on its business.

New Lionsgate’s ability to compete depends, in part, upon successful protection of its intellectual property. New Lionsgate attempts to maintain and protect its proprietary and intellectual property rights to its productions through available copyright and trademark laws, contractual provisions in its agreements with its employees, contractors and production partners that develop intellectual property on its behalf, and licensing and distribution arrangements with reputable international companies in specific territories and media for limited durations. Despite these precautions, existing copyright and trademark laws afford only limited practical protection in certain countries where New Lionsgate distributes its products. As a result, it may be possible for unauthorized third parties to copy and distribute New Lionsgate’s productions or certain portions or applications of its intended productions, which could have a material adverse effect on New Lionsgate’s business, financial condition, operating results, liquidity and prospects. Moreover, there can be no assurance that New Lionsgate’s content producers or other third parties from whom it may license or acquire content have, in every instance, entered into agreements that contain appropriate protections regarding intellectual property, including nondisclosure, “work made for hire” or valid assignment provisions, with each party who has developed intellectual property on their respective behalf. Litigation may also be necessary to enforce New Lionsgate’s intellectual property rights, to protect its trade secrets, or to determine the validity and scope of the proprietary rights of others or to defend against claims of infringement or invalidity. Any such litigation, infringement or invalidity claims could result in substantial costs and the diversion of resources and could have a material adverse effect on New Lionsgate’s

 

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business, financial condition, operating results, liquidity and prospects. New Lionsgate’s more successful and popular film or television products or franchises may experience higher levels of infringing activity, particularly around key release dates. Alleged infringers have claimed and may claim that their products are permitted under fair use or similar doctrines, that they are entitled to compensatory or punitive damages because New Lionsgate’s efforts to protect its intellectual property rights are illegal or improper, and that New Lionsgate’s key trademarks or other significant intellectual property are invalid. Such claims, even if meritless, may result in adverse publicity or costly litigation. New Lionsgate will vigorously defend its copyrights and trademarks from infringing products and activity, which can result in litigation. It may receive unfavorable preliminary or interim rulings in the course of litigation, and there can be no assurance that a favorable final outcome will be obtained in all cases. Additionally, one of the risks of the film and television production business is the possibility that others may claim that New Lionsgate’s productions and production techniques misappropriate or infringe the intellectual property rights of third parties.

Notwithstanding New Lionsgate’s efforts to obtain all permissions and clearances it deems necessary in relation to the content it will create or distribute, from time to time, New Lionsgate may be subject to claims and legal proceedings regarding alleged infringement by it of the intellectual property rights (including patents) of third parties. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, require the development of alternative technology or business practices, injunctions against New Lionsgate, or payments for licenses or damages. New Lionsgate may also enter into licenses or other arrangements to settle and resolve such allegations on commercially reasonable terms where available, though there can be no assurance such agreements can be obtained on acceptable terms. These risks may be amplified by the increase in third parties whose sole or primary business is to assert such claims. Regardless of the validity or the success of the assertion of any such claims, New Lionsgate could incur significant costs and diversion of resources in enforcing its intellectual property rights or in defending against such claims, which could have a material adverse effect on its business, financial condition, operating results, liquidity and prospects.

In addition, New Lionsgate may, from time to time, lose or cease to control certain of its rights in the intellectual property on which it relies. Pursuant to applicable intellectual property laws, such rights may expire or be transferred to third parties as a result of the operation of copyright reversion and/or termination of transfer rights under applicable laws. Additionally, where New Lionsgate acquires rights in certain properties or content, it may only acquire such rights for a limited period or subject to other restrictions. Where New Lionsgate loses intellectual property rights, it may not be able to re-acquire such rights on reasonable terms or at all, including due to material entering the public domain. The loss of (or of control of) such intellectual property rights may adversely impact New Lionsgate’s ability to prevent others from exploiting content based on such rights.

New Lionsgate’s business involves risks of claims and content of material, which could adversely affect New Lionsgate’s business, results of operations and financial condition.

As a distributor of media content, in the ordinary course of business, New Lionsgate may face potential liability for defamation, invasion of privacy, negligence, copyright or trademark infringement, claims related to the mature nature of some of its content, other claims based on the nature and content of the materials distributed, or statements made by personnel or talent regarding or promoting those materials or attributable to its business. These types of claims have historically been brought, sometimes successfully, against producers and distributors of media content. Any imposition of liability that is not covered by insurance or is in excess of insurance coverage could have a material adverse effect on New Lionsgate’s business, financial condition and results of operations.

New Lionsgate may become subject to litigation and other legal proceedings, which could adversely impact its business, financial condition and results of operations.

From time to time, New Lionsgate may be subject to various legal proceedings (including class action lawsuits), claims, regulatory investigations and arbitration proceedings, including claims relating to intellectual

 

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property, employment, wage and hour, consumer privacy, contractual and commercial disputes, and the production, distribution, and licensing of its content. The outcomes of legal proceedings are inherently uncertain. Any proceedings, actions, claims or inquiries initiated by or against it, whether successful or not, may be time consuming, result in costly litigation, damage awards, consent decrees, injunctive relief or increased costs of business, require to change its business practices or products, result in negative publicity, require significant amounts of management time, result in the diversion of significant operational resources or otherwise harm its business and financial results. In addition, New Lionsgate’s insurance may not be adequate to protect it from all material expenses related to pending and future claims. Any of these factors could materially adversely affect New Lionsgate’s business, financial condition and results of operations.

Piracy of films and television programs could adversely affect New Lionsgate’s business over time.

Piracy is extensive in many parts of the world and is made easier by the availability of digital copies of content and technological advances allowing conversion of films and television content into digital formats. This trend facilitates the creation, transmission and sharing of high-quality unauthorized copies of motion pictures and television content. The proliferation of unauthorized copies of these products has had and will likely continue to have an adverse effect on New Lionsgate’s business, because these products reduce the revenue it may receive from distribution. In order to contain this problem, New Lionsgate may have to implement elaborate and costly security and anti-piracy measures, which could result in significant expenses and losses of revenue. New Lionsgate cannot assure shareholders that even the highest levels of security and anti-piracy measures will prevent piracy.

New Lionsgate relies upon cloud computing services to operate certain aspects of its service and any disruption of or interference with its use of its cloud computing service could adversely impact its operations and its business.

New Lionsgate utilizies cloud computing services to deliver a distributed computing infrastructure platform for its business operations. New Lionsgate architects its software and computer systems so as to utilize data processing, storage capabilities and other services provided by its current cloud computing service provider and run its computing via such cloud computing service provider. Given this, along with the fact that switching cloud computing services to another provider may be difficult, any problems faced by New Lionsgate’s cloud computing provider, including technological or business-related disruptions, as well as cybersecurity threats and regulatory interference, or any unanticipated interference with its current cloud service provider could adversely impact New Lionsgate’s operations and its business.

New Lionsgate’s activities are subject to stringent and evolving obligations which may adversely impact its operations. New Lionsgate’s actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of its business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.

Data Privacy and Security. In the ordinary course of its business, New Lionsgate collects, generates, uses, stores, processes, discloses, transmits, shares and transfers (collectively “process”) personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, and third-party data, through its websites and applications and those of third parties. Among other purposes, New Lionsgate uses this information to engage with users, promote its programming, and monitor the use of its digital platforms. New Lionsgate’s processing of personal data may subjects it to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.

In the U.S, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of

 

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the Federal Trade Commission Act and the Controlling the Assault of Non-Solicited Pornography and Marketing Act), and other similar laws (e.g., wiretapping laws). For example, numerous U.S. states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal data. As applicable, such rights include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact New Lionsgate’s business and ability to provide its products and services. Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance, for example, the California Consumer Privacy Act (“CCPA”). Similar laws are being considered in several other states, as well as at the federal and local levels. These developments will further complicate compliance efforts and increase legal risk and compliance costs for New Lionsgate and the third parties with whom New Lionsgate works.

Outside the U.S, an increasing number of laws, regulations, and industry standards apply to data privacy and security. For example, the European Union’s General Data Protection Regulation (the “EU GDPR”), the United Kingdom’s GDPR (the “UK GDPR” and, together with the EU GDPR, the “GDPR”), the EU Digital Services Act, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or “LGPD”) (Law No. 13,709/2018) and Canada’s Personal Information Protection and Electronic Documents Act (“PIPEDA”) impose strict requirements for processing personal data. For example, under the GDPR, companies may face temporary or definitive bans on data processing and other corrective actions; fines of up to 20 million Euros (under the EU GDPR) or 17.5 million pounds sterling (under the UK GDPR), or 4% of annual global revenue, whichever is greater; or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests. As another example, in Canada, PIPEDA and various related provincial laws, as well as Canada’s Anti-Spam Legislation (“CASL”), apply to New Lionsgate’s operations, as well as the LGPD in Brazil. The LGPD broadly regulates processing personal data of individuals in Brazil and imposes compliance obligations and penalties comparable to those of the GDPR.

Additionally, regulators are increasingly scrutinizing companies that process children’s data. Numerous laws, regulations, and legally-binding codes, such as the Children’s Online Privacy Protection Act (“COPPA”), California’s Age Appropriate Design Code, CCPA, other U.S. state comprehensive privacy laws, GDPR, and the UK Age Appropriate Design Code impose various obligations on companies that process children’s data, including requiring certain consents to process such data and extending certain rights to children and their parents with respect to that data. Some of these obligations have wide ranging applications, including for services that do not intentionally target child users (defined in some circumstances as a user under the age of 18 years old). These laws may be, or in some cases, have already been, subject to legal challenges and changing interpretations, which may further complicate New Lionsgate’s efforts to comply with these laws.

New Lionsgate is subject to certain new laws governing the processing of consumer health data, including by providing for reproductive, sexual orientation, and gender identity privacy rights. For example, Washington’s My Health My Data Act (“MHMD”) broadly defines consumer health data, places restrictions on processing consumer health data (including imposing stringent requirements for consents), provides consumers certain rights with respect to their health data, and creates a private right of action to allow individuals to sue for violations of the law. Other states are considering and may adopt similar laws.

Additionally, under various privacy laws (such as the Video Privacy Protection Act) and other obligations, New Lionsgate may be required to obtain certain consents to process personal data. Noncompliance with such obligations is increasingly subject to challenges by class action plaintiffs. New Lionsgate’s inability or failure to obtain such consents could result in adverse consequences.

In the ordinary course of business, New Lionsgate transfers personal data from Europe and other jurisdictions to the U.S. or other countries. Europe and other jurisdictions have enacted laws requiring data to be

 

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localized or limiting the transfer of personal data to other countries. In particular, the European Economic Area (“EEA”) and the United Kingdom (“U.K.”) have significantly restricted the transfer of personal data to the U.S. and other countries whose privacy laws it believes are inadequate. Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws. Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the U.S. in compliance with law, such as the EEA standard contractual clauses, the UK’s International Data Transfer Agreement / Addendum, and the EU-U.S. Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the Framework), these mechanisms are subject to legal challenges, and there is no assurance that New Lionsgate can satisfy or rely on these measures to lawfully transfer personal data to the U.S.

If there is no lawful manner for New Lionsgate to transfer personal data from the EEA, the UK or other jurisdictions to the U.S., or if the requirements for a legally-compliant transfer are too onerous, New Lionsgate could face significant adverse consequences, including the interruption or degradation of its operations, the need to relocate part of or all its business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against processing or transferring of personal data necessary to operate its business. Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups. Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of the EEA for allegedly violating the GDPR’s cross-border data transfer limitations.

New Lionsgate is also bound by contractual obligations related to data privacy and security, and its efforts to comply with such obligations may not be successful. For example, New Lionsgate is contractually subject to certain industry standards adopted by industry groups, such as the Payment Card Industry Data Security Standard (“PCI DSS”). The PCI DSS requires companies to adopt certain measures to ensure the security of cardholder information, including using and maintaining firewalls, adopting proper password protections for certain devices and software, and restricting data access. Noncompliance with PCI DSS can result in penalties ranging from fines of $5,000 to $100,000 per month by credit card companies, litigation, damage to New Lionsgate’s reputation, and revenue losses. New Lionsgate relies on third parties to process payment card data, who may be subject to PCI DSS, and its business may be negatively affected if these parties are fined or suffer other consequences as a result of PCI DSS noncompliance. Moreover, New Lionsgate publishes privacy policies, marketing materials and other statements regarding data privacy and security, including as required by applicable laws and regulations. Regulators in the United States are increasingly scrutinicing these materials, and if these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading or misrepresentative of New Lionsgate’s practices, it may be subject to investigation, enforcement actions by regulators or other adverse consequences.

Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing, becoming increasingly stringent, and creating uncertainty. Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying with these obligations requires significant resources and has in the past and may continue to necessitate changes to New Lionsgate’s information systems, policies and practices and to those of any third parties upon with whom it works.

New Lionsgate may at times fail (or be perceived to have failed) in efforts to comply with data privacy and security obligations. Moreover, despite its efforts, its personnel or third parties with whom it works may fail to comply with such obligations, which could negatively impact New Lionsgate’s business operations and compliance posture. If New Lionsgate or the third parties with whom it works fails, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, New Lionsgate could face significant consequences, including, but not limited to: government enforcement actions (e.g., investigations,

 

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fines, penalties, audits, inspections, and similar); litigation (including class-action claims) and mass arbitration demands; additional reporting requirements and/or oversight; bans or restrictions on processing personal data; or orders to destroy or not use personal data. In particular, plaintiffs have become increasingly active in bringing privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental statutory damages, depending on the volume of data and the number of violations. Any of these events could have a material adverse effect on New Lionsgate’s reputation, business, or financial condition, including, but not limited to: loss of customers; interruptions or stoppages in business operations; inability to process personal data or to operate in certain jurisdictions; limited ability to develop or commercialize its products; expenditure of time and resources to defend any claim or inquiry; adverse publicity; or substantial changes to its business model or operations.

Consumer Protection Laws. The continued growth and development of the market for online commerce may lead to more stringent consumer protection laws both domestically and internationally, which may impose additional burdens on New Lionsgate. If authorities start taking increased enforcement action related to statutes governing perceived unfair deceptive acts and practices, New Lionsgate could suffer additional costs, complaints and/or regulatory investigations or fines. Several of these laws also have private rights of action. New Lionsgate’s actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions, litigation, fines and penalties, reputational harm, and other adverse business consequences. Other changes in consumer protection laws and the interpretations thereof, could have a materially adverse effect on New Lionsgate’s business, financial condition and results of operations.

Levies/Taxes. Governments are increasingly looking to introduce regulations related to media and tax that may apply to New Lionsgate’s services. For example, some international governments have enacted or are considering enacting laws that impose levies and other financial obligations on media operators located outside their jurisdiction. Other changes in levy or tax laws and the interpretations thereof could have a materially adverse effect on New Lionsgate’s business, financial condition and results of operations.

Service disruptions or failures, or security incidents impacting New Lionsgate or its third-party service providers’ information systems, data and networks may disrupt its businesses, damage its reputation, expose it to regulatory investigations, actions, litigation, fines and penalties or have a negative impact on its results of operations including but not limited to loss of revenue or profit, loss of customers or sales and other adverse consequences.

In the ordinary course of New Lionsgate’s business, New Lionsgate and the third parties with whom it works process proprietary, confidential, and sensitive data, including personal data, intellectual property, and trade secrets (collectively, sensitive information). Threats such as cyberattacks, malicious internet-based activity, and online and offline fraud are becoming more prevalent and are increasingly difficult to detect. These threats come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” personnel (such as through theft or misuse), sophisticated nation-states, and nation-state-supported actors. Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities. During times of war and other major conflicts, New Lionsgate and the third parties with whom it works may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt New Lionsgate’s systems and operations, supply chain, and ability to produce, sell and distribute its goods and services.

New Lionsgate and the third parties with whom it works are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks, credential stuffing attacks, credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets,

 

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adware, telecommunications failures, attacks enhanced or facilitated by artificial intelligence, and other similar threats. In particular, ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in New Lionsgate’s operations, loss of data and income, reputational harm, and diversion of funds. Extortion payments may alleviate the negative impact of a ransomware attack, but New Lionsgate may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments. Further, a partially remote workforce poses increased risks to New Lionsgate’s information technology systems and data, as certain employees may work from home on a full or part-time basis, utilizing network connections outside New Lionsgate’s premises. Business transactions (such as acquisitions or integrations) could expose New Lionsgate to additional cybersecurity risks and vulnerabilities, as its systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies. Furthermore, New Lionsgate may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into its information technology environment and security program.

New Lionsgate works with certain third parties to operate critical business systems and process proprietary, confidential or other sensitive data in a variety of contexts, including, without limitation, cloud-based infrastructure (for more, see the Risk Factor titled “New Lionsgate relies upon cloud computing services to operate certain aspects of its service and any disruption of or interference with its use of its cloud computing servicer could adversely impact its operations and its business.”), data center facilities, encryption and authentication technology, employee email servers, content delivery systems, and other functions. New Lionsgate’s ability to monitor these third parties’ information security practices may be limited, and these third parties may not have adequate information security measures in place. If these third parties experience a security incident or other interruption, New Lionsgate could experience adverse consequences. While New Lionsgate may be entitled to damages if these third parties fail to satisfy their privacy or security-related obligations to it, any award may be insufficient to cover New Lionsgate’s damages, or New Lionsgate may be unable to recover such award. Similarly, supply-chain attacks have increased in frequency and severity, and New Lionsgate cannot guarantee that third parties and infrastructure in its supply chain or its third-party partners’ supply chains have not been compromised.

New Lionsgate takes steps designed to detect, mitigate and remediate vulnerabilities in its information systems (such as its hardware or software) and those of the third parties with whom New Lionsgate works, but it has not and may not in the future be able to detect and remediate (or have the third parties with whom it works remediate) all such vulnerabilities on a timely basis or at all. Further, New Lionsgate has in the past and may in the future experience delays in developing and deploying remedial measures and patches designed to address any such identified vulnerabilities. Vulnerabilities could be exploited and result in a security incident.

Certain of the previously identified or similar threats have in the past and may in the future cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to New Lionsgate’s sensitive information. For example, New Lionsgate has been the target of unsuccessful phishing attempts in the past, and expects such attempts will continue in the future. A security incident or other interruption could disrupt New Lionsgate’s ability (and that of third parties with whom it works) to provide its services. New Lionsgate has expended significant resources and may continue to do so or modify its business activities to try to protect against security incidents. Certain data privacy and security obligations may require New Lionsgate’s to implement and maintain specific industry-standard or reasonable security measures to protect its information technology systems and sensitive information. While New Lionsgate takes steps to implement security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

Applicable data privacy and security obligations may require New Lionsgate to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents. Such disclosures are costly, and the disclosures or the failure to comply with such requirements could lead to adverse consequences. If New Lionsgate (or a third party with whom it works) experiences a security incident or is perceived to have

 

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experienced a security incident, New Lionsgate may experience adverse consequences, such as: government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information; litigation; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; interruptions in its operations; financial loss; and other similar harms. Security incidents and attendant consequences may cause customers to stop using New Lionsgate’s services, deter new customers from using New Lionsgate’s services, and negatively impact New Lionsgate’s ability to grow and operate its business. New Lionsgate’s contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in its contracts are sufficient to protect it from liabilities, damages, or claims related to its data privacy and security obligations. New Lionsgate cannot be sure that its insurance coverage will be adequate or sufficient to protect it from or to mitigate liabilities arising out of its privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.

In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about New Lionsgate’s from public sources, data brokers, or other means that reveals competitively sensitive details about its organization and could be used to undermine its competitive advantage or market position.

Purported noteholders have instituted suit against Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.

On August 27, 2024, purported holders of former 5.500% Notes of Lionsgate (now Starz) filed a complaint in New York State court asserting claims for breach of certain contractual provisions and breach of the implied covenant of good faith and fair dealing based on a May 2024 transaction in which Lions Gate Entertainment Corp. exchanged approximately $390 million in aggregate principal amount of 5.500% Notes for new 5.500% exchange notes due 2029 (now, the 6.00% Notes) and entered into Supplemental Indenture No. 10 to the indenture governing the 5.500% Notes (the “LGEC Indenture”). The main basis for these claims is that Supplemental Indenture No. 10 allegedly implicated certain provisions of the LGEC Indenture that require consent of each affected holder for certain types of waivers, amendments, and supplements to the LGEC Indenture. The relief sought includes a request for a declaration that Supplemental Indenture No. 10 and the associated exchange transaction are null and void. On September 13, 2024, another purported holder sought to intervene as a plaintiff in the same suit asserting nearly identical claims, which intervention was granted on October 11, 2024. The second holder subsequently added additional theories against Lions Gate Entertainment Corp. and brought claims against other parties. Lions Gate Entertainment Corp. filed a motion to dismiss the claims. On May 23, 2025, both plaintiffs amended their complaints in view of the completion of the separation transaction. Defendants moved to dismiss these amended complaints.

Although Lionsgate and Starz believe that both the original and the amended claims are without merit, there can be no assurance that the plaintiffs will not be successful in obtaining relief sought in their complaints. If the plaintiffs are successful in obtaining a declaratory judgment, they may also issue the trustee of the 5.500% Notes a notice of default and seek accelerated payments for amounts due under the 5.500% Notes. These actions may result in an outcome that could have a material adverse impact on New Lionsgate’s and Starz’s business, operations and financial conditions as well as their stakeholders, as any such actions could require payments on the 5.500% Notes earlier than expected. Even if Starz and/or New Lionsgate are successful in defending against such claims, it may expend significant management time and attention and funds to defend against such claims.

 

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Some provisions of the BC Act and the adoption of the rights plan may delay or prevent a change in control and may discourage bids for our common stock that shareholders consider favorable.

Under the BC Act, the following powers are available to companies to make themselves potentially less vulnerable to hostile takeover attempts:

 

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any shareholder proposals must be signed by qualified shareholders who, together with the submitter, are, at the time of signing, registered owners or beneficial owners of shares that, in the aggregate, constitute at least one percent (1%) of the issued shares of a company that carry the right to vote at general meetings, or have a fair market value in excess of the prescribed amount and must have been received by such company at least three months before the anniversary of the previous year’s annual reference date;

 

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shareholders who hold in the aggregate at least 5% of the issued shares of a company that carry the right to vote at general meetings may requisition a general meeting of shareholders by following the procedures in the BC Act, in which case the directors are required to call a meeting for a date not more than four (4) months after the date the requisition is received and if they do not do so within 21 days after the date on which the requisition was received by such company, the requisitioning shareholders may send a notice of a general meeting to be held to transact the business stated in the requisition; and

 

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unless the articles state otherwise, directors may only be removed by a two-thirds (66 2/3%) majority vote by shareholders.

The BC Act also does not restrict related-party transactions for public companies; however, in Canada, takeover bids and related-party transactions of private and public companies are addressed in provincial securities legislation and policies.

Additionally, on May 6, 2025, the Board declared a dividend of one common share purchase right (the “Right”) for each outstanding Lionsgate common share, and adopted a shareholder rights plan, as set forth in the Shareholder Rights Agreement dated as of May 7, 2025 (the “Rights Agreement”), by and between Lionsgate and Computershare Investor Services, Inc., as rights agent. The dividend was payable on May 20, 2025 to Lionsgate stockholders of record as of the close of business on May 19, 2025. The Rights will expire on the earliest to occur of May 7, 2026 (or, if confirmed by resolution passed by a majority of the votes cast by shareholders present or represented by proxy at a meeting of shareholders of Lionsgate to be held within one (1) year of the Rights Agreement, May 7, 2028), the Redemption Date (as defined in the Rights Agreement), the time at which the Board orders the exchange of the Rights or upon the consummation of a consensual merger, each as provided in the Rights Agreement.

The Rights will cause substantial dilution to a person or group that attempts to acquire us on terms not approved by the Board and could have the effect of discouraging, delaying or preventing a change in management or control over us that shareholders consider favorable.

Risks Related to New Lionsgate’s Indebtedness

New Lionsgate has incurred significant indebtedness that could adversely affect its business and profitability and its ability to meet other obligations.

As of March 31, 2025, Legacy Lionsgate Studios and its subsidiaries had outstanding an aggregate principal amount of corporate debt of approximately $1,697.8 million, and film related obligations of approximately $1,990.2 million. New Lionsgate’s debt service obligations (principal and interest) on such corporate debt and film related obligations over the next twelve months is estimated to be approximately $1,965.3 million. This amount is based on the applicable SOFR rate as of March 31, 2025, is net of payments and receipts from Legacy Lionsgate’s interest rate swaps and excludes amounts that may be required for future borrowings under its senior

 

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secured revolving credit facility. See the section entitled “Part II. Item 7. Management’s Discussion & Analysis of Financial Condition and Results of Operations—Material Cash Requirements from Known Contractual and Other Obligations” for more information. In connection with consummation of the Starz Separation, New Lionsgate incurred additional indebtedness after March 31, 2025 that is not reflected in the amounts above. See “Part II. Item 7. Management’s Discussion & Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources—Corporate Debt” for more information on such indebtedness.

This significant amount of debt could potentially have important consequences to New Lionsgate and its debt and equity investors, including:

 

  •  

requiring a substantial portion of its cash flow from operations to make interest payments;

 

  •  

making it more difficult to satisfy debt service and other obligations;

 

  •  

increasing the risk of a future credit ratings downgrade of its debt, which could increase future debt costs and limit the future availability of debt financing;

 

  •  

increasing its vulnerability to general adverse economic and industry conditions;

 

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reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow its business;

 

  •  

limiting New Lionsgate’s flexibility in planning for, or reacting to, changes in its business and the industry;

 

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placing New Lionsgate at a competitive disadvantage relative to its competitors that may not be as highly leveraged with debt;

 

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limiting New Lionsgate’s ability to borrow additional funds as needed or take advantage of business opportunities as they arise, pay cash dividends or repurchase New Lionsgate new common shares; and

 

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restricting the way in which New Lionsgate conducts its business because of financial and operating covenants in the agreements governing its existing and future indebtedness and exposing it to potential events of default (if not cured or waived) under covenants contained in its debt instruments.

To the extent that New Lionsgate incurs additional indebtedness, the foregoing risks could increase. In addition, to the extent that New Lionsgate incurs additional indebtedness, the foregoing risks could increase. In addition, New Lionsgate’s actual cash requirements in the future may be greater than expected. Its cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and New Lionsgate may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance its debt.

In addition, New Lionsgate may seek additional capital that may result in stockholder dilution or that may have rights senior to those of its shareholders. The decision to obtain additional capital will depend on, among other things, New Lionsgate’s business plans, operating performance and condition of the capital markets. Rising interest rates or any disruption in the capital markets could make it more difficult and expensive for New Lionsgate to raise additional capital or refinance its existing indebtedness. If New Lionsgate raises additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of its common shares, and New Lionsgate’s shareholders may experience dilution. Any large equity or equity-linked offering could also negatively impact New Lionsgate’s share price.

New Lionsgate may not be able to generate sufficient cash to service all of its indebtedness and may be forced to take other actions to satisfy its obligations under its indebtedness, which may not be successful.

A significant portion of New Lionsgate’s cash flows from operations is expected to be dedicated to the payments of principal and interest obligations. New Lionsgate’s ability to make scheduled payments on or refinance its debt obligations will depend on New Lionsgate’s financial condition and operating performance, which are subject to prevailing economic and competitive conditions and to certain financial, business, legislative, regulatory and other factors beyond New Lionsgate’s control, including global pandemics, wars,

 

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recessions and their effects. If New Lionsgate’s cash flow from operations declines significantly, it could result in the inability to pay the principal, premium, if any, and interest on its indebtedness.

If New Lionsgate’s cash flows and capital resources are insufficient to fund its debt service obligations, New Lionsgate could face substantial liquidity problems and could be forced to reduce or delay investments and capital expenditures or to dispose of material assets or operations, seek additional debt or equity capital or restructure or refinance its indebtedness. In addition, during times of economic instability, including disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from global pandemics, wars, or recessions, it has been difficult for many companies to obtain financing in the public markets or to obtain debt financing. New Lionsgate may not be able to affect any such alternative measures, if necessary, on commercially reasonable terms or at all and, even if successful, those alternative actions may not allow us to meet its scheduled debt service obligations. The agreements governing New Lionsgate’s corporate indebtedness restrict its ability to dispose of assets and use the proceeds from those dispositions, and also restrict its ability to raise debt or certain types of equity to be used to repay other indebtedness when it becomes due. New Lionsgate may not be able to consummate those dispositions or to obtain proceeds in an amount sufficient to meet any debt service obligations then due. Additionally, there can also be no assurance that New Lionsgate will not face credit rating downgrades as a result of weaker than anticipated performance of its businesses, fluctuations in its leverage or cost of capital or other factors. Future downgrades could further adversely affect New Lionsgate’s cost of funds and related margins, liquidity, competitive position and access to capital markets, and a significant downgrade could have an adverse commercial impact on New Lionsgate’s business.

In addition, New Lionsgate conducts a substantial portion of its operations through its subsidiaries, certain of which are not guarantors of New Lionsgate’s corporate indebtedness. Accordingly, repayment of such indebtedness is dependent on the generation of cash flow by New Lionsgate’s subsidiaries and their ability to make such cash available to it, by dividend, debt repayment or otherwise. Unless they are guarantors of New Lionsgate’s corporate indebtedness, New Lionsgate’s subsidiaries do not have any obligation to pay amounts due on such indebtedness or to make funds available for that purpose. New Lionsgate’s subsidiaries may not be able to, or may not be permitted to, make distributions to enable New Lionsgate to make payments in respect of its indebtedness. While the agreements governing New Lionsgate’s corporate indebtedness limit the ability of New Lionsgate’s subsidiaries to incur consensual restrictions on their ability to pay dividends or make other intercompany payments to New Lionsgate, these limitations are subject to qualifications and exceptions. In the event that New Lionsgate does not receive distributions from its subsidiaries, it may be unable to make required principal and interest payments on its indebtedness.

Despite its current level of indebtedness, New Lionsgate and its subsidiaries may still be able to incur substantially more debt. This could further exacerbate the risks to New Lionsgate’s financial condition described above.

New Lionsgate and its subsidiaries may be able to incur significant additional indebtedness in the future. Although the agreements governing New Lionsgate’s corporate indebtedness contain restrictions on the incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions, and the additional indebtedness incurred in compliance with these restrictions could be substantial. These restrictions also will not prevent New Lionsgate from incurring obligations that do not constitute indebtedness under such agreements, such as certain qualified receivables financings. If new debt is added to New Lionsgate’s current debt levels, the related risks that New Lionsgate and its guarantors now face could intensify.

The terms of New Lionsgate’s corporate indebtedness restrict New Lionsgate’s current and future operations, particularly Lionsgate’s ability to respond to changes or to take certain actions.

The agreement governing New Lionsgate’s corporate indebtedness contain a number of restrictive covenants that impose operating and financial restrictions on New Lionsgate and limit its ability to engage in acts that may be in its long-term best interest, including restrictions on its ability to: incur, assume or guarantee

 

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additional indebtedness; issue certain disqualified stock; pay dividends or distributions or redeem or repurchase capital stock; prepay, redeem or repurchase debt that is junior in right of payment to the debt under such agreements; make loans or investments; incur liens; restrict dividends, loans or asset transfers from its restricted subsidiaries; sell or otherwise dispose of assets, including capital stock of subsidiaries and sale/leaseback transactions; consolidate or merge with or into, or sell substantially all of its assets to, another person; enter into transactions with affiliates; and enter into new lines of business.

In addition, New Lionsgate’s senior secured revolving credit facility requires New Lionsgate to maintain specified financial ratios. New Lionsgate’s ability to meet those financial ratios can be affected by events beyond its control, including the effects on its business from global pandemics, wars, recessions, tariffs and related government actions and consumer behavior; as such, New Lionsgate may be unable to meet such financial ratios.

A breach of the covenants under the agreements governing New Lionsgate’s corporate indebtedness, or nonpayment of any principal or interest when due thereunder, could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In addition, an event of default under New Lionsgate’s senior secured revolving credit facility would permit the lenders thereunder to terminate all commitments to extend further credit thereunder. Furthermore, if New Lionsgate were unable to repay the amounts due and payable thereunder, the lenders thereof could proceed against the collateral granted to them to secure such indebtedness. In the event New Lionsgate’s lenders or noteholders accelerate the repayment of its indebtedness, New Lionsgate and its subsidiaries may not have sufficient assets to repay that indebtedness.

New Lionsgate’s variable rate indebtedness subjects it to interest rate risk, which could cause its debt service obligations to increase significantly.

Certain of New Lionsgate’s borrowings, primarily borrowings under its senior secured revolving credit facility, and its film related obligations, are, and are expected to continue to be, at variable rates of interest and expose New Lionsgate to interest rate risk. If interest rates were to increase, New Lionsgate’s debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and its net income and cash flows, including cash available for servicing its indebtedness, will correspondingly decrease.

Risks Related to Tax Rules and Regulations

The Internal Revenue Service may not agree that New Lionsgate should be treated as a non-U.S. corporation for U.S. federal tax purposes and may not agree that its U.S. affiliates should not be subject to certain adverse U.S. federal income tax rules.

Under current U.S. federal tax law, a corporation is generally considered for U.S. federal tax purposes to be a tax resident in the jurisdiction of its organization or incorporation. Because New Lionsgate is incorporated outside of the U.S., it would generally be classified as a non-U.S. corporation (and, therefore, a non-U.S. tax resident) under these rules. However, Section 7874 of the Internal Revenue Code (the “Code”) (“Section 7874”) provides an exception to this general rule under which a non-U.S. incorporated entity may, in certain circumstances, be treated as a U.S. corporation (or surrogate foreign corporation) for U.S. federal tax purposes if it acquires a domestic entity (referred to as a “domestic entity acquisition”), and after the domestic entity acquisition, 80% or more (by vote or value) of the non-U.S. incorporated entity’s stock (60% or more for purposes of a surrogate foreign corporation determination) is held by former shareholders of the domestic entity by reason of holding stock in the domestic entity. This exception generally does not apply to situations in which, prior to the domestic entity acquisition, 80% or more (by vote and value) of the stock of the domestic entity was held directly or indirectly by a parent corporation (referred to as the “common parent”), and, after the domestic entity acquisition, the same common parent holds 80% or more (by vote and value) of the stock of the non-U.S. incorporated entity (referred to as the “internal group restructuring exception”).

 

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There is limited guidance regarding the application of Section 7874, including the application of the rules to the facts as they currently exist. If New Lionsgate were to be treated as a U.S. corporation for federal tax purposes, it could be subject to substantially greater U.S. tax liability than currently contemplated as a non-U.S. corporation. In addition, non-U.S. shareholders of New Lionsgate would be subject to U.S. withholding tax on the gross amount of any dividends paid by us to such shareholders (subject to an exemption or reduced rate available under an applicable tax treaty). Alternatively, if New Lionsgate were to be treated as a surrogate foreign corporation for federal tax purposes, it and its U.S. affiliates (including the U.S. affiliates historically owned by it) may, in some circumstances, be subject to certain adverse U.S. federal income tax rules (which, among other things, could retroactively increase its transition tax under Section 965 from 8%-15.5% to 35% (as well as that of its prospective U.S. acquiror as the case may be) and limit its ability to utilize certain U.S. tax attributes to offset U.S. taxable income, such as the use of net operating losses and certain tax credits, or to offset the gain resulting from certain transactions, such as from the transfer or license of property to a foreign related person during the 10-year period following the merger).

Future changes to U.S. and non-U.S. tax laws could adversely affect New Lionsgate.

The U.S. Congress, the Organisation for Economic Co-operation and Development (“OECD”) and other government agencies in jurisdictions where New Lionsgate and its affiliates will conduct business have had an extended focus on issues related to the taxation of multinational corporations. For the past several years, the primary focus has been in the area of “base erosion and profit shifting,” including situations where payments are made between affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. As part of its so-called Base Erosion and Profit Shifting (“BEPS”) project, OECD and the G-20 developed changes to numerous long-standing international tax principles. More recently, countries are increasingly seeking ways to tax what is sometimes referred to as the digitalized economy. For example, in response to the increasing globalization and digitalization of trade and business operations, OECD is working on a proposal as an extension of its BEPS project to establish a global minimum corporate taxation rate. The rules are designed to ensure that large multinational groups pay corporate income taxes at the minimum rate of 15% in the countries where they operate. As of January 2025, 55 jurisdictions have enacted or introduced legislation to implement these rules, while an additional 10 jurisdictions have taken concrete steps toward doing so.

Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. The U.S. Congress and various state legislatures are currently evaluating, or may in the future propose, tax legislation, including, at the federal level, new laws to address the expiration of provisions enacted under the Tax Cuts and Jobs Act of 2017, the timing and substance of which remain uncertain. Many countries in the European Union, as well as a number of other countries and organizations such as OECD, are increasingly scrutinizing the tax positions of companies and actively considering changes to existing tax laws that, if enacted, could increase its tax obligations in countries where it does business. For example, the OECD has urged its member countries to raise taxes to protect against future fiscal risks attributed to high deficit and debt levels. There can be no assurance that Canadian federal income tax laws, the judicial interpretation thereof, or the administrative policies and assessing practices of the Canada Revenue Agency will not be changed in a manner that adversely affects New Lionsgate or the holders of New Lionsgate new common shares. If U.S. or other foreign tax authorities change applicable tax laws, its overall taxes could increase, and its business, financial condition or results of operations may be adversely impacted.

Changes in foreign, state and local tax incentives may increase the cost of original programming content to such an extent that they are no longer feasible.

Original programming requires substantial financial commitment, which can occasionally be offset by foreign, state or local tax incentives. However, there is a risk that the tax incentives will not remain available for the duration of a series. If tax incentives are no longer available or reduced substantially, it may result in increased costs for it to complete the production, or make the production of additional seasons more expensive. If New Lionsgate is unable to produce original programming content on a cost-effective basis its business, financial condition and results of operations would be materially adversely affected.

 

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New Lionsgate’s tax rate is uncertain and may vary from expectations.

There is no assurance that New Lionsgate will be able to maintain any particular worldwide effective corporate tax rate because of uncertainty regarding the tax policies in the jurisdictions in which it and its affiliates operate. New Lionsgate’s actual effective tax rate may vary from its expectations, and such variance may be material. Additionally, tax laws or their implementation and applicable tax authority practices in any particular jurisdiction could change in the future, possibly on a retroactive basis, and any such change could have an adverse impact on New Lionsgate and its affiliates.

Legislative or other governmental action in the U.S. could adversely affect New Lionsgate’s business.

Legislative action may be taken by the U.S. Congress that, if ultimately enacted, could limit the availability of tax benefits or deductions that New Lionsgate expects to claim, override tax treaties upon which it expects to rely, or otherwise increase the taxes that the U.S. imposes on New Lionsgate’s worldwide operations. Such changes could materially adversely affect New Lionsgate’s effective tax rate and/or require it to take further action, at potentially significant expense, to seek to preserve its effective tax rate. In addition, if proposals were enacted that had the effect of limiting New Lionsgate’s ability as a Canadian company to take advantage of tax treaties with the U.S., it could incur additional tax expense and/or otherwise incur business detriment.

Changes in, or interpretations of, tax rules and regulations, and changes in geographic operating results, may adversely affect New Lionsgate’s effective tax rates.

New Lionsgate is subject to income taxes in Canada, the U.S. and foreign tax jurisdictions. It also conducts business and financing activities between its entities in various jurisdictions and it is subject to complex transfer pricing regulations in the countries in which it operates. Although uniform transfer pricing standards are emerging in many of the countries in which it operates, there is still a relatively high degree of uncertainty and inherent subjectivity in complying with these rules. In addition, due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change. New Lionsgate’s future effective tax rates could be affected by changes in tax laws or regulations or the interpretation thereof (including those affecting the allocation of profits and expenses to differing jurisdictions), by changes in the amount of revenue or earnings that it derives from international sources in countries with high or low statutory tax rates, by changes in the valuation of its deferred tax assets and liabilities, by changes in the expected timing and amount of the release of any tax valuation allowance, or by the tax effects of stock-based compensation. Unanticipated changes in its effective tax rates could affect its future results of operations. Further, New Lionsgate may be subject to examination of its income tax returns by federal, state, and foreign tax jurisdictions. New Lionsgate regularly assesses the likelihood of outcomes resulting from possible examinations to determine the adequacy of its provision for income taxes. In making such assessments, it exercises judgment in estimating its provision for income taxes. While New Lionsgate believes its estimates are reasonable, it cannot assure you that final determinations from any examinations will not be materially different from those reflected in its historical income tax provisions and accruals. Any adverse outcome from any examinations may have an adverse effect on its business and operating results, which could cause the market price of its securities to decline.

Risks Related to the Transactions

New Lionsgate may be unable to achieve some or all of the benefits that it expects to achieve through the Transactions.

New Lionsgate may be unable to achieve the full strategic and financial benefits expected to result from the Transactions, or such benefits may be delayed or may never occur at all. The Transactions are expected to provide the following benefits, among others:

 

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allow New Lionsgate to more effectively pursue its own distinct operating priorities and strategies, and enable the management team of New Lionsgate to focus on strengthening its core business, and pursue distinct and targeted opportunities to accelerate revenue and profitability;

 

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allow New Lionsgate to allocate its financial resources to meet the unique needs of its own business, enabling it to sharpen its focus on distinct strategic priorities;

 

  •  

allow the LG Studios Business to more effectively pursue its own distinct capital structure and capital allocation strategy;

 

  •  

allow New Lionsgate to more effectively articulate its own clear investment thesis for its business as a pure-play content studio, operating in a world of vertically integrated conglomerates, in order to attract a long-term investor base suited to its business, and facilitate its access to capital by providing investors with a distinct and targeted investment opportunity;

 

  •  

allow for continued participation by Lionsgate’s shareholders in New Lionsgate’s future earnings and growth potential following the completion of the Transactions; and

 

  •  

provide employees with stock-based compensation that more closely aligns with the performance of the underlying businesses.

New Lionsgate may not achieve these or other anticipated benefits for a variety of reasons, including, among others: (i) the Transactions have required significant amounts of management time and effort, which may have diverted and may continue to divert management attention from operating and growing New Lionsgate’s business and (ii) the other actions required to separate New Lionsgate’s and Starz’s respective businesses prior to the Arrangement Effective Time could have disrupted and may continue to disrupt New Lionsgate’s operations. If New Lionsgate fails to achieve some or all of the benefits expected to result from the Transactions, or if such benefits are delayed, New Lionsgate’s business, results of operations and financial condition could be materially and adversely affected.

Challenges in the commercial and credit environment may adversely affect the expected benefits of the Transactions and future access to capital on favorable terms.

Volatility in the world financial markets could increase borrowing costs or affect New Lionsgate’s ability to access the capital markets. New Lionsgate’s ability to issue debt or enter into other financing arrangements on acceptable terms could be adversely affected if there is a material decline in the demand for its business’s content, products or in the solvency of its customers or suppliers or if there are other significantly unfavorable changes in economic conditions, such as a recession. These conditions may also adversely affect the expected benefits of the Transactions, including by increasing the time and expense involved in the Transactions.

The historical financial information of the LG Studios Business and pro forma financial information of Lionsgate included in this prospectus is not necessarily representative of the results that New Lionsgate would have achieved as a separate, publicly traded company and may not be a reliable indicator of its future results.

As described elsewhere in this prospectus, for accounting and financial reporting purposes, the Starz Business is presented as being spun-off from Lionsgate in a “reverse spin” in accordance with GAAP, specifically FASB Accounting Standards Codification 505-60, “Spinoff and Reverse Spinoffs.” Following the completion of the Transactions, New Lionsgate reports the historical consolidated results of operations of the Starz Business in discontinued operations. The historical information about the LG Studios Business in this prospectus refers to the LG Studios Business as operated by and integrated with Lionsgate, excluding the Starz Business. The historical and pro forma financial information included in this prospectus is derived from the consolidated financial statements and accounting records of Lionsgate. Accordingly, the historical and pro forma financial information included in this prospectus does not necessarily reflect the financial condition, results of operations or cash flows that New Lionsgate would have achieved as a separate, publicly traded company during the periods presented or those that New Lionsgate will achieve in the future primarily as a result of the factors described below:

 

  •  

Following the completion of the Transactions, New Lionsgate’s results of operations and cash flows are likely to be more volatile, and it may need to obtain additional financing from banks, through

 

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public offerings or private placements of debt or equity securities, strategic relationships or other arrangements, which may or may not be available on terms acceptable to New Lionsgate and may be more costly.

 

  •  

Previously, the LG Studios Business was integrated with the Starz Business. Historically, Lionsgate’s businesses shared economies of scope and scale in costs, employees, vendor relationships and customer relationships. While Lionsgate has sought to minimize the impact on New Lionsgate when separating these arrangements, there is no guarantee these arrangements will continue to capture these benefits in the future.

 

  •  

The cost of capital for New Lionsgate’s business may be higher than Lionsgate’s cost of capital prior to the Transactions.

 

  •  

In connection with the Transactions, New Lionsgate retained certain existing indebtedness of Lionsgate and incurred certain additional indebtedness. New Lionsgate’s historical financial information does not reflect the debt that it incurred as part of the Transactions, including the financing discussed in the section entitled “Description of Material Indebtedness and Film Related Obligations.”

 

  •  

The unaudited pro forma condensed consolidated financial information included in this prospectus includes adjustments to reflect the divestiture of the Starz Business from Lionsgate. The pro forma adjustments are based upon available information and assumptions that management of Lionsgate believes are reasonable; however, actual outcomes may vary from such assumptions. In addition, the unaudited pro forma condensed consolidated financial information included in this prospectus does not give effect to on-going costs that New Lionsgate may incur or may be eliminated in connection with being a stand-alone company.

Other significant changes may occur in New Lionsgate’s cost structure, management, financing and business operations as a result of operating as a company separate from Starz. For additional information about the past financial performance of its business and the basis of presentation of the historical combined financial statements and the unaudited pro forma condensed consolidated financial statements of its business, see “Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the historical financial statements and accompanying notes included elsewhere in this prospectus.

New Lionsgate is a smaller, less diversified company than Lionsgate prior to the Transactions with a different financial profile.

The Transactions resulted in New Lionsgate being a smaller, less diversified company than Lionsgate prior to the Transactions, with more limited business concentrated primarily in film and television production and distribution. As a result, New Lionsgate may be more vulnerable to changing market conditions, which could have a material adverse effect on New Lionsgate’s business, financial condition and results of operations. In addition, the diversification of revenues, costs, and cash flows have diminished for New Lionsgate as a result of the Transactions, such that its results of operations, cash flows, working capital and financing requirements may be subject to increased volatility and its ability to fund capital expenditures and investments, pay dividends and service debt may be diminished. New Lionsgate may also lose capital allocation efficiency and flexibility, as New Lionsgate is no longer be able to use cash flow from the Starz Business.

Substantial sales of New Lionsgate new common shares, or the perception that such sales might occur, could depress the market prices of New Lionsgate new common shares.

The smaller relative size and different investment characteristics of New Lionsgate as compared to Lionsgate prior to the Transactions may not appeal to the investor base of Lionsgate prior to the completion of the Transactions, which could result in the disposition of New Lionsgate new common shares. Any sales of substantial amounts of New Lionsgate new common shares in the public market, for this or other reasons, or the

 

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perception that such sales might occur, could depress the market price of New Lionsgate new common shares. There is no assurance that there will be sufficient buying interest to offset any such sales, and, accordingly, the prices of New Lionsgate new common shares may be depressed by such sales and have periods of volatility. New Lionsgate has several shareholders who each hold a significant percentage of their respective outstanding common shares. If such shareholders sell a significant portion or all of their shares, the prices of New Lionsgate new common shares may be depressed by such sales.

Starz may fail to perform under the agreements that were executed as part of the Transactions, and such failure to perform could have a material adverse effect on New Lionsgate’s operations.

In connection with, and prior to, the Transactions, New Lionsgate and Lionsgate (which has been renamed Starz) have entered into an Arrangement Agreement, an amendment to the Arrangement Agreement, the Separation Agreement and certain other agreements, including a Transition Services Agreement, a Tax Matters Agreement Amendment, an Employee Matters Agreement and agreements governing other commercial licensing arrangements between the parties thereto. The Arrangement Agreement, Separation Agreement and other agreements, together with the documents and agreements by which the internal reorganization was effected, determine the allocation of assets and liabilities between the companies following the completion of the Transactions for those respective areas and include any applicable indemnifications related to liabilities and obligations. The Transition Services Agreement provides for the performance of certain services by each company for the benefit of the other for a period of time after the Transactions. New Lionsgate will rely on Starz to satisfy its performance and payment obligations under these agreements. If Starz is unable or unwilling to satisfy its obligations under these agreements, including its indemnification obligations, New Lionsgate could incur operational difficulties and/or losses. If New Lionsgate does not have in place its own systems and services, or if it does not have agreements with other providers of these services once certain Transactions-related agreements expire, it may not be able to operate its business effectively, and its profitability may decline.

New Lionsgate may be held liable to Starz if it fails to perform under its agreements, and the performance of such services may negatively affect New Lionsgate’s business and operations.

In connection with the Transactions, New Lionsgate and Starz entered into a Transition Services Agreement, agreements governing other commercial licensing arrangements between the parties to the Transactions and other agreements that provide for the performance of certain services by each company for the benefit of the other. If New Lionsgate does not satisfactorily perform its obligations under the agreements, it may be held liable for any resulting losses suffered by Starz, subject to certain limits. In addition, during the transition services periods, New Lionsgate’s management and employees may be required to divert their attention away from New Lionsgate’s business in order to provide services to Starz, which could adversely affect New Lionsgate’s business.

Certain of the transaction agreements between New Lionsgate and Starz may be on terms that differ from the terms each may have otherwise received from unaffiliated third parties.

The agreements that New Lionsgate and Lionsgate (which has been renamed Starz) have entered into in connection with the Transactions, including the Arrangement Agreement, Separation Agreement, Transition Services Agreement, Tax Matters Agreement Amendment, Employee Matters Agreement and agreements governing other commercial licensing arrangements, were prepared in the context of the Transactions while New Lionsgate and Starz were still part of the same combined company. Accordingly, during the period in which the terms of those agreements were prepared, New Lionsgate did not have an independent board of directors or a management team that was fully independent of Starz’s business. While New Lionsgate believes that the terms of such agreements generally reflect market terms, they may not reflect the same terms that would have resulted from negotiations with unaffiliated third parties.

 

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The transfer to New Lionsgate of certain contracts, permits and other assets and rights may have required or may require the consents or approvals of, or provide other rights to, third parties and governmental authorities. If such consents or approvals have not been or are not obtained, New Lionsgate may not be entitled to the full benefit of such contracts, permits and other assets and rights, which could increase its expenses or otherwise harm its business and financial performance.

The Separation Agreement provides for the transfer of certain contracts, permits and other assets and rights from Lionsgate (which has been renamed Starz) or its subsidiaries to New Lionsgate or its subsidiaries, or vice versa, in connection with the Transactions. The transfer of, or transfer of control related to, certain contracts, permits and other assets and rights may have required or may require consents or approvals of third parties or governmental authorities or provide other rights to third parties. In addition, in some circumstances, both New Lionsgate and Starz or their respective beneficiaries may have been beneficiaries of contracts, and New Lionsgate and/or Starz may have needed or may need the consents of third parties in order to split or separate the contracts or the relevant portion of the contracts to New Lionsgate.

Some parties may use consent requirements or other rights to seek to terminate contracts or obtain more favorable contractual terms from New Lionsgate, which, for example, could take the form of price increases, require the expenditure of additional resources in order to obtain the services or assets previously provided under the contract, or require the pursuit of arrangements with new third parties or letters of credit or other forms of credit support. If New Lionsgate has been or is unable to obtain required consents or approvals, it may be unable to obtain the benefits, permits, assets and contractual commitments that are intended to be allocated to them as part of the Transactions, and it may be required to seek alternative arrangements to obtain services and assets which may be more costly and/or of lower quality. The termination or modification of these contracts or permits or the failure to timely complete the transfer or separation of these contracts or permits could negatively impact New Lionsgate’s business, financial condition, results of operations and cash flows.

The Transactions may result in litigation and/or regulatory inquiries and investigations, which would harm New Lionsgate’s business, financial condition and operating results and could divert management attention.

In the past, securities class action litigation and/or shareholder derivative litigation and inquiries or investigations by regulatory authorities have often followed certain significant business transactions, such as the sale of a company or announcement of any other strategic transaction, such as the Transactions. Any litigation or investigation relating to the Transactions against New Lionsgate, whether or not resolved in either party’s favor, could result in substantial costs and divert the applicable company’s management’s attention from other business concerns, which could adversely affect the applicable company’s business and cash resources and the ultimate value of New Lionsgate new common shares.

The Transactions have involved significant time and expense, which could disrupt or adversely affect the business of New Lionsgate following the Transactions.

The process of completing the proposed Transactions has been time-consuming and has involved significant costs and expenses. The costs of the Transactions may be significantly higher than what New Lionsgate anticipated and may not yield a discernible benefit if the expected benefits of the Transactions are not realized. Executing the proposed Transactions also required significant amounts of New Lionsgate’s management’s time and effort, which may have diverted management’s attention from operating and growing New Lionsgate’s businesses. In addition, if the expected benefits of the Transactions are not realized, there may be a negative impact on the market price of New Lionsgate new common shares.

New Lionsgate and its shareholders could suffer material adverse tax consequences as a result of the Transactions.

There can be no assurance that the New Lionsgate new common shares will be qualified investments for purposes of the Canadian Tax Act. New Lionsgate will endeavor to ensure that the New Lionsgate new common shares are

 

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qualified investments for Registered Plans. However, no assurance can be given in this regard. The Canadian Tax Act imposes penalties for the acquisition or holding of non-qualified investments by Registered Plans.

The transactions contemplated by the arrangement may have given rise to tax for holders of LGEC common shares who are resident in Canada for the purposes of the Canadian Tax Act or for holders of LGEC common shares who are non-residents of Canada and to whom such shares constitute “taxable Canadian property.”

Certain of the anticipated tax consequences to New Lionsgate are based on valuations of the LG Studios Business and the Starz Business. In the event that such valuations are successfully challenged by one or more relevant taxing authorities, it is possible that New Lionsgate could suffer material adverse tax consequences.

Actual or potential conflicts of interest may develop between the management and directors of Starz, on the one hand, and the management and directors of New Lionsgate, on the other hand.

The management and directors of New Lionsgate and Starz own both Starz common shares and New Lionsgate new common shares. This ownership overlap could create, or appear to create, potential conflicts of interest when New Lionsgate’s and Starz’s respective directors and executive officers face decisions that could have different implications for New Lionsgate and Starz. For example, potential conflicts of interest could arise in connection with the resolution of any dispute between New Lionsgate and Starz regarding terms of the agreements governing the Transactions and the relationship between New Lionsgate and Starz, including the Arrangement Agreement, the Separation Agreement, the Employee Matters Agreement, the Tax Matters Agreement Amendment, the Transition Services Agreement or any commercial agreements between the parties thereto or their affiliates. Potential conflicts of interest could also arise if New Lionsgate and Starz enter into any commercial arrangements in the future.

The allocation of intellectual property rights between Starz and New Lionsgate as part of the Transactions could adversely affect New Lionsgate’s competitive positions and/or ability to develop and commercialize certain content and services.

In connection with the Transactions, New Lionsgate and Starz entered into commercial agreements governing, among other things, the allocation of intellectual property rights related to their respective businesses. The allocation of intellectual property rights between the two parties may also impose limitations on New Lionsgate’s ability to fully develop and commercialize certain content, brands and services. For example, although Starz generally has secured long-term licenses for its current and library originals that were greenlit prior to the Transactions from Lionsgate, Starz does not own the intellectual property rights for most of such shows because they were allocated to Lionsgate. However, as part of such original programming license agreements, Starz typically has rights of first negotiation/first refusal for periods that extend beyond the initial run of the programs to acquire exclusive rights to any television derivative or spinoff of such programs. Additionally, Starz generally owns or co-owns the intellectual property rights to most of its current development slate and owns or co-owns most of its originals following the Transactions.

Risks Related to New Lionsgate New Common Shares

New Lionsgate cannot be certain that an active trading market for its common shares will develop or be sustained and its share price may fluctuate significantly.

The trading of New Lionsgate new common shares began on the first trading day after the Arrangement Effective Time. However, New Lionsgate cannot guarantee that an active trading market for its common shares will develop or be sustained, nor can New Lionsgate predict the prices at which its common shares may trade. Similarly, New Lionsgate cannot predict whether the combined market value of the New Lionsgate new common shares and Starz common shares will be less than, equal to or greater than the market value of LGEC Class A

 

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shares and LGEC Class B shares, respectively, prior to the Transactions, or whether the market value of the New Lionsgate new common shares will be less than, equal to or greater than the market value of LG Studios common shares prior to the Transactions.

The market price of New Lionsgate new common shares may decline or fluctuate significantly due to a number of factors, many of which may be beyond New Lionsgate’s control, including:

 

  •  

the limited trading history of the New Lionsgate new common shares;

 

  •  

actual or anticipated fluctuations in New Lionsgate’s operating results, as applicable, and the expectations of securities analysts, investors and the financial community with respect thereto;

 

  •  

actual or anticipated fluctuations in operating revenues derived from New Lionsgate’s core business, as applicable;

 

  •  

the gain or loss of significant customers;

 

  •  

changes in management;

 

  •  

changes in financial estimates and recommendations by securities analysts;

 

  •  

announcements of developments affecting New Lionsgate’s business or systems or expansion plans by New Lionsgate or others;

 

  •  

the amount of short interest in New Lionsgate new common shares;

 

  •  

the operating and share price performance of comparable companies; and

 

  •  

changes in the regulatory and legal environment under which New Lionsgate operates.

New Lionsgate does not expect to pay any cash dividends for the foreseeable future.

New Lionsgate currently intends to retain future earnings to finance and grow its business. As a result, New Lionsgate does not expect to pay any cash dividends for the foreseeable future. All decisions regarding the payment of dividends by New Lionsgate are made in the sole discretion of the New Lionsgate Board from time to time in accordance with applicable law. There can be no assurance that New Lionsgate will have sufficient surplus under applicable law to be able to pay any dividends at any time in the future. This may result from extraordinary cash expenses, actual costs exceeding contemplated costs, funding of capital expenditures or increases in reserves. If New Lionsgate does not pay dividends, the price of the New Lionsgate new common shares must appreciate for shareholders to receive a gain on their investment. This appreciation may not occur. Further, shareholders may have to sell some or all of their New Lionsgate new common shares in order to generate cash flow from their investment.

Shareholders’ percentage ownership in New Lionsgate may be diluted in the future.

In the future, shareholders’ percentage ownership in New Lionsgate may be diluted because of equity awards that New Lionsgate grants to New Lionsgate’s directors, officers and employees or otherwise as a result of equity issuances for acquisitions, strategic transactions or capital market transactions. New Lionsgate’s employees and former employees of Lionsgate (regardless of the division in which such former employees served) received equity awards for New Lionsgate new common shares after the Transactions as a result of conversion of their Lionsgate equity awards to New Lionsgate equity awards. New Lionsgate anticipates that, in normal course, its compensation committees will grant additional stock-based awards to its employees. Such awards will have a dilutive effect on the earnings per share of New Lionsgate which could adversely affect the market price of the New Lionsgate new common shares. For more detailed description of the treatment of the Lionsgate equity awards in connection with the Transactions, see “The Transactions—Treatment of Lionsgate Equity Awards.”

In addition, New Lionsgate’s articles, which we refer to as the “New Lionsgate Articles,” allow for the issuance of one or more classes or series of preference shares that may have powers, preferences and/or other

 

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special rights, including preferences over the New Lionsgate new common shares with respect to dividends and distributions. The terms of such preference shares could dilute the voting power or reduce the value of the New Lionsgate new common shares. Similarly, the repurchase or redemption rights or liquidation preferences that New Lionsgate could assign to holders of preference shares could affect the residual value of the New Lionsgate new common shares. For additional information, see “Description of Capital Stock.”

If securities or industry analysts do not publish research or publish misleading or unfavorable research about New Lionsgate’s business, New Lionsgate’s share price and/or trading volume could decline.

The trading markets for the New Lionsgate new common shares depends in part on the research and reports that securities or industry analysts publish about New Lionsgate or its business. If one or more of the analysts downgrades the New Lionsgate new common shares or publishes unfavorable research about New Lionsgate’s business, the share price of the New Lionsgate new common shares may decline. If one or more of the analysts cease coverage of the New Lionsgate new common shares or fail to publish reports on it regularly, demand for the New Lionsgate new common shares could decrease, which could cause the price or trading volume of the New Lionsgate new common shares to decline.

 

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes and incorporates by reference “forward-looking statements” within the meaning of the securities laws. All statements that are not historical facts are “forward-looking statements.” The words “estimate,” “projects,” “intend,” “expect,” “believe,” “anticipate,” “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “guidance,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning, and statements concerning strategy, identify forward-looking statements. These forward-looking statements include, among others, statements regarding future financial performance, anticipated trends, and prospects in the markets and industries in which New Lionsgate operates, business prospects and strategies, including the Transactions, and anticipated financial position, liquidity, and capital needs relating to New Lionsgate. For those statements, New Lionsgate claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Forward-looking statements are estimates and projections reflecting judgments and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Although New Lionsgate believes that the estimates and projections reflected in the forward-looking statements are reasonable, these expectations may prove to be incorrect. Other unknown or unpredictable factors also could have material adverse effects on New Lionsgate’s future results, performance or achievements. When considering forward-looking statements, you should keep in mind the factors described under the caption “Risk Factors.” Important factors, some of which are described under the caption “Risk Factors,” that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, among others:

 

  •  

Weakness in the global economy and financial markets, including a recession.

 

  •  

Competitive factors that could adversely affect New Lionsgate’s operations, including new product or service introductions and technologies by its current or future competitors, consolidation or strategic alliances among media companies, and/or distributors to improve their competitive position or develop new models for the delivery of entertainment, increased pricing pressure due to the impact of low-cost content providers or new entrants into its markets.

 

  •  

The adverse financial impact resulting from unfavorable changes in foreign currency exchange rates.

 

  •  

Regional, national and foreign economic factors, including inflation, deflation, and fluctuations in interest rates, and their potential effect on the operating performance of New Lionsgate.

 

  •  

Security breaches of New Lionsgate’s information systems, which could impair its ability to conduct business, compromise sensitive information of New Lionsgate and its customers and other business partners, and result in actions by regulatory bodies or civil litigation.

 

  •  

The impact of business combinations or divestitures, including any volatility in earnings relating to acquisition-related costs, and New Lionsgate’s ability to successfully integrate any business it may acquire.

 

  •  

Conditions in international markets, including social and political conditions, civil unrest, terrorist activity, governmental changes, restrictions on the ability to transfer capital across borders, tariffs and other protectionist measures, difficulties in protecting and enforcing its intellectual property rights and governmental expropriation of assets. New Lionsgate’s international operations also increase its compliance risks, including risks under the Foreign Corrupt Practices Act and other anti-corruption laws, as well as regulatory and privacy laws.

 

  •  

Natural disasters, global pandemics, wars (such as Russia’s invasion of Ukraine), terrorism, labor disruptions or strikes, and international conflicts that could cause significant economic disruption and political and social instability, resulting in decreased demand for New Lionsgate’s services or adversely affect New Lionsgate’s content procurement and distribution capabilities.

 

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  •  

Pending and potential future litigation or other proceedings asserting, including and/or subpoenas seeking information with respect to, alleged violations of law and/or regulation, including the availability or collectability of insurance relating to any such claims.

 

  •  

New or changing laws and regulations affecting domestic and foreign operations, or changes in enforcement practices, including laws relating to trade, monetary and fiscal policies or taxation (including tax reforms that could adversely impact multinational corporations).

 

  •  

Issuance of new or revised accounting standards by the Financial Accounting Standards Board or the SEC.

 

  •  

The expected benefits of the Transactions.

 

  •  

The possibility that any consents or approvals required in connection with the Transactions have not been or will not be received or obtained within the expected time frame, on the expected terms or at all.

 

  •  

Financing transactions undertaken in connection with the Transactions and risks associated with additional indebtedness.

 

  •  

The risk that dissynergy costs, costs of restructuring transactions and other costs incurred in connection with the Transactions will exceed estimates.

 

  •  

The impact of the Transactions on the LG Studios Business and the risk that the Transactions may be more difficult, time-consuming or costly than expected, including the impact on New Lionsgate’s respective resources, systems, procedures and controls, diversion of management’s attention and the impact on relationships with customers, suppliers, employees and other business counterparties.

 

  •  

Other risks and uncertainties discussed in this prospectus and other reports that New Lionsgate may file with the SEC.

New Lionsgate believes these forward-looking statements are reasonable. However, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. The above list of factors is not exhaustive or necessarily in order of importance. New Lionsgate is not under any obligation, nor does it intend, to make publicly available any update or other revisions to any of the forward-looking statements contained in this prospectus to reflect circumstances existing after the date of this prospectus or to reflect the occurrence of future events even if experience or future events make it clear that any expected results expressed or implied by those forward-looking statements will not be realized, except as required by law.

 

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THE TRANSACTIONS

Structure of the Transactions

The Transactions resulted in the separation of the LG Studios Business from the Starz Business through a series of steps that resulted in the pre-transaction shareholders of LGEC owning shares in two separate public companies: (1) LGEC, which has been renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business, and (2) New Lionsgate, which has been renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the LG Studios Business.

The Transactions consisted of elements of a typical Canadian “spinoff” and were completed through the Plan of Arrangement, which is a British Columbia statutory procedure providing for approval with respect to fairness and supervision with respect to procedure by the BC Court. The Plan of Arrangement was subject to approval by the shareholders of LGEC, the shareholders of LG Studios and the BC Court. The Transactions occurred on a taxable basis to the shareholders of LGEC under the Canadian Tax Act, with non-residents of Canada expected to have been exempt from Canadian income tax on any gains realized. Holders of LG Studios common shares who held such shares as capital property for purposes of the Canadian Tax Act will generally not realize either a capital gain or a capital loss on the exchange of LG Studios common shares for New Lionsgate new common shares.

With respect to dissent rights, under the Interim Orders, registered shareholders of Lionsgate as of the Record Date were granted the right to dissent in respect of the Lionsgate Transactions Proposal, and registered shareholders of LG Studios as of the Record Date were granted dissent rights in respect of the LG Studios Reorganization Proposal (collectively, the “dissent rights”), provided they strictly followed the procedures specified in Section 237 through Section 247 of the BC Act, as modified by the Plan of Arrangement, the applicable Interim Order, and any other order of the BC Court. None of the registered shareholders who were granted dissent rights exercised such rights.

In connection with the completion of the Transactions, among other things:

 

  •  

LGEC shareholders first received, in exchange for each outstanding LGEC Class A share that they held:

 

  •  

One (1) New Lionsgate Class A share; and

 

  •  

One (1) New Lionsgate Class C preferred share.

 

  •  

LGEC shareholders first received, in exchange for each outstanding LGEC Class B share that they held:

 

  •  

One (1) New Lionsgate Class B share; and

 

  •  

One (1) New Lionsgate Class C preferred share.

 

  •  

LGEC changed its name to Starz Entertainment Corp. and created a new class of voting common shares, the Starz common shares.

 

  •  

New Lionsgate created a new class of common shares without par value (the “New Lionsgate new common shares”) and New Lionsgate shareholders (formerly LGEC shareholders) received, in exchange for each:

 

  •  

New Lionsgate Class A share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class A share in the Initial Share Exchange, one and twelve one-hundredths (1.12) New Lionsgate new common shares and one and twelve one-hundredths (1.12) Starz common shares; and

 

  •  

New Lionsgate Class B share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class B share in the Initial Share Exchange, one (1) New Lionsgate new common share and one (1) Starz common share.

 

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  •  

Such exchange transactions by LGEC shareholders are collectively referred to as the “Second Share Exchange.”

 

  •  

As a result of the steps described above, each of New Lionsgate and Starz have a single class of “one share, one vote” common shares.

 

  •  

Following the Second Share Exchange, pursuant to the Reverse Stock Split, the Starz common shares were consolidated on a 15-to-1 basis, such that every fifteen (15) Starz common shares were consolidated into one (1) Starz common share.

 

  •  

LG Studios shareholders, other than New Lionsgate and dissenting shareholders, transferred to New Lionsgate each LG Studios common share, without par value (“LG Studios common shares”), they held and such shareholders received, in exchange for each LG Studios common share so transferred, a number of New Lionsgate new common shares equal to the product of the LG Studios Consideration Shares divided by the LG Studios Flip Shares (the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equaled the aggregate number of LG Studios common shares obtained when the LG Studios Flip Percentage was multiplied by the quotient of (a) the aggregate number of New Lionsgate new common shares issued to New Lionsgate shareholders (formerly LGEC shareholders) in the Second Share Exchange divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equaled the quotient, expressed as a percentage, of (1) the total number of LG Studios common shares issued and outstanding immediately prior to the Arrangement Effective Time and held by LG Studios shareholders other than the LG Sirius Owned Shares divided by (2) the total number of LG Studios common shares issued and outstanding immediately prior to the Arrangement Effective Time. Such transactions by LG Studios shareholders are collectively referred to as the “LG Studios Flip.” The LG Studios Reorganization Ratio was determined to be 0.989632 and approximately 34,880,006 New Lionsgate new common shares were issued to LG Studios shareholders in connection with the Transactions. The LG Studios common shares were delisted from Nasdaq and deregistered under the Exchange Act.

 

  •  

New Lionsgate changed its name to “Lionsgate Studios Corp.”

 

  •  

LG Studios changed its name to “Lionsgate Studios Holding Corp.”

Reasons for the Transactions

The Lionsgate Board and the LG Studios Board believed that the separation of the LG Studios Business and the Starz Business into two independent, publicly traded companies was in the best interests of Lionsgate and its shareholders for a number of reasons, including:

 

  •  

Enhanced Focus on Strategic, Operational Drivers to Accelerate Revenue and Profit Growth. The Transactions allow New Lionsgate and Starz to more effectively pursue their own distinct operating priorities and strategies, and enable the management teams of each of the two companies to focus on strengthening their core businesses and pursue distinct and targeted opportunities to accelerate revenue and profitability.

 

  •  

The Transactions allow New Lionsgate to better highlight opportunities and value in its diversified theatrical wide release and multi-platform motion picture business and its television production and distribution business, and continue to drive growth of its film and television library.

 

  •  

The Transactions allow Starz to focus on areas where it can scale its business cost-effectively, to take advantage of bundling and packaging opportunities and to efficiently grow its operations on a standalone basis.

 

  •  

More Efficient Resource and Capital Allocation to Pursue Each Company’s Strategic Goals. The Transactions allow each of New Lionsgate and Starz to allocate its financial resources to meet the unique needs of its own business, enabling each company to sharpen its focus on distinct strategic priorities. The Transactions also allow each business to more effectively pursue its own distinct capital structures and capital allocation strategy.

 

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  •  

The Transactions allow New Lionsgate to re-invest positive free cash flow exclusively into the continued growth of its content business.

 

  •  

The Transactions allow Starz to focus its cash flow on subscriber growth and retention, increased profitability and content development, production and acquisition.

 

  •  

Targeted Investment Opportunity. The Transactions allow each of New Lionsgate and Starz to more effectively articulate its own clear investment thesis for its business as a pure-play content studio and platform, respectively, operating in a world of vertically integrated conglomerates, in order to attract a long-term investor base suited to its business, and facilitate each company’s access to capital by providing investors with two distinct and targeted investment opportunities.

 

  •  

The Transactions allow New Lionsgate to become one of the only pure-play publicly traded content studios.

 

  •  

The Transactions allow Starz to become one of the only pure-play premium subscriber platforms, with a focused content strategy targeting two valuable and scalable core demographics, offering premium original programming that complements other streaming offerings.

 

  •  

Creation of Independent Equity Currencies. The Transactions create fully independent equity securities, including affording the Starz Business direct access to the capital markets, enabling each of New Lionsgate and Starz to use its capital stock to consummate future transactions. As a result, New Lionsgate and Starz have more flexibility to capitalize on their unique strategic opportunities.

 

  •  

Employee Recruitment, Incentives and Retention. The Transactions allow each of New Lionsgate and Starz to more effectively attract, incentivize and retain employees through the use of stock-based compensation that more closely reflects and aligns management and employee incentives with specific growth objectives, financial goals and business performance. In addition, the Transactions allow incentive structures and targets at each company to be better aligned with each underlying business.

 

  •  

Stronger Corporate Governance. The Lionsgate Board also believed that a one (1) share, one (1) vote capital structure at Starz and New Lionsgate was in the best interests of Starz, New Lionsgate and their respective shareholders as it strengthens corporate governance by aligning the voting power and economic interests of all shareholders, streamlines Starz’s and New Lionsgate’s capital structures, reducing complexity and potentially making Starz and New Lionsgate more attractive to retail and institutional investors, who may not prefer or may be unable to invest in dual-class structures, and may appeal to a broader range of investors by providing a more straightforward investment opportunity, enhancing liquidity and improving long-term shareholder value.

The Lionsgate Board and the LG Studios Board also considered a number of potentially negative factors in evaluating the Transactions, including:

 

  •  

Risk of Failure to Achieve Anticipated Benefits of the Transactions. New Lionsgate and Starz may not achieve the anticipated benefits of the Transactions on the expected timeframe or at all for a variety of reasons, including, among others, fluctuating market conditions and the demand of the Transactions on each of their respective management’s time, effort and resources.

 

  •  

Loss of Scale and Increased Administrative Costs. The LG Studios Business and the Starz Business benefited from certain economies of scale operating within the broader corporate organization that are no longer available after the Transactions. As standalone companies, New Lionsgate and Starz have reduced purchasing power with respect to vendor relationships. In addition, the transition to two standalone public companies has and will continue to result in incremental accounting, tax, legal, information system, recruiting and executive hiring costs as each of New Lionsgate and Starz require corporate general and administrative functions.

 

  •  

Working Capital Requirements and Cost of Capital. Generally, the working capital requirements and capital for general corporate purposes for each of the Starz Business and the LG Studios Business,

 

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including capital expenditures and acquisitions, were historically satisfied as part of the corporate-wide cash management policies of Lionsgate, including the other business. New Lionsgate’s and/or Starz’s results of operations and cash flows may be more volatile, and each of them may need to obtain additional financing from banks, through public offerings or private placements of debt or equity securities, through strategic relationships or through other arrangements, which may or may not be available on terms acceptable to New Lionsgate or Starz, as applicable, and may be more costly.

In determining to pursue the Transactions, the Lionsgate Board and the LG Studios Board each concluded the potential benefits of the Transactions outweighed the foregoing factors. See “Risk Factors—Risks Related to the Transactions” included elsewhere in this prospectus.

Treatment of Lionsgate Equity Awards

Background. Lionsgate previously maintained four equity compensation plans: the Lionsgate 2023 Plan, the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (the “Lionsgate 2019 Plan”), the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan (the “Lionsgate 2017 Plan”) and the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan (together with the Lionsgate 2023 Plan, the Lionsgate 2019 Plan and the Lionsgate 2017 Plan, the “Prior Plans”). New Lionsgate assumed the Lionsgate 2023 Plan and amended and restated the Lionsgate 2023 Plan as the New Lionsgate 2025 Plan as approved prior to the Transactions by the New Lionsgate Board and by LGEC, as the sole shareholder of New Lionsgate, which became effective as of the date of the completion of the Transactions, subject to the approval of holders of LGEC Class A shares which was obtained. Awards outstanding under the equity plans of Lionsgate including awards outstanding under the Prior Plans immediately prior to the completion of the Transactions held by a Lionsgate employee who became a New Lionsgate employee after the Transactions (a “New Lionsgate Employee”) or by a former employee of Lionsgate (regardless of the division in which such former employee served), were converted into awards of New Lionsgate under the New Lionsgate 2025 Plan, which is attached hereto as Exhibit 10.5. Starz adopted the Starz 2025 Plan as approved prior to the Transactions by the Lionsgate Board, which became effective as of the date of the Transactions, subject to the approval of holders of LGEC Class A shares which was obtained. Awards outstanding under the equity plans of Lionsgate immediately prior to the Transactions including awards outstanding under the Prior Plans immediately prior to the Transactions held by a Lionsgate employee who became an employee of Starz (a “Starz Employee”), were converted into awards of Starz immediately after the Transactions and assumed under the Starz 2025 Plan. Each Lionsgate equity award that was outstanding immediately prior to the Transactions was adjusted to reflect the impact of the Transactions, as described below.

Stock Options

Stock Options Held by Starz Employees. Each award of Lionsgate stock options held by a Starz Employee was converted into an award of stock options with respect to the Starz common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Stock Options Held by New Lionsgate Employees and Former Employees. Each award of Lionsgate stock options held by a New Lionsgate Employee or by a former employee of Lionsgate was converted into an award of stock options with respect to New Lionsgate new common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

 

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Stock Appreciation Rights

Stock Appreciation Rights Held by Starz Employees. Each award of Lionsgate stock appreciation rights held by a Starz Employee was converted into an award of stock appreciation rights with respect to Starz common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Stock Appreciation Rights Held by New Lionsgate Employees and Former Employees. Each award of Lionsgate stock appreciation rights held by a New Lionsgate Employee or by a former employee was converted into an award of stock appreciation rights with respect to the New Lionsgate new common shares. The exercise price of, and number of shares subject to, each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Time-Vesting Restricted Share Units

Time-Vesting Restricted Share Units Held by Starz Employees and Starz Directors. Each award of Lionsgate time-vesting restricted share units held by a Starz Employee or a non-employee director of Lionsgate who became a non-employee director of Starz but not a non-employee director of New Lionsgate immediately following the Transactions was converted into an award of time-vesting restricted share units with respect to Starz common shares. The number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Time-Vesting Restricted Share Units Held by New Lionsgate Employees, New Lionsgate Directors and Former Lionsgate Employees. Each award of Lionsgate time-vesting restricted share units held by a New Lionsgate Employee, by a non-employee director of Lionsgate who became a non-employee director of New Lionsgate but not a non-employee director of Starz immediately following the Transactions or by a former employee of Lionsgate was converted into an award of time-vesting restricted share units with respect to the New Lionsgate new common shares. The number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions.

Time-Vesting Restricted Share Units Held by Dual Directors. Each award of Lionsgate time-vesting restricted share units held by a non-employee director of Lionsgate who became a non-employee director on both the Starz Board and the New Lionsgate Board immediately following the Transactions (a “Dual Director”) was converted into an award of time-vesting restricted share units with respect to Starz common shares and an award of time-vesting restricted share units with respect to New Lionsgate new common shares. The number of shares subject to such Starz award and the number of shares subject to such New Lionsgate award was the number of Starz common shares and the number of New Lionsgate new common shares, respectively, that would have been

 

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received pursuant to the Plan of Arrangement had such Dual Director held the number of LGEC common shares subject to such Lionsgate time-vesting restricted share units immediately prior to the Arrangement Effective Time.

Performance-Based Restricted Share Units

Performance-Vesting Restricted Share Units Held by Starz Employees. Each award of Lionsgate performance-based restricted share units held by a Starz Employee was converted into an award of restricted share units with respect to Starz common shares, provided that the number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions, subject to any modifications to applicable performance-based vesting conditions determined by the Lionsgate Compensation Committee prior to the Arrangement Effective Time, or by the Starz Compensation Committee after the Arrangement Effective Time, in order to reflect the impact of the Transactions.

Performance-Vesting Restricted Share Units Held by New Lionsgate Employees. Each award of Lionsgate performance-based restricted share units held by a New Lionsgate Employee was converted into an award of restricted share units with respect to New Lionsgate new common shares, provided that the number of shares subject to each such award was adjusted in a manner intended to preserve the aggregate intrinsic value of the original Lionsgate award as measured immediately before and immediately after the Transactions (in each case, as calculated based on the applicable stock price measurements specified in the Employee Matters Agreement), subject to rounding. Such adjusted award otherwise continued to have the same terms and conditions that applied to the original Lionsgate award immediately prior to the Transactions, subject to any modifications to applicable performance-based vesting conditions determined by the Lionsgate Compensation Committee prior to the Arrangement Effective Time, or by the New Lionsgate Compensation Committee after the Arrangement Effective Time, in order to reflect the impact of the Transactions.

Results of the Transactions

Following the Transactions, New Lionsgate became a separate, publicly traded company. Approximately 285,688,670 New Lionsgate new common shares were issued in connection with the Transactions, which reflects any exercise of stock options (“stock options”) or share appreciation rights (“SARs”) relating to the LGEC common shares prior to the Arrangement Effective Time.

New Lionsgate, Lionsgate and LG Studios have entered into an Arrangement Agreement, an amendment to the Arrangement Agreement, a Separation Agreement and other related agreements to effect the Transactions and to provided a framework for their relationship after the Transactions, including a Transition Services Agreement, a Tax Matters Agreement Amendment, an Employee Matters Agreement and agreements governing other commercial licensing arrangements between the parties thereto. The Separation Agreement and other agreements provided for, among other things, the allocation between New Lionsgate and Starz of the assets, employees, liabilities and obligations (including, among others, investments, property, intellectual property and employee benefits and tax-related assets and liabilities) of Lionsgate and its subsidiaries attributable to periods prior to, at and after New Lionsgate’s separation from Lionsgate and govern the relationship between New Lionsgate and Starz subsequent to the completion of the Transactions. For additional information regarding the Separation Agreement and other transaction agreements, see the sections entitled “Risk Factors—Risks Related to the Transactions” and “Certain Relationships and Related Party Transactions.”

Transferability of New Lionsgate New Common Shares

The New Lionsgate new common shares that were issued in connection with the Transactions were issued in reliance on an exemption from the prospectus requirements of securities legislation in each province and territory

 

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of Canada. Subject to certain disclosure and regulatory requirements and to customary restrictions applicable to distributions of shares that constitute “control distributions,” the shares issued pursuant to the Transactions may be resold in each province and territory in Canada, subject in certain circumstances, to the usual conditions that no unusual effort, or no effort, has been made to prepare the market or create demand.

Markets for New Lionsgate New Common Shares

The New Lionsgate new common shares are listed on the NYSE under the symbol “LION”. On July 23, 2025, the closing price of New Lionsgate new common shares as reported on NYSE was $6.56 per share.

The prices at which New Lionsgate new common shares trade may fluctuate significantly, particularly until an orderly public market for such shares develops. Trading prices for the New Lionsgate new common shares are determined in the public markets and may be influenced by many factors. See “Risk Factors—Risks Related to the Transactions.”

Conditions to the Transactions

The Transactions were completed on May 6, 2025, beginning at the Arrangement Effective Time, in accordance with the Plan of Arrangement, and were conditioned on the satisfaction of the conditions set forth in the Separation Agreement (or the waiver thereof by Lionsgate in its sole and absolute discretion), including, among others:

 

  •  

the Transactions having been duly approved by the Lionsgate Board;

 

  •  

the Transactions having been duly approved by the LG Studios Board;

 

  •  

the approval by the Lionsgate’s shareholders of the Lionsgate Transactions Proposal at the Lionsgate Annual General and Special Meeting;

 

  •  

the approval by the LG Studios’ shareholders of the LG Studios Reorganization Proposal at the LG Studios Special Meeting;

 

  •  

the SEC declaring effective Lionsgate’s and New Lionsgate’s registration statement on Form S-4 and such registration statement not being the subject of any order suspending the effectiveness of the registration statement; and there being no proceedings for such purposes having been instituted or threatened by the SEC;

 

  •  

the internal reorganization having been completed in accordance with the Separation Agreement;

 

  •  

the receipt by Lionsgate Entertainment Inc., a subsidiary of New Lionsgate, of an opinion from Lionsgate Entertainment Inc.’s outside tax advisor to the effect that the requirements for tax-free treatment under Section 355 of the Internal Revenue Code should be satisfied;

 

  •  

an independent appraisal firm acceptable to the Lionsgate Board having delivered an opinion to the Lionsgate Board confirming the solvency and financial viability of Starz after giving effect to the Transactions, in a form and substance acceptable to the Lionsgate Board in its sole and absolute discretion;

 

  •  

all actions necessary or appropriate under applicable Canadian and U.S. federal, state, provincial or other securities or blue sky laws and the rule and regulations thereunder having been taken or made and, where applicable, having become effective or been accepted;

 

  •  

the execution of certain agreements contemplated by the Separation Agreement;

 

  •  

no order, injunction or decree issued by any government authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions being in effect;

 

  •  

the New Lionsgate new common shares to be issued having been accepted for listing on the NYSE, subject to official notice of issuance; and

 

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  •  

no other event or development existing or having occurred that, in the judgment of the Lionsgate Board, or the LG Studios Board, having made it inadvisable to effect the Transactions.

Accounting Treatment

Notwithstanding the legal form of the Transactions described elsewhere in this prospectus, for accounting and financial reporting purposes, the Starz Business will be presented as being spun-off from New Lionsgate. This presentation is in accordance with GAAP, specifically FASB Accounting Standards Codification 505-60, “Spinoff and Reverse Spinoffs,” and is primarily a result of the relative significance of the LG Studios Business as compared to the Starz Business and the continued involvement of existing senior management of Lionsgate with the LG Studios Business and, as a result, New Lionsgate. As a result, the separation of the Starz Business from the LG Studios Business qualifies as a discontinued operation. For additional information, see “Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Listing of New Lionsgate New Common Shares

The New Lionsgate new common shares are listed for trading on the NYSE.

Regulatory Requirements Related to the Transactions

New Lionsgate is not aware of any material governmental approvals or actions that were necessary for the completion of the Transactions. However, certain Lionsgate and LG Studios shareholders may have had filing obligations under the Hart–Scott–Rodino Antitrust Improvements Act of 1976.

Post-Closing Governance and Management

The following individuals are the executive officers of New Lionsgate. Some of New Lionsgate’s executive officers were previously employees of Lionsgate, but ceased to hold such positions upon the completion of the Transactions. See “Directors and Executive Officers—Management of New Lionsgate”.

 

   

Name

   

Position

  Jon Feltheimer    Chief Executive Officer
  Michael Burns    Vice Chair
  James W. Barge    Chief Financial Officer
  Brian Goldsmith    Chief Operating Officer
  Bruce Tobey    Executive Vice President and General Counsel

For more information regarding New Lionsgate’s governance and management, see the section of this prospectus entitled “Directors and Executive Officers.”

 

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DIVIDEND POLICY

New Lionsgate does not expect to pay a regular dividend. However, the timing, declaration, amount of and payment of any dividends is within the discretion of the New Lionsgate Board and will depend upon many factors, including its financial condition, earnings, capital requirements of its operating subsidiaries, covenants associated with certain of its debt service obligations, legal requirements, regulatory constraints, industry practice, ability to access capital markets and other factors deemed relevant by the New Lionsgate Board. Moreover, if the New Lionsgate Board determines to pay any dividend in the future, there can be no assurance that it will continue to pay such dividends or the amount of such dividends.

 

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NEW LIONSGATE CAPITALIZATION

The following table sets forth the capitalization of New Lionsgate as of March 31, 2025, on a historical basis and on a pro forma basis to give effect to the pro forma adjustments included in Unaudited Pro Forma Condensed Consolidated Financial Information. Notwithstanding the legal form of the Transactions described elsewhere in this prospectus, for accounting and financial reporting purposes, the Starz Business will be presented as being spun-off from Lionsgate. This presentation is in accordance with U.S. GAAP and is primarily a result of the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of existing Old Lionsgate senior management with the Studio Business. Therefore, the historical financial statements of Old Lionsgate will represent the historical financial statements of New Lionsgate given the presentation of the Starz Business as discontinued operations upon completion of the Transactions.

The information below is not necessarily indicative of what New Lionsgate’s capitalization would have been had the Transactions and related transactions, including financing transactions, been completed as of March 31, 2025. In addition, it is not necessarily indicative of New Lionsgate’s future capitalization. This table should be read in conjunction with “Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lionsgate Studios Corp.,” and the Consolidated Financial Statements and notes included in the “Index to Financial Statements” section of this prospectus.

 

     As of
March 31, 2025		  
     Actual(1)      Pro Forma  
     (Amounts in millions)  

Cash and cash equivalents

    $ 223.7      $ 179.4  

Corporate debt(2)

      2,291.2        1,653.2  

Equity:

      

Old Lionsgate Class A common shares, no par value, 500.0 shares authorized, 83.7 million shares issued and outstanding (Pro Forma - no shares authorized, no shares issued and outstanding) and Old Lionsgate Class B common shares, no par value, 500.0 shares authorized, 156.8 million shares issued and outstanding (Pro Forma - no shares authorized, no shares issued and outstanding)

      3,196.8        —   

New Lionsgate new common shares, no par value, no shares authorized, no shares issued and outstanding (Pro Forma - unlimited authorized, 285.7 million shares issued and outstanding)

      —         2,433.1  

Accumulated deficit

      (3,534.1 )       (3,537.7 ) 

Accumulated other comprehensive income

      72.6        61.3  

Noncontrolling interests

      (88.0 )       28.8  
  

 

 

     

 

 

  

Total equity (deficit)

      (352.7 )       (1,014.5 ) 
  

 

 

     

 

 

  

Total capitalization

    $ 2,162.2      $ 818.1  
  

 

 

     

 

 

  

 

(1)

This column is derived from Old Lionsgate’s audited consolidated financial statements for the fiscal year ended March 31, 2025 included in this prospectus.

(2)

Corporate debt excludes film related obligations of approximately $2,073.8 million (net of deferred financing costs) as of March 31, 2025, see Note 6 and Note 7 to the audited consolidated financial statements in this prospectus.

 

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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF NEW LIONSGATE

The following unaudited pro forma condensed consolidated financial information of New Lionsgate presents the financial information of Lions Gate Entertainment Corp. adjusted to give effect to the separation of the Starz Business and the Lionsgate Studios Corp. (NASDAQ: LION) (“Legacy Lionsgate Studios” or the Studio Business) and other significant corporate and financing transactions of Old Lionsgate related thereto. The following unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X.

Old Lionsgate encompassed the Studio Business comprised of its motion picture and television studio operations, and the Starz Business, comprised of the STARZ-branded premium subscription platforms. On May 6, 2025, through a series of transactions contemplated by the Arrangement Agreement, Old Lionsgate completed the separation of the Studio Business and the Starz Business (the “Transactions”) that resulted in the pre-transaction shareholders of Old Lionsgate owning shares in two separate public companies: (i) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (NYSE: LION) (and herein after referred to as the “Company,” “Lionsgate,” “we,” “us,” or “our”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” (“Starz”) and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate. Prior to the Transactions, New Lionsgate had no assets or operations and therefore its financial information is not included in this pro forma financial information. New Lionsgate was determined to be the accounting spinnor in the Transactions and therefore the financial statements of New Lionsgate will reflect that of Old Lionsgate following the Transactions. Therefore, the pro forma financial information has been prepared by utilizing Old Lionsgate’s historical financial statements and adjusting for the Transactions and other significant corporate and financing transactions related thereto.

The following unaudited pro forma condensed consolidated financial statements consist of unaudited pro forma condensed consolidated statements of operations for the fiscal years ended March 31, 2025, 2024 and 2023, and an unaudited pro forma condensed consolidated balance sheet as of March 31, 2025. The unaudited pro forma condensed consolidated financial information should be read together with the following:

 

  •  

Old Lionsgate’s historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the three fiscal years ended March 31, 2025 included as Exhibit 99.1 in Legacy Lionsgate Studios’ Annual Report on From 10-K;

 

  •  

Legacy Lionsgate Studios historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its annual report on Form 10-K for the three fiscal years ended March 31, 2025; and

 

  •  

The historical combined financial statements of the Starz Business of Old Lionsgate and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Starz Entertainment Corp’s annual report on Form 10-K for the three fiscal years ended March 31, 2025.

The unaudited pro forma condensed consolidated financial statements is provided for illustrative and informational purposes only and does not purport to represent or be indicative of the actual results of operations or financial condition and should not be construed as representative of the future results of operations or financial condition of New Lionsgate.

The unaudited pro forma condensed consolidated balance sheet gives effect to the Transactions and other significant corporate and financing transactions of New Lionsgate related thereto, not otherwise reflected in the historical consolidated financial statements of Old Lionsgate, as if they had occurred on March 31, 2025. The

 

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unaudited pro forma condensed consolidated statement of operations for the fiscal year ended March 31, 2025 gives effect to the Transactions and other significant corporate and financing transactions of New Lionsgate related thereto, as if they had occurred on April 1, 2024. The unaudited pro forma condensed consolidated statement of operations for the fiscal years ended March 31, 2024 and 2023 reflect only the retroactive presentation required under the discontinued operations accounting guidance and therefore do not reflect any other transaction adjustments. Accordingly, intercompany transactions between the Studio Business and the Starz Business remain eliminated in the pro forma condensed consolidated statements of operations for the fiscal years ended March 31, 2024 and 2023.

Capitalized terms defined in this unaudited pro forma condensed consolidated financial information of New Lionsgate have the meanings ascribed to such terms in, and for the purposes of, this section.

Description of the Transactions

In connection with the completion of the Transactions and related transactions, pre-transaction shareholders of Old Lionsgate holding Class A voting shares (“Old Lionsgate Class A Shares”) received one and twelve one-hundredths (1.12) Lionsgate new common shares (“Lionsgate Common Shares”) and one and twelve one-hundredths (1.12) Starz Entertainment Corp. common shares (“Starz Common Shares”) and pre-transaction shareholders of Old Lionsgate holding Class B non-voting shares (“Old Lionsgate Class B Shares”) received one Lionsgate Common Share and one Starz Common Share. Pre-transaction Legacy Lionsgate Studios shareholders, other than Old Lionsgate, received, in exchange for each Legacy Lionsgate Studios common share, without par value (“Legacy Lionsgate Studios Common Share”), they held, a number of Lionsgate Common Shares equal to the product of the Lionsgate Studios Consideration Shares divided by the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation and held by Legacy Lionsgate Studios shareholders other than Old Lionsgate (such shares, the “LG Studios Flip Shares” and such ratio, the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equals the aggregate number of Legacy Lionsgate Studios Common Shares obtained when the LG Studios Flip Percentage is multiplied by the quotient of (a) the aggregate number of Lionsgate Common Shares issued to Lionsgate shareholders divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equals the quotient, expressed as a percentage, of (1) the LG Studios Flip Shares divided by (2) the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation. Such transactions by Legacy Lionsgate Studios shareholders are collectively referred to as the “LG Studios Flip.” Immediately following the completion of the Transactions, there were 285,688,670 Lionsgate Common Shares outstanding. The LG Studios Reorganization Ratio was determined to be 0.989632 and approximately 34,880,006 New Lionsgate new common shares were issued to LG Studios shareholders in connection with the Transactions.

According to United States (“U.S.”) generally accepted accounting principles (“GAAP”), due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with New Lionsgate and the Studio Business following the completion of the Transactions, New Lionsgate (which holds the Studio Business) is considered the accounting spinnor or divesting entity and Starz (which holds the Starz Business) is considered the accounting spinnee or divested entity. As a result, the pro rata distribution of the Starz Business will be recorded through equity with no gain or loss recorded. Beginning in the first quarter ending June 30, 2025, New Lionsgate’s historical financial results for comparative prior periods will reflect the Starz Business as discontinued operations.

Description of Other Transactions

Business Combination and Prior Legacy Lionsgate Studios Separation

On May 13, 2024, Old Lionsgate consummated the transactions (the “Business Combination”) contemplated by that certain business combination agreement (the “Business Combination Agreement”), with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius, LG Orion Holdings ULC, a

 

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British Columbia unlimited liability company and wholly-owned subsidiary of Old Lionsgate (“Legacy Lionsgate Studios”) and other affiliates of SEAC. Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of Legacy Lionsgate Studios and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continues the existing business operations of Legacy Lionsgate Studios, consisting of the Studio Business of Old Lionsgate. The Studio Business consists of the businesses of Old Lionsgate’s Motion Picture and Television Production segments, together with substantially all of Old Lionsgate’s corporate general and administrative functions and costs. Legacy Lionsgate Studios became a separate publicly traded company and its common shares commenced trading on Nasdaq under the symbol “LION” on May 14, 2024.

In connection with and prior to the Business Combination, Old Lionsgate and Legacy Lionsgate Studios entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to Legacy Lionsgate Studios such that Legacy Lionsgate Studios held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Prior Legacy Lionsgate Studios Separation”).

As a result of the Business Combination, approximately 87.8% of the total shares of Legacy Lionsgate Studios continued to be held by Old Lionsgate, while other shareholders owned approximately 12.2% of Legacy Lionsgate Studios, including the period immediately following the closing of the Business Combination through immediately prior to the Transactions. In addition to establishing Legacy Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Old Lionsgate. The net proceeds were used to partially pay down amounts outstanding under Old Lionsgate’s corporate debt.

Basis of Pro Forma Presentation

The unaudited pro forma condensed consolidated financial information has been prepared in accordance with Article 11 of Regulation S-X. Management has made significant estimates and assumptions in its determination of the pro forma adjustments based on information available as of the date of this prospectus. As the unaudited pro forma condensed consolidated financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented as additional information becomes available. Management considers this basis of presentation to be reasonable under the circumstances.

The unaudited pro forma condensed consolidated financial statements have been adjusted to give effect to the following:

 

  •  

The disposition by Old Lionsgate of the Starz Business including certain assets and liabilities and operations that comprise the Starz Business, in connection with the Transactions and the resulting treatment as a discontinued operation (see Note 2).

 

  •  

Other transactions, related to the Transactions, including changes in the capital structure:

 

  •  

The LG Studios Flip, as defined above, including the elimination of noncontrolling interest in Legacy Lionsgate Studios which was previously recognized as a result of the Prior Legacy Lionsgate Studios Separation and Business Combination;

 

  •  

The pay-off of Old Lionsgate’s existing Revolving Credit Facility and remaining Term Loan A (all as defined under “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lionsgate Studios Corp. — Liquidity and Capital Resources” included elsewhere herein), with $325.1 million of Lionsgate’s 5.5% senior notes due April 15, 2029 (the “Existing Notes”) remaining obligations of the Starz Business that are presented as part of discontinued operations and $389.9 million of the Lionsgate Exchange Notes (also defined under

 

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“Management’s Discussion and Analysis of Financial Condition and Results of Operations of Lionsgate Studios Corp. — Liquidity and Capital Resources”, the “Exchange Notes”) which will remain with New Lionsgate;

 

  •  

The transfer of cash from Starz to New Lionsgate in connection with the capital structure allocation as a result of the Transactions, including the allocation of Existing Notes and Exchange Notes discussed above and the settlement of intercompany financing arrangements; and

 

  •  

The impact to interest expense as a result of New Lionsgate’s incurrence of new debt in anticipation of the Transactions, including IP facilities of approximately $1.3 billion executed during the fiscal year ended March 31, 2025 (see details below at Note 3(b) and Note 3(c)).

 

  •  

The impact, if any, of various agreements entered into in connection with the Transactions inclusive of the separation agreement, a transition services agreement, a tax matters agreement, an employee matters agreement, and other commercial agreements between New Lionsgate and Starz.

 

  •  

The related income tax effects of the pro forma adjustments.

Beginning in the first quarter ending June 30, 2025, New Lionsgate’s historical financial results for comparative prior periods will reflect the Starz Business as discontinued operations.

The unaudited pro forma condensed consolidated financial statements are presented based on information currently available, are intended for informational purposes, are not intended to represent what New Lionsgate’s financial position and results of operations actually would have been had the Transactions and related transactions occurred on the dates indicated above and do not reflect all actions that may be undertaken by New Lionsgate after the disposition of the Starz Business. In addition, the unaudited pro forma condensed consolidated financial statements are not necessarily indicative of New Lionsgate’s results of operations and financial position for any future period.

 

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NEW LIONSGATE

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2025

(in millions)

 

     Historical
Lionsgate
(as reported)		      Discontinued
Operations
(Note 2(A))		     Transaction
Accounting
Adjustments		     Notes     Pro Forma
New
Lionsgate		  

ASSETS

            

Cash and cash equivalents

    $ 223.7      $ (15.1 )    $ (29.2 )      3 (b)    $ 179.4  

Accounts receivable, net

      636.5        (51.4 )      215.0       3 (a)      800.1  

Other current assets

      375.8        (17.5 )      —          358.3  
  

 

 

     

 

 

    

 

 

      

 

 

  

Total current assets

      1,236.0        (84.0 )      185.8         1,337.8  

Investment in films and television programs and program rights, net

      2,913.1        (919.0 )      —          1,994.1  

Property and equipment, net

      82.7        (48.6 )      —          34.1  

Investments

      77.8        —        —          77.8  

Intangible assets

      836.8        (816.0 )      —          20.8  

Goodwill

      808.5        —        —          808.5  

Other assets

      867.2        (41.8 )      —          825.4  
  

 

 

     

 

 

    

 

 

      

 

 

  

Total assets

    $ 6,822.1      $ (1,909.4 )    $ 185.8       $ 5,098.5  
  

 

 

     

 

 

    

 

 

      

 

 

  

LIABILITIES

            

Accounts payable

    $ 310.1      $ (63.3 )    $ —        $ 246.8  

Content related payables

      134.5        (99.4 )      —          35.1  

Other accrued liabilities

      269.7        (54.6 )      —          215.1  

Participations and residuals

      670.2        (29.5 )      —          640.7  

Film related and other obligations

      1,708.7        (90.7 )      —          1,618.0  

Debt - short term portion

      134.0        —        (134.0 )      3 (c)      —   

Deferred revenue

      240.1        (38.4 )      36.8       3 (a)      238.5  
  

 

 

     

 

 

    

 

 

      

 

 

  

Total current liabilities

      3,467.3        (375.9 )      (97.2 )        2,994.2  

Debt

      2,157.2        (318.2 )      (185.8 )      3 (c)      1,653.2  

Participations and residuals

      409.3        —        —          409.3  

Film related and other obligations

      365.1        —        —          365.1  

Other liabilities

      493.0        (75.9 )      —          417.1  

Deferred revenue

      169.1        —        —          169.1  

Deferred tax liabilities

      20.1        (8.8 )      —          11.3  
  

 

 

     

 

 

    

 

 

      

 

 

  

Total liabilities

      7,081.1        (778.8 )      (283.0 )        6,019.3  

Redeemable noncontrolling interest

      93.7        —        —          93.7  

EQUITY (DEFICIT)

            

Old Lionsgate Class A shares, no par value, 500.0 million shares authorized, 83.7 million shares issued and outstanding (Pro Forma - no shares authorized, no shares issued and outstanding) and Old Lionsgate Class B shares, no par value, 500.0 million shares authorized, 156.8 million shares issued and outstanding (Pro Forma - no shares authorized, no shares issued and outstanding)

      3,196.8        (1,111.4 )      472.4       3 (d)      —   
          (2,557.8 )      3 (e)   

 

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     Historical
Lionsgate
(as reported)		     Discontinued
Operations
(Note 2(A))		     Transaction
Accounting
Adjustments		     Notes     Pro Forma
New
Lionsgate		  

New Lionsgate new common shares, no par value, no shares authorized, no shares issued and outstanding (Pro Forma - unlimited authorized, 285.7 million shares issued and outstanding)

      —          2,433.1       3 (e)      2,433.1  

Accumulated deficit

      (3,534.1 )      —        (3.6 )      3 (c)      (3,537.7 ) 

Accumulated other comprehensive income

      72.6       (19.2 )      7.9       3 (e)      61.3  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total shareholders’ equity (deficit)

      (264.7 )      (1,130.6 )      352.0         (1,043.3 ) 

Noncontrolling interests

      (88.0 )      —        116.8       3 (e)      28.8  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total equity (deficit)

      (352.7 )      (1,130.6 )      468.8         (1,014.5 ) 
  

 

 

    

 

 

    

 

 

      

 

 

  

Total liabilities, redeemable noncontrolling interest and equity

    $ 6,822.1     $ (1,909.4 )    $ 185.8       $ 5,098.5  
  

 

 

    

 

 

    

 

 

      

 

 

  

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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NEW LIONSGATE

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED MARCH 31, 2025

(in millions, except per share amounts)

 

     Historical
Lionsgate
(as reported)		     Discontinued
Operations
(Note 2(B))		     Transaction
Accounting
Adjustments		     Notes     Pro Forma
New
Lionsgate		  

Revenues

    $ 3,947.9     $ (1,363.2 )    $ 619.7       3 (g)    $ 3,204.4  

Expenses:

           

Direct operating

      2,352.1       (611.8 )      476.4       3 (g)      2,216.7  

Distribution and marketing

      776.9       (378.2 )      —          398.7  

General and administration

      445.4       (87.9 )      (10.0 )      3 (j)      347.5  

Depreciation and amortization

      188.1       (170.3 )      —          17.8  

Restructuring and other

      253.5       (172.0 )      —          81.5  
  

 

 

    

 

 

    

 

 

      

 

 

  

Total expenses

      4,016.0       (1,420.2 )      466.4         3,062.2  
  

 

 

    

 

 

    

 

 

      

 

 

  

Operating income (loss)

      (68.1 )      57.0       153.3         142.2  

Interest expense

      (283.6 )      22.6       1.3       3 (h)      (259.7 ) 

Interest and other income

      15.1       (0.2 )      —          14.9  

Other gains (losses), net

      (19.0 )      7.1       —          (11.9 ) 

Gain (loss) on extinguishment of debt

      (7.5 )      2.5       (10.2 )      3 (i)      (15.2 ) 

Equity interests income

      4.3       —        —          4.3  
  

 

 

    

 

 

    

 

 

      

 

 

  

Loss from continuing operations before income taxes

      (358.8 )      89.0       144.4         (125.4 ) 

Income tax provision

      (14.8 )      0.3       —        3 (k)      (14.5 ) 
  

 

 

    

 

 

    

 

 

      

 

 

  

Net loss from continuing operations

      (373.6 )      89.3       144.4         (139.9 ) 

Less: Net loss (income) from continuing operations attributable to noncontrolling interests

      11.6       —        (13.2 )      3 (f)      (1.6 ) 
  

 

 

    

 

 

    

 

 

      

 

 

  

Net loss from continuing operations attributable to controlling interest

    $ (362.0 )    $ 89.3     $ 131.2       $ (141.5 ) 
  

 

 

    

 

 

    

 

 

      

 

 

  

Per share information attributable to shareholders:

           

Basic net loss from continuing operations per common share

    $ (1.49 )          3 (l)    $ (0.51 ) 
  

 

 

          

 

 

  

Diluted net loss from continuing operations per common share

    $ (1.49 )          3 (l)    $ (0.51 ) 
  

 

 

          

 

 

  

Weighted average number of common shares outstanding:

           

Basic

      238.9           3 (l)      279.8  

Diluted

      238.9           3 (l)      279.8  

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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NEW LIONSGATE

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED MARCH 31, 2024

(in millions, except per share amounts)

 

     Historical
Lionsgate
(as reported)		     Discontinued
Operations
(Note 2(B))		     Notes     Pro Forma
New
Lionsgate		  

Revenues

    $ 4,016.9     $ (1,566.7 )      3 (g)    $ 2,450.2  

Expenses:

         

Direct operating

      2,189.2       (720.0 )      3 (g)      1,469.2  

Distribution and marketing

      911.4       (446.2 )        465.2  

General and administration

      490.5       (107.4 )        383.1  

Depreciation and amortization

      192.2       (176.6 )        15.6  

Restructuring and other

      508.5       (378.3 )        130.2  

Goodwill impairment

      663.9       (663.9 )        —   
  

 

 

    

 

 

      

 

 

  

Total expenses

      4,955.7       (2,492.4 )        2,463.3  
  

 

 

    

 

 

      

 

 

  

Operating loss

      (938.8 )      925.7         (13.1 ) 

Interest expense

      (269.8 )      23.8         (246.0 ) 

Interest and other income

      22.1       (3.7 )        18.4  

Other expense

      (26.9 )      7.6         (19.3 ) 

Gain (loss) on extinguishment of debt

      19.9       (21.2 )        (1.3 ) 

Gain on investments

      3.5       —          3.5  

Equity interests income

      8.7       —          8.7  
  

 

 

    

 

 

      

 

 

  

Loss from continuing operations before income taxes

      (1,181.3 )      932.2         (249.1 ) 

Income tax benefit (provision)

      65.0       (46.9 )        18.1  
  

 

 

    

 

 

      

 

 

  

Net loss from continuing operations

      (1,116.3 )      885.3         (231.0 ) 

Less: Net loss from continuing operations attributable to noncontrolling interests

      13.4       —          13.4  
  

 

 

    

 

 

      

 

 

  

Net loss from continuing operations attributable to controlling interest

    $ (1,102.9 )    $ 885.3       $ (217.6 ) 
  

 

 

    

 

 

      

 

 

  

Per share information attributable to shareholders:

         

Basic net loss from continuing operations per common share

    $ (4.77 )        3 (l)    $ (0.89 ) 
  

 

 

        

 

 

  

Diluted net loss from continuing operations per common share

    $ (4.77 )        3 (l)    $ (0.89 ) 
  

 

 

        

 

 

  

Weighted average number of common shares outstanding:

         

Basic

      233.6         3 (l)      243.7  

Diluted

      233.6         3 (l)      243.7  

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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NEW LIONSGATE

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FISCAL YEAR ENDED MARCH 31, 2023

(in millions, except per share amounts)

 

     Historical
Lionsgate
(as reported)		     Discontinued
Operations
(Note 2(B))		     Notes     Pro Forma
New
Lionsgate		  

Revenues

    $ 3,854.8     $ (1,537.1 )      3 (g)    $ 2,317.7  

Expenses:

         

Direct operating

      2,312.5       (807.1 )      3 (g)      1,505.4  

Distribution and marketing

      801.7       (493.2 )        308.5  

General and administration

      531.1       (109.9 )        421.2  

Depreciation and amortization

      180.3       (162.3 )        18.0  

Restructuring and other

      411.9       (389.8 )        22.1  

Goodwill impairment

      1,475.0       (1,475.0 )        —   
  

 

 

    

 

 

      

 

 

  

Total expenses

      5,712.5       (3,437.3 )        2,275.2  
  

 

 

    

 

 

      

 

 

  

Operating income (loss)

      (1,857.7 )      1,900.2         42.5  

Interest expense

      (221.2 )      31.4         (189.8 ) 

Interest and other income

      6.4       (0.7 )        5.7  

Other expense

      (26.9 )      6.7         (20.2 ) 

Gain (loss) on extinguishment of debt

      57.4       (58.7 )        (1.3 ) 

Gain on investments

      44.0       —          44.0  

Equity interests income

      0.5       —          0.5  
  

 

 

    

 

 

      

 

 

  

Loss from continuing operations before income taxes

      (1,997.5 )      1,878.9         (118.6 ) 

Income tax provision

      (21.3 )      2.5         (18.8 ) 
  

 

 

    

 

 

      

 

 

  

Net loss from continuing operations

      (2,018.8 )      1,881.4         (137.4 ) 

Less: Net loss from continuing operations attributable to noncontrolling interests

      8.6       —          8.6  
  

 

 

    

 

 

      

 

 

  

Net loss from continuing operations attributable to controlling interest

    $ (2,010.2 )    $ 1,881.4       $ (128.8 ) 
  

 

 

    

 

 

      

 

 

  

Per share information attributable to shareholders:

         

Basic net loss from continuing operations per common share

    $ (8.82 )        3 (l)    $ (0.54 ) 
  

 

 

        

 

 

  

Diluted net loss from continuing operations per common share

    $ (8.82 )        3 (l)    $ (0.54 ) 
  

 

 

        

 

 

  

Weighted average number of common shares outstanding:

         

Basic

      227.9         3 (l)      237.9  

Diluted

      227.9         3 (l)      237.9  

See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

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NEW LIONSGATE

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.

Basis of Presentation

The unaudited pro forma condensed consolidated balance sheet gives effect to the Transactions and other significant corporate and financing transactions of New Lionsgate related thereto, to the extent not reflected in Old Lionsgate’s historical financial information, as if they had occurred on March 31, 2025. The pro forma adjustments to the unaudited pro forma condensed consolidated statement of operations for the fiscal year ended March 31, 2025 gives effect to the Transactions and other significant corporate and financing transactions of New Lionsgate related thereto, as if they had occurred on April 1, 2024. The unaudited pro forma condensed consolidated statement of operations for the fiscal years ended March 31, 2024 and 2023 reflect only the retroactive presentation required under the discontinued operations accounting guidance and therefore do not reflect any other transaction adjustments. Accordingly, intercompany transactions between the Studio Business and the Starz Business remain eliminated in the pro forma condensed consolidated statements of operations for the fiscal years ended March 31, 2024 and 2023.

The information in the “Discontinued Operations” column in the unaudited pro forma condensed consolidated statements of operations was derived from Old Lionsgate’s consolidated financial statements and related accounting records for the fiscal years ended March 31, 2025, 2024, and 2023 and reflects the operating results of the Starz Business under the accounting rules for discontinued operations. Discontinued Operations does not include any allocation of general corporate overhead expense of Old Lionsgate to the Starz Business, which results in all of Old Lionsgate’s corporate general and administrative expenses, net of reductions for the transition services agreement (see Note 3(j)), reflected in New Lionsgate’s unaudited pro forma condensed consolidated statements of operations, which is consistent with those functions remaining with New Lionsgate.

Pro forma New Lionsgate results of operations presented in these unaudited pro forma financial statements differ from the audited consolidated results of operations of Legacy Lionsgate Studios as presented elsewhere in this prospectus primarily due to the impact of Transactions and other related adjustments for the fiscal year ended March 31, 2025, the elimination of intercompany licensing revenues and related direct operating expense for the fiscal years ended March 31, 2024 and 2023 and the allocation of Old Lionsgate’s historical corporate general and administrative expenses to the Starz Business.

The foregoing historical financial statements have been prepared in accordance with U.S. GAAP. The unaudited pro forma condensed consolidated financial information has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described in the notes to the unaudited pro forma condensed consolidated financial information. Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed consolidated financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

The unaudited pro forma condensed consolidated financial information does not give effect to any synergies, operating efficiencies, tax savings or cost savings that may be associated with the Transactions.

The pro forma adjustments reflecting the completion of the Transactions are based on currently available information and assumptions and methodologies that management believes are reasonable under the circumstances. The pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Transactions based on information available to management at the current time.

 

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The unaudited pro forma condensed consolidated financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the company following completion of the Transactions.

 

2.

Discontinued Operations

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2025, and the unaudited pro forma condensed consolidated statements of operations for the fiscal years ended March 31, 2025, 2024, and 2023 includes the following adjustments:

(A) Reflects the balance sheet deconsolidation adjustments for the discontinued operations of the Starz Business, including the associated assets, liabilities, and equity, that are directly related to the Transactions, and debt that was assumed by the Starz Business following the completion of the Transactions.

(B) Reflects the statement of operations adjustments for the discontinued operations of the Starz Business that are directly related to the Transactions. The following is a description of selected financial information from the “Discontinued Operations” column:

 

  •  

No portion of Old Lionsgate’s historical corporate general and administrative expenses were allocated to discontinued operations because U.S. GAAP precludes the elimination of these amounts from continuing operations.

 

  •  

Expenses incurred directly attributable to the Transactions, including legal, accounting and tax advisory services, are reflected as discontinued operations, including $37.9 million, $5.8 million, and $10.2 million, for the fiscal years ended March 31, 2025, 2024, and 2023, respectively. After March 31, 2025, New Lionsgate incurred additional expenses directly attributable to the Transaction of $34.1 million, including but not limited to investment advisory fees, which have not been reflected in the unaudited pro forma condensed consolidated statement of operations as such costs are reported within discontinued operations as incurred.

 

  •  

Discontinued operations includes only interest expense related to debt positions that are directly related to the Starz Business or remained with the Starz Business following the completion of the Transactions, specifically the Existing Notes which are issued by a Starz entity, and to the extent not exchanged for new 5.5% senior notes which became obligations of New Lionsgate, along with any other film related and other obligations directly related to the Starz Business. No other interest expense was allocated to discontinued operations.

 

  •  

Income Taxes attributable to discontinued operations were calculated by applying tax allocation methods in accordance with U.S. GAAP.

The discontinued operations of the Starz Business presented in these pro forma financial statements differs from the information presented for the Media Networks segment in Lionsgate’s historical consolidated financial statements primarily due to the Media Networks’ segment profit including only revenue less direct operating, distribution and marketing and general and administrative expenses. The discontinued operations of the Starz Business, when applicable, includes restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content strategy and certain charges related to the COVID-19 global pandemic which are excluded from the Media Networks’ segment profit. The discontinued operations of the Starz Business also includes the impact of certain eliminations associated with the intercompany licensing arrangement for the license of content from Old Lionsgate to the Starz Business.

 

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3.

Transaction Accounting Adjustments

The pro forma adjustments included in the unaudited pro forma condensed consolidated balance sheet as of March 31, 2025 are as follows:

(a) Reflects the recognition of accounts receivable representing amounts due from the Starz Business to the Studio Business and deferred revenue from the Starz Business as of March 31, 2025 that were previously eliminated in consolidation but are expected to remain outstanding following the completion of the Transactions.

(b) Reflects the expected change in cash as a result of the refinancing of Old Lionsgate’s existing Term Loan A (which is based on the outstanding balance of $314.4 million as of March 31, 2025) and Revolving Credit Facility, which did not have an outstanding balance as of March 31, 2025.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2025 includes a cash transfer from the Starz Business based on the actual cash held by the Starz Business at the time of the Transactions, including cash proceeds resulting from to the incurrence of new debt by Starz.

The following reflects the significant components of the pro forma adjustment to cash related to the Transactions:

 

(in millions)    As of
March 31, 2025		  

Payment of issuance costs from incurrence of debt (see 3(c))

    $ (9.0 ) 

Repayment of existing debt (see Note 3(c))

      (314.4 ) 

Cash transfer from Starz

      294.2  
  

 

 

  

Total pro forma adjustment to cash

    $ (29.2 ) 
  

 

 

  

(c) The following table summarizes debt refinancing activity as of March 31, 2025:

 

(in millions)    As of
March 31, 2025		  

Cash repayment of debt

    $ (314.4 ) 

Write-off unamortized debt issuance costs

      3.6  

Issuance costs

      (9.0 ) 
  

 

 

  

Total pro forma adjustment to debt

    $ (319.8 ) 
  

 

 

  

Pro forma adjustment to Short term debt

    $ (134.0 ) 
  

 

 

  

Pro forma adjustment to Long term debt

    $ (185.8 ) 
  

 

 

  

In connection with the close of the Transactions, all outstanding obligations in respect of principal, interest and fees under Old Lionsgate’s credit agreement, were repaid in full and all commitments thereunder were terminated. New Lionsgate entered into a new credit agreement (the “Lionsgate Credit Agreement”) which provides for an $800.0 million senior secured revolving credit facility. New Lionsgate incurred debt issuance costs of approximately $9.0 million, which is reflected as a reduction to cash and debt.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2025 reflects the pay-off of $314.4 million of corporate debt, which is equal to the outstanding amount of Old Lionsgate’s remaining outstanding balance of its existing Term Loan A as of March 31, 2025 and excludes (i) $389.9 million of the Exchange Notes which will remain with New Lionsgate; (ii) approximately $1.3 billion of IP credit facilities which will remain with New Lionsgate, and (iii) $325.1 million of Existing Notes which were not exchanged into New 5.5% senior notes and will remain with the Starz Business and are therefore reflected within discontinued operations. The total pro forma adjustment to debt includes a write-off of unamortized

 

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debt issuance costs as of $3.6 million, which is also reflected as a reduction to accumulated deficit within equity on the unaudited pro forma condensed consolidated balance sheet as of March 31, 2025.

In addition to the above, Starz incurred $300.0 million in new debt ($294.2 million net of debt issuance costs), with a portion of the cash proceeds transferred to New Lionsgate as part of the capital allocation described above (see Note 3(b)).

If a portion of the debt paid off is deemed to be a modification of terms rather than an extinguishment of debt as assumed herein, then that portion of unamortized debt issuance costs related to the early repayment would be amortized over the life of the new debt issuances, and the portion related to the upfront financing fees and costs would be expensed as a loss on extinguishment of debt.

(d) Reflects the impact to Old Lionsgate’s shareholders’ equity as a result of the recognition of accounts receivables due from the Starz Business and deferred revenue from the Starz Business described in Note 3(a), transaction costs described in Note 3(b) and the cash transfer from the Starz Business described in Note 3(b):

 

(in millions)    As of
March 31, 2025		  

Recognition of accounts receivable - due from the Starz Business

    $ 215.0  

Recognition of deferred revenue - from the Starz Business

      (36.8 ) 

Cash transfer from Starz (see Note 3(b))

      294.2  
  

 

 

  

Total pro forma adjustment to equity

    $ 472.4  
  

 

 

  

(e) Reflects the impact to shareholders’ equity as a result of the recapitalization of Old Lionsgate Class A shares and Old Lionsgate Class B shares into New Lionsgate new common shares, and issuance of New Lionsgate new common shares pursuant to the LG Studios Flip, which results in the elimination of Old Lionsgate’s historical noncontrolling interest in LG Studios.

 

(in millions)    As of
March 31, 2025		  

Recapitalization of Old Lionsgate common shares for New Lionsgate new common shares

    $ 2,557.8  

Elimination of accumulated other comprehensive income of LG Studios

      (7.9 ) 

Elimination of noncontrolling interest in LG Studios

      (116.8 ) 
  

 

 

  

Total pro forma adjustments to New Lionsgate new common shares

    $ 2,433.1  
  

 

 

  

The table below details the number of New Lionsgate new common shares issued to effectuate a collapse of Old Lionsgate’s existing two classes of shares into a single class based upon an exchange ratio of 1.12 New Lionsgate new common shares for each Old Lionsgate Class A share and 1 New Lionsgate new common share for each Old Lionsgate Class B share. The number of shares issued to Legacy Lionsgate Studios public shareholders to effectuate the LG Studios Flip was to ensure such shareholders maintained the same pro rata ownership of the post-Transactions entity in aggregate. Based on the Legacy Lionsgate Studios common shares outstanding as of the completion of the Transactions, Legacy Lionsgate Studios public shareholders other than Old Lionsgate owned 12.2%, which resulted in an LG Studios Reorganization Ratio of approximately 99%.

 

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(shares in millions)    As of
May 6, 2025		  

Old Lionsgate Class A shares outstanding

      83.7  

Distribution ratio

      112 % 
  

 

 

  

New Lionsgate new common shares issued to holders of Old Lionsgate Class A shares

      93.8  
  

 

 

  

Old Lionsgate Class B shares outstanding

      157.0  

Distribution ratio

      100 % 
  

 

 

  

New Lionsgate new common shares issued to holders of Old Lionsgate Class B shares

      157.0  
  

 

 

  

LG Studios common shares outstanding- held by public shareholders

      35.2  

Preliminary estimated distribution ratio

      99 % 
  

 

 

  

New Lionsgate new common shares issued to public shareholders of LG Studios common shares

      34.9  
  

 

 

  

Total New Lionsgate new common shares

      285.7  
  

 

 

  

The pro forma adjustments included in the unaudited pro forma condensed consolidated statements of operations:

(f) Reflects the adjustment to net loss attributable to noncontrolling interests as a result of the LG Studios Flip, which noncontrolling interest was initially recorded as a result of the Business Combination.

(g) The Starz Business licenses motion pictures and television programming (including Starz original productions) from Old Lionsgate’s Motion Picture and Television Production segments which will continue after the completion of the Transactions. Had the Transactions occurred as of April 1, 2024, for the fiscal year ended March 31, 2025, the intercompany licensing revenues and related direct operating expense would not have been eliminated. This adjustment is to record the revenues and direct operating expenses that were historically eliminated in consolidation to reflect these intercompany licensing arrangements as third-party transactions. Revenue and direct operating expenses eliminated in fiscal 2024 were $545.9 million and $495.6 million, respectively. Revenue and direct operating expenses eliminated in fiscal 2023 were $775.5 million and $710.8 million, respectively.

(h) Reflects (i) the elimination of the actual coupon interest expense and amortization of debt issuance costs incurred in the period related to Old Lionsgate’s legacy credit facility which was repaid prior to or at the time of the completion of the Transactions, excluding interest rate swap payments and receipts, and excluding the amortization of unrealized losses and gains in accumulated other comprehensive income (loss) related to certain interest rate swaps and (ii) the recognition of estimated interest associated with the Lionsgate Credit Agreement as discussed above in Note 3(c), including the new IP credit facilities executed during the fiscal year ended March 31, 2025, as if such borrowings were outstanding since April 1, 2024.

The interest expense on the new debt is based on a weighted average credit spread of 2.25% above the applicable SOFR rate and reflects the amortization of estimated debt issuance costs. Interest expense was calculated assuming the new IP facilities were entered into on April 1, 2024, and assuming borrowings under the new revolving line of credit using the weighted average borrowings under Old Lionsgate’s revolving credit facility during the fiscal year ended March 31, 2025 of $806.3 million. Interest expense in future periods may be higher or lower depending on the actual interest rate on the new borrowings and the actual borrowing amounts.

 

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(in millions)    Year ended
March 31, 2025		  

Interest expense on new debt

    $ 103.5  

Amortization of issuance costs

      3.9  

Reversal of amortization of issuance costs on debt expected to be repaid (Note 3(c))

      (2.0 ) 

Reversal of interest expense on debt repaid or expected to be repaid (Note 3(c))

      (106.7 ) 
  

 

 

  

Total pro forma adjustment to interest expense

    $ (1.3 ) 
  

 

 

  

(i) Reflects the recognition of non-recurring loss on extinguishment of debt of $10.2 million for the write-off of unamortized debt issuance costs as of the beginning of the fiscal year ended March 31, 2025, as this debt is assumed to be refinanced as discussed above in Note 3(c).

(j) Reflects a reduction to general and administrative expense related to the estimated impact of the transition services agreement entered into in connection with the Transactions. We currently estimate fees will be received from the Starz Business for the first 12 months of the transition service arrangement which may decrease following the first year of the completion of the Transactions, as we transition to two stand-alone public companies. As such, the adjustment is only reflected for the fiscal year ended March 31, 2025. The estimate of these adjustments is subject to change based on the actual usage of services.

The pro forma unaudited condensed consolidated statement of operations does not include a potential adjustment related to equity awards that were held by employees of Old Lionsgate that were exchanged for equity awards in either New Lionsgate or Starz. The method and formula used for the exchange was intended to provide new equity awards with a fair value immediately after the Transaction that was equivalent to the fair value of the Old Lionsgate equity awards immediately prior to the Transactions. The exchange is expected to be accounted for as a modification pursuant to U.S. GAAP and may result in an immediate charge to share-based compensation expense and an increase to share-based compensation expense over the remaining vesting period to the extent the fair value of the new equity awards exceed the fair value of the Old Lionsgate equity awards exchanged. New Lionsgate is evaluating the impact of these potential increases to share-based compensation expense; however, as the intention is to exchange awards of equivalent values, management does not expect the impact to be significant.

(k) The income tax impact of the pro forma adjustments is zero due to the net operating loss carryforward position and the full valuation allowance against net deferred tax assets. New Lionsgate’s income taxes following the completion of the Transactions will be impacted by many factors, including the profitability in local jurisdictions and the legal entity structure implemented subsequent to the completion of the Transactions, and may be materially different from the pro forma results.

(l) Represents earnings per share after giving effect to the pro forma adjustments, including the Transactions and application of the application distribution ratio for each class of existing shares (see Note 3(e)). As there were net losses for each of the three fiscal years in the period ended March 31, 2025, the number of basic and diluted shares outstanding is the same for each period presented, as all common shares issuable were determined to be antidilutive.

Pro forma weighted average number of basic and diluted shares outstanding after giving effect to the Transactions for the fiscal years ended March 31, 2025, 2024, and 2023, was calculated by applying the applicable distribution ratio to each class of historical weighted average shares outstanding (“WASO”) for Old Lionsgate for the fiscal years ended March 31, 2025, 2024, and 2023. In addition, the pro forma WASO for the fiscal year ended March 31, 2025 includes an adjustment, using the same calculation methodology, to reflect the New Lionsgate new common shares that are issuable as part of the LG Studios Flip, to noncontrolling interest holders of the Studio Business (Legacy Lionsgate Studios public shareholders), which public shareholders did not exist during the fiscal years ended March 31, 2024 and 2023.

 

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     Year ended March 31,  
(shares in millions)    2025     2024     2023  

Historical WASO Old Lionsgate Class A shares

      83.6       83.5       83.4  

Distribution ratio

      112 %      112 %      112 % 
  

 

 

    

 

 

    

 

 

  

Pro forma WASO New Lionsgate new common shares issued to holders of Old Lionsgate Class A shares

      93.6       93.6       93.4  
  

 

 

    

 

 

    

 

 

  

Historical WASO Old Lionsgate Class B shares

      155.3       150.1       144.5  

Distribution ratio

      100 %      100 %      100 % 
  

 

 

    

 

 

    

 

 

  

Pro forma WASO New Lionsgate new common shares issued to holders of Old Lionsgate Class B shares

      155.3       150.1       144.5  
  

 

 

    

 

 

    

 

 

  

Historical WASO Legacy Lionsgate Studios common shares held by public shareholders

      31.2       —        —   

Distribution ratio

      99 %      n/a       n/a  
  

 

 

    

 

 

    

 

 

  

Pro forma WASO New Lionsgate new common shares issued to pubic shareholders of Legacy Lionsgate Studios common shares

      30.9       —        —   
  

 

 

    

 

 

    

 

 

  

Total pro forma WASO New Lionsgate shares

      279.8       243.7       237.9  
  

 

 

    

 

 

    

 

 

  

 

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BUSINESS

All amounts discussed in this section are in millions of U.S. dollars, unless otherwise indicated. This section discusses New Lionsgate’s business, constituting the LG Studios Business and excluding the Starz Business.

Overview

New Lionsgate is one of the world’s leading standalone, pure play, publicly traded content companies. It brings together diversified motion picture and television production and distribution businesses, a world-class portfolio of valuable brands and franchises, a talent management and production powerhouse and a more than 20,000-title film and television library, all driven by New Lionsgate’s bold and entrepreneurial culture.

New Lionsgate manages and reports its operating results through two reportable business segments: Motion Picture and Television Production.

Segment Information

Motion Picture: New Lionsgate’s Motion Picture segment includes revenues derived from the following:

 

  •  

Theatrical. The domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by New Lionsgate directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that New Lionsgate negotiates with its theatrical exhibitors in the U.S. generally provide that New Lionsgate receives a percentage of the box office results. Theatrical revenues also include revenues from licenses to direct-to-platform customers where the initial license of a motion picture is to a direct-to-platform customer.

 

  •  

Home Entertainment. The sale or rental of New Lionsgate’s film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental). In addition, New Lionsgate has revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, New Lionsgate shares in the rental or sales revenues generated by the platform on a title-by-title basis.

 

  •  

Television. The licensing of New Lionsgate’s theatrical productions and acquired films to the linear pay, basic cable and free television markets. In addition, when a license in New Lionsgate’s traditional pay television window is made to a subscription video-on-demand or other digital platform, the revenues are included here.

 

  •  

International. The (i) licensing of New Lionsgate’s productions, acquired films, New Lionsgate’s catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis, and (ii) the direct distribution of New Lionsgate’s productions, acquired films, and New Lionsgate’s catalog product and libraries of acquired titles in the United Kingdom.

 

  •  

Other. Among others, the licensing of New Lionsgate’s film and television and related content (e.g., games, music, location-based entertainment royalties, etc.) to other ancillary markets.

Television Production: New Lionsgate’s Television Production segment includes revenues derived from the following:

 

  •  

Television. The licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming. Television revenues also include revenue from licenses to subscription video-on-demand platforms in which the initial license of a television series is to a subscription video-on-demand platform. Television revenues include fixed fee arrangements as well as arrangements in which New Lionsgate earns advertising revenue from the exploitation of certain content on television networks.

 

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  •  

International. The licensing and syndication to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.

 

  •  

Home Entertainment. The sale or rental of television production movies or series on packaged media and through digital media platforms.

 

  •  

Other. Among others, the licensing of New Lionsgate’s television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of New Lionsgate’s productions, and from commissions and executive producer fees earned related to talent management.

Segment Revenue

For the year ended March 31, 2025, contributions to New Lionsgate’s consolidated revenues from its reportable segments included Motion Picture, 49.7% and Television Production 50.3%.

 

  •  

Within the Motion Picture segment, revenues were generated from the following:

 

  •  

Theatrical, 9.7%;

 

  •  

Home Entertainment, 41.4%;

 

  •  

Television, 21.8%;

 

  •  

International, 25.3%; and

 

  •  

Motion Picture-Other, 1.8%.

 

  •  

Within the Television Production segment, revenues were generated from the following:

 

  •  

Television, 66.6%;

 

  •  

International, 15.5%;

 

  •  

Home Entertainment, 11.7%; and

 

  •  

Television Production-Other, 6.2%.

Corporate Strategy

New Lionsgate manages a large and diversified portfolio of film and television content that it licenses to theatrical exhibitors, streaming, broadcast, pay cable and other platform partners worldwide, maintaining a disciplined, targeted and cost-effective approach to the acquisition, production, marketing and distribution of that content. New Lionsgate believs that this strategic focus makes it a preferred supplier to third-party buyers. The extension of New Lionsgate’s deep portfolio of brands and franchises, creation of new intellectual properties and rigorous focus on retaining key rights to its content is designed to create incremental long-term value for shareholders through a combination of current releases and one of the most valuable film and television libraries in the world.

Motion Picture - Theatrical

Production and Acquisition

New Lionsgate takes a disciplined approach to theatrical production, with the goal of producing content that can be distributed through various domestic and international platforms. In doing so, New Lionsgate may mitigate the financial risk associated with production by, among other things:

 

  •  

Negotiating co-financing development and co-production agreements which may provide for cost-sharing with one or more third-parties;

 

  •  

Pre-licensing international distribution rights on a selective basis, including through international output agreements (which license rights to distribute a film in one or more media generally for a limited term, and in one or more specific territories prior to completion of the film);

 

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  •  

Structuring agreements that provide for talent participation in the financial success of the film in exchange for reduced guaranteed “up-front payments” that would be paid regardless of the film’s success; and

 

  •  

Utilizing governmental incentives, programs and other structures from state and foreign countries (e.g., sales tax refunds, transferable tax credits, refundable tax credits, low interest loans, direct subsidies or cash rebates, calculated based on the amount of money spent in the particular jurisdiction in connection with the production).

New Lionsgate’s approach to acquiring films complements its theatrical production strategy—New Lionsgate typically seeks to limit its financial exposure while adding films with high potential for commercial box office success, critical recognition and successful monetization across a broad array of platforms.

Distribution

The economic life of a motion picture may consist of its exploitation in theaters, on packaged media and on various digital and television platforms in territories around the world. New Lionsgate generally distributes motion pictures directly to movie theaters in the U.S. whereby the exhibitor retains a portion of the gross box office receipts and the balance is remitted to the distributor. Concurrent with their release in the U.S., films are generally released in Canada and may also be released in one or more other foreign countries. New Lionsgate constructs release schedules taking into account moviegoer attendance patterns and competition from other studios’ scheduled theatrical releases. After the initial theatrical release, distributors seek to maximize revenues by releasing films in sequential release date windows, which may be exclusive against other non-theatrical distribution platforms. In certain circumstances, New Lionsgate’s distribution strategy has and may continue to change, and certain films intended for theatrical release may be licensed to other platforms.

Producing, marketing and distributing films can involve significant risks and costs, and can cause New Lionsgate’s financial results to vary depending on the timing of a film’s release. For instance, marketing costs are generally incurred before and throughout the theatrical release of a film and, to a lesser extent, other distribution windows, and are expensed as incurred. Therefore, New Lionsgate typically incurs losses with respect to a particular film prior to and during the film’s theatrical exhibition, and profitability for the film may not be realized until after its theatrical release window. Further, New Lionsgate may revise the release date of a film as the production schedule changes or in such a manner as New Lionsgate believes is likely to maximize revenues or for other business reasons. Additionally, there can be no assurance that any of the films scheduled for release will be completed and/or in accordance with the anticipated schedule or budget, or that the film will ever be released.

Theatrical Releases

For the fiscal year ended March 31, 2025, New Lionsgate released twenty-seven (27) films theatrically in the U.S. across its labels (including New Lionsgate’s partnership with Roadside Attractions, of which New Lionsgate owns a 43% equity interest). Such titles and their release patterns included the following:

 

Fiscal 2025

Theatrical Releases – Lionsgate

Title

  

Release Date

  

Release Pattern

The Ministry of Ungentlemanly Warfare   April 15, 2024   Theatrical and Premium Video-on-Demand
Unsung Hero   April 26, 2024   Theatrical and Accelerated Home Entertainment
The Strangers: Chapter 1   May 17, 2024   Theatrical and Premium Video-on-Demand
Borderlands   August 9, 2024   Theatrical and Premium Video-on-Demand
The Crow   August 23, 2024   Theatrical and Premium Video-on-Demand
1992   August 30, 2024   Theatrical and Premium Video-on-Demand

 

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Fiscal 2025

Theatrical Releases – Lionsgate

Title

  

Release Date

  

Release Pattern

The Killer’s Game   September 13, 2024   Theatrical and Premium Video-on-Demand
Never Let Go   September 20, 2024   Theatrical and Premium Video-on-Demand
Megalopolis   September 27, 2024   Theatrical and Premium Video-on-Demand
White Bird   October 4, 2024   Theatrical and Premium Video-on-Demand
The Best Christmas Pageant Ever   November 8, 2024   Theatrical and Premium Video-on-Demand
Den Of Thieves 2: Pantera   January 10, 2025   Theatrical and Premium Video-on-Demand
Flight Risk   January 24, 2025   Theatrical and Premium Video-on-Demand
The Unbreakable Boy   February 21, 2025   Theatrical and Accelerated Home Entertainment
 
*

Does not include releases of 29 day-and-date and multi-platform titles for the fiscal year ended March 31, 2025.

 

Fiscal 2025

Theatrical Releases – Roadside Attractions

Title

   

Release Date

   

Release Pattern

The Absence of Eden    April 12, 2024    Theatrical and Accelerated Home Entertainment
Boy Kills World    April 26, 2024    Theatrical and Premium Video-on-Demand
Summer Camp    May 31, 2024    Theatrical and Accelerated Home Entertainment
Firebrand    June 14, 2024    Theatrical and Accelerated Home Entertainment
Kill    July 5, 2024    Theatrical and Premium Video-on-Demand
My Penguin Friend    August 16, 2024    Theatrical and Accelerated Home Entertainment
City of Dreams    August 30, 2024    Theatrical and Accelerated Home Entertainment
Lee    September 27, 2024    Theatrical and Premium Video-on-Demand
Exhibiting Forgiveness    October 12, 2024   

Theatrical and Accelerated Home

Entertainment

Small Things Like These    November 8, 2024   

Theatrical and Premium

Video-on-Demand

The Last Showgirl    December 13, 2024   

Theatrical and Accelerated Home

Entertainment

Riff Raff    February 28, 2025   

Theatrical and Premium

Video-on-Demand

Bob Trevino Likes It    March 21, 2025    Theatrical and Accelerated Home Entertainment

New Lionsgate continues to evaluate release strategies of its films by releasing solely and/or earlier on streaming platforms, initially releasing on premium video-on-demand, premium electronic sell-through, or by licensing directly to streaming platforms. In doing so, New Lionsgate capitalizes on increased optionality in distribution and maintains a platform agnostic approach to distribution to take full advantage of new windowing opportunities and alternative distribution strategies (while also continuing to work closely with New Lionsgate’s theatrical exhibition partners).

Nominations and Awards

New Lionsgate and affiliated companies (including its wholly-owned subsidiaries, Artisan Pictures, eOne Entertainment, Mandate Pictures and Summit Entertainment, as well as Roadside Attractions) have distributed

 

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films that have earned numerous Academy Awards®, Golden Globe Awards®, Producers Guild Awards®, Screen Actors Guild Awards®, Directors Guild Awards®, BAFTA Awards and Independent Spirit Awards nominations and wins.

Motion Picture - Home Entertainment

New Lionsgate’s U.S. home entertainment distribution operation exploits its film and television content library of more than 20,000 motion picture titles and television episodes and programs, consisting of titles from, among others, Lionsgate, Lionsgate Television, New Lionsgate’s subsidiaries, affiliates and joint ventures (such as Anchor Bay Entertainment, Artisan Entertainment, eOne Entertainment, Grindstone Entertainment Group, Roadside Attractions, Summit Entertainment, Trimark and Vestron), as well as titles from third parties such as A24, A&E, AMC, Entertainment Studios, EuropaCorp, Showbiz Direct, Angel Studios, Gravitas, Saban Entertainment, StudioCanal, Starz, STX Entertainment, Tyler Perry Studios, Visiona Romantica and Zeotrope. Home entertainment revenue consists of packaged media and digital revenue.

Packaged Media

New Lionsgate’s packaged media distribution involves the marketing, promotion and/or sale of DVDs/Blu-ray/4K Ultra HD discs to wholesalers and retailers in the U.S. and Canada. Fulfillment of physical distribution services are substantially licensed to Sony Pictures Home Entertainment. New Lionsgate distributes or sells content directly to retailers such as Amazon, who buy large volumes of New Lionsgate’s packaged media to sell directly to consumers, as well as exclusive content through New Lionsgate’s direct-to-consumer site, Lionsgate Limited.

Digital Media

New Lionsgate considers alternative distribution strategies for its films and releases several titles solely and/or in an accelerated post-theatrical window on various digital platforms (including multi-platform distribution). New Lionsgate directly distributes this and other content (including certain titles not distributed theatrically or on physical media) across a wide range of global distribution platforms and networks on an on-demand basis (whereby the viewer controls the timing of playback) through dozens of transactional (transactional video-on-demand and electronic-sell-through), subscription, ad-supported and free video-on-demand platforms. New Lionsgate also directly distributes content on a linear distribution basis (i.e., whereby the programmer controls the timing of playback) through various linear pay, basic cable, and free, over-the-air television platforms worldwide. Transactional video-on demand services to which New Lionsgate licenses its content include, among others, Amazon’s Prime Video, Apple TV, Comcast Xfinity, Fandango at Home, Google TV, Microsoft Movies & TV and YouTube; subscription video-on demand services to which New Lionsgate licenses its content include, among others, Amazon’s Prime Video, Hulu, Max, Netflix, Peacock and Paramount+; ad-supported video-on-demand services to which New Lionsgate licenses its content include, among others, Pluto, The Roku Channel, Samsung, Tubi TV and YouTube; and linear networks to which New Lionsgate distributes its content includes, among others, pay television networks such as MGM+, HBO, Showtime and Starz, and basic cable network groups such as AMC Networks, Disney Media & Entertainment Distribution Networks, NBCUniversal’s SpinCo, Paramount Global Domestic Media Networks and Warner Media Entertainment Networks, as well as Bounce, Telemundo and UniMás. Additionally, New Lionsgate owns and operates a suite of 16 multi-content and single series free, ad-supported streaming linear channels (also known as FAST channels) carried by various platforms including, among others, Tubi TV, Samsung, The Roku Channel and Pluto.

Motion Picture - Television

New Lionsgate licenses its theatrical productions and acquired films to the domestic linear pay, basic cable and free television markets. For additional information regarding such distribution, see “—Motion Picture — Home Entertainment—Digital Media.”

 

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Motion Picture - International

New Lionsgate’s international sales operations are headquartered at its offices in London, England. The primary components of New Lionsgate’s international business are, on a territory-by-territory basis through third parties or directly through its international divisions:

 

  •  

The licensing of rights in all media of its in-house feature film product and third-party acquisitions on an output basis;

 

  •  

The licensing of rights in all media of its in-house product and third-party acquisitions on a sales basis for non-output territories;

 

  •  

The licensing of third-party feature films on an agency basis; and

 

  •  

Direct distribution of theatrical and/or ancillary rights licensing.

New Lionsgate licenses rights in all media on a territory-by-territory sales basis (other than the territories where New Lionsgate self-distributes) of (i) New Lionsgate’s in-house feature film product, and (ii) films produced by third parties such as Ace Entertainment, Buzzfeed, Fifth Season, Asbury Park Pictures and Endurance Media. Films licensed and/or released by us internationally in fiscal 2025, included such in-house productions as The Long Walk, Good Fortune, Now You See Me 3, Michael, Never Let Go (f/k/a Motherland), Borderlands, Day Drinker and Housemaid, as well as films produced by third parties such as Hurry Up Tomorrow, Above The Below, The Killer’s Game, Flight Risk, Anniversary, Unsung Hero, The Strangers Trilogy, Arthur The King, Dust Bunny, F Marry Kill and Freaky Tales. Third-party films for which we were engaged as exclusive sales agent and/or released by us internationally in fiscal 2025 included Bone Yard, Rich Flu, Orphan 3 and The Fabulous Four.

Through territory-by-territory sales arrangements, New Lionsgate generally covers a substantial portion of the production budget or acquisition cost of new theatrical releases which New Lionsgate licenses and distributes internationally. New Lionsgate also has an output arrangement in France (for all rights for all media, including home entertainment and television rights), and distributes theatrical titles in Latin America through International Distribution Company, as well as theatrical rights in Canada through Cineplex.

New Lionsgate also self-distributes motion pictures in the United Kingdom and Ireland through its subsidiary, Lions Gate International UK (“Lionsgate UK”). For the fiscal year ended March 31, 2025, Lionsgate UK released the following theatrical titles:

 

Fiscal 2025

Lionsgate UK

Title

   

Release Date

Love Lies Bleeding    May 3, 2024
The Strangers: Chapter 1    May 17, 2024
Kill    July 5, 2024
Borderlands    August 9, 2024
The Critic    September 13, 2024
Never Let Go    September 27, 2024
Small Things Like These    November 1, 2024
Saw (20th Anniversary)    November 1, 2024
Flight Risk    January 24, 2025
The Seed of the Sacred Fig    February 7, 2025

Motion Picture - Other

Global Products and Experiences

New Lionsgate’s Global Products and Experiences division drives incremental revenue and builds consumer engagement across New Lionsgate’s entire portfolio of properties via live shows and experiences, location-based entertainment destinations, games, physical and digital merchandise, and select strategic partnerships and investments.

 

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Within the division, New Lionsgate’s Global Live Entertainment business focuses on licensing, developing, and producing live stage shows, concerts, and live immersive experiences and events based on New Lionsgate’s theatrical and television content. New Lionsgate has announced multiple live entertainment projects, including Dirty Dancing, Wonder, and La La Land for Broadway, The Hunger Games for London, as well as a live dance show inspired by New Lionsgate’s Step-Up film franchise. Live to film concerts currently touring globally include Dirty Dancing, La La Land and Twilight.

New Lionsgate’s Interactive Entertainment business focuses on growing a slate that includes games across PC/console, mobile, virtual reality and more, both through stand-alone games based solely on New Lionsgate’s content and the integration of New Lionsgate’s properties with marquee games such as Call of Duty, Dead By Daylight Fortnite and Roblox. Stand-alone game titles include Blair Witch, Power Rangers: Battle for the Grid, Power Rangers: Legacy Wars and RetroRealms: Ash vs Evil Dead. A John Wick AAA video game is currently in development.

New Lionsgate’s Location Based Entertainment business licenses and produces New Lionsgate’s Lionsgate, theatrical, and television brands for theme parks, destinations, and stand-alone attractions and experiences. Attractions based on The Hunger Games, John Wick, Now You See Me, SAW and other of our intellectual property can be found at theme parks and destinations in China, the United States, United Kingdom, and the Middle East. The John Wick Experience in Las Vegas, which opened in March 2025, is New Lionsgate’s newest standalone attraction. New Lionsgate has also partnered with Six Flags to open SAW themed haunted houses across multiple Six Flags theme parks during the Halloween season.

New Lionsgate’s Consumer Products business licenses and develops products around its leading film and television properties, including John Wick, The Hunger Games, Twilight, Dirty Dancing and Saw. New Lionsgate merchandise is available in the Lionsgate Shop, New Lionsgate’s official ecommerce shop, and at many well-known retail outlets such as Hot Topic, Walmart and Target. New Lionsgate is developing new offerings across a broad range of categories with best-in-class licensees, including LEGO, American Classics, Ripple Junction, Goodie Two-Sleeves, Hot Toys, Funko, ColourPop and more.

Music

New Lionsgate manages music for New Lionsgate’s theatrical and television slates, including overseeing songs, scores and soundtracks for all of New Lionsgate’s theatrical productions, co-productions and acquisitions, as well as music staffing, scores and soundtracks for all of New Lionsgate’s television productions. Music revenues are derived from the sales and licensing of music from New Lionsgate’s films, television, and other productions, and the theatrical exhibition of New Lionsgate’s films and the broadcast and webcast of New Lionsgate’s productions.

Ancillary Revenues

Ancillary revenues are derived from the licensing of films and television content at non-theatrical venues including educational and institutional facilities, U.S. military bases, oil rigs, hospitals, hotels, prisons, and on all forms of common carrier transportation, including airlines and ships.

Television Production - Television

New Lionsgate’s television business consists of the development, production, syndication and distribution of television programming. New Lionsgate principally generates revenue from the licensing and distribution of such programming to broadcast television networks, pay and basic cable networks, digital platforms and syndicators of first-run programming, which licenses programs on a station-by-station basis and pays in cash or via barter (i.e., trade of programming for airtime). Each of these platforms may acquire a mix of original and library programming.

 

 

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After initial exhibition, New Lionsgate distributes programming to subsequent buyers, both domestically and internationally, including basic cable network, premium subscription services or digital platforms (known as “off-network syndicated programming”).

Off-network syndicated programming can be sold in successive cycles of sales which may occur on an exclusive or non-exclusive basis. In addition, television programming is sold on home entertainment (packaged media and via digital delivery) and across all other applicable ancillary revenue streams including music publishing, touring and integration.

Similar to film production practices, New Lionsgate leverages tax credits, subsidies, and other incentive programs to optimize its returns and maintain financially prudent production models for television content.

New Lionsgate currently produces, syndicates and distributes more than 75 television shows on more than 40 networks.

For the fiscal year ended March 31, 2025, scripted and unscripted programming produced, co-produced or distributed by us and our affiliated entities, as well as programming syndicated by our wholly-owned subsidiary, Debmar-Mercury, included the following:

 

Fiscal 2025

Scripted - Lionsgate

Title

   

Network

Acapulco    Apple
Black Mafia Family    Starz
Ghosts    CBS
Mythic Quest    Apple
Power Book III: Raising Kanan    Starz
Power Book IV: Force    Starz

 

Fiscal 2025

Scripted - eOne

Title

   

Network

A Gentleman in Moscow    Paramount+
Mistletoe Murders    Hallmark/Corus
Ripple    Hallmark
The Rookie    ABC
Yellowjackets    Showtime

 

Fiscal 2025

Unscripted - Lionsgate Alternative Television*

Title

   

Network

Adam Richman Eats The Premier League    Discovery
American Rebel    History
Braver    BYUTV
Buried In The Backyard    Oxygen
Caresha Please: A Day In Miami    BET
Christmas on the Farm    Channel 5
Cruising with Susan Calman    Channel 5
Face the Firm    Amazon
Fletcher’s Family Farm    ITV
Fletcher’s Family Farm at Christmas    ITV
Harpooners    Discovery
Married to The Game    AmazonUK

 

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Fiscal 2025

Unscripted - Lionsgate Alternative Television*

Title

   

Network

Milf Manor    TLC
My Big Fat Fab Life    TLC
Naked and Afraid    Discovery
Naked and Afraid: Last One Standing    Discovery
Naked and Afraid XL    Discovery
Power Slap: Road to the Title    Rumble
Scamanda    ABC / Hulu
Selling Sunset    Netflix
Springtime on the Farm    Channel 5
The Barnes Bunch    WETV
The Greens at Christmas    Channel 5
The Impact: Atlanta    BET+
The Saints    Fox Nation
The Ultimate Fighter    ESPN+
The Yorkshire Vet    Channel 5
The Yorkshire Vet: Christmas Donkey Special    Channel 5
The Yorkshire Vet: Great and Small    Channel 5
Trivial Pursuit    CW
Very Scary People    Investigative Discovery
Very Scary People Podcast    N/A
Zombie House Flippers    A&E

 

Fiscal 2025

Syndication – Debmar-Mercury

Title

Family Feud
People Puzzler
Sherri Shepherd
The Conners
 
*

Lionsgate Alternative Television includes programming produced by New Lionsgate’s wholly-owned subsidiaries, Pilrim Media Group and eOne’s U.S. and U.K. non-scripted group, Blackfin, Renegade and Daisybeck Studios.

Television Production - International

New Lionsgate licenses, sells and distributes original Lionsgate television series (including Lionsgate UK television programming), third party television programming and format acquisitions to international markets via packaged media and various digital platforms. For the fiscal year ended March 31, 2025, Lionsgate UK television programming that was acquired, began production, was produced or was broadcast, included the following:

 

Fiscal 2025

Television – Lionsgate UK

Title

   

Network

   

Partner(s)

Son of A Critch 4    CBC & CW    Project 10
Borderline    ZDF & Roku    Further South Productions and ShinAwil
Queenie    Channel 4    Further South Productions Limited
The German    DBS Satellite Services (YES)    Gil Formats Ltd
Amandaland    BBC    Merman Television Limited

 

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Television Production - Home Entertainment

For information regarding television production home entertainment revenue, see “—Motion Picture —Home Entertainment.”

Television Production - Other

Other revenues are derived from, among others, the licensing of New Lionsgate’s television programs to other ancillary distributors, the sales and licensing of music from the television broadcasts of New Lionsgate’s productions, and from New Lionsgate’s interest in 3 Arts Entertainment, a talent management company. 3 Arts Entertainment is one of the world’s leading talent management and production companies, representing an A-list client roster of directors, writers, showrunners and actors, producing long-running hit series (The Office, Parks & Recreation, Brooklyn Nine-Nine) and partnering with Lionsgate on a slate of premium scripted series. 3 Arts Entertainment receives commission revenue from talent representation and are producers on a number of television shows and films where they receive an executive producer fee and back-end participations.

Specialized Skill and Knowledge

New Lionsgate’s management team brings together strong complementary skills, expertise and experience in various aspects of the media and entertainment industry, including in film and television studio operations, production and distribution, as well as in strategic planning, financing, sales, marketing and mergers and acquisitions.

Competitive Conditions

New Lionsgate’s businesses operate in highly competitive markets. New Lionsgate competes with companies within the entertainment and media business and from alternative forms of leisure entertainment, such as travel, sporting events, outdoor recreation and other cultural-related activities. New Lionsgate competes with the major studios, numerous independent motion picture and television production companies, television networks, pay television services and digital media platforms for the acquisition of literary, film and television properties, the services of performing artists, directors, producers and other creative and technical personnel and production financing, all of which are essential to the success of New Lionsgate’s businesses. In addition, New Lionsgate’s motion pictures compete for audience acceptance and exhibition outlets with motion pictures produced and distributed by other companies. Likewise, New Lionsgate’s television product faces significant competition from independent distributors as well as major studios. As a result, the success of any of New Lionsgate’s motion picture and television business is dependent not only on the quality and acceptance of a particular film or program, but also on the quality and acceptance of other competing content released into the marketplace at or near the same time as well as on the ability to license and produce quality content.

Intellectual Property

New Lionsgate currently uses and owns or licenses a number of trademarks, service marks, copyrights, domain names and similar intellectual property in connection with New Lionsgate’s businesses and owns registrations and applications to register them both domestically and internationally. New Lionsgate believes that ownership of, and/or the right to use, such trademarks, service marks, copyrights, domain names and similar intellectual property is an important factor in New Lionsgate’s businesses and that New Lionsgate’s success depends, in part, on such ownership.

The prevalence of motion picture and television piracy is widespread across various regions globally, notably in South America, Asia, and specific Eastern European countries. This is exacerbated by technological advancements and the digital transformation of content, facilitating the unauthorized creation, distribution, and sharing of high-quality copies through physical media and digital platforms. The proliferation of these unauthorized copies has, and will likely continue to have an adverse effect on New Lionsgate’s business. New

 

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Lionsgate’s ability to safeguard and enforce its intellectual property rights is subject to inherent risks, and New Lionsgate’s occasionally face disputes concerning rights and obligations related to intellectual property. New Lionsgate cannot guarantee success in all intellectual property disputes that may arise.

Following the consummation of the Transactions, New Lionsgate either owns or continues to license from third parties’ intellectual property rights necessary to operate its business as of the consummation of the Transactions. New Lionsgate and Starz have entered into certain agreements concerning commercial licensing arrangements between the parties to the Transactions, which are described in the section titled “Certain Relationships and Related Party Transactions.”

Seasonality (Business Cycles)

New Lionsgate’s business is not subject to cyclical or seasonal fluctuations, but may depend significantly based on the risk factors set forth in the section entitled “Risk Factors—Risks Related to New Lionsgate and the LG Studios Business—New Lionsgate’s revenues and results of operations may fluctuate significantly.”

Dependence on Key Customer Contracts

New Lionsgate’s business is not dependent on any key customer contracts. Following the Transactions, New Lionsgate and Starz are party to certain commercial arrangements, as described under “Certain Relationships and Related Party Transactions,” pursuant to which Starz is a significant customer of New Lionsgate, at least for the near term. See “Risk Factors—Risks Related to New Lionsgate and the LG Studios Business—The LG Studios Business relies on a few major retailers and distributors and the loss of any of those could reduce New Lionsgate’s revenues and operating results.”

Changes to Contracts

Except in connection with the Transactions, New Lionsgate’s business is not expected to be affected by the renegotiation or termination of contracts or subcontracts.

Environmental Protection

New Lionsgate’s business does not involve environmental protection requirements.

Employees

New Lionsgate employed approximately 1,026 individuals as of the Arrangement Effective Time in its worldwide operations. New Lionsgate also utilizes consultants in the ordinary course of its business and hires additional employees on a project-by-project basis in connection with the production of New Lionsgate’s motion pictures and television programming.

Environmental and Social Responsibility and Human Capital Management

New Lionsgate generally expects to continue Lionsgate’s policies and practices prior to the Transactions with respect to environmental, social responsibility and human capital matters. For more information, see “—Environmental, Social and Governance.”

Legal Proceedings and Regulatory Actions

From time to time, New Lionsgate is expected to be involved in certain claims and legal proceedings arising in the normal course of business. While the resolution of these matters cannot be predicted with certainty, New Lionsgate does not believe, based on current knowledge, that the outcome of any currently pending legal proceedings in which Lionsgate is currently involved will have a material adverse effect on New Lionsgate’s consolidated financial position, results of operations or cash flow. For additional information regarding legal proceedings in which Lionsgate is involved, see “Risk Factors—Purported noteholders have instituted suit

 

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against Lionsgate claiming that it breached the indenture governing certain 5.500% senior notes due 2029 by virtue of an amendment executed in connection with an exchange by certain noteholders for new notes.”

Interest of Informed Persons in Material Transactions

Since the formation of New Lionsgate, except as otherwise described in this prospectus, no informed person of New Lionsgate or any associate or affiliate of any informed person has had any interest in any transaction that has materially affected or is reasonably expected to materially affect New Lionsgate. For the purposes of this paragraph, an “informed person” means a director or officer of New Lionsgate, a director or officer of a person or company that is itself an “informed person” or subsidiary of New Lionsgate; any person or company who beneficially owns or controls or directs, directly or indirectly, voting securities of New Lionsgate or who exercises control or direction over voting securities of New Lionsgate or a combination of both carrying more than 10 percent of the voting rights attached to all outstanding voting securities of New Lionsgate. The New Lionsgate directors and executive officers have no substantial interests, directly or indirectly, in the Transactions, except to the extent of their ownership in shares of New Lionsgate.

Insurance

The Separation Agreement provides for the allocation between the parties thereto of rights and obligations under existing insurance policies with respect to occurrences prior to the Arrangement Effective Time and sets forth procedures for the administration of insured claims and certain other insurance matters.

Properties

New Lionsgate’s corporate office is located at 250 Howe Street, 20th Floor, Vancouver, BC V6C 3R8. Its principal executive offices are located at 2700 Colorado Avenue, Santa Monica, California 90404, where New Lionsgate occupies 192,584 square feet (per a lease that expires in September 2029).

In addition, New Lionsgate leases the following properties:

 

  •  

93,670 square feet at 12020 Chandler Blvd., Valley Village, California (per a lease that expires in December 2027);

 

  •  

39,000 square feet at 2700 Pennsylvania Avenue, Santa Monica, California (per a lease that expires in August 2029);

 

  •  

34,332 square feet at 530 Fifth Avenue, New York, New York (per a lease that expires in August 2025) (of which approximately 18,000 square feet is leased to Starz per a sublease that expires in August 2025);

 

  •  

28,192 square feet at 15301 Ventura Blvd., Sherman Oaks, California (per a lease that expires in December 2025);

 

  •  

25,346 square feet at 9460 Wilshire Blvd., Beverly Hills, California (per a lease that expires in February 2026);

 

  •  

24,999 square feet at 495-517 Wellington Street West, Toronto, Ontario (per a lease that expires in December 2035);

 

  •  

15,673 square feet at 45 Mortimer Street, London, United Kingdom (per a lease that expires in July 2029); and

 

  •  

An aggregate of 20,610 square feet for properties located in Beijing, China (per a lease that expires in December 2025), Brentwood, California (per a lease that expires in April 2026), Leeds, United Kingdom (per leases that expire in September 2025 and October 2027), Luxembourg City, Luxembourg (per a lease that expires in April 2027), Mumbai, India (per a lease that expires in December 2026) and New York, New York (per a lease that expires in May 2030).

 

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New Lionsgate believes that its current facilities are adequate to conduct its business operations for the foreseeable future. New Lionsgate believes that it will be able to renew these leases on similar terms upon expiration. If it cannot renew, New Lionsgate believes that it could find other suitable premises without any material adverse impact on its operations.

Material Contracts

The sole material contracts within the meaning of applicable Canadian securities legislation, other than the contracts entered into in the ordinary course of business, which have been entered into by New Lionsgate since its formation or are otherwise material to New Lionsgate within the meaning of applicable Canadian securities legislation are the Separation Agreement, Transition Services Agreement, Tax Matters Agreement (as amended by the Tax Matters Agreement Amendment), Employee Matters Agreement, New Lionsgate Investor Rights Agreement, New Lionsgate Voting Agreement and New Lionsgate Registration Rights Agreements which are described in the section entitled “Certain Relationships and Related Party Transactions.”

Auditors

Ernst & Young LLP, independent registered public accounting firm, is New Lionsgate’s auditor.

Environmental, Social and Governance

The New Lionsgate Board believes that social responsibility and human capital matters are vital to New Lionsgate’s organizational health and intends to be committed to a positive corporate culture, equal opportunity, inclusion, talent acquisition, retention, employee satisfaction and engagement, with the tone set from the top. New Lionsgate expects to report on social responsibility and human capital matters at each regularly scheduled New Lionsgate Board meeting and periodically throughout the year.

Human Capital

Recruitment

New Lionsgate’s leadership team works across the organization to thoughtfully address matters related to equity, workforce representation, and overall corporate culture. As part of this commitment, New Lionsgate maintains the following recruitment and hiring initiatives:

 

  •  

Internship Programs designed to increase inclusion across the entertainment industry.

 

  •  

Hiring Process ensuring that New Lionsgate attracts top-tier talent through fair and accessible methods. The core principle of New Lionsgate’s hiring process is to seek out the strongest candidate for every role, while also emphasizing equal access to roles, objective and unbiased hiring and a rigorous, competitive, and consistent hiring process.

 

  •  

Supplier Diversity and Inclusion Program actively fostering relationships with diverse businesses while prioritizing more competitive pricing, quality, service, innovation and creativity in procurement of services.

Employee Resource Groups

New Lionsgate provides its employees with an array of Employee Resource Groups (“ERGs”) which offer them the chance to establish a greater presence at New Lionsgate and an opportunity to enhance cross-cultural awareness, develop leadership skills and network across the Company’s various business units and levels. The ERGs are voluntary, employee-led groups that foster a diverse, engaging and inclusive workplace.

 

  •  

New Lionsgate Early Career Group aims to inspire curiosity and networking to foster growth for professionals in early stages of their careers.

 

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  •  

New Lionsgate Multicultural Employee Resource Groups consists of resource groups that support New Lionsgate’s Asian American Pacific Islander community, its Black community and its Latine and Hispanic community.

 

  •  

New Lionsgate Parents and Caregivers Group aims to bring together parents, expecting parents, caregivers, and allies to ensure New Lionsgate’s community fosters an environment that supports all families.

 

  •  

New Lionsgate Pride supports, develops and inspires future LGBTQ+ leaders within New Lionsgate and the industry.

 

  •  

New Lionsgate Vets creates a community of veterans and their supporters working together to enhance veteran presence and engage the industry from the unique perspective of a military background.

 

  •  

New Lionsgate Women’s Empowerment Together Group creates a community that improves the prominence of female leaders and empowers women at all levels within New Lionsgate and the industry.

Community Involvement

New Lionsgate is committed to acting responsibly and making a positive difference in the local and global community through Lionshares, its volunteer program that seeks to provide opportunities for employees to partner with a diverse range of charitable organizations.

New Lionsgate maintains a Corporate Sponsorship Committee that prioritizes corporate philanthropic initiatives throughout New Lionsgate, focusing particularly on organizations and activities related to diversity and poverty in order to increase its impact and to develop meaningful relationships with a core group of organizations and events.

Other Employee Benefits and Programs

New Lionsgate offers a comprehensive benefits package which includes health, dental and vision insurance, family forming benefits, mental health support, resources for caregiving (children and adult family), online fitness and meditation classes, and new parent coaching.

New Lionsgate offers programs to develop and enrich the employee experience with offerings such as tuition reimbursement, leadership development programs, mentorship, and additional programs to help support specific populations. New Lionsgate conducts annual employee training on anti-harassment, information technology security, the Foreign Corrupt Practices Act, as well as other manager trainings. New Lionsgate also provides training and development to all employees, focusing on career development, professional development and industry knowledge.

Corporate, Environmental and Social Responsibility

New Lionsgate protects its social, financial, informational, environmental, and reputational assets and makes it a priority to operate the New Lionsgate business in a responsible and sustainable manner.

Engaging in a responsible manner not only helps New Lionsgate manage risks and maximize opportunities, but also helps New Lionsgate understand and manage its social, environmental, and economic impact that will enable New Lionsgate to contribute to society’s wider goal of sustainable development. This includes, but is not limited to, conducting business in a socially responsible and ethical manner, supporting human rights, and committing to environmental sustainability.

In all its offices, New Lionsgate prioritizes efforts to prevent pollution, and to conserve, recover, and recycle materials, water and energy wherever possible.

 

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New Lionsgate productions distribute documents electronically to minimize paper consumption and waste and limit the use of single-use plastics.

New Lionsgate productions follow best practices featured in the Producers Guild of America and Sustainable Production Alliance’s Green Production Guide, which are designed to reduce the film, television, and streaming industry’s carbon footprint and environmental impact.

New Lionsgate U.S. productions encourage the employment of green vendors that provide sustainable goods and services for film, television and streaming productions.

New Lionsgate also prioritizes vendors whose dedication to operating business in a responsible and sustainable manner directly aligns with those of New Lionsgate.

Corporate Governance

Corporate governance will be a continuing focus of New Lionsgate, starting with the New Lionsgate Board and its committees, and extending to management and all employees. The New Lionsgate Board and its committees will review New Lionsgate’s governance policies and business strategies at New Lionsgate Board and committee meetings throughout the year, and through ongoing communication with each other and with management.

Role of the New Lionsgate’s Board and Corporate Governance Guidelines

New Lionsgate’s corporate governance practices are embodied in its Corporate Governance Guidelines established by the New Lionsgate Board. These guidelines, which provide a framework for the conduct of the New Lionsgate Board’s business, provide that:

 

  •  

the New Lionsgate Board review and regularly monitor the effectiveness of New Lionsgate’s fundamental operating, financial and other business plans, policies and decisions, including the execution of its strategies and objectives;

 

  •  

the New Lionsgate Board act in the best interest of New Lionsgate to seek to enhance long-term shareholder value;

 

  •  

a majority of the members of the New Lionsgate Board be independent directors;

 

  •  

the independent directors meet at least quarterly in executive session, or otherwise as needed;

 

  •  

directors have unimpeded access to management and, as necessary and appropriate, independent advisors; and

 

  •  

the New Lionsgate Board and its committees conduct annual self-evaluations to determine whether they are functioning effectively.

The full text of the key practices and procedures of the New Lionsgate Board is outlined in the Corporate Governance Guidelines and is available on New Lionsgate’s investor relations website at https://investors.lionsgate.com, or is able to be obtained in print, without charge, by any shareholder upon request to New Lionsgate’s Corporate Secretary, at either of its principal executive offices.

Separate Chair and Chief Executive Officer Roles

New Liongate’s leadership structure, in which the roles of the New Lionsgate Board Chair and the New Lionsgate Chief Executive Officer are separate, is appropriate for New Lionsgate, taking into consideration New Lionsgate’s evolving needs, corporate strategy, and operating environment. The separation of the chair and Chief Executive Officer roles reinforces the independence of the New Lionsgate Board and its oversight of the business and affairs of New Lionsgate, enabling the New Lionsgate Chief Executive Officer to focus on the business, operations, and strategy of New Lionsgate, and will allow Lionsgate to leverage the New Lionsgate Chair’s experience, perspective, and vision to serve the best interests of its shareholders.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis of financial condition and results of operations reflects the consolidated financial statements of Lionsgate Studios Corp. following the Studio Separation and for periods prior to the Studio Separation, the combined financial statements of the Studio Business of Lionsgate. This discussion should be read together with the audited consolidated financial statements of Lionsgate Studios Corp. that are included in this prospectus. This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties. Lionsgate Studios Corp.’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth elsewhere in this prospectus under the section entitled “Risk Factors”.

Capitalized terms defined in this Management’s Discussion and Analysis of Financial Condition and Results of Operations have the meanings ascribed to such terms in, and for the purposes of, this section.

Overview

Prior to the Starz Separation, as further discussed below, Lionsgate Studios Corp. (the “Company,” “Lionsgate Studios,” “we,” “us,” or “our”) was a subsidiary of Lions Gate Entertainment Corp (“Lionsgate” or “Parent”) which encompasses the motion picture and television studio operations (collectively referred to as the “LG Studio Business”) of Lionsgate.

The Studio Business consists of the Motion Picture and Television Production reportable segments, together with substantially all of Lionsgate’s corporate general and administrative costs. The Motion Picture segment consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. The Television Production segment consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and non-fiction programming. The Motion Picture segment includes the licensing of motion pictures and the Television Production segment includes the licensing of Starz original productions to the STARZ-branded premium global subscription platforms (the “Starz Business”). The Television Production segment also includes the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment, a talent management company.

Studio Separation and Business Combination

On May 13, 2024, Lionsgate consummated the transactions contemplated by that certain business combination agreement (the “Business Combination Agreement”), with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Lionsgate (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and wholly-owned subsidiary of Lionsgate (“StudioCo”), and other affiliates of SEAC. Pursuant to the terms and conditions of the Business Combination Agreement, the LG Studios Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “LG Studios”) and continues the existing business operations of the LG Studios Business of Lionsgate. The Company became a separate publicly traded company and its common shares, without par value (“LG Studios Common Shares”), commenced trading on Nasdaq under the symbol “LION” on May 14, 2024.

 

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In connection with and prior to the Business Combination, Lionsgate and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Studio Separation”).

The Business Combination has been accounted for as a reverse recapitalization in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of LG Studios represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing LG Studios Common Shares for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of the Studio Business.

The Studio Business has been determined to be the accounting acquirer in the Business Combination because Lionsgate held a controlling financial interest.

As a result of the Business Combination and additional private investments in public equities (“PIPE”) financing discussed in Note 2 to the consolidated financial statements of Lionsgate Studios, former SEAC public shareholders and founders and new common equity financing investors owned approximately 12.2% of LG Studios Common Shares. In addition to establishing the Studio Business as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Lionsgate received at closing, including $254.3 million in PIPE financing. See Note 2 to the consolidated financial statements of Lionsgate Studios for additional information related to the Business Combination. The net proceeds from the transaction were used by the Company to pay down the Intercompany Note, see Note 8 to the consolidated financial statements of Lionsgate Studios.

Starz Separation

On May 6, 2025, Lionsgate, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”) completed the separation of the businesses of LG Studios, from the STARZ-branded premium subscription platform business (the “Starz Separation”). As a result of the Arrangement Agreement, the pre-transaction shareholders of Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the Studio Business previously held by Lionsgate, and is owned by Lionsgate shareholders and LG Studios shareholders, and (2) Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Lionsgate (see Note 22 to the consolidated financial statements of Lionsgate Studios).

Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with U.S. GAAP, due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Lionsgate’s senior management with New Lionsgate following the completion of the Starz Separation, New Lionsgate (which holds the Lionsgate Studio Business) is considered the accounting spinnor or divesting entity and Starz (which holds the Starz Business) is considered the accounting spinnee or divested entity. As a result, Lionsgate will be the accounting predecessor to New Lionsgate and the pro rata distribution of the Starz Business will be recorded through equity with no gain or loss recorded. The Starz Business will be reflected as discontinued operations in the financial statements of New Lionsgate following the completion of the Starz Separation, beginning with the first quarter ending June 30, 2025. For periods following the Starz Separation, New Lionsgate will reflect the historical financial position and results of operations of Lionsgate.

 

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See also “Liquidity and Capital Resources” for discussion of the Starz Separation financing transactions.

Basis of Presentation

Upon the effective date of the Studio Separation, the Company’s financial statements are presented on a consolidated basis, as Lionsgate completed the contribution of the Studio Business on such date.

For periods prior to the Studio Separation, the Company operated as a segment of Lionsgate and not as a separate entity. The Company’s financial statements prior to the Studio Separation were prepared on a carve-out basis and were derived from Lionsgate’s consolidated financial statements and accounting records and reflect Studio Business’s combined historical financial position, results of operations and cash flows as they were historically managed in accordance with U.S. GAAP. Prior to the Studio Separation, a management approach was applied to determine the carve-out basis of presentation. In using the management approach, considerations over how the business operates were utilized to identify historical operations that should be presented within the carve-out financial statements.

For periods subsequent to the Studio Separation, the accompanying consolidated financial statements include the accounts of LG Studios and all of its majority-owned and controlled subsidiaries. The financial statements of the Company for all periods presented are referred to hereinafter as “consolidated financial statements”, but include the historical results of the Company prior to the Studio Separation that are presented on a carve-out basis.

All revenues and costs as well as assets and liabilities directly associated with the business activity of the Studio Business were included in the accompanying consolidated financial statements. Prior to the Studio Separation, revenues and costs associated with the Studio Business were specifically identifiable in the accounting records maintained by Lionsgate and primarily represent the revenue and costs used for the determination of segment profit of the Motion Picture and Television Production segments of Lionsgate. In addition, the LG Studios Business costs included an allocation of corporate general and administrative expense (inclusive of share-based compensation) which was allocated to the LG Studios Business as further discussed below. Other costs excluded from the Motion Picture and Television Production segment profit but relating to the LG Studios Business were generally specifically identifiable as costs of the Studio Business in the accounting records of Lionsgate and were included in the accompanying consolidated financial statements in periods prior to the Studio Separation.

In connection with the Business Combination, on May 9, 2024, Lionsgate and StudioCo entered into a shared services and overhead sharing agreement (the “Shared Services Agreement”) which took effect upon the closing of the Business Combination. The Shared Services Agreement facilitates the allocation to the Company of all corporate general and administrative expenses of Lionsgate, except for an amount of $10.0 million to be allocated annually to Lionsgate. The $10.0 million allocation of Lionsgate’s corporate general and administrative expenses to the Starz Business pursuant to the Shared Services Agreement is designed to reflect the portion of corporate expenses expended and reflective of the level of effort and costs incurred related to management oversight and services provided for the Starz Business post Studio Separation with consideration of the anticipated separation of the Starz Business.

The corporate general and administrative expenses that are allocated to the Company pursuant to the Shared Services Agreement include salaries and wages for certain executives and other corporate officers related to executive oversight, investor relations costs, costs for the maintenance of corporate facilities, and other common administrative support functions, including corporate accounting, finance and financial reporting, audit and tax costs, corporate and other legal support functions, and certain information technology and human resources. In addition, the Separation Agreement and the Shared Services Agreement provide that officers, employees and directors of the Company will continue to receive awards of equity and equity-based compensation pursuant to

 

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the existing plans of Lionsgate. Such awards will be treated as a capital contribution by Lionsgate to the Company, with the associated stock based compensation expense for such awards allocated to the Company, see Note 14 to the consolidated financial statements of Lionsgate Studios.

For periods prior to the Studio Separation, the combined financial statements of the LG Studios Business included allocations of corporate general and administrative expenses (inclusive of share-based compensation) from Lionsgate related to the corporate and shared service functions historically provided by Lionsgate. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated Lionsgate revenue, payroll expense or other measures considered to be a reasonable reflection of the historical utilization levels of these services.

Management believes the assumptions underlying these consolidated financial statements, including the assumptions regarding the allocation of general and administrative expenses from Lionsgate to the Studio Business prior to the Studio Separation, are reasonable. See Note 21 to the consolidated financial statements of Lionsgate Studios for further detail of the allocations included in the consolidated financial statements.

In connection with the Business Combination, the Company entered into certain intercompany note arrangements, which mirrored the terms and amounts outstanding under Lionsgate’s credit facilities as previously reflected in the historical financial statements of the Studio Business prior to the Studio Separation, see Note 8 to the consolidated financial statements of Lionsgate Studios.

Components of Results of Operations

Revenues

Our revenues are derived from the Motion Picture and Television Production segments, as described below. As mentioned above, we refer to our Motion Picture and Television Production segments collectively as our Studio Business. Our revenues are derived from the U.S., Canada, the United Kingdom and other foreign countries. None of the non-U.S. countries individually comprised greater than 10% of total revenues for the fiscal years ended March 31, 2025, 2024 and 2023.

Motion Picture: Our Motion Picture segment includes revenues derived from the following:

 

  •  

Theatrical. Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a picture-by-picture basis (distributed by us directly in the U.S. and through a sub-distributor in Canada). The revenues from Canada are reported net of distribution fees and release expenses of the Canadian sub-distributor. The financial terms that we negotiate with our theatrical exhibitors in the U.S. generally provide that we receive a percentage of the box office results. Theatrical revenues also include revenues from licenses to direct-to-platform customers where the initial license of a motion picture is to a direct-to-platform customer.

 

  •  

Home Entertainment. Home entertainment revenues are derived from the sale or rental of our film productions and acquired or licensed films and certain television programs (including theatrical and direct-to-video releases) on packaged media and through digital media platforms (including pay-per-view and video-on-demand platforms, electronic sell through, and digital rental). In addition, we have revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, we share in the rental or sales revenues generated by the platform on a title-by-title basis.

 

  •  

Television. Television revenues are primarily derived from the licensing of our theatrical productions and acquired films to the linear pay, basic cable and free television markets. In addition, when a license in our traditional pay television window is made to a subscription video-on-demand (“SVOD”) or other digital platform, the revenues are included here.

 

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  •  

International. International revenues are derived from (1) licensing of our productions, acquired films, our catalog product and libraries of acquired titles to international distributors, on a territory-by-territory basis; and (2) the direct distribution of our productions, acquired films, and our catalog product and libraries of acquired titles in the United Kingdom.

 

  •  

Other. Other revenues are derived from, among others, the licensing of our film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets.

Television Production: Our Television Production segment includes revenues derived from the following:

 

  •  

Television. Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television and syndication) of scripted and unscripted series, television movies, mini-series and non-fiction programming. Television revenues also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform. Television revenues include fixed fee arrangements as well as arrangements in which we earn advertising revenue from the exploitation of certain content on television networks.

 

  •  

International. International revenues are derived from the licensing and syndication to international markets of scripted and unscripted series, television movies, mini-series and non-fiction programming.

 

  •  

Home Entertainment. Home entertainment revenues are derived from the sale or rental of television production movies or series on packaged media and through digital media platforms.

 

  •  

Other. Other revenues are derived from, among others, the licensing of our television programs to other ancillary markets, the sales and licensing of music from the television broadcasts of our productions, and from commissions and executive producer fees earned related to talent management.

Expenses

Our primary operating expenses include direct operating expenses, distribution and marketing expenses and general and administration expenses.

Direct operating expenses include amortization of film and television production or acquisition costs, participation and residual expenses, provision for doubtful accounts, and foreign exchange gains and losses.

Participation costs represent contingent consideration payable based on the performance of the film or television program to parties associated with the film or television program, including producers, writers, directors or actors. Residuals represent amounts payable to various unions or “guilds” such as the Screen Actors Guild - American Federation of Television and Radio Artists, Directors Guild of America, and Writers Guild of America, based on the performance of the film or television program in certain ancillary markets or based on the individual’s (i.e., actor, director, writer) salary level in the television market.

Distribution and marketing expenses primarily include the costs of theatrical prints and advertising (“P&A”) and premium video-on-demand (“Premium VOD”) expense and of DVD/Blu-ray duplication and marketing. Theatrical P&A includes the costs of the theatrical prints delivered to theatrical exhibitors and the advertising and marketing cost associated with the theatrical release of the picture. Premium VOD expense represents the advertising and marketing cost associated with the Premium VOD release of the picture. DVD/Blu-ray duplication represents the cost of the DVD/Blu-ray product and the manufacturing costs associated with creating the physical products. DVD/Blu-ray marketing costs represent the cost of advertising the product at or near the time of its release or special promotional advertising.

General and administration expenses include salaries and other overhead. Following the Studio Separation, the Shared Services Agreement facilitates the allocation of substantially all corporate general and administrative expenses to the Company, including salaries and wages for certain executives and other corporate officers related

 

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to executive oversight, investor relations costs, costs for the maintenance of corporate facilities, and other common administrative support functions, including corporate accounting, finance and financial reporting, audit and tax costs, corporate and other legal support functions, and certain information technology and human resources. Prior to the Studio Separation, general and administrative expenses included allocations for certain general and administrative expenses from Lionsgate related to certain corporate and shared service functions historically provided by Lionsgate. See “Basis of Presentation” above, Note 1 and Note 21 to our consolidated financial statements for further details on the Shared Services Agreement and our methodology for allocating these costs for periods prior to the Studio Separation.

For the fiscal years ended March 31, 2025, 2024 and 2023, total Lionsgate corporate general and administrative expenses were $123.2 million, $136.1 million and $122.9 million, respectively, of which $120.9 million, $110.6 million, and $100.8 million, respectively, was allocated to the Company.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our accounting policies are more fully described in Note 1 to our consolidated financial statements. As disclosed in Note 1 to our consolidated financial statements, the preparation of our financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The application of the following accounting policies, which are important to our financial position and results of operations, requires significant judgments and estimates on the part of management. As described more fully below, these estimates bear the risk of change due to the inherent uncertainty of the estimate. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations will be affected. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We believe that the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments.

Accounting for Films and Television Programs

Capitalized costs for films or television programs are predominantly monetized individually.

Amortization. Film cost amortization as well as participations and residuals expense are based on management’s estimates. Costs of acquiring and producing films and television programs and of acquired libraries are amortized and estimated liabilities for participations and residuals costs are accrued using the individual-film-forecast method, based on the ratio of the current period’s revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”). Management’s judgment is required in estimating ultimate revenue and the costs to be incurred throughout the life of each film or television program.

Management estimates ultimate revenues based on historical experience with similar titles or the title genre, the general public appeal of the cast, audience test results when available, actual performance (when available) at the box office or in markets currently being exploited, and other factors such as the quality and acceptance of motion pictures or programs that our competitors release into the marketplace at or near the same time, critical reviews, general economic conditions and other tangible and intangible factors, many of which we do not control and which may change.

For motion pictures, ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture. The most sensitive factor affecting our estimate of ultimate revenues for a film intended for theatrical release is the film’s theatrical box office performance, as subsequent revenues

 

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from the licensing and sale in other markets have historically been highly correlated to its theatrical box office performance. After a film’s release, our estimates of revenue from succeeding markets are revised based on historical relationships and an analysis of current market trends.

For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. The most sensitive factors affecting our estimate of ultimate revenues for a television series is whether the series will be ordered for a subsequent season and estimates of revenue in secondary markets other than the initial license fee, which may depend on a number of factors, including, among others, the ratings or viewership the program achieves on the customers’ platforms. The initial estimate of ultimate revenue may include estimates of revenues outside of the initial license window (i.e., international, home entertainment and other distribution platforms) and are based on historical experience for similar programs (genre, duration, etc.) and the estimated number of seasons of the series. Ultimates of revenue beyond the initial license fee are generally higher for programs that have been or are expected to be ordered for multiple seasons. We regularly monitor the performance of each season, and evaluate whether impairment indicators are present (i.e., low ratings, cancellations or the season is not reordered), and based upon our review, we revise our estimates as needed and perform an impairment assessment if impairment indicators are present (see below).

For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.

Due to the inherent uncertainties involved in making such estimates of ultimate revenues and expenses, these estimates have differed in the past from actual results and are likely to differ to some extent in the future from actual results. In addition, in the normal course of our business, some films and titles are more successful or less successful than anticipated. Management regularly reviews and revises when necessary its ultimate revenue and cost estimates, which may result in a change in the rate of amortization of film costs and participations and residuals and/or a write-down of all or a portion of the unamortized costs of the film or television program to its estimated fair value (see below).

An increase in the estimate of ultimate revenue will generally result in a lower amortization rate and, therefore, less film and television program amortization expense, while a decrease in the estimate of ultimate revenue will generally result in a higher amortization rate and, therefore, higher film and television program amortization expense, and also periodically results in an impairment requiring a write-down of the film cost to the title’s fair value. These write-downs are included in amortization expense within direct operating expenses in our consolidated statements of operations. See further discussion below under Impairment Assessment.

Impairment Assessment. An individual film or television program is evaluated for impairment when events or changes in circumstances indicate that the fair value of an individual film is less than its unamortized cost. If the result of the impairment test indicates that the carrying value exceeds the estimated fair value, an impairment charge will then be recorded for the amount of the difference.

Estimate of Fair Value. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. For motion pictures intended for theatrical release, the discounted cash flow analysis used in the impairment evaluation prior to theatrical release is subjective and the key inputs include estimates of future anticipated revenues and estimates of box office performance, which may differ from future actual results. These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews. As discussed in Note 4 to the consolidated financial statements, the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million at March 31, 2025. For television programs, the discounted cash flow analysis used in the impairment evaluation includes key inputs such as estimates of future anticipated revenue, as discussed above. See further discussion of Valuation Assumptions below.

 

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Valuation Assumptions. The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 11 to our consolidated financial statements). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.

Revenue Recognition. Our Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media), television, and international market places.

Our content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties. Our fixed fee or minimum guarantee licensing arrangements in the television, digital media and international markets may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.

Sales or usage based royalties represent amounts due to us based on the “sale” or “usage” of our content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated has been satisfied (or partially satisfied). Generally, when we license completed content (with standalone functionality, such as a movie, or television show), our performance obligation will be satisfied prior to the sale or usage. When we license intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), our performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to us under these arrangements are generally not reported to us until after the close of the reporting period. We record revenue under these arrangements for the amounts due and not yet reported to us based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from our customers, historical experience with similar titles in that market or territory, the performance of the title in other markets and/or available data in the industry. While we believe these estimates are reasonable estimates of the amounts due under these arrangements, such estimated amounts could differ from the actual amounts to be subsequently reported by the customer, which could be higher or lower than our estimates, and could result in an adjustment to revenues in future periods.

Revenue from the theatrical release of feature films are treated as sales or usage-based royalties and recognized starting at the exhibition date and based on our participation in box office receipts of the theatrical exhibitor.

Digital media revenue sharing arrangements are recognized as sales or usage based royalties.

Revenue from commissions are recognized as such services are provided.

Goodwill. At March 31, 2025, the carrying value of goodwill was $808.5 million. Goodwill is allocated to our reporting units, which are our operating segments or one level below our operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. Our reporting units for purposes of goodwill

 

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impairment testing, along with their respective goodwill balances at March 31, 2025, were Motion Picture (goodwill of $397 million), and our Television (goodwill of $319 million) and Talent Management (goodwill of $93 million) businesses, both of which are part of our Television Production segment.

Goodwill is not amortized but is reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. We perform our annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit of whether or not it is more-likely-than-not that the fair value is less than the carrying value of the reporting unit. If we believe that as a result of our qualitative assessment it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company. A quantitative assessment requires determining the fair value of our reporting units. The determination of fair value requires considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates.

In performing a quantitative assessment of goodwill, we determine the fair value of our reporting units by using a combination of discounted cash flow (“DCF”) analyses and market-based valuation methodologies. The models rely on significant judgments and assumptions surrounding general market and economic conditions, short-term and long-term growth rates, discount rates, income tax rates, and detailed management forecasts of future cash flow and operating margin projections, and other assumptions, all of which are based on our internal forecasts of future performance as well as historical trends. The market-based valuation method utilizes EBITDA multiples from guideline public companies operating in similar industries and a control premium. The results of these valuation methodologies are weighted as to their relative importance and a single fair value is determined. The fair value of our reporting units is reconciled to the market value of our equity, determined based on the average prices of our common shares just prior to the period end. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the annual or interim goodwill impairment tests will prove to be an accurate prediction of the future.

Goodwill Impairment Assessments:

For our annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, we performed quantitative goodwill impairment assessments for all of our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company’s reporting units. The DCF analysis components of the fair value estimates were determined primarily by discounting estimated future cash flows, which included weighted average perpetual nominal growth rates ranging from 2.0% to 3.5%, at a weighted average cost of capital (discount rate) ranging from 8.5% to 10.0%, which considered the risk of achieving the projected cash flows, including the risk applicable to the reporting unit, industry and market as a whole. Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units significantly exceeded the carrying values for all of our reporting units with a remaining goodwill balance.

Management will continue to monitor all of its reporting units for further changes in the business environment that could impact the recoverability in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from our business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in our goodwill impairment tests, and ultimately impact the estimated fair value of our reporting units may include the global

 

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economy; consumer consumption levels of our content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; the duration and potential impact of strikes of unions, on our ability to produce, acquire and distribute our content; the commercial success of our television programming and motion pictures; our continual contractual relationships with our customers; and changes in consumer behavior. If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.

Corporate expense allocation. For periods prior to the Studio Separation, Lionsgate’s corporate general and administrative functions and costs provided oversight over both the Starz Business and the Studio Business. These functions and costs include, but are not limited to, salaries and wages for certain executives and other corporate officers related to executive oversight, investor relations costs, costs for the maintenance of corporate facilities, and other common administrative support functions, including corporate accounting, finance and financial reporting, audit and tax costs, corporate and other legal support functions, and certain information technology and human resources. Accordingly, for periods prior to the Studio Separation, the consolidated financial statements of the Studio Business include allocations of certain general and administrative expenses from Lionsgate of $14.2 million, $110.6 million, and $100.8 million for the fiscal years ended March 31, 2025, 2024, and 2023, respectively, related to these corporate and shared service functions historically provided by Lionsgate.

The allocation of costs to the Studio Business were subjective and required judgment. The allocations of general and administrative expenses to the Studio Business were on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated Lionsgate revenue, payroll expense or other measures management considered to be a reasonable reflection of the estimated historical utilization levels of these services. Following the Studio Separation, $106.7 million of Lionsgate’s corporate general and administrative costs were allocated to the Company pursuant to the Shared Services Agreement. In aggregate, allocations of Lionsgate’s corporate general and administrative costs to the Company represent approximately 98.0%, 80.1%, and 80.2% for the fiscal years ended March 31, 2025, 2024, and 2023, respectively, of total Lionsgate corporate general and administrative expense. See Components of Results of Operations–Expenses above for further information.

Income Taxes. We are subject to federal and state income taxes in the U.S. and in several foreign jurisdictions. We record deferred tax assets related to net operating loss carryforwards and certain temporary differences, net of applicable reserves in each jurisdiction. We recognize a future tax benefit to the extent that realization of such benefit is more likely than not on a jurisdiction-by-jurisdiction basis; otherwise, a valuation allowance is applied. In order to realize the benefit of our deferred tax assets, we will need to generate sufficient taxable income in the future in each of the jurisdictions which have these deferred tax assets. However, the assessment as to whether there will be sufficient taxable income in a jurisdiction to realize our net deferred tax assets in that jurisdiction is an estimate which could change in the future depending primarily upon the actual performance of our Company. We will be required to continually evaluate the more likely than not assessment that our net deferred tax assets will be realized, and if operating results deteriorate in a particular jurisdiction, we may need to record a valuation allowance for all or a portion of our deferred tax assets through a charge to our income tax benefit (provision). As of March 31, 2025, we maintained a valuation allowance of $686.6 million against certain U.S. and foreign deferred tax assets that may not be realized on a more likely than not basis.

Our effective tax rates differ from the U.S. federal statutory income tax rate and is affected by many factors, including the overall level of income (loss) before taxes and its mix across the jurisdictions in which conduct operations, any changes in tax laws and regulations, changes in valuation allowances against our deferred tax assets, changes in unrecognized tax benefits, tax planning strategies available to us, and other discrete items.

For periods prior to the Business Combination (including the period from April 1, 2024, through May 13, 2024), income taxes were calculated on a separate tax return basis. The separate tax return method applies the

 

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accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and standalone enterprise. The Company’s U.S. operations, and certain of its non-U.S. operations historically were included in the income tax returns of Lionsgate or its subsidiaries that may not be part of the Company. Management believes the assumptions supporting the Company’s allocation and presentation of income taxes on a separate tax return basis for the periods prior to the Business Combination to be reasonable.

For periods following the Business Combination (including the period from May 14, 2024, through March 31, 2025), income taxes were calculated by applying an estimated effective income tax rate to the Company’s ordinary income (loss), adjusted for the income tax effects of items that related discretely to the period, if any. Following the Business Combination, certain tax attributes (including U.S. federal net operating losses) were statutorily allocated from Lionsgate to the legal entities comprising the Studio Business, and were available for use.

Recent Accounting Pronouncements

See Note 1 to the consolidated financial statements of Lionsgate Studios for a discussion of recent accounting guidance.

 

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RESULTS OF OPERATIONS

Fiscal 2025 Compared to Fiscal 2024

Consolidated Results of Operations

The following table sets forth our consolidated results of operations for the fiscal years ended March 31, 2025 and 2024. Due to the acquisition of eOne, fiscal 2024 includes the results of operations of eOne from the acquisition date of December 27, 2023, see Note 3 to our consolidated financial statements for further details.

 

     Year Ended
March 31, 		     Change  
     2025      2024      Amount      Percent  
    

(Amounts in millions)

 

Revenues

            

Studio Business

            

Motion Picture(1)

    $ 1,589.7      $ 1,656.3      $ (66.6 )       (4.0 )% 

Television Production(2)

      1,605.8        1,330.1        275.7        20.7 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total revenues

      3,195.5        2,986.4        209.1        7.0 % 

Expenses:

            

Direct operating

      2,210.0        1,886.7        323.3        17.1 % 

Distribution and marketing

      395.9        462.3        (66.4 )       (14.4 )% 

General and administration

      344.6        349.2        (4.6 )       (1.3 )% 

Depreciation and amortization

      17.8        15.6        2.2        14.1 % 

Restructuring and other

      102.6        132.9        (30.3 )       (22.8 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total expenses

      3,070.9        2,846.7        224.2        7.9 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

Operating income

      124.6        139.7        (15.1 )       (10.8 )% 

Interest expense

      (242.5 )       (222.5 )       (20.0 )       9.0 % 

Interest and other income

      14.8        19.2        (4.4 )       (22.9 )% 

Other gains (losses), net

      (11.8 )       (20.0 )       8.2        (41.0 )% 

Loss on extinguishment of debt

      (1.8 )       (1.3 )       (0.5 )       38.5 % 

Gain on investments, net

      —         3.5        (3.5 )       (100.0 )% 

Equity interests income

      4.3        8.7        (4.4 )       (50.6 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Loss before income taxes

      (112.4 )       (72.7 )       (39.7 )       54.6 % 

Income tax provision

      (14.5 )       (34.2 )       19.7        (57.6 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net loss

      (126.9 )       (106.9 )       (20.0 )       18.7 % 

Less: Net loss (income) attributable to noncontrolling interests

      (1.6 )       13.4        (15.0 )       (111.9 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Net loss attributable to Lionsgate Studios Corp. shareholders

    $ (128.5 )     $ (93.5 )     $ (35.0 )       37.4 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

 

 
(1)

Motion Picture revenues for the fiscal years ended March 31, 2025 and 2024, includes $203.3 million and $128.2 million, respectively, of revenues from licensing Motion Picture segment product to the Starz Business.

(2)

Television Production revenues for the fiscal years ended March 31, 2025 and 2024, includes $416.4 million and $417.7 million, respectively, of revenues from licensing Television Production segment product to the Starz Business.

Revenues. Consolidated revenues increased $209.1 million in fiscal 2025. Revenues for fiscal 2025 included approximately $591.9 million from eOne (reflecting a full fiscal year of revenues from eOne), as compared to approximately $113.8 million in fiscal 2024, reflecting revenues from the acquisition date of December 27, 2023.

 

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Motion Picture revenue decreased $66.6 million in fiscal 2025 due to lower home entertainment and theatrical revenue primarily due to revenue in fiscal 2024 from John Wick: Chapter 4 and The Hunger Games: The Ballad of Songbirds & Snakes, offset by increased international and television revenue. Motion Picture revenues for fiscal 2025 included approximately $123.4 million of revenues from eOne, as compared to approximately $19.5 million in fiscal 2024 from the acquisition date of December 27, 2023. Motion Picture revenue included $203.3 million of revenue from licensing Motion Picture segment product to the Starz Business, representing an increase of $75.1 million from fiscal 2024.

Television Production revenue increased $275.7 million due to increased domestic television revenue reflecting the inclusion of a full fiscal year of revenues from eOne in fiscal 2025, as well as increased other, and international revenue, which was partially offset by lower home entertainment digital revenue. Television Production revenues for fiscal 2025 included approximately $468.5 million of revenues from eOne, as compared to approximately $94.3 million in fiscal 2024 from the acquisition date of December 27, 2023. Television Production revenue included $416.4 million of revenue from licensing Television Production segment product to the Starz Business, representing a decrease of $1.3 million from fiscal 2024.

See further discussion in the Segment Results of Operations section below.

Direct Operating Expenses. Direct operating expenses by segment were as follows for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended March 31,        
     2025     2024     Change  
     Amount      % of
Segment
Revenues		     Amount      % of
Segment
Revenues		     Amount      Percent  
     (Amounts in millions)         

Direct operating expenses

                

Motion Picture

    $ 824.2        51.8 %    $ 796.0        48.1 %    $ 28.2        3.5 % 

Television Production

      1,369.3        85.3 %      1,090.1        82.0 %      279.2        25.6 % 

Other

      16.5        nm       0.6        nm       15.9        nm  
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
   $ 2,210.0        69.2 %    $ 1,886.7        63.2 %    $ 323.3        17.1 % 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  
 

nm - Percentage not meaningful.

Direct operating expenses increased in fiscal 2025, due to higher direct operating expenses of the Television Production segment due to increased revenues from Television Production and higher direct operating expenses as a percentage of revenue of the Motion Picture segment driven by the performance and costs of the titles released during the fiscal year, in particular, Borderlands, which resulted in higher direct operating cost in relation to revenue. See further discussion in the Segment Results of Operations section below.

Other. Other direct operating expense in fiscal 2025 includes rent cost for production facilities that were unutilized as a result of the industry strikes amounting to $18.6 million, which was not allocated to the segments, and is included in direct operating expense. In addition, other direct operating expense in fiscal 2025 and 2024 includes COVID related charges, if any, net of insurance recoveries.

 

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Distribution and Marketing Expenses. Distribution and marketing expenses by segment were as follows for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended
March 31,		      Change  
       2025          2024        Amount      Percent  
     (Amounts in millions)         

Distribution and marketing expenses

            

Motion Picture

    $ 357.8      $ 427.0      $ (69.2 )       (16.2 )% 

Television Production

      38.1        35.3        2.8        7.9 % 
  

 

 

     

 

 

     

 

 

     

 

 

  
     $395.9      $462.3      $(66.4)      (14.4)%  
  

 

 

     

 

 

     

 

 

     

 

 

  

U.S. theatrical P&A and Premium VOD expense included in Motion Picture distribution and marketing expense

    $ 231.7      $ 277.7      $ (46.0 )       (16.6 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Distribution and marketing expenses decreased in fiscal 2025 and primarily reflects lower Motion Picture theatrical P&A and Premium VOD expense associated with the theatrical slate releases in fiscal 2025, and lower Motion Picture home entertainment distribution and marketing expense. See further discussion in the Segment Results of Operations section below.

General and Administrative Expenses. General and administrative expenses by segment were as follows for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended March 31,     Change  
     2025      % of
Revenues		     2024      % of
Revenues		     Amount     Percent  
     (Amounts in millions)  

General and administrative expenses

               

Motion Picture

    $ 100.1        $ 113.9        $ (13.8 )      (12.1 )% 

Television Production

      61.9          57.9          4.0       6.9 % 

Corporate allocations from Lionsgate, excluding allocation of share-based compensation expense

      120.9          110.6          10.3       9.3 % 

Share-based compensation expense

      53.0          54.8          (1.8 )      (3.3 )% 

Purchase accounting and related adjustments

      8.7          12.0          (3.3 )      (27.5 )% 
  

 

 

       

 

 

       

 

 

    

 

 

  

Total general and administrative expenses

    $ 344.6        10.8 %    $ 349.2        11.7 %    $ (4.6 )      (1.3 )% 
  

 

 

       

 

 

       

 

 

    

 

 

  

General and administrative expenses decreased in fiscal 2025, resulting from decreased Motion Picture general and administrative expenses, purchase accounting and related adjustments and share-based compensation expense, partially offset by increased corporate general and administrative expenses and Television Production general and administrative expenses. Studio Business general and administrative expenses for fiscal 2025 included approximately $23.8 million from eOne, as compared to approximately $7.5 million in fiscal 2024 from the acquisition date of December 27, 2023. See further discussion in the Segment Results of Operations section below.

As discussed in Components of Results of Operations, following the Studio Separation, the Shared Services Agreement facilitates the allocation of substantially all corporate general and administrative expenses to the Company. For periods prior to the Studio Separation, the Company has been allocated a portion of Lionsgate’s total corporate expenses which are included in general and administrative expenses. Corporate general and administrative expenses increased approximately $10.3 million, or 9.3%, primarily due to increases in professional fees and salaries and related expenses and corporate general and administrative expenses from eOne. Corporate general and administrative expenses for fiscal 2025 included approximately $12.0 million from eOne, as compared to approximately $4.0 million in fiscal 2024 from the acquisition date of December 27, 2023.

 

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Certain of our employees participate in the share-based compensation plans sponsored by Lionsgate. For periods prior to the Studio Separation, Lionsgate share-based compensation awards granted to employees of the Company were reflected in parent net investment within the consolidated statements of equity (deficit) at the time they are expensed in the consolidated statements of operations. The following table presents share-based compensation expense by financial statement line item:

 

     Year Ended
March 31,		  
     2025      2024  
     (Amounts in millions)  

Share-based compensation is comprised of:

      

Studio employee share-based compensation expense

    $ 29.1      $ 39.8  

Allocation of Lionsgate corporate and shared employee share-based compensation expense

      23.9        15.0  
  

 

 

     

 

 

  

Total share-based compensation included in general and administrative expense

      53.0        54.8  

Restructuring and other(1)

      4.9        7.7  
  

 

 

     

 

 

  

Total share-based compensation expense

    $ 57.9      $ 62.5  
  

 

 

     

 

 

  
 
(1)

Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.

Purchase accounting and related adjustments in fiscal 2025 and 2024 include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment. Amounts in fiscal 2024 also include the non-cash charge for the amortization of the recoupable portion of the purchase price (through May 2023) related to 3 Arts Entertainment. These amounts are accounted for as compensation and are included in general and administrative expense. The noncontrolling equity interests in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment. Purchase accounting and related adjustments decreased $3.3 million, or 27.5%, primarily due to lower noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment of $2.0 million associated with a lower noncontrolling interest ownership percentage as a result of our acquisition of an additional interest in 3 Arts Entertainment (see Note 12 to our consolidated financial statements). In addition, purchase accounting and related adjustments decreased due to lower amortization of the recoupable portion of the purchase price of 3 Arts Entertainment of $1.3 million, due to the amortization period ending in May 2023.

Depreciation and Amortization Expense. Depreciation and amortization of $17.8 million for fiscal 2025 increased $2.2 million from $15.6 million in fiscal 2024.

 

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Restructuring and Other. Restructuring and other decreased $30.3 million in fiscal 2025 as compared to fiscal 2024, and includes restructuring and severance costs and certain transaction and other costs, when applicable. Restructuring and other costs were as follows for the three months ended March 31, 2025 and 2024 (see Note 16 to our consolidated financial statements):

 

    
Year Ended March 31		      Change  
     2025      2024      Amount      Percent  
     (Amounts in millions)         

Restructuring and other:

            

Content and other impairments(1)

    $ 26.1      $ 12.8      $ 13.3        103.9 % 

Severance(2)

      37.0        35.2        1.8        5.1 % 

Transaction and other costs(3)

      39.5        84.9        (45.4 )       (53.5 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 102.6      $ 132.9      $ (30.3 )       (22.8 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  
 
(1)

Amounts in the fiscal year ended March 31, 2025 include content impairments of $7.7 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. In addition, amounts in the fiscal year ended March 31, 2025 also include impairments of certain operating lease rightof- use and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company primarily related to the integration of eOne. Content and other impairments in the fiscal year ended March 31, 2024 include $12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne.

(2)

Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives. In fiscal 2025, in connection with the Company’s current restructuring plan, approximately 8% of its eligible U.S. employees elected to take advantage of voluntary severance and early retirement packages. A total of approximately $26.0 million in severance expense was incurred under the voluntary severance program and was recognized in restructuring and other in fiscal 2025. In the fiscal year ended March 31, 2024, amounts were due to restructuring activities including integration of the acquisition of eOne, and our Motion Picture and Television Production segments.

(3)

Transaction and other costs in the fiscal years ended March 31, 2025 and 2024 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters. In fiscal 2025 and fiscal 2024, amounts include costs associated with the separation of the Starz Business from the Studio Business, and acquisition and integration costs related to the acquisition of eOne. In fiscal 2024, amounts also include $49.2 million associated with the acquisition of additional interest in 3 Arts Entertainment. Due to the new arrangement representing a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million, representing the excess of the fair value of the modified award over amounts previously expensed (see Note 12 to our consolidated financial statements for further information). In addition, transaction and other costs in fiscal 2024 includes approximately $16.6 million of a loss associated with a theft at a production of a 51% owned consolidated entity. In the quarter ended March 31, 2025, the Company recognized a benefit of $3.1 million for insurance recoveries related to the loss. The Company also expects to recover a portion of the loss from the noncontrolling interest holders of this entity.

 

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Interest Expense. Interest expense of $242.5 million in fiscal 2025 increased $20.0 million from fiscal 2024 due to higher average balances on variable rate corporate debt and a smaller benefit from the interest rate swaps, partially offset by lower average balances on film related obligations and slightly lower average interest rates. The following table sets forth the components of interest expense for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended
March 31,		  
     2025      2024  
     (Amounts in millions)  

Interest Expense

      

Cash Based:

      

Revolving credit facility(1)

    $ 56.3      $ 43.0  

Term loans(1)

      50.4        90.6  

IP credit facilities(2)

      43.1        —   

Other(3)

      69.0        63.8  
  

 

 

     

 

 

  
     218.8        197.4  

Amortization of debt issuance costs and other non-cash interest(4)

      23.7        25.1  
  

 

 

     

 

 

  

Total interest expense

    $ 242.5      $ 222.5  
  

 

 

     

 

 

  
 
(1)

Prior to the Studio Separation, amounts reflect interest attributable to borrowings outstanding under Lionsgate’s Credit Agreement (including the revolving credit facility, term loan A and term loan B). Subsequent to the Studio Separation, amounts reflect interest attributable to borrowings outstanding under the Company’s Intercompany Note with LGCH (see Note 8).

(2)

IP credit facility interest expense includes interest expense associated with the eOne IP Credit Facility and the LG IP Credit Facility.

(3)

Other interest expense includes payments associated with certain film related obligations (Production Tax Credit Facility, Film Library Facility, Backlog Facility and other, see Note 9 to our consolidated financial statements), and payments and receipts associated with the Company’s interest rate swaps (see Note 19 to our consolidated financial statements).

(4)

Amounts include the amortization of unrealized losses in accumulated other comprehensive income (loss) related to de-designated interest rate swaps which are being amortized to interest expense (see Note 19 to our consolidated financial statements).

Interest and Other Income. Interest and other income of $14.8 million for the fiscal year ended March 31, 2025 decreased as compared to interest and other income of $19.2 million for the fiscal year ended March 31, 2024 due to certain insurance recoveries that occurred in fiscal 2024.

Other Losses, net. Other losses, net of $11.8 million for fiscal 2025 decreased as compared to other losses, net of $20.0 million for fiscal 2024. The decrease is due to lower losses recorded related to our monetization of accounts receivable programs in the fiscal year ended March 31, 2025 as compared to the fiscal year ended March 31, 2024 (see Note 20 to our consolidated financial statements) and foreign currency gains in the fiscal year ended March 31, 2025.

Loss on Extinguishment of Debt. Loss on extinguishment of debt of $1.8 million for fiscal 2025 related to the write-off of debt issuance costs associated with the September 2024 and November 2024 voluntary prepayment of $605.1 million principal amount of the LGTV Term Loan B, and the May 2024 voluntary prepayment of $84.9 million principal amount of the LGTV Term Loan A and $214.1 million of the LGTV Term Loan B. See Note 8 to our consolidated financial statements.

Loss on extinguishment of debt of $1.3 million for fiscal 2024 is due to the write-off of issuance costs associated with the early prepayment of certain production loans.

 

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Gain on Investments, net. Gain on investments, net was nil for fiscal 2025, as compared to gain on investments, net of $3.5 million for fiscal 2024 related to other investments.

Equity Interests Income. Equity interests income of $4.3 million in fiscal 2025 compared to equity interests income of $8.7 million in fiscal 2024 due to a gain in fiscal 2024 related to the sale of an equity method investee, partially offset by higher income generated in fiscal 2025 by our equity method investees.

Income Tax Provision. We had an income tax provision of $14.5 million in fiscal 2025, compared to an income tax provision of $34.2 million in fiscal 2024. Our income tax provision differs from the U.S. federal statutory income tax rate of 21% multiplied by income (loss) before taxes due to the mix of our earnings across the various jurisdictions in which our operations are conducted, changes in valuation allowances against our deferred tax assets and certain minimum income and foreign withholding taxes. In connection with the Business Combination, certain tax attributes (including significant U.S. federal net operating losses (“NOLs”)) were statutorily allocated from Lionsgate to the legal entities comprising the Studio Business. The utilization of these tax attributes (particularly the U.S. federal NOL) for the fiscal year ended March 31, 2025, attributed to the reduction in income tax expense in comparison to the prior year.

Net Loss Attributable to Lionsgate Studios Corp. Shareholders. Net loss attributable to our shareholders for the fiscal year ended March 31, 2025 was $128.5 million, or basic and diluted net loss per common share of $0.43 on 284.6 million weighted average common shares outstanding. This compares to net loss attributable to our shareholders for the fiscal year ended March 31, 2024 of $93.5 million, or basic and diluted net loss per common share of $0.42 on 253.4 million weighted average common shares outstanding.

Segment Results of Operations and Non-GAAP Measures

The Company’s primary measure of segment performance is segment profit. Segment profit is defined as segment revenues, less segment direct operating and segment distribution and marketing expense, less segment general and administration expenses. Segment profit and total segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content strategy, certain benefits related to the COVID-19 global pandemic, unallocated rent cost and purchase accounting and related adjustments. Segment profit is a GAAP financial measure and is disclosed in Note 17 to our consolidated financial statements.

We also present below our total segment profit for all of our segments. Total segment profit, when presented outside of the segment information and reconciliations included in Note 17 to our consolidated financial statements, is considered a non-GAAP financial measure, and should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP. We use this non-GAAP measure, among other measures, to evaluate the aggregate operating performance of our business.

The Company believes the presentation of total segment profit is relevant and useful for investors because it allows investors to view total segment performance in a manner similar to the primary method used by the Company’s management and enables them to understand the fundamental performance of the Company’s businesses before non-operating items. Total segment profit is considered an important measure of the Company’s performance because it reflects the aggregate profit contribution from the Company’s segments and represents a measure, consistent with our segment profit, that eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of the Company’s businesses, are infrequent in occurrence, and in some cases are non-cash expenses. Not all companies calculate segment profit or total segment profit in the same manner, and segment profit and total segment profit as defined by the Company may not be comparable to similarly titled measures presented by other companies due to differences in the methods of calculation and excluded items.

 

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The following table reconciles the GAAP measure, operating income (loss), to the non-GAAP measure, total segment profit, for the fiscal years ended March 31, 2025 and 2024. In addition, each of segment direct operating expense, distribution and marketing expense and general and administrative expense is reconciled to the respective line items presented in the GAAP-based statement of operations in the preceding section of the Management’s Discussion and Analysis of Financial Condition and Results of Operations which discusses consolidated results of operations.

 

     Year Ended
March 31,		      Change  
     2025      2024      Amount      Percent  
     (Amounts in millions)                

Operating income

    $ 124.6      $ 139.7      $ (15.1 )       (10.8 )% 

Corporate general and administrative expense allocations from Lionsgate, excluding allocation of share-based compensation expense

      120.9        110.6        10.3        9.3 % 

Adjusted depreciation and amortization

      13.6        10.5        3.1        29.5 % 

Restructuring and other

      102.6        132.9        (30.3 )       (22.8 )% 

COVID-19 related benefit

      (2.1 )       (0.9 )       (1.2 )       133.3 % 

Content charges

      —         1.5        (1.5 )       (100.0 )% 

Unallocated rent cost included in direct operating expense

      18.6        —         18.6        n/a  

Adjusted share-based compensation expense

      53.0        54.8        (1.8 )       (3.3 )% 

Purchase accounting and related adjustments

      12.9        17.1        (4.2 )       (24.6 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total segment profit

    $ 444.1      $ 466.2      $ (22.1 )       (4.7 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

See Note 17 to our consolidated financial statements for further information on the reconciling line items above, and for reconciliations of depreciation and amortization and share-based compensation expense as presented on our consolidated statements of operations to adjusted depreciation and amortization and adjusted share-based compensation expense, respectively, as presented in the line items above.

The table below sets forth the revenues and segment profit by segment:

 

     Year Ended
March 31,		      Change  
     2025      2024      Amount      Percent  
     (Amounts in millions)                

Revenue

            

Motion Picture

    $ 1,589.7      $ 1,656.3      $ (66.6 )       (4.0 )% 

Television Production

      1,605.8        1,330.1        275.7        20.7 % 
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 3,195.5      $ 2,986.4      $ 209.1        7.0 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

Segment Profit

            

Motion Picture

    $ 307.6      $ 319.4      $ (11.8 )       (3.7 )% 

Television Production

      136.5        146.8        (10.3 )       (7.0 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Segment Profit

    $ 444.1      $ 466.2      $ (22.1 )       (4.7 )% 
  

 

 

     

 

 

     

 

 

     

 

 

  

See the following discussion for further detail of our individual segments.

 

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Motion Picture

The table below sets forth Motion Picture gross contribution and segment profit for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended
March 31,		     Change  
     2025     2024     Amount      Percent  
     (Amounts in millions)               

Motion Picture Segment:

          

Revenue

    $ 1,589.7     $ 1,656.3     $ (66.6 )       (4.0 )% 

Expenses:

          

Direct operating expense

      824.2       796.0       28.2        3.5 % 

Distribution & marketing expense

      357.8       427.0       (69.2 )       (16.2 )% 
  

 

 

    

 

 

    

 

 

     

 

 

  

Gross contribution

      407.7       433.3       (25.6 )       (5.9 )% 

General and administrative expenses

      100.1       113.9       (13.8 )       (12.1 )% 
  

 

 

    

 

 

    

 

 

     

 

 

  

Segment profit

    $ 307.6     $ 319.4     $ (11.8 )       (3.7 )% 
  

 

 

    

 

 

    

 

 

     

 

 

  

U.S. theatrical P&A and Premium VOD expense included in distribution and marketing expense

    $ 231.7     $ 277.7     $ (46.0 )       (16.6 )% 

Direct operating expense as a percentage of revenue

      51.8 %      48.1 %      

Gross contribution as a percentage of revenue

      25.6 %      26.2 %      

Revenue. The table below sets forth Motion Picture revenue by media and product category for the fiscal years ended March 31, 2025 and 2024. Motion Picture revenues for fiscal 2025 included approximately $123.4 million of revenues from eOne, as compared to approximately $19.5 million of revenues from eOne in fiscal 2024 from the acquisition date of December 27, 2023.

 

    Year Ended March 31,        
    2025     2024        
    New Lionsgate
Original Releases(1)		     Other
Film(2)		     Total     New Lionsgate
Original Releases(1)		     Other
Film(2)		     Total     Total Increase
(Decrease)		  
    (Amounts in millions)  

Motion Picture Revenue

              

Theatrical

   $ 149.3     $ 4.8     $ 154.1     $ 222.4     $ 4.1     $ 226.5     $ (72.4 ) 

Home Entertainment

              

Digital Media

     397.9       200.3       598.2       459.7       192.6       652.3       (54.1 ) 

Packaged Media

     38.4       21.6       60.0       57.3       26.7       84.0       (24.0 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total Home Entertainment

     436.3       221.9       658.2       517.0       219.3       736.3       (78.1 ) 

Television

     311.2       36.1       347.3       240.5       33.9       274.4       72.9  

International

     319.7       81.8       401.5       332.9       58.1       391.0       10.5  

Other

     11.6       17.0       28.6       19.8       8.3       28.1       0.5  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
  $ 1,228.1     $ 361.6     $ 1,589.7     $ 1,332.6     $ 323.7     $ 1,656.3     $ (66.6 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

 
(1)

New Lionsgate Original Releases: Includes titles originally planned for a wide theatrical release by Lionsgate, including titles that have changed from a planned wide theatrical release to an initial direct-to-streaming release. These releases include films developed and produced in-house, films co-developed and co-produced and films acquired or licensed from third parties. In addition, New Lionsgate Original Releases also includes multi-platform and direct-to-platform motion pictures originally released or licensed by Lionsgate, and the licensing of our original release motion picture content to other ancillary markets (location-based entertainment, games, etc.).

 

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(2)

Other Film: Includes acquired and licensed brands and libraries originally released by other parties such as third-party library product, including our titles released by acquired companies prior to our acquisition of the company (i.e., Summit Entertainment library), and titles released with our equity method investees, Roadside Attractions and Pantelion Films, and other titles.

Theatrical revenue decreased $72.4 million in fiscal 2025, as compared to fiscal 2024 primarily due to a decrease of $73.1 million from New Lionsgate Original Releases due to significant revenue in fiscal 2024 from The Hunger Games: The Ballad of Songbirds & Snakes and John Wick: Chapter 4, partially offset by the performance of the fiscal 2025 theatrical slate titles released and from the direct-to-platform release, Another Simple Favor.

Home entertainment revenue decreased $78.1 million, or 10.6%, in fiscal 2025, as compared to fiscal 2024, due to lower digital media revenue and packaged media revenue of $54.1 million and $24.0 million, respectively, primarily due to decreases from New Lionsgate Original Releases. Digital media revenue and packaged media revenue from New Lionsgate Original Releases declined $61.8 million and $18.9 million, respectively, due to lower revenue in fiscal 2025 from our fiscal 2024 theatrical slate titles, as compared to the revenue in fiscal 2024 from our fiscal 2023 theatrical slate titles, and in particular John Wick: Chapter 4, and revenue in fiscal 2024 from titles in The Hunger Games franchise. These decreases were partially offset by increased digital media revenue in fiscal 2025 from direct-to-platform and multi-platform releases.

Television revenue increased $72.9 million, or 26.6%, in fiscal 2025, as compared to fiscal 2024 due to an increase from New Lionsgate Original Releases of $70.7 million due to higher revenue generated from our fiscal 2025 and 2024 theatrical slate titles with television windows opening in fiscal 2025 as compared to the revenue from our fiscal 2024 and fiscal 2023 theatrical slate titles with television windows opening in fiscal 2024, and higher revenue generated from our multi-platform and direct-to-platform releases with television windows opening in fiscal 2025.

International revenue increased $10.5 million, or 2.7% in fiscal 2025, as compared to fiscal 2024 due to an increase from Other Film of $23.7 million from our acquired library titles, partially offset by a decrease from New Lionsgate Original Releases of $13.2 million. The decrease from New Lionsgate Original Releases of $13.2 million reflected lower revenue from our theatrical slate titles due to revenue in fiscal 2024 for The Hunger Games: The Ballad of Songbirds & Snakes and John Wick: Chapter 4, which was partially offset by higher revenue from multi-platform releases.

Direct Operating Expense. The increase in direct operating expenses is due to higher direct operating expenses as a percentage of revenue driven by the performance and costs of the titles released during the fiscal year 2025, in particular, Borderlands, which resulted in higher direct operating cost in relation to revenue. Investment in film write-downs included in Motion Picture segment direct operating expense in fiscal 2025 were $19.7 million, as compared to $34.6 million in fiscal 2024.

Distribution and Marketing Expense. The decrease in distribution and marketing expense in fiscal 2025 is due to lower theatrical P&A and Premium VOD expense associated with the theatrical slate releases in fiscal 2025, and lower home entertainment distribution and marketing expense. In the fiscal year ended March 31, 2025 approximately $23.4 million of P&A and Premium VOD expense was incurred in advance for films to be released in subsequent quarters, compared to approximately $26.2 million in the fiscal year ended March 31, 2024. We expect Motion Picture distribution and marketing expense in fiscal 2026 to increase as compared to fiscal 2025.

Gross Contribution. Gross contribution of the Motion Picture segment for fiscal 2025 decreased as compared to fiscal 2024 due to the negative contribution of the theatrical slate titles released in fiscal 2025, including Borderlands, as a result of higher direct operating expense as a percentage of revenue, and lower Motion Picture revenue. These decreases in gross contribution were partially offset by lower Motion Picture distribution and marketing expense.

 

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General and Administrative Expense. General and administrative expenses of the Motion Picture segment decreased $13.8 million, or 12.1%, primarily due to a decrease in incentive based compensation, partially offset by an increase in salaries and related expenses.

Television Production

The table below sets forth Television Production gross contribution and segment profit for the fiscal years ended March 31, 2025 and 2024:

 

     Year Ended
March 31,		     Change  
     2025     2024     Amount      Percent  
     (Amounts in millions)               

Television Production Segment:

          

Revenue

    $ 1,605.8     $ 1,330.1     $ 275.7        20.7 % 

Expenses:

          

Direct operating expense

      1,369.3       1,090.1       279.2        25.6 % 

Distribution & marketing expense

      38.1       35.3       2.8        7.9 % 
  

 

 

    

 

 

    

 

 

     

 

 

  

Gross contribution

      198.4       204.7       (6.3 )       (3.1 )% 

General and administrative expenses

      61.9       57.9       4.0        6.9 % 
  

 

 

    

 

 

    

 

 

     

 

 

  

Segment profit

    $ 136.5     $ 146.8     $ (10.3 )       (7.0 )% 
  

 

 

    

 

 

    

 

 

     

 

 

  

Direct operating expense as a percentage of revenue

      85.3 %      82.0 %      

Gross contribution as a percentage of revenue

      12.4 %      15.4 %      

Revenue. The table below sets forth Television Production revenue and changes in revenue by media for the fiscal years ended March 31, 2025 and 2024. Television Production revenues for fiscal 2025 included approximately $468.5 million of revenues from eOne, as compared to approximately $94.3 million of revenues from eOne in fiscal 2024 from the acquisition date of December 27, 2023.

 

     Year Ended
March 31,		      Change  
     2025      2024      Amount      Percent  
     (Amounts in millions)                

Television Production

            

Television

    $ 1,069.4      $ 788.5      $ 280.9        35.6 % 

International

      248.2        228.8        19.4        8.5 % 

Home Entertainment

            

Digital

      184.0        240.6        (56.6 )       (23.5 )% 

Packaged Media

     
 4.1
  
      2.0        2.1        105.0 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

Total Home Entertainment

      188.1        242.6        (54.5 )       (22.5 )% 

Other

      100.1        70.2        29.9        42.6 % 
  

 

 

     

 

 

     

 

 

     

 

 

  
   $ 1,605.8      $ 1,330.1      $ 275.7        20.7 % 
  

 

 

     

 

 

     

 

 

     

 

 

  

The primary component of Television Production revenue is domestic television revenue. Domestic television revenue increased $280.9 million, or 35.6% in fiscal 2025 as compared to fiscal 2024, primarily due to an increase of approximately $289.3 million for revenues from eOne, due to the inclusion of revenue for the full fiscal period as compared to fiscal 2024 reflecting revenues from the acquisition date of December 27, 2023 and an increase of $82.0 million from revenues from the licensing of Starz original series to Starz Networks. These increases were partially offset by decreases from other third-party domestic television revenue due to significant revenue in fiscal 2024 from The Continental and lower revenue from reality television programs.

 

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International revenue in fiscal 2025 increased $19.4 million, or 8.5% as compared to fiscal 2024 due to an increase of approximately $55.1 million for revenues from eOne in fiscal 2025, partially offset by a decrease of $36.6 million from revenues from the licensing of Starz original series to Starz Networks.

Home entertainment revenue in fiscal 2025 decreased $54.5 million, or 22.5% as compared to fiscal 2024 due to lower revenues of $47.0 million from the licensing of Starz original series to Starz Networks, and lower third-party digital media revenues. The decrease in third-party digital media revenues reflects significant revenue in fiscal 2024 for The Continental, offset by revenue in fiscal 2025 from The Chosen series and an increase of $25.1 million from revenues from eOne.

Other revenue in fiscal 2025 increased $29.9 million, or 42.6% as compared to fiscal 2024, primarily due to increased revenue from 3 Arts Entertainment, which is generated from commissions and executive producer fees earned related to talent management and an increase in eOne revenue.

Direct Operating Expense. Direct operating expense of the Television Production segment in fiscal 2025 increased $279.2 million, or 25.6%, due to the increase in Television Production revenues. Direct operating expenses as a percentage of television production revenue increased primarily due to the mix of titles generating revenue in fiscal 2025 as compared to fiscal 2024, and in particular, fiscal 2024 included significant revenue from The Continental which has a lower amortization rate as compared to fiscal 2025. Investment in film and television programs write-downs included in Television Production segment direct operating expense in fiscal 2025 were $6.7 million as compared to $8.4 million in fiscal 2024.

Gross Contribution. Gross contribution of the Television Production segment for fiscal 2025 decreased by $6.3 million as compared to fiscal 2024, due to increased television production revenue, partially offset by higher direct operating expenses as a percentage of television production revenue.

General and Administrative Expense. General and administrative expenses of the Television Production segment increased $4.0 million, or 6.9%. Television Production general and administrative expenses for fiscal 2025 included an increase of $19.8 million from eOne, and an increase in professional fees, partially offset by a decrease in incentive based compensation.

Liquidity and Capital Resources

Sources of Cash

Our liquidity and capital requirements in fiscal 2025 were provided principally through cash generated from operations, our Intercompany Note, Intercompany Revolver, eOne IP Credit Facility, LG IP Credit Facility, our film related obligations (as further discussed below), the monetization of trade accounts receivable and prior to the Studio Separation, Lionsgate’s Senior Credit Facilities and parent net investments. Prior to the Studio Separation, from time to time, sources of cash also included cash generated from the Starz Business and contributed to the Studio Business through parent net investment.

As discussed in Studio Separation and Business Combination, on May 13, 2024, Lionsgate consummated the transactions contemplated by the Business Combination which, in addition to establishing the Studio Business as a standalone publicly traded entity, resulted in approximately $330.0 million of gross proceeds, including $254.3 million in PIPE financing. Shortly after the closing of the Business Combination, approximately $299.0 million was transferred to a wholly-owned subsidiary of Lionsgate in partial repayment of the Intercompany Note described below.

As discussed in Starz Separation, on May 6, 2025 the Starz Separation was completed and as a result the pre-transaction shareholders of Lionsgate own shares in two separately traded public companies: (1) New

 

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Lionsgate, which was renamed “Lionsgate Studios Corp.” and holds, directly and through subsidiaries, the Studio Business previously held by Lionsgate, and is owned by Lionsgate shareholders and LG Studios shareholders, and (2) Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Lionsgate.

In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Lionsgate credit and guarantee agreement dated December 8, 2016, as amended (the “Lionsgate Credit Agreement”), were repaid in full and all commitments thereunder were terminated and all outstanding obligations in respect of principal, interest and fees under the Intercompany Note and Intercompany Revolver were repaid in full and all commitments thereunder were terminated. New Lionsgate entered into a new credit agreement (the “New Lionsgate Credit Agreement”) which provides for an $800.0 million senior secured revolving credit facility. New Lionsgate also assumed the Exchange Notes and pursuant to the terms thereof, New Lionsgate assumed and agreed to perform as primary obligor all obligations of the initial issuer under the Exchange Notes and the initial issuer, a wholly-owned subsidiary of Starz Entertainment Corp. was released and discharged.

As of March 31, 2025 we had cash and cash equivalents of $205.7 million.

Corporate Debt

Our corporate debt at March 31, 2025, excluding film related obligations discussed further below, consisted of the following:

Intercompany Note: In connection with the Studio Separation and Business Combination, on May 8, 2024, Lions Gate Capital Holdings LLC, a Delaware limited liability company and subsidiary of Lionsgate (“LGCH”), which is not a consolidated subsidiary of LG Studios, as lender, entered into an intercompany note and assumption agreement (the “Intercompany Note”) with Lions Gate Television Inc., a Delaware corporation and wholly owned consolidated subsidiary of the Company (“LGTV”), as borrower and assuming party.

The Intercompany Note at March 31, 2025, excluding the Intercompany Revolver and film related obligations discussed further below, consisted of the following:

 

  •  

LGTV Revolver. We had a $1.1 billion revolving credit facility (with no amounts outstanding at March 31, 2025) due April 2026 (the “LGTV Revolver”). We maintained significant availability under our LGTV Revolver, which was used to meet our short-term liquidity requirements, and could also be used for longer term liquidity requirements.

 

  •  

LGTV Term Loan A. We had a term loan A facility due April 2026 (the “LGTV Term Loan A”), with $314.4 million outstanding at March 31, 2025.

In November 2024, the Company paid in full the term loan B facility due March 2025 (the “LGTV Term Loan B”, and, together with the LGTV Revolving Credit Facility and the LGTV Term Loan A, the “Intercompany Note”).

Upon completion of the Starz Separation, the outstanding obligations of the LGTV Revolver and LGTV Term Loan A were repaid in full, see Note 22 to our audited consolidated financial statements.

Intercompany Revolver: In connection with the Studio Separation and Business Combination, on May 13, 2024, LGAC International LLC, a Delaware limited liability company and wholly owned consolidated subsidiary of the Company (“LGAC International”) and Lions Gate Capital Holdings 1, Inc., a Delaware corporation and subsidiary of Lionsgate (“LGCH1”) entered into a revolving credit agreement (the “Intercompany Revolver”), pursuant to which LGAC International and LGCH1 agreed to make revolving loans to each other from time to time provided that the net amount owing by one party to the other at any particular time may not exceed

 

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$150.0 million. There was $81.6 million outstanding and due to LGCH1 at March 31, 2025. Upon completion of the Starz Separation, the outstanding obligations of the Intercompany Revolver were repaid in full, see Note 22 to our consolidated financial statements.

eOne IP Credit Facility: In July 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “eOne IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition. The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries, with $323.0 million outstanding as of March 31, 2025. The eOne IP Credit Facility matures on July 3, 2029.

LG IP Credit Facility: In September 2024, certain subsidiaries of the Company entered into a $455.0 million senior secured amortizing term credit facility (the “LG IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles. In November 2024 and December 2024, the Company closed amendments which increased the maximum principal amount of the LG IP Credit Facility to $850.0 million, and in March 2025, the Company closed an amendment which increased the maximum principal amount of the LG IP Credit Facility to $1.0 billion, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. As of March 31, 2025, $978.8 million was outstanding under the LG IP Credit Facility. The LG IP Credit Facility matures on September 30, 2029.

Lionsgate Exchange Notes and Existing Notes: As discussed in Note 8 to our consolidated financial statements, on May 8, 2024, LGCH1, an indirect, wholly-owned subsidiary of Lionsgate, which is not a consolidated subsidiary of LG Studios, issued $389.9 million aggregate principal amount of the 5.5% senior notes due 2029 (the “Exchange Notes”). The Exchange Notes were exchanged by Lionsgate for an equivalent amount of Lionsgate’s existing 5.5% senior notes due 2029 (the “Existing Notes”). The Exchange Notes initially bear interest at 5.5% annually and mature April 15, 2029, with the interest rate increasing to 6.0% and the maturity date extending to April 15, 2030 effective upon completion of the Starz Separation. The successor issuer thereunder may redeem the Exchange Notes, in whole at any time, or in part from time to time, prior to or on and after the Separation Closing Date, as defined in the indenture governing the Exchange Notes, at certain specified redemption prices set forth in the indenture governing the Exchange Notes, plus accrued and unpaid interest, if any, to, but not including, the redemption date.

The Exchange Notes and Existing Notes and related interest expense are not reflected in the Company’s consolidated financial statements. The Company and certain of its subsidiaries are guarantors under the Exchange Notes and Existing Notes. Upon completion of the Starz Separation, the Exchange Notes became obligations of New Lionsgate. See Note 22 to our consolidated financial statements for further discussion of the impact of the Starz Separation.

See Note 8 to our consolidated financial statements for a discussion of our corporate debt.

Film Related Obligations

We utilize our film related obligations to fund our film and television productions. Our film related obligations at March 31, 2025 include the following:

 

•  

Production Loans: Production loans represent individual and multi-title loans for the production of film and television programs that we produce or license. The majority of the Company’s production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis. At March 31, 2025, there was $1,395.4 million outstanding of production loans.

 

•  

Production Tax Credit Facility: At March 31, 2025, we had a $280.0 million non-recourse senior secured revolving credit facility due January 2028 based on collateral consisting solely of certain of the Company’s

 

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tax credit receivables (the “Production Tax Credit Facility”). As of March 31, 2025, tax credit receivables amounting to $357.8 million represented collateral related to the Production Tax Credit Facility. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. At March 31, 2025 there was $280.0 million outstanding under the Production Tax Credit Facility. In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million.

 

•  

Film Library Facility: In July 2021, as amended in September 2022, certain of our subsidiaries entered into a senior secured amortizing term credit facility due July 2027 (the “Film Library Facility”) based on the collateral consisting solely of certain of our rights in certain acquired library titles, including the Spyglass and other recently acquired libraries. The maximum principal amount of the Film Library Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. At March 31, 2025 there was $75.9 million, outstanding under the Film Library Facility.

 

•  

Backlog Facility and Other:

 

  •  

Backlog Facility. In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the “Backlog Facility”) based on collateral consisting solely of certain of the Company’s fixed fee or minimum guarantee contracts where cash will be received in the future. As of March 31, 2025, the maximum principal amount of the Backlog Facility was $175.0 million, subject to the amount of eligible collateral contributed to the facility. In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility. The facility maturity date is up to two years and 90 days after the revolving period ends, currently August 28, 2027. As of March 31, 2025 there was $135.7 million outstanding under the Backlog Facility.

 

  •  

Other. The Company has other loans which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements. Outstanding loan balances under these “other” loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees. As of March 31, 2025, there was $103.2 million outstanding under the “other” loans, with contractual repayment dates in July 2025 and October 2025. As of March 31, 2025, accounts receivable amounting to $36.2 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2025 amounting to $86.1 million represented collateral related to the “other” loans.

See Note 9 to our consolidated financial statements for a discussion of our film related obligations.

Accounts Receivable Monetization and Governmental Incentives

Our accounts receivable monetization programs include individual agreements to monetize certain of our trade accounts receivable directly with third-party purchasers and previously have included a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions.

In addition, we utilize governmental incentives, programs and other structures from states and foreign countries (e.g., sales tax refunds, transferable tax credits, refundable tax credits, low interest loans, direct subsidies or cash rebates, calculated based on the amount of money spent in the particular jurisdiction in connection with the production) to fund our film and television productions and reduce financial risk.

See Note 20 to our consolidated financial statements for our accounts receivable monetization programs and our tax credit receivables.

 

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Uses of Cash

Our principal uses of cash in operations include the funding of film and television productions, film rights acquisitions, the distribution and marketing of films and television programs, and general and administrative expenses. We also use cash for debt service (i.e. principal and interest payments) requirements, equity method or other equity investments, capital expenditures, and acquisitions of or investment in businesses.

In addition, the Company has a redeemable noncontrolling interest balance of $93.7 million as of March 31, 2025, related to 3 Arts Entertainment, and $90.7 million included in other liabilities- non current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest which may require the use of cash in the event the holders of the noncontrolling interests require the Company to repurchase their interests (see Note 12 to our consolidated financial statements).

We may from time to time seek to retire or purchase or refinance our outstanding debt through cash purchases, and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, refinancings, or otherwise. Such repurchases or exchanges or refinancings, if any, will depend on prevailing market conditions, our liquidity requirements, our assessment of opportunities to lower interest expense, contractual restrictions and other factors, and such repurchases or exchanges could result in a charge from the early extinguishment of debt. The amounts involved may be material.

Anticipated Cash Requirements. The nature of our business is such that significant initial expenditures are required to produce, acquire, distribute and market films and television programs, while revenues from these films and television programs are earned over an extended period of time after their completion or acquisition. In addition to the cash requirements of any potential future redemption of our noncontrolling interests as discussed above, which we may fund with a combination of cash on hand, borrowings under our line of credit and/ or new financing arrangements, we have other anticipated cash requirements outside of our normal operations.

In the short-term, we currently expect that our cash requirements for productions will be consistent and our marketing spend will increase in fiscal 2026 as compared to fiscal 2025.

However, we currently believe that cash flow from operations, cash on hand, the New Lionsgate Credit Agreement, the monetization of trade accounts receivable, tax-efficient financing, the availability from other financing obligations and available production or intellectual property financing, will be adequate to meet known operational cash and debt service (i.e. principal and interest payments) requirements for the next 12 months and beyond, including the funding of future film and television production and theatrical and home entertainment release schedules, and future equity method or other investment funding requirements. We monitor our cash flow liquidity, availability, fixed charge coverage, capital base, film spending and leverage ratios with the long-term goal of maintaining our credit worthiness.

Our current financing strategy is to fund operations and to leverage investment in films and television programs in the short-term and long-term, through our cash flow from operations, our revolving credit facility, eOne IP Credit Facility, LG IP Credit Facility, production loans, government incentive programs, the monetization of trade accounts receivable, our Production Tax Credit Facility, our Film Library Facility, our Backlog Facility, and other obligations. In addition, we may acquire businesses or assets, including individual films or libraries that are complementary to our business. Any such transaction could be financed through our cash flow from operations, credit facilities, equity or debt financing. If additional financing beyond our existing cash flows from operations and credit facilities cannot fund such transactions, there is no assurance that such financing will be available on terms acceptable to us. Our ability to obtain any additional financing will depend on, among other things, our business plans, operating performance, the condition of the capital markets at the time we seek financing, and short and long-term debt ratings assigned by independent rating agencies. Additionally, circumstances related to inflation and rising interest rates and bank failures ongoing disruptions in financial markets and in commercial activity generally related to changes in monetary and fiscal policy, United States political developments, geopolitical events and other sources of instability, could make financing more difficult and/or expensive, and we may not be able to obtain such financing. We may also dispose of businesses

 

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or assets, including individual films or libraries, and use the net proceeds from such dispositions to fund operations or such acquisitions, or to repay debt.

Material Cash Requirements from Known Contractual and Other Obligations. Our material cash requirements from known contractual and other obligations primarily relate to our Intercompany Note and Revolver, IP Credit Facilities and film related obligations. The following table sets forth our significant contractual and other obligations as of March 31, 2025 and the estimated timing of payment:

 

     Total      Next 12
Months		      Beyond 12
Months		  
     (Amounts in millions)  

Future annual repayment of debt and other obligations recorded as of March 31, 2025 (on-balance sheet arrangements)

         

Corporate debt:

         

Intercompany Revolver(1)

    $ 81.6      $ 81.6      $ —   

Intercompany Note(1)

         

LGTV Revolver

      —         —         —   

LGTV Term Loan A

      314.4        —         314.4  

eOne IP Credit Facility(1)

      323.0        34.0        289.0  

LG IP Credit Facility(1)

      978.8        100.0        878.8  

Film related obligations(2)

      1,990.2        1,617.8        372.4  

Content related payables(3)

      38.1        32.8        5.3  

Operating lease obligations

      334.7        44.0        290.7  
  

 

 

     

 

 

     

 

 

  
     4,060.8        1,910.2        2,150.6  

Contractual commitments by expected repayment date (off-balance sheet arrangements)

         

Film related obligations commitments(4)

      240.4        187.3        53.1  

Interest payments(5)

      376.1        131.9        244.2  

Other contractual obligations

      416.3        92.8        323.5  
  

 

 

     

 

 

     

 

 

  
     1,032.8        412.0        620.8  
  

 

 

     

 

 

     

 

 

  

Total future repayment of debt and other commitments under contractual obligations(6)

    $ 5,093.6      $ 2,322.2      $ 2,771.4  
  

 

 

     

 

 

     

 

 

  

 

(1)

See Note 8 to our consolidated financial statements for further information on our corporate debt and New Lionsgate financing transactions following the completion of the Starz Separation.

(2)

See Note 9 to our consolidated financial statements for further information on our film related obligations.

(3)

Content related payables include minimum guarantees included on our consolidated balance sheet, which represent amounts payable for film or television rights that we have acquired or licensed.

(4)

Film related obligations commitments include distribution and marketing commitments, minimum guarantee commitments, and production loan commitments not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition.

(5)

Includes cash interest payments on our Intercompany Note, eOne IP Credit Facility, LG IP Credit Facility, and film related obligations, based on the applicable SOFR interest rates at March 31, 2025, net of payments and receipts from the Company’s interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.

(6)

Not included in the amounts above are $90.7 million included in other liabilities-non current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest and $93.7 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 12 to our consolidated financial statements).

For additional details of contingencies, see Note 18 to our consolidated financial statements.

 

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Discussion of Operating, Investing, Financing Cash Flows

Cash, cash equivalents and restricted cash decreased by $57.7 million for the fiscal year ended March 31, 2025 and increased by $82.2 million for the fiscal year ended March 31, 2024, before foreign exchange effects on cash. Components of these changes are discussed below in more detail.

Operating Activities. Cash flows provided by (used in) operating activities for the fiscal years ended March 31, 2025 and 2024 were as follows:

 

    
Year Ended March 31,		         
     2025     2024      Net Change  
     (Amounts in millions)  

Net Cash Flows Provided By (Used In) Operating Activities

    $ (106.8 )    $ 488.9      $ (595.7 ) 
  

 

 

    

 

 

     

 

 

  

Cash flows used in operating activities for the fiscal year ended March 31, 2025 were $106.8 million compared to cash flows provided by operating activities of $488.9 million for the fiscal year ended March 31, 2024.

The decrease in cash provided by operating activities is due to greater cash used in changes in operating assets and liabilities of $833.4 million. The decrease in cash provided by changes in operating assets and liabilities was driven by greater cash used for investment in film and television programs, increases in amounts due from the Starz Business, increases in other assets, increases in cash used for participations and residuals and accounts payable and accrued liabilities, partially offset by greater proceeds from increases in deferred revenue and decreases in accounts receivable, net.

Investing Activities. Cash flows used in investing activities for the fiscal years ended March 31, 2025 and 2024 were as follows:

 

     Year Ended March 31,  
      2025        2024   
     (Amounts in millions)  

Net proceeds from purchase price adjustments for eOne acquisition (see Note 3)

    $ 12.0      $ —   

Purchase of eOne, net of cash acquired (see Note 3)

      —         (331.1 ) 

Proceeds from the sale of other investments

      1.6        5.2  

Investment in equity method investees and other

      (2.0 )       (13.3 ) 

Distributions from equity method investees and other

      —         0.8  

Acquisition of assets (film library and related assets)

      (35.0 )       —   

Other

      1.5        16.5  

Capital expenditures

      (13.5 )       (9.9 ) 
  

 

 

     

 

 

  

Net Cash Flows Used In Investing Activities

    $ (35.4 )     $  (331.8 ) 
  

 

 

     

 

 

  

Cash flows used in investing activities were $35.4 million for the fiscal year ended March 31, 2025 compared to cash flows used in investing activities of $331.8 million for the fiscal year ended March 31, 2024. The decrease was primarily due to cash used for the acquisition of a film library and related assets, partially offset by proceeds from the settlement of certain working capital items pursuant to the Purchase Agreement for eOne in fiscal 2025 as compared to cash used for the purchase of eOne, net of cash acquired, in fiscal 2024.

 

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Financing Activities. Cash flows provided by (used in) financing activities for the fiscal years ended March 31, 2025 and 2024 were as follows:

 

     Year Ended March 31,  
     2025      2024      Net Change  
     (Amounts in millions)  

Debt- borrowings

    $ 4,387.7      $ 3,145.0      $ 1,242.7  

Debt- repurchases and repayments

      (4,474.5 )       (2,611.4 )       (1,863.1 ) 
  

 

 

     

 

 

     

 

 

  

Net proceeds from (repayments and repurchases of) debt

      (86.8 )       533.6        (620.4 ) 

Film related obligations - borrowings

      1,985.8        1,820.8        165.0  

Film related obligations - repayments

      (1,959.5 )       (1,942.9 )       (16.6 ) 
  

 

 

     

 

 

     

 

 

  

Net proceeds from (repayments of) film related obligations

      26.3        (122.1 )       148.4  

Net cash proceeds from the Business Combination and related transactions

      281.7        —         281.7  

Parent net investment

      (100.3 )       (290.1 )       189.8  

Other financing activities

      (36.4 )       (196.3 )       159.9  
  

 

 

     

 

 

     

 

 

  

Net Cash Flows Provided By (Used In) Financing Activities

    $ 84.5      $ (74.9 )     $ 159.4  
  

 

 

     

 

 

     

 

 

  

Cash flows provided by financing activities were $84.5 million for the fiscal year ended March 31, 2025 compared to cash flows used in financing activities of $74.9 million for the fiscal year ended March 31, 2024. Parent net investment reflects the net funding provided to or distributions received from the Starz Business prior to the Studio Separation.

Cash flows provided by financing activities for the fiscal year ended March 31, 2025 primarily reflects the net proceeds from the Business Combination and related transaction of $281.7 million and net proceeds from film related obligations of $26.3 million, which was offset by cash flows used in parent net investment of $100.3 million consisting of cash pooling, general financing activities and funding to the Starz Business to settle amounts due from the Starz Business related to the Company’s licensing arrangements with the Starz Business prior to the Studio Separation, net debt repayments of $86.8 million, and cash used for other financing activities of $36.4 million. Net repayments of debt of $86.8 million in the fiscal year ended March 31, 2025 included the below transactions, along with required repayments on our LG IP Credit Facility:

 

  •  

In May 2024, we used the proceeds from the Business Combination to prepay $84.9 million principal amount of the LGTV Term Loan A and $214.1 million of the LGTV Term Loan B.

 

  •  

In July 2024 and September 2024, we borrowed $340.0 million under the eOne IP Credit Facility and $455.0 million under the LG IP Credit Facility, respectively. In September 2024, we used the proceeds from the LG IP Credit Facility to prepay $355.1 million principal amount of the LGTV Term Loan B.

 

  •  

In November 2024, we borrowed $265.0 million under the LG IP Credit Facility, and used the net proceeds to pay in full the remaining $250.0 million principal amount of the Term Loan B.

 

  •  

In December 2024 and March 2025, we borrowed $130.0 million and $150.0 million, respectively, under the LG IP Credit Facility.

 

  •  

Net repayments of $540.0 million under the LGTV Revolver.

 

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Cash flows used in financing activities for fiscal 2024 primarily reflects parent net investment of $290.1 million, net of cash used for other financing activities of $196.3 million, representing primarily the purchase of an additional interest in 3 Arts Entertainment of approximately $194 million, and net film related obligations repayments of $122.1 million due to net repayments under production loans and the Production Tax Credit Facility of $146.3 million, offset by net borrowings under the Backlog Facility, IP Credit Facility and other of $24.2 million.

These uses of cash were partially offset by net proceeds from debt of $533.6 million in fiscal 2024, which included net borrowings under our revolving credit facility of $575.0 million (of which $375.0 million was used to fund the purchase of eOne and approximately $194 million was used to fund the acquisition of an additional interest in 3 Arts Entertainment), which were offset by required repayments on our term loans.

Cash flows used in parent net investment in fiscal 2024 of $290.1 million consists of cash pooling and general financing activities and funding to the Starz Business to settle amounts due from the Starz Business related to the Company’s licensing arrangements with the Starz Business.

Remaining Performance Obligations and Backlog

Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). As disclosed in Note 13 to our consolidated financial statements, remaining performance obligations were $1.5 billion at March 31, 2025 (March 31, 2024 - $1.8 billion). The backlog portion of remaining performance obligations (excluding deferred revenue) was $1.1 billion at March 31, 2025 (March 31, 2024 - $1.5 billion).

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Currency and Interest Rate Risk Management

Market risks relating to our operations result primarily from changes in interest rates and changes in foreign currency exchange rates. Our exposure to interest rate risk results from the financial debt instruments that arise from transactions entered into during the normal course of business. As part of our overall risk management program, we evaluate and manage our exposure to changes in interest rates and currency exchange risks on an ongoing basis. Hedges and derivative financial instruments will continue to be used in the future in order to manage our interest rate and currency exposure. We have no intention of entering into financial derivative contracts, other than to hedge a specific financial risk. See Note 19 to our consolidated financial statements for additional information on our financial instruments.

Currency Rate Risk. We enter into forward foreign exchange contracts to hedge our foreign currency exposures on future production expenses denominated in various foreign currencies. These contracts are entered into with major financial institutions as counterparties. We are exposed to credit loss in the event of nonperformance by the counterparty, which is limited to the cost of replacing the contracts, at current market rates. We do not require collateral or other security to support these contracts. See Note 19 to our consolidated financial statements for additional information on our financial instruments.

Interest Rate Risk. At March 31, 2025, we had interest rate swap agreements to fix the interest rate on $727.8 million of variable rate SOFR-based debt. See Note 19 to our consolidated financial statements for additional information. The difference between the fixed rate to be paid and the variable rate received under the terms of the interest rate swap agreements will be recognized as interest expense for the related debt. Changes in the variable interest rates to be paid or received pursuant to the terms of the interest rate swap agreements will have a corresponding effect on future cash flows.

Certain of our borrowings, primarily borrowings under our Intercompany Note, eOne IP Credit Facility, LG IP Credit Facility, and our film related obligations, are, and are expected to continue to be, at variable rates of

 

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interest and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remained the same, and our net income would decrease. The applicable margin with respect to loans under the LGTV Revolver and LGTV Term Loan A is a percentage per annum equal to SOFR plus 0.10% plus 1.75% margin. Advances under the eOne Credit Facility and LG IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum. Assuming the LGTV Revolver is drawn up to its maximum borrowing capacity of $1.1 billion, based on the applicable SOFR in effect as of March 31, 2025, each quarter point change in interest rates would result in a $5.0 million change in annual net interest expense on the LGTV Revolver, LGTV Term Loan A, eOne IP Credit Facility, LG IP Credit Facility, and interest rate swap agreements. In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the LGTV Revolver and LGTV Term Loan A were repaid in full. In addition, on May 6, 2025, Lionsgate entered into the Lionsgate Credit Agreement which provides for an $800.0 million senior secured revolving credit facility. Borrowings under the Lionsgate Credit Agreement will bear interest at a rate per annum equal to, at LGTV’s option, either Term SOFR (subject to a 0.00% floor) or a base rate, in each case plus a margin of 2.50% for SOFR loans and 1.50% for base rate loans. See Note 22 for further information.

The variable interest film related obligations (which includes our production loans, Production Tax Credit Facility, Film Library Facility, Backlog Facility and other) incur primarily SOFR-based interest, with applicable margins ranging from 0.25% to 3.25% per annum. A quarter point increase of the interest rates on the variable interest film related obligations would result in $3.5 million in additional costs capitalized to the respective film or television asset for production loans, and a $1.5 million change in annual net interest expense (based on the outstanding principal amount of such loans).

 

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The following table presents information about our financial instruments that are sensitive to changes in interest rates. The table also presents the cash flows of the principal amounts of the financial instruments, or the cash flows associated with the notional amounts of interest rate derivative instruments, and related weighted-average interest rates by expected maturity or required principal payment dates and the fair value of the instrument as of March 31, 2025:

 

    Year Ending March 31,     Fair Value  
    2026     2027     2028     2029     2030     Thereafter     Total     March 31,
2025		  
          (Amounts in millions)              

Variable Rates:

                

Intercompany Revolver(1)

   $ 81.6     $ —        —      $ —      $ —      $ —      $ 81.6     $ 81.6  

Average Interest Rate

     6.17 %      —        —        —        —        —       

LGTV Revolving Credit Facility(1)

     —        —        —        —        —        —        —        —   

Average Interest Rate

     —        —        —        —        —        —       

LGTV Term Loan A(1)

     —        314.4       —        —        —        —        314.4       312.9  

Average Interest Rate

     —        6.17 %      —        —        —        —       

eOne IP Credit Facility(1)

     34.0       34.0       34.0       34.0       187.0       —        323.0       323.0  

Average Interest Rate

     6.57 %      6.57 %      6.57 %      6.57 %      6.57 %      —       

LG IP Credit Facility(1)

     100.0       100.0       100.0       100.0       578.8       —        978.8       978.8  

Average Interest Rate

     6.57 %      6.57 %      6.57 %      6.57 %      6.57 %      —       

Film related obligations(2)

     1,617.8       38.6       333.8       —        —        —        1,990.2       1,990.2  

Average Interest Rate

     5.70 %      6.74 %      5.86 %      —        —        —       

Fixed Rates:

                

Interest Rate Swaps(3)

                

Variable to fixed notional amount

     —        727.8       —        —        —        —        727.8       (3.1 ) 

 

(1)

The effective interest rate in the table above is before the impact of interest rate swaps.

(2)

Represents amounts outstanding under film related obligations (i.e., production loans, Production Tax Credit Facility, Backlog Facility and other, and Film Library Facility), actual amounts outstanding and the timing of expected future repayments may vary in the future (see Note 8 to our consolidated financial statements for further information).

(3)

Represents interest rate swap agreements on certain of our SOFR-based floating-rate debt with fixed rates paid ranging from 3.803% to 4.097% with maturities from August 2026 to February 2027. See Note 19 to our consolidated financial statements. See Note 22 for interest rate swap agreements entered into subsequent to March 31, 2025.

 

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DESCRIPTION OF CAPITAL STOCK

New Lionsgate’s notice of articles and articles were amended, and New Lionsgate adopted the New Lionsgate Articles, in connection with the Transactions. The following briefly summarizes the material terms of New Lionsgate new common shares and New Lionsgate preference shares that are contained in the New Lionsgate Articles. These summaries do not describe every aspect of these securities and New Lionsgate Articles and are subject to all the provisions of the New Lionsgate Articles, and are qualified in their entirety by reference to the New Lionsgate Articles, which you should read (along with the applicable provisions of British Columbia law) for complete information on the New Lionsgate new common shares. The New Lionsgate Articles are included as an exhibit to the registration statement of which this prospectus forms a part. The following also summarizes certain relevant provisions of British Columbia law. Since British Columbia law is more detailed than the general information provided below, you should read the actual provisions of British Columbia law for complete information.

General

New Lionsgate’s authorized capital consists of an unlimited number of New Lionsgate new common shares, without par value, and 200,000,000 New Lionsgate preference shares, without par value. The New Lionsgate Board may establish the rights and restrictions of a series of New Lionsgate preference shares from time to time. Immediately following the completion of the Transactions, approximately 285,688,670 New Lionsgate new common shares were issued and outstanding and no New Lionsgate preference shares were issued and outstanding.

Dividend Rights

The holders of the New Lionsgate new common shares are, subject to the rights of the holders of any other class of shares of New Lionsgate entitled to dividends in priority to the holders of the New Lionsgate new common shares, entitled to dividends as and when declared by New Lionsgate. Dividends shall be payable only as and when declared by the New Lionsgate Board.

The holders of a series of New Lionsgate preference shares are, subject to the rights of the holders of any other class or series of shares of New Lionsgate entitled to dividends in priority to the holders of such series of New Lionsgate preference shares, entitled to dividends in accordance with the special rights or restrictions set out in the New Lionsgate Articles with respect to the series of New Lionsgate preference shares from time to time. The New Lionsgate Board may determine the rights of a series of the New Lionsgate preference shares at the time of the creation of such series of New Lionsgate preference shares. Dividends shall be payable only as and when declared by the New Lionsgate Board.

Participation Rights

In the event of the distribution of assets of New Lionsgate or on the liquidation, dissolution or winding-up of New Lionsgate, whether voluntary or involuntary, or on any other distribution of assets of New Lionsgate among its shareholders for the purpose of winding up its affairs (each, a “New Lionsgate Liquidity Event”), all of the property and assets of New Lionsgate available for distribution to holders of New Lionsgate’s common shares shall be paid or distributed equally, share for share, to holders of the New Lionsgate new common shares. Notwithstanding the foregoing, on the occurrence of a New Lionsgate Liquidity Event, holders of New Lionsgate preference shares shall be entitled to certain rights as described below. See “—Preferred Stock” below.

Preemptive Rights

Except as provided for in the New Lionsgate Investor Rights Agreement, there are no preemptive rights relating to the New Lionsgate new common shares and New Lionsgate preference shares.

 

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Share Distributions

Notwithstanding that the market value of any stock dividend paid on one class of shares may be different from the market value of the stock dividend paid simultaneously on another class of shares, the New Lionsgate Board may, at any time and from time to time, declare and pay a stock dividend on any class of shares in accordance with the New Lionsgate Articles and the BC Act.

Voting Rights

Each holder of New Lionsgate new common shares is entitled to: (a) one vote for each New Lionsgate new common share held at all meetings of shareholders; (b) receive notice of and to attend all meetings of shareholders of New Lionsgate; and (c) vote on all matters submitted to a vote or consent of shareholders of New Lionsgate.

Each holder of New Lionsgate preference shares will be entitled to the rights or restrictions set out in the New Lionsgate Articles for the applicable series of the New Lionsgate preference shares. Article 25.1 of the New Lionsgate Articles describes some of the potential rights, including voting rights and rights to preferential dividends, that the New Lionsgate Board may determine and establish for a series of New Lionsgate preference shares.

Preferred Stock

The New Lionsgate preference shares consist of a maximum of 200,000,000 preference shares as set out in the New Lionsgate Articles and shall, as a class, have attached thereto the special rights and restrictions specified below.

Pursuant to the New Lionsgate Articles, the New Lionsgate preference shares may at any time and from time to time be issued in one or more series.

Subject to the BC Act, the New Lionsgate Board may from time to time, by resolution, create a series of the New Lionsgate preference shares, and prior to the issuance of any preference shares in such series, alter the New Lionsgate Articles and authorize the alteration of the notice of articles of New Lionsgate, as the case may be, to fix the number of New Lionsgate preference shares in, and to determine the designation of the preference shares of, that series, alter the New Lionsgate Articles to create, define and attach special rights and restrictions to the New Lionsgate preference shares of that series, including, but without in any way limiting or restricting the generality of the foregoing, the rate or amount of dividends, whether cumulative, non-cumulative or partially cumulative, the dates, places and currencies of payment thereof, the consideration for, and the terms and conditions of, any purchase for cancellation or redemption thereof, including redemption after a fixed term or at a premium, conversion or exchange rights, the terms and conditions of any share purchase plan or sinking fund, the restrictions respecting payment of dividends on, or the repayment of capital in respect of, any other shares of New Lionsgate; and voting rights and restrictions; so long as none of the foregoing are inconsistent with the entitlement of holders of other existing series of New Lionsgate preference shares to receive, on the occurrence of a New Lionsgate Liquidity Event, before any distribution shall be made to holders of New Lionsgate new common shares or any other shares of New Lionsgate ranking junior to the New Lionsgate preference shares with respect to repayment of capital, the amount paid up with respect to each New Lionsgate preference share held by them, plus any accrued and unpaid cumulative dividends (if any and if preferential) thereon. After payment to holders of New Lionsgate preference shares of the amounts so payable to them, the holders of New Lionsgate preference shares shall not be entitled to share in any further distribution of the property or assets of New Lionsgate except as specifically provided in the special rights and restrictions attached to any particular series of the New Lionsgate preference shares.

Rights Agreement

On May 6, 2025, Lionsgate’s Board of Directors, declared a dividend of one common share purchase right for each outstanding Lionsgate common share (“Company Common Shares”), and adopted a shareholder rights

 

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plan, as set forth in the Shareholder Rights Agreement dated as of May 7, 2025 (the “Rights Agreement”), by and between Lionsgate and Computershare Investor Services, Inc., as rights agent. The dividend was payable on May 20, 2025 to Lionsgate stockholders of record as of the close of business on May 19, 2025.

General.

The Rights. The Rights will initially trade with, and will be inseparable from, Company Common Shares. The Rights are evidenced only by registration in Lionsgate’s share register that represent Company Common Shares. New Rights will accompany any new Company Common Shares issued after the Record Date until the Distribution Date (as defined below) or the earlier expiration, exchange or redemption of the Rights.

Exercise Price. Each Right will initially allow its holder to purchase from Lionsgate one (1) Company Common Share, as such number may be adjusted pursuant to the terms of the Rights Agreement, for $32.00 (the “Exercise Price”).

Exercisability. The Rights will not be exercisable until 10 days after the public announcement that a person or group has become an “Acquiring Person” (as defined in the Rights Agreement) by obtaining beneficial ownership of 15% or more of the outstanding Company Common Shares.

The date when the Rights become exercisable is the “Distribution Date.” Until that date, Company Common Shares certificates, or, in the case of uncertificated shares, registration in Lionsgate’s share register, will also evidence the Rights, and any transfer of shares of Company Common Shares will constitute a transfer of the Rights. After that date, the Rights will separate from Company Common Shares and be evidenced by book-entry credits or by Rights certificates that Lionsgate will mail to all eligible holders of Company Common Shares. Any Rights held by an Acquiring Person are null and void and may not be exercised.

Expiration. The Rights will expire on the earliest to occur of May 7, 2026 (or, if confirmed by resolution passed by a majority of the votes cast by shareholders present or represented by proxy at a meeting of shareholders of Lionsgate to be held within one (1) year hereof, May 7, 2028), the Redemption Date (defined below) and the Exchange Date (defined below).

Voting Rights. The Rights do not carry any voting rights.

Redemption. Lionsgate’s Board of Directors may redeem the Rights for $0.001 per Right at any time before any person or group becomes an Acquiring Person. If Lionsgate’s Board of Directors redeems any Rights, it must redeem all of the Rights. Once the Rights are redeemed, the only right of the holders of the Rights will be to receive the redemption price of $0.001 per Right. The redemption price will be adjusted if there is a stock split or stock combination or stock dividends of Company Common Shares. We refer to the date on which the Rights are redeemed as the “Redemption Date.”

Anti-Dilution Provisions. Lionsgate’s Board of Directors may adjust the Exercise Price, the number of Company Common Shares issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split or a reclassification of Company Common Shares. No adjustments to the Exercise Price of less than 1% will be made.

Amendments. The terms of the Rights and the Rights Agreement may be amended in any respect without the consent of the holders of the Rights on or prior to the Distribution Date. Thereafter, the terms of the Rights and the Rights Agreement may be amended without the consent of the holders of Rights in order to (1) cure any ambiguities, (2) shorten or lengthen any time period pursuant to the Rights Agreement or (3) make changes that do not adversely affect the interests of holders of the Rights.

 

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Consequences of a Person or Group Becoming an Acquiring Person.

 

  •  

Flip In. If a person or group becomes an Acquiring Person, all holders of the Rights except the Acquiring Person may, for the Exercise Price, purchase that number of Company Common Shares having an aggregate value equal to twice the Exercise Price.

  •  

Exchange. After a person or group becomes an Acquiring Person, but before an Acquiring Person owns 50% or more of the outstanding Company Common Shares, the Board of Directors of Lionsgate may extinguish the Rights by exchanging one Company Common Share or an equivalent security for each Right, other than Rights held by the Acquiring Person. We refer to the date on which the Rights are exchanged as the “Exchange Date”

  •  

Flip Over. If Lionsgate is later acquired in a merger or similar transaction after the Distribution Date, all holders of Rights except the Acquiring Person may, for the Exercise Price, purchase that number of shares of the acquiring corporation having an aggregate value equal to twice the Exercise Price.

Limitation on Liability of Directors and Indemnification of Directors and Officers

The New Lionsgate Articles provide that, subject to the BC Act, New Lionsgate must indemnify an eligible party and their heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and New Lionsgate must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding.

For the purposes of the New Lionsgate Articles, “eligible party” means an individual who is a director, officer, former director or former officer of New Lionsgate.

For the purposes of the New Lionsgate Articles, “eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding.

For the purposes of the New Lionsgate Articles, “eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which any eligible party or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of New Lionsgate: (i) is or may be joined as a party; or (ii) is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding.

The BC Act prohibits indemnification if any of the following circumstances apply: (i) if the indemnity or payment is made under an earlier agreement to indemnify or pay expenses and, at the time that the agreement to indemnify or pay expenses was made, the company was prohibited from giving the indemnity or paying the expenses by its memorandum or articles; (ii) if the indemnity or payment is made otherwise than under an earlier agreement to indemnify or pay expenses and, at the time that the indemnity or payment is made, the company is prohibited from giving the indemnity or paying the expenses by its memorandum or articles; (iii) if, in relation to the subject matter of the eligible proceeding, the eligible party did not act honestly and in good faith with a view to the best interests of the company or the associated corporation, as the case may be; or (iv) in the case of an eligible proceeding other than a civil proceeding, if the eligible party did not have reasonable grounds for believing that the eligible party’s conduct in respect of which the proceeding was brought was lawful.

Anti-Takeover Provisions and Other Shareholder Protections

Shareholder Rights

Under the BC Act, the following powers are available to companies to make themselves potentially less vulnerable to hostile takeover attempts:

 

  •  

any shareholder proposals must be signed by qualified shareholders who, together with the submitter, are, at the time of signing, registered owners or beneficial owners of shares that, in the aggregate,

 

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constitute at least one percent (1%) of the issued shares of a company that carry the right to vote at general meetings, or have a fair market value in excess of the prescribed amount and must have been received by such company at least three months before the anniversary of the previous year’s annual reference date;

 

  •  

shareholders who hold in the aggregate at least 5% of the issued shares of a company that carry the right to vote at general meetings may requisition a general meeting of shareholders by following the procedures in the BC Act, in which case the directors are required to call a meeting for a date not more than four (4) months after the date the requisition is received and if they do not do so within 21 days after the date on which the requisition was received by such company, the requisitioning shareholders may send a notice of a general meeting to be held to transact the business stated in the requisition; and

 

  •  

unless the articles state otherwise, directors may only be removed by a two-thirds (66 2/3%) majority vote by shareholders.

Additionally, the BC Act contains no restriction on the adoption of a shareholder rights plan. The BC Act also does not restrict related-party transactions for public companies; however, in Canada, takeover bids and related-party transactions of private and public companies are addressed in provincial securities legislation and policies.

Dissent Rights

Under the BC Act, shareholders have a right to dissent and receive a payout from a company in exchange for their shares in the context of an amalgamation, an arrangement, a redomicile, and certain other significant transactions.

Derivative Actions

Under the BC Act, a shareholder (including a beneficial shareholder) or director of a company and any person who, in the discretion of the court, is an appropriate person to make an application to the court to prosecute or defend an action on behalf of a company (a derivative action) may, with judicial leave: (i) bring an action in the name and on behalf of the company to enforce a right, duty or obligation owed to the company that could be enforced by the company itself or to obtain damages for any breach of such right, duty or obligation or (ii) defend, in the name and on behalf of the company, a legal proceeding brought against the company.

The BC Court may grant leave if: (i) the complainant has made reasonable efforts to cause the directors of the company to prosecute or defend the action; (ii) notice of the application for leave has been given to the company and any other person that the court may order; (iii) the complainant is acting in good faith; and (iv) it appears to the court to be in the interests of the company for the action to be prosecuted or defended.

Upon the final disposition of a derivative action, the court may make any order it determines to be appropriate.

Oppression Remedy

The BC Act provides an oppression remedy that enables a court to make an order, whether interim or final, if an application is made to the court by a shareholder (which for the purposes of the oppression remedy includes legal and beneficial owners of shares as well as any other person whom the court considers appropriate in the circumstances) in a timely manner and it appears to the court that there are reasonable grounds for believing (i) that the affairs of the corporation are being or have been conducted, or the powers of the directors are being or have been exercised, in a manner that is oppressive to one or more shareholders, or (ii) that an act of the corporation has been done or is threatened, or that a resolution of the shareholders or of the shareholders holding shares of a class or series of shares has been passed or is proposed, that is unfairly prejudicial to one or more of the shareholders.

 

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The oppression remedy provides the court with broad and flexible jurisdiction to intervene in corporate affairs to protect shareholders.

Additional Takeover Bid Considerations

Unless an offer constitutes an exempt transaction, and this summary does not address exemptions available under Canadian law, an offer made by a person, an “offeror,” to acquire outstanding shares of a Canadian entity that, when aggregated with the offeror’s holdings (and those of persons or companies acting jointly with the offeror), would constitute 20% or more of the outstanding shares in a class, will be subject to the takeover provisions of Canadian securities laws.

The acquisition of a company’s shares may also trigger the application of statutory regimes including among others, the Investment Canada Act and the Competition Act.

Limitations on the ability to acquire and hold a company’s shares may be imposed by the Competition Act. The Competition Act permits the Commissioner of Competition (the “Commissioner”) to review any acquisition of control over or of a significant interest in a Canadian entity. The Competition Act grants the Commissioner jurisdiction, for up to three years after closing (or up to one year if the acquisition was notified to the Commissioner), to challenge an acquisition before the Canadian Competition Tribunal on the basis that it would, or would be likely to, substantially prevent or lessen competition in any market in Canada.

When dealing with a publicly traded corporation, the Competition Act also requires any person who intends to acquire voting shares to file a notification with the Canadian Competition Bureau if certain financial thresholds are exceeded and if that person (and their affiliates) would hold more than 20% of the company’s voting shares as a result of such acquisition. If a person already owns more than 20% of a company’s voting shares, a notification must be filed before the acquisition of additional voting shares that would bring that person’s holdings to over 50%. Where a notification is required, the Competition Act prohibits completion of the acquisition until the expiration of a statutory waiting period or, if applicable, a second statutory waiting period, unless the Commissioner provides written notice that they do not intend to challenge the acquisition. A common closing condition of acquisitions subject to notification under the Competition Act is clearance from the Commissioner, even if the applicable statutory waiting period has expired and the parties to the Transactions are in a legal position to close.

The Investment Canada Act requires any person that is a “non-Canadian” (as defined in the Investment Canada Act) who acquires control of an existing Canadian business, where the acquisition of control is not a reviewable transaction, to file a notification with Innovation, Science and Economic Development. The Investment Canada Act generally prohibits the implementation of a reviewable transaction unless, after review, the relevant minister is satisfied that the investment is likely to be of net benefit to Canada. Under the Investment Canada Act , the acquisition of control of an existing Canadian business (either through the acquisition of the shares or all or substantially all the assets of such business) by a non-Canadian would be reviewable under the “net benefit” standard only if the applicable specified financial threshold is met or exceeded and no exemption applies.

The acquisition of a majority of the voting interests of an entity is deemed to be an acquisition of control of that entity. The acquisition of less than a majority, but one-third (33 1/3%) or more of the voting shares of a corporation or an equivalent undivided ownership interest in the voting shares of a corporation is presumed to be an acquisition of control of that corporation unless it can be established that, on the acquisition, the corporation is not controlled in fact by the acquirer through the ownership of voting shares. The acquisition of less than one-third (33 1/3%) of the voting shares of a corporation is deemed not to be an acquisition of control of that corporation.

Under the national security regime in the Investment Canada Act, a national security review on a discretionary basis may also be undertaken by the federal government in respect of a much broader range of

 

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investments by a non-Canadian to “acquire, in whole or in part, or to establish an entity carrying on all or any part of its operations in Canada,” provided that the entity has a specified nexus to Canada. The relevant test is whether such an investment by a non-Canadian could be “injurious to national security.” The relevant minister has broad discretion to determine whether an investor is a non-Canadian and may be subject to a national security review. Review on national security grounds is at the discretion of the federal government and, depending on the facts, may occur on a pre- or post-closing basis and includes the ability to block a transaction or, for a completed transaction, order divestiture, or authorize the investment subject to terms and conditions. Interim conditions imposed during the course of a national security review and written undertakings to satisfy the relevant minister regarding the risks of injury to national security are also possible.

This summary above is not a comprehensive description of relevant or applicable considerations regarding such requirements and, accordingly, is not intended to be, and should not be interpreted as, legal advice to any prospective purchaser and no representation with respect to such requirements to any prospective purchaser is made. Prospective investors should consult their own Canadian legal advisors with respect to any questions regarding the foregoing and securities law in the provinces and territories of Canada.

Listing

New Lionsgate new common shares are listed on the NYSE under the symbol “LION.”

Sale of Unregistered Securities

On January 10, 2025, New Lionsgate issued one Class A voting share, without par value, to Lionsgate pursuant to Section 4(a)(2) of the Securities Act. New Lionsgate did not register the issuance of the issued shares under the Securities Act because such issuance did not constitute a public offering. This share was cancelled on May 6, 2025, in connection with the Plan of Arrangement.

Transfer Agent and Registrar

The transfer agent and registrar for New Lionsgate new common shares is Computershare.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Securities Owned by Certain Beneficial Owners

The following table presents certain information about beneficial ownership of New Lionsgate new common shares by each person (or group of affiliated persons) who is known by New Lionsgate to own beneficially more than 5% of the outstanding shares of any class of common shares. All of such information is based on publicly available filings. The security ownership information is given as of July 18, 2025 and, in the case of percentage ownership information, is based upon 288,633,360 New Lionsgate new common shares issued and outstanding on that date. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and dispositive power with respect to all shares shown as beneficially owned by them, subject to community property laws, where applicable. In general, “beneficial ownership” includes those shares that a person has the sole or shared power to vote or dispose of, including shares that the person has the right to acquire within sixty (60) days.

 

     New Lionsgate
new common shares		  
     Number of
Shares (1)		      % of Class (2)  

Mark H. Rachesky, M.D.(3)

      37,869,428        13.1 % 

Liberty 77 Capital L.P. (4)

      37,548,125        13.0 % 

Capital Research Global Investors(5)

      24,979,928        8.6 % 

Vanguard Group, Inc.(6)

      20,465,192        7.1 % 

Shapiro Capital Management LLC(7)

      15,226,809        5.3 % 

BlackRock, Inc.(8)

      14,498,606        5.0 % 
 
(1)

The addresses for the listed beneficial owners are as follows: Mark H. Rachesky, M.D., c/o MHR Fund Management LLC, 1345 Avenue of the Americas, 42nd Floor, New York, NY 10105; Liberty 77 Capital L.P., 2099 Pennsylvania Ave NW, Washington, DC 20006; Capital Research Global Investors, 333 South Hope Street, 55th Floor, Los Angeles, CA 90071; Vanguard Group, Inc., PO Box 2600 V26, Valley Forge, PA 19482-2600; Shapiro Capital Management LLC, 3060 Peachtree Road NW, Suite 1555, Atlanta, GA 30305; and BlackRock Inc., 50 Hudson Yards New York, NY 10001.

(2)

The expected percentage of total New Lionsgate new common shares beneficially owned by each person (or group of affiliated persons) is calculated by dividing: (1) the number of New Lionsgate new common shares deemed to be beneficially held by such person (or group of affiliated persons) as of July 18, 2025 (unless otherwise indicated), as determined in accordance with Rule 13d-3 under the Exchange Act by (2) 288,633,360, which is the number of common shares issued and outstanding on July 18, 2025; plus (B) the number of New Lionsgate new common shares issuable upon the exercise of stock options and stock appreciation rights, if any, exercisable as of July 18, 2025 or within 60 days thereafter (i.e., September 16, 2025).

(3)

The information is based solely on a Form 4 filed with the SEC on May 13, 2025.

(4)

The information is based solely on a Form 4 filed with the SEC on July 7, 2025.

(5)

Capital Research Global Investors has not filed a report regarding its greater than five percent ownership of New Lionsgate new common shares with the SEC. The number of shares for such stockholder included in the table above is estimated based on holdings disclosed prior to the Starz Separation on a Schedule 13F-HR filed with the SEC on May 12, 2025.

(6)

Vanguard Group, Inc. has not filed a report regarding its greater than five percent ownership of New Lionsgate new common shares with the SEC. The number of shares for such stockholder included in the table above is estimated based on holdings disclosed prior to the Starz Separation on a Schedule 13F-HR filed with the SEC on May 9, 2025.

(7)

Shapiro Capital Management LLC has not filed a report regarding its greater than five percent ownership of New Lionsgate new common shares with the SEC. The number of shares for such stockholder included in the table above is estimated based on holdings disclosed prior to the Starz Separation on a Schedule 13F-HR filed with the SEC on May 15, 2025.

 

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(8)

The information is based solely on a Schedule 13G filed with the SEC on July 17, 2025.

Stock Ownership of Management

The following table presents certain information about beneficial ownership of New Lionsgate new common shares by (i) each current director, nominee for director and current Named Executive Officer and (ii) all current directors and executive officers of New Lionsgate as a group. The security ownership information is given as of July 18, 2025 and, in the case of percentage ownership information, is based upon 288,633,360 common shares issued and outstanding on that date. Except as indicated in the footnotes to this table, the persons named in the table have sole voting and dispositive power with respect to all shares shown as beneficially owned by them, subject to community property laws, where applicable. In general, “beneficial ownership” includes those shares that a person has the sole or shared power to vote or dispose of, including shares that the person has the right to acquire within sixty (60) days.

 

     New Lionsgate
new common shares		  
     Number of
Shares (1)		      % of Class (2)  

James W. Barge(3)

      3,405,258        1.2 % 

Michael Burns(4)

      5,891,629        2.0 % 

Gordon Crawford

      2,191,711        *  

Jon Feltheimer (5)

      6,961,119        2.4 % 

Emily Fine

      104,464        *  

Michael T. Fries

      0        *  

Brian Goldsmith(6).

      2,141,709        *  

John D. Harkey, Jr.

      152,474        *  

Susan McCaw

      60,853        *  

Yvette Ostolaza

      93,301        *  

Mark H. Rachesky, M.D.(7)

      37,869,428        13.1 % 

Richard Rosenblatt

      30,017        *  

Harry E. Sloan

      359,885        *  

Bruce Tobey

      71,163        *  

All former and current executive officers and directors and director nominees, as a group
(14 persons)

      59,333,011        19.8 % 
 
*

Less than 1%

(1)

Pursuant to Rule 13d-3(d)(1) of the Exchange Act, amount includes vested restricted share units, and restricted share units vesting and stock options and share appreciation rights exercisable, within sixty (60) days of July 18, 2025 (i.e., September 16, 2025).

(2)

The percentage of total New Lionsgate new common shares beneficially owned by each person (or group of affiliated persons) is calculated by dividing: (1) the number of New Lionsgate new common shares deemed to be beneficially held by such person (or group of affiliated persons) as of July 18, 2025 (unless otherwise indicated), as determined in accordance with Rule 13d-3 under the Exchange Act by (2) 288,633,360, which is the number issued and outstanding common shares on July 18, 2025; plus (B) the number of New Lionsgate new common shares issuable upon the exercise of stock options and stock appreciation rights, if any, exercisable as of July 18, 2025 or within 60 days thereafter (i.e., September 16, 2025).

(3)

Includes 2,183,473 New Lionsgate new common shares subject to stock options/SARs that are currently exercisable.

(4)

Includes 3,125,117 New Lionsgate new common shares subject to stock options/SARs that are currently exercisable.

(5)

Includes 4,576,854 New Lionsgate new common shares subject to stock options/SARs that are currently exercisable.

 

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(6)

Includes 1,079,942 New Lionsgate new common shares subject to stock options/SARs that are currently exercisable.

(7)

The information is based solely on a Form 4 filed with the SEC on May 13, 2025.

 

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DIRECTORS AND EXECUTIVE OFFICERS

Management of New Lionsgate

The following table sets forth information as of July 18, 2025 regarding the individuals who serve as executive officers of New Lionsgate.

 

Name

    Age     

Position

   

State and Country of Residence

Jon Feltheimer

      73      Chief Executive Officer    California, U.S.

Michael Burns

      66      Vice Chair    California, U.S.

James W. Barge

      69      Chief Financial Officer    California, U.S.

Brian Goldsmith

      52      Chief Operating Officer    California, U.S.

Bruce Tobey

      66      Executive Vice President and General Counsel    California, U.S.

Michael Burns has been New Lionsgate’s Vice Chair since May 2025. From March 2000 to May 2025, Mr. Burns served as the Vice Chair of Lionsgate, and from May 2024 to May 2025, as the Vice Chair of LG Studios. Mr. Burns served as Managing Director and Head of Prudential Securities Inc.’s Los Angeles Investment Banking Office from 1991 to March 2000.

James W. Barge has been New Lionsgate’s Chief Financial Officer since May 2025. From October 2013 to May 2025, Mr. Barge served as Chief Financial Officer of Lionsgate, and from May 2024 to May 2025, as Chief Financial Officer of LG Studios. From October 2010 to November 2012, Mr. Barge served as the Executive Vice President, Chief Financial Officer of Viacom, Inc. (having served as its Executive Vice President, Controller, Tax and Treasury since January 2008), where he was responsible for overseeing all aspects of the company’s global finances and capital structure, as well as information technology, risk management and internal audit activities. Prior to joining Viacom, Mr. Barge served as Senior Vice President, Controller and Chief Accounting Officer (from October 2002 to December 2007) and Vice President and Controller (from February 2000 to October 2002) of Time Warner Inc., where he was responsible for the company’s overall financial planning, reporting and analysis, including budgeting and long-range planning, and led several shared service and global process improvement initiatives. Mr. Barge joined Time Warner in March 1995 as Assistant Controller. Prior to joining Time Warner, Mr. Barge held several positions at Ernst & Young, including Area Industry Leader of the Consumer Products Group and National Office Partner, where he was responsible for the resolution of SEC accounting and reporting issues. Mr. Barge is the chair of the Audit Committee and a member of the Nominating and Governance Committee of Scholastic Corporation (Nasdaq: SCHL).

Brian Goldsmith has been New Lionsgate’s Chief Operating Officer since May 2025. From October 2012 to May 2025, Mr. Goldsmith served as Chief Operating Officer of Lionsgate, and its Executive Vice President, Corporate Development and Strategy, from September 2008 to October 2012. From May 2024 to May 2025, Mr. Goldsmith served as Chief Operating Officer of LG Studios. Prior to that, Mr. Goldsmith served as the Chief Operating Officer and Chief Financial Officer of Mandate Pictures, LLC, a wholly-owned subsidiary of Lionsgate since September 2007.

Bruce Tobey has been New Lionsgate’s Executive Vice President and General Counsel since May 2025. From March 2023 to May 2025, Mr. Tobey served as Executive Vice President and General Counsel of Lionsgate, and from May 2024 to May 2025, as Executive Vice President and General Counsel of LG Studios. Prior to that, Mr. Tobey was a partner at O’Melveny & Myers LLP, where he worked from August 2012 to March 2023. Prior to joining O’Melveny & Myers LLP, Mr. Tobey also served as Chief Operating Officer at CBS Films from March 2007 to December 2010, as Executive Vice President at Paramount Pictures Corporation from February 2001 to August 2005, and as a partner at Troop Steuber Pasich Reddick & Tobey, LLP (and its predecessor firm), where he worked from May 1986 to March 2000.

 

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Directors of New Lionsgate

Board of Directors Following the Transactions

The following sets forth information regarding those individuals who were appointed to the New Lionsgate Board following the completion of the Transactions.

 

GORDON CRAWFORD   

Age: 78

 

New Lionsgate Board Committee

Membership:

Audit & Risk Committee

 

Residence:

Dana Point, California, U.S.

   

Business Experience

For over 40 years, Mr. Crawford served in various positions at Capital Research and Management, a privately held global investment management company. In December 2012, Mr. Crawford retired as its Senior Vice President.

 

Other Directorships

Additionally, Mr. Crawford serves as Director Emeritus of the Board of Trustees of the U.S. Olympic and Paralympic Foundation (which he Chaired for nine years from its inception in 2013), and as a Life Trustee on the Board of Trustees of Southern California Public Radio (which he Chaired from 2005 to 2012). Mr. Crawford formerly served as Vice Chairman at The Nature Conservancy and is currently a member of the Emeritus Board of the Nature Conservancy. Mr. Crawford is a past Vice Chairman of the Paley Center for Media and a member of the Board of Trustees of Berkshire School. Mr. Crawford also served on the Board of the U.S. Olympic and Paralympic Committee, and as a member of the Board of the LA24 Olympic and Paralympic Bid Committee. Mr. Crawford served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from February 2013 to May 2025.

 

Qualifications

Mr. Crawford has been one of the most influential and successful investors in the media and entertainment industry for over 40 years. With a wealth of experience and a deep understanding of the sector, Mr. Crawford brings valuable insight and expertise to New Lionsgate as a member of the New Lionsgate Board.

JON FELTHEIMER   

Age: 73

 

Position with New Lionsgate:

Chief Executive Officer

 

Residence:

Los Angeles, California, U.S.

   

Business Experience

During his entertainment industry career, Mr. Feltheimer has held leadership positions at Lions Gate Entertainment Corp., Sony Pictures Entertainment and New World Entertainment, and has been responsible for tens of thousands of hours of television programming and hundreds of films. Prior to joining Lionsgate, he served as President of TriStar Television from 1991 to 1993, President of Columbia TriStar Television from 1993 to 1995, and President of Columbia TriStar Television Group and Executive Vice President of Sony Pictures Entertainment from 1995 to 1999, shepherding a string of hit television shows and leading the television group’s launch of nearly 30 branded channels around the world.

 

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Other Directorships

Mr. Feltheimer is a director of Grupo Televisa, S.A.B. (NYSE: TV; BMV: TLEVISA CPO). Mr. Feltheimer served as a director of LG Studios from May 2024 to May 2025, and a director of Lionsgate from January 2000 to May 2025 (where he also served as Chief Executive Officer from March 2000 to May 2025).

 

  

Qualifications

Under Mr. Feltheimer’s leadership, Lionsgate grew into one of the world’s premier independent content platforms, with deep film and television pipelines, a vast library of over 20,000 film and television titles, a valuable portfolio of brands and franchises, and a strong reputation for innovation. As New Lionsgate’s Chief Executive Officer, Mr. Feltheimer serves as a vital bridge to management’s perspective in New Lionsgate Board discussions, offering critical insights into the business and strategic direction of New Lionsgate. With extensive experience across three major and independent studios in the entertainment industry, Mr. Feltheimer brings an unparalleled level of strategic and operational expertise to the New Lionsgate Board, a deep understanding of New Lionsgate’s evolving industry, and invaluable relationships within the business and entertainment community.

EMILY FINE*   

Age: 51

 

New Lionsgate Board Committee Membership:

Nominating and Corporate

Governance Committee

 

Residence: New York, New York, U.S.

 

* Ethnic/gender diverse member of the New Lionsgate Board

   

Business Experience

Ms. Fine is a principal of MHR Fund Management, a New York-based private equity firm that manages approximately $5 billion of capital and has holdings in public and private companies in a variety of industries. Ms. Fine joined MHR Fund Management in 2002 and is a member of the firm’s investment committee. Prior to joining MHR Fund Management, Ms. Fine served as Senior Vice President at Cerberus Capital Management, L.P. and also worked at Merrill Lynch in the Telecom, Media & Technology Investment Banking Group, where she focused primarily on media merger and acquisition transactions.

 

Other Directorships

Ms. Fine is a director of LG Studios since May 2024. Ms. Fine also serves on the Board of Directors of Rumie Initiative, a non-profit organization dedicated to providing access to free educational content through digital microlearning.Ms. Fine served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from November 2015 to May 2025.

 

Ms. Fine also serves on the Starz Board, and a member of the Nominating and Corporate Governance Committee.

 

Qualifications

Ms. Fine brings to the New Lionsgate Board a distinct perspective of New Lionsgate’s business operations and provides valuable insight into financial matters. With over 25 years of investment experience, Ms. Fine has worked with numerous companies in the media industry, including, as a principal of MHR Fund Management, working closely with Lionsgate for nearly fifteen years.

 

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Investor Rights Agreement

Ms. Fine serves as a designee of MHR Fund Management under the New Lionsgate Investor Rights Agreement.

MICHAEL T. FRIES   

Age: 63

 

New Lionsgate Board Committee Membership:

Compensation Committee

 

Residence: Denver, Colorado, U.S.

   

Business Experience

Mr. Fries has served as the Chief Executive Officer of Liberty Global, plc (“Liberty Global”) (Nasdaq: LBTYA, LBTYB, LBTYK) since June 2005. Mr. Fries was Chief Executive Officer of UnitedGlobalCom LLC (“UGC”) from January 2004 until the businesses of UGC and Liberty Media International, Inc. were combined to form Liberty Global.

 

Other Directorships

Mr. Fries is the Executive Chairman of Liberty Latin America Ltd. (since December 2017) (Nasdaq: LILA) and a director of Grupo Televisa S.A.B. (since April 2015) (NYSE: TV; BMV: TLEVISA CPO). Mr. Fries serves as a board member of CableLabs®, as a trustee and finance committee member of The Paley Center for Media and as an ICT Governor of the World Economic Forum. Mr. Fries served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from November 2015 to May 2025.

 

Qualifications

As an executive officer of Liberty Global and co-founder of its predecessor, Mr. Fries has overseen its growth into a world leader in converged broadband, mobile and video communications and an active investor in cutting-edge infrastructure, content and technology businesses through its $3 billion ventures platform. Liberty Global delivers next generation products through advanced fiber and 5G networks in five core European markets, and currently provides over 85 million connections across Europe and the U.K. Liberty Global’s joint ventures in the U.K. and the Netherlands generate combined annual revenue of over $18 billion, while remaining operations generate consolidated revenue of more than $7 billion. Through its substantial scale and commitment to innovation, Liberty Global is building Tomorrow’s Connections Today, investing in the infrastructure and platforms that empower customers and deploying the advanced technologies that nations and economies need to thrive. Mr. Fries’ significant executive experience in building and managing international distribution and programming businesses, in-depth knowledge of all aspects of a global telecommunications business and responsibility for setting the strategic, financial and operational direction for Liberty Global contributes to the New Lionsgate Board’s consideration of the strategic, operational and financial challenges and opportunities of New Lionsgate’s business, and strengthens the New Lionsgate Board’s collective qualifications, skills and attributes.

 

Investor Rights Agreement

Mr. Fries serves as a designee of Liberty under the New Lionsgate Investor Rights Agreement.

 

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JOHN D. HARKEY, JR.   

Age: 64

 

New Lionsgate Board Committee Membership:

Audit & Risk Committee (Chair)

 

Residence: Dallas, Texas, U.S.

   

Business Experience

Mr. Harkey has served as the principal and founder of JDH Investment Management, LLC, an investment advisory firm, since 2007, and as chairman and chief executive officer of Consolidated Restaurant Operations, Inc., a full-service and franchise restaurant company, since 1998. Mr. Harkey is also co-founder, and serves on the board of directors, of Cessation Therapeutics, a developer of vaccines for addictions to fentanyl, heroin and nicotine, since June 2018. Mr. Harkey is also a co-founder and executive chairman of the board of Dialectic Therapeutics, Inc. which is developing cancer immunotherapies, since November 2018. In addition, he was a co-founder of AveXis, Inc., a biotechnology company, from 2010 until it was acquired in 2018 by Novartis AG, and served as executive chairman from 2010 to 2015. Mr. Harkey holds a B.B.A. in Business Honors from the University of Texas at Austin, a J.D. from the University of Texas School of Law, and an M.B.A. from Stanford Graduate School of Business.

 

Other Directorships

Mr. Harkey serves as chairman of privately-held Veterinary Service, Inc., as well as several non-profit organizations. He previously served on the board of directors of Sumo Logic, Inc. until its acquisition by Francisco Partners in May 2023, Loral Space & Communications Inc. until its merger with Telesat Canada in November 2021, Emisphere Technologies, Inc. until its acquisition by Novo Nordisk in December 2020, and Zuora, Inc. until is acquisition by Silver Lake in February 2025. Mr. Harkey also served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from June 2023 to May 2025.

 

Qualifications

Mr. Harkey has extensive operational experience as a private investor and chief executive in both public and private companies across a wide range of industries. Mr. Harkey’s qualifications and expertise, including executive leadership, global management, business development and strategy, growth and operational scaling, finance and accounting, legal, regulatory and compliance matters, and public company board experience, are invaluable to the New Lionsgate Board.

 

Investor Rights Agreement

Mr. Harkey serves as a designee of MHR Fund Management under the New Lionsgate Investor Rights Agreement.

SUSAN MCCAW*   

Age: 63

 

New Lionsgate

Board Committee

Membership:

Audit & Risk Committee, Compensation Committee

   

Business Experience

Ms. McCaw is the President of SRM Capital Investments, a private investment firm. Before this, Ms. McCaw served as President of COM Investments, a position she held from April 2004 to June 2019 except while serving as U.S. Ambassador to the Republic of Austria from November 2005 to December 2007. Prior to April 2004, Ms. McCaw was the Managing Partner of Eagle Creek Capital, a private investment firm investing in private technology companies, a Principal with

 

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Residence: North Palm Beach, Florida, U.S

 

* Ethnic/gender diverse member of the New Lionsgate Board`

   

Robertson, Stephens & Company, a San Francisco-based technology investment bank, and an Associate in the Robertson Stephens Venture Capital Group. Earlier in her career, Ms. McCaw was a management consultant with McKinsey & Company.

 

Other Directorships

Ms. McCaw is a director of Air Lease Corporation (NYSE: AL) and member of their Leadership Development and Compensation Committee. Ms. McCaw is the chair of the Hoover Institution and a board member of the Ronald Reagan Presidential Foundation & Institute. She is also a founding board member of the Malala Fund and serves as the chair of the Knight-Hennessy Scholars Global Advisory Board. Ms. McCaw is also Trustee Emerita of Stanford University. Ms. McCaw holds a Bachelor’s Degree in Economics from Stanford University and a Masters of Business Administration from Harvard Business School. Ms. McCaw served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from September 2018 to May 2025.

 

Qualifications

Ms. McCaw brings a wealth of experience and invaluable relationships in global business and capital markets to the New Lionsgate Board through her private sector background in investment banking and investment management, as well as her distinguished public service as a former U.S. Ambassador. Ms. McCaw’s experience both as an investor and diplomat brings broad and meaningful insight to the New Lionsgate Board’s oversight of New Lionsgate’s business.

YVETTE OSTOLAZA*   

Age: 60

 

New Lionsgate Board Committee Membership:

Nominating and Corporate Governance Committee (Chair)

 

Residence: Dallas, Texas, U.S.

 

* Ethnic/gender diverse member of the New Lionsgate Board

   

Business Experience

Since October 2013, Ms. Ostolaza has been a partner at Sidley Austin LLP, an international law firm with 21 offices located in four continents and over $3.4 billion in revenue. She currently serves as Sidley’s Management Committee Chair and as a member of the firm’s Executive Committee. Ms. Ostolaza has also served on a number of nonprofit organizations as a board member or trustee. She regularly advises companies and boards in governance, crisis management, internal investigations, and litigation matters. Ms. Ostolaza was recently named to CNBC’s 2024 inaugural list of 50 “Changemakers: Women Transforming Business” and Forbes 2024 America’s Top 200 Lawyers. She has received awards for her leadership, legal work, and community involvement, including the American Bar Association’s Margaret Brent Award in 2023, Girls, Inc.’s “Woman of Achievement” award, Hispanic National Bar Law Firm Leader of 2022, Texas Lawyer’s Lifetime Achievement Award, and one of 20 “Women of Excellence” nationally by Hispanic Business magazine. In 2018, she received the Anti-Defamation League’s Schoenbrun Jurisprudence Award for her outstanding leadership and exemplary contributions to the community.

 

Other Directorships

Ms. Ostolaza served as a director of LG Studios from May 2024 to May 2025, and as a director of Old Lionsgate Parent from December 2019 to May 2025.

 

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Qualifications

Ms. Ostolaza has dedicated her career building a global practice advising public and private companies, board committees, and directors and officers in litigation, investigations, shareholder activism, regulatory, governance, and crisis management matters across a wide variety of industries. This breadth of experience offers invaluable insight and counsel to the New Lionsgate Board’s oversight of New Lionsgate’s business.

MARK H. RACHESKY, M.D.   

Age: 66

 

New Lionsgate Board Committee Membership:

Compensation Committee

 

Residence: New York, NY, U.S.

   

Business Experience

Dr. Rachesky is Founder and Chief Investment Officer of MHR Fund Management LLC, a New York-based private equity firm that manages approximately $5 billion of capital and has holdings in public and private companies across a variety of industries.

 

Other Directorships

Dr. Rachesky is the Non-Executive Chairman of the Board of Directors, member of the Nominating Committee and the Human Resources and Compensation Committee of Telesat Corporation (Nasdaq: TSAT), and a director and member of the Nominating Committee, the Corporate Governance Committee and the Compensation Committee of Titan International, Inc. (NYSE: TWI). Dr. Rachesky formerly served on the Board of Directors of Loral Space & Communications Inc. until its merger with Telesat Canada in November 2021, on the Board of Directors of Navistar International Corporation (NYSE: NAV) until its merger with Traton SE in July 2021, and on the Board of Directors of Emisphere Technologies Inc. until it was acquired by Novo Nordisk in December 2020. Dr. Rachesky also serves on the Board of Directors of Mt. Sinai Hospital Children’s Center Foundation, the Board of Advisors of Columbia University Medical Center, as well as the Board of Overseers of the University of Pennsylvania. Dr. Rachesky served as a director of LG Studios from May 2024 to May 2025, and as a director of Old Lionsgate Parent from September 2009 to May 2025.

 

Dr. Rachesky also serves on the Starz Board and is the co-Chair of the Compensation and Talent Committee.

 

Qualifications

Dr. Rachesky has demonstrated leadership skills as well as extensive financial expertise and broad-based business knowledge and relationships. In addition, as the Chief Investment Officer of MHR Fund Management LLC, with a demonstrated investment record in companies engaged in a wide range of businesses over the last 25 plus years, together with his experience as chair and director of other public and private companies, Dr. Rachesky brings broad and insightful perspectives to the New Lionsgate Board relating to economic, financial and business conditions affecting New Lionsgate and its strategic direction.

 

Investor Rights Agreement

Dr. Rachesky serves as a designee of MHR Fund Management under the New Lionsgate Investor Rights Agreement.

 

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RICHARD ROSENBLATT   

Age: 55

 

New Lionsgate Board Committee Membership:

Nominating and Corporate Governance Committee

 

Residence: Los Angeles, CA, U.S.

   

Business Experience

Mr. Rosenblatt is a serial entrepreneur who has built, operated, taken public and/or sold several high-profile Internet media companies including Demand Media Inc., Intermix Media, Inc., Myspace LLC and iMall. Mr. Rosenblatt has continued his entrepreneurial journey by co-founding several tech/media companies, such as Whip Media Group (where he served as Chair and Chief Executive Officer from January 2014 to October 2023) and D’Amelio Brands (co-founded in February 2022 with the D’Amelio family to bring high quality products to their engaged audience), and has entered into the emerging Web3 space. Since February 2021, Mr. Rosenblatt serves as Co-Founder and Co-Chairman of Autograph, a first-of-its-kind experience-driven Web3 platform for sports, with his partner, Tom Brady. In December 2021, Mr. Rosenblatt also Co-Founded and Chaired Adim with Robert McElhenney, a Web3 platform that connects content creators and fans to create the next generation of content networks. Adim is being renamed INCENTION, with a focus on bringing IP to the blockchain for safe and protected development by the IP’s fans/community. Mr. Rosenblatt also serves as senior advisor to a number of firms, including Draft Kings, a16z Crypto and Fifth Down Capital.

 

Fortune Magazine has recognized him as one of “The 50 Smartest People in Tech” and The Los Angeles Business Journal named Mr. Rosenblatt one of the “Most Admired CEOs.” A southern California native, Mr. Rosenblatt holds a B.A. from UCLA and a J.D. from USC Law School. In 2016, he was inducted into the USC Marshall School of Business Entrepreneurs Hall of Fame.

 

Other Directorships

Mr. Rosenblatt served on the Board of Directors of Draft Kings from April 2020 to April 2021 (and its predecessor from January 2018 to April 2020).

 

Qualifications

Mr. Rosenblatt is well qualified to serve on the New Lionsgate Board—his extensive experience as an executive in the media and entertainment industry and experience guiding companies through transformational events, position him to provide valuable strategic insight and leadership to the New Lionsgate Board.

HARRY E. SLOAN   

Age: 75

 

New Lionsgate Board Committee Membership:

Compensation Committee (Chair)

 

Residence: Los Angeles, CA, U.S.

   

Business Experience

Mr. Sloan is a founder, public company chief executive officer and a leading investor in the media, entertainment and technology industries. Mr. Sloan is the Chairman and CEO of Eagle Equity Partners II, LLC (“Eagle Equity”). Under Mr. Sloan’s leadership, Eagle Equity has acquired and taken public, through special purpose acquisition companies, several digital media companies including, during 2020, DraftKings, Inc. (Nasdaq: DKNG) (“DraftKings”) and Skillz Inc. (NYSE: SKLZ). Mr. Sloan has been at the forefront and evolution of the

 

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video gaming industry as one of the founding investors and a Board Member of Zenimax/ Bethesda Game Studios, the award-winning studio acquired by Microsoft in March 2021. Mr. Sloan co-founded Soaring Eagle Acquisition Corp., which raised $1.725 billion in its initial public offering in February 2021, and in September 2021, completed its initial business combination with Ginkgo Bioworks Holdings, Inc. (NYSE: DNA) (“Ginkgo”). In January 2022, Mr. Sloan and his partners launched Screaming Eagle Acquisition Corp., which became LG Studios (NYSE: LION) in May 2024. Earlier in his career, Mr. Sloan was Chairman and Chief Executive Officer of MGM Studios and founded and led two public companies in the entertainment media arena, New World Entertainment and SBS Broadcasting, S.A. Mr. Sloan was also one of the founding investors of Lionsgate and served as Lionsgate’s Non-Executive Chairman from 2004 to 2005. In May 2023, Mr. Sloan was appointed by President Biden as a member of the United States Holocaust Memorial Council.

 

Other Directorships

Mr. Sloan is also a member of the Board of Directors and a member of the Audit Committee of Ginkgo, and Vice Chairman of the Board of Directors and Chair of the Transaction Committee of DraftKings. Mr. Sloan served as a director of LG Studios from May 2024 to May 2025, and as a director of Lionsgate from December 2021 to May 2025.

 

Mr. Sloan also serves on the Starz Board and a member of the Audit and Risk Committee.

 

Qualifications

Mr. Sloan’s extensive experience as an international media investor, entrepreneur, and studio executive uniquely qualifies him to serve on the New Lionsgate Board. Mr. Sloan’s wealth of strategic and operational expertise will offer valuable insights and will contribute meaningfully to New Lionsgate’s strategic direction and decision-making processes.

Director Independence

It is the policy of the New Lionsgate Board that, as required by the NYSE listing standards, a majority of directors be “independent” of New Lionsgate and its management. For a director to be deemed “independent,” the New Lionsgate Board must affirmatively determine that the director has no material relationship with New Lionsgate or its affiliates or any member of the senior management of New Lionsgate or his/her affiliates.

Pursuant to New Lionsgate’s Corporate Governance Guidelines, the New Lionsgate Board will undertake an annual review of director independence. During each annual review, the New Lionsgate Board will consider transactions and relationships between each director or any member of his/her immediate family and New Lionsgate and its subsidiaries and affiliates. The New Lionsgate Board will also examine transactions and relationships with New Lionsgate between directors or their affiliates and members of New Lionsgate’s senior management or their affiliates. As provided in New Lionsgate’s Corporate Governance Guidelines, the purpose of this review will be to determine whether any such relationships or transactions are inconsistent with a determination that the director is “independent.” The Nominating and Corporate Governance Committee of the New Lionsgate Board, with assistance from counsel, will regularly review New Lionsgate’s Corporate Governance Guidelines to ensure their compliance with Canadian law, SEC and NYSE regulations. The full text of New Lionsgate’s Corporate Governance Guidelines is available on New Lionsgate’s investor relations website at https://investors.lionsgate.com,

 

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or may be obtained in print, without charge, by any shareholder upon request to New Lionsgate’s Corporate Secretary. The New Lionsgate website and the information to be contained therein or connected thereto are not incorporated into this prospectus or the registration statement of which this prospectus forms a part, or in any other filings with, or any information furnished or submitted to, the SEC.

The New Lionsgate Board has affirmatively determined that each of Messrs. Crawford, Fries, Harkey, Rachesky, Rosenblatt and Sloan, and Mmes. Fine, McCaw and Ostolaza are “independent” under New Lionsgate’s Standards for Director Independence, Canadian standards, SEC rules and regulations (for New Lionsgate Audit & Risk Committee members) and the NYSE listing standards (including the enhanced independence requirements for compensation committee members). A number of New Lionsgate’s independent board members are currently serving or have served as directors or as members of senior management of other public companies, including LGEC. All of the committees of the New Lionsgate Board are comprised solely of independent directors, each with a different independent director serving as chair of the committee.

Committees of the New Lionsgate Board

There are three (3) standing committees of the New Lionsgate Board: an audit & risk committee (the “New Lionsgate Audit & Risk Committee”), a compensation committee (the “New Lionsgate Compensation Committee”) and a nominating and corporate governance committee (the “New Lionsgate Nominating and Corporate Governance Committee”). The New Lionsgate Board has adopted written charters for the New Lionsgate Audit & Risk Committee, the New Lionsgate Compensation Committee and the New Lionsgate Nominating and Corporate Governance Committee, which are available on New Lionsgate’s investor relations website.

The table below sets forth the standing committees. Each of the New Lionsgate Audit & Risk, the New Lionsgate Compensation and the New Lionsgate Nominating and Corporate Governance Committee are composed solely of directors who have been determined by the New Lionsgate Board to be independent in accordance with SEC regulations and Canadian securities laws, NYSE listing standards and New Lionsgate’s Standards for Director Independence (including the heightened independence standards applicable to audit committee members pursuant to Rule 10A-3(b)(i) under the Exchange Act for members of New Lionsgate’s Audit & Risk Committee and the enhanced independent standards applicable to compensation committee members under the NYSE listing standards for members of New Lionsgate’s Compensation Committee).

 

COMMITTEE

   

FUNCTIONS

Audit & Risk   

The New Lionsgate Audit & Risk Committee has the responsibilities set forth in the charter of such committee. These responsibilities include:

 

•  overseeing the integrity of New Lionsgate’s financial statements, accounting and financial reporting processes;

 

•  overseeing New Lionsgate’s exposure to risk and compliance with legal and regulatory requirements;

 

•  overseeing the independent auditor’s qualifications and independence;

 

•  overseeing the performance of New Lionsgate’s internal audit function and independent auditor;

 

•  overseeing the development, application and execution of all New Lionsgate’s risk management and risk assessment policies and programs;

 

•  preparing the reports required by applicable SEC and Canadian securities commissions’ disclosure rules; and

 

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COMMITTEE

   

FUNCTIONS

  

 

•  reviewing and providing oversight over New Lionsgate’s information technology and cybersecurity risk, policies and procedures.

Compensation Committee   

The New Lionsgate Compensation Committee has the responsibilities set forth in the charter of such committee. These responsibilities include:

 

•  reviewing, evaluating and making recommendations to the New Lionsgate Board with respect to management’s proposals regarding New Lionsgate’s overall compensation policies and practices and overseeing the development and implementation of such policies and practices;

 

•  evaluating the performance of and reviewing and approving the level of compensation for New Lionsgate’s Chief Executive Officer and Vice Chair;

 

•  in consultation with New Lionsgate’s Chief Executive Officer, considering and approving the selection, retention and remuneration arrangements for other executive officers and employees of New Lionsgate with compensation arrangements that meet the requirements for New Lionsgate’s Compensation Committee review, and establishing, reviewing and approving compensation plans in which such executive officers and employees are eligible to participate;

 

•  reviewing and recommending for adoption or amendment by New Lionsgate Board and, when required, New Lionsgate’s shareholders, incentive compensation plans and equity compensation plans and administering such plans and approving award grants thereunder to eligible persons; and

 

•  reviewing and recommending to the New Lionsgate Board compensation for New Lionsgate Board and committee members.

Nominating and Corporate Governance Committee   

The New Lionsgate Nominating and Corporate Governance Committee has the responsibilities set forth in the charter of such committee. These responsibilities include:

 

•  identifying, evaluating and recommending individuals qualified to become members of the New Lionsgate Board, consistent with criteria approved by the New Lionsgate Board;

 

•  considering and recommending to the New Lionsgate Board the director nominees for each annual general meeting of shareholders, the New Lionsgate Board committees and the Chairpersons thereof;

 

•  periodically reviewing New Lionsgate’s activities and practices regarding corporate responsibility and environmental, social and related governance matters that are significant to New Lionsgate, oversee New Lionsgate’s public reporting on these topics and receive updates from New Lionsgate’s

 

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COMMITTEE

   

FUNCTIONS

  

management committee responsible for significant environmental, social and governance activities;

 

•  reviewing New Lionsgate’s human capital management policies, programs and initiatives focused on New Lionsgate’s culture, talent development, retention and inclusion;

 

•  developing and recommending to the New Lionsgate Board a set of corporate governance guidelines applicable to New Lionsgate and assisting in the oversight of such guidelines; and

 

•  overseeing the evaluation of the New Lionsgate Board and management.

How New Lionsgate Makes Pay Decisions and Assesses Its Programs

During New Lionsgate’s fiscal year ended March 31, 2025, New Lionsgate was not an independent company and did not have a compensation committee or any other committee serving a similar function. Decisions as to the compensation of those who currently serve as New Lionsgate’s executive officers were made by Lionsgate, as described in the section of this prospectus entitled “Compensation Discussion and Analysis.”

Corporate Governance

New Lionsgate is committed to good corporate governance, which it believes will help it compete more effectively and build long-term shareholder value. New Lionsgate is governed by the New Lionsgate Board and committees of the New Lionsgate Board that meet throughout the year. Directors are expected to discharge their responsibilities at New Lionsgate Board and committee meetings through ongoing communication with each other and with management throughout the year.

Governance is a continuing focus at New Lionsgate, starting with the New Lionsgate Board and extending to management and all employees. Therefore, the New Lionsgate Board reviews New Lionsgate’s policies and business strategies and advise and counsel its Chief Executive Officer and the other executive officers who manage New Lionsgate’s businesses, including actively overseeing and reviewing, on at least an annual basis, New Lionsgate’s strategic plans.

In addition, New Lionsgate solicits feedback from shareholders on corporate governance and executive compensation practices and engage in discussions with various groups and individuals on these matters.

Mandate of the New Lionsgate Board

Under the Corporate Governance Guidelines established by the New Lionsgate Board, which include the New Lionsgate Board’s mandate, the New Lionsgate Board has the overall responsibility to review and regularly monitor the effectiveness of New Lionsgate’s fundamental operating, financial and other business plans, policies and decisions, including the execution of its strategies and objectives. Generally, the New Lionsgate Board seeks to enhance shareholder value over the long term. The full text of New Lionsgate’s Corporate Governance Guidelines is available on New Lionsgate’s investor relations website at https://investors.lionsgate.com, or will be able to be obtained in print, without charge, by any shareholder upon request to its Corporate Secretary.

Director Orientation and Education

The New Lionsgate Board continues the policies and practices of Lionsgate with respect to director orientation and education.

 

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Considerations of the Representation of Women on the New Lionsgate Board

New Lionsgate’s Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and to take diversity considerations into account when identifying candidates. New Lionsgate’s Nominating and Corporate Governance Committee utilizes a broad concept of diversity, including diversity of professional experience, employment history, prior experience on other boards of directors, and more familiar diversity concepts such as race, gender and national origin. These factors, and others considered useful by New Lionsgate’s Nominating and Corporate Governance Committee, are reviewed in the context of an assessment of the perceived needs of the New Lionsgate Board at a particular point in time. Prior to the nomination of a new director, New Lionsgate’s Nominating and Corporate Governance Committee follows prudent practices, such as interviews of the potential nominee conducted by members of the New Lionsgate Board and senior management. There are currently three (3) female directors on the New Lionsgate Board.

New Lionsgate Board, Committee and Director Evaluations

Under the Corporate Governance Guidelines and charter of the Nominating and Corporate Governance Committee, New Lionsgate’s Nominating and Corporate Governance Committee oversees an annual evaluation of the performance of the New Lionsgate Board, its committees and each director in order to assess the overall effectiveness of the New Lionsgate Board and its committees, director performance and board dynamics. The evaluation process is intended to be designed to facilitate ongoing, systematic examination of the New Lionsgate Board’s effectiveness and accountability, and to identify opportunities for improving its operations and procedures. The effectiveness of individual directors is considered each year when the directors stand for re-nomination. Detailed surveys are used for the evaluations conducted for the New Lionsgate Board and each committee. The surveys are designed to provide information pertaining to the competencies, behaviors and effectiveness of the New Lionsgate Board, the committees and the directors, and suggested areas for improvement.

Director Selection Process

Shareholder Recommendations for New Lionsgate Director Nominees and Other Proposals

 

  •  

Shareholder recommendations for New Lionsgate director nominees are welcome and will be sent to the Chair of New Lionsgate’s Nominating and Corporate Governance Committee. At the time a shareholder makes a recommendation the shareholder must provide:

 

  •  

As to the shareholder who makes the recommendation (the “nominating shareholder”):

 

  •  

the name and address of the nominating shareholder;

 

  •  

the class or series and number of shares of New Lionsgate that are owned beneficially or of record by the nominating shareholder;

 

  •  

details of any proxy, contract, arrangement, or relationship pursuant to which the nominating shareholder, its affiliates or associates, or any person acting jointly or in concert with the nominating shareholder has interests or rights related to the voting of shares of New Lionsgate; and

 

  •  

if a shareholder recommending a candidate is not a record holder, the shareholder must provide evidence of eligibility as set forth in Exchange Act Rule 14a-8(b)(2);

 

  •  

As to the candidate(s):

 

  •  

the name, age, business address and residential address of the candidate(s);

 

  •  

The principal occupation or employment of the candidate(s);

 

  •  

The class or series and number of shares of New Lionsgate that are owned beneficially or of record by the candidate(s);

 

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  •  

Proof of the candidate’s consent to serve on the New Lionsgate Board if nominated and elected;

 

  •  

Proof of the candidate’s agreement to complete, upon request, any questionnaire(s) customary for New Lionsgate’s directors; and

 

  •  

If a shareholder recommending a candidate is not a record holder, the shareholder must provide evidence of eligibility as set forth in Exchange Act Rule 14a-8(b)(2).

Shareholders submitting proposals pursuant to Rule 14a-8 promulgated under the Exchange Act must also satisfy other procedural and qualification requirements set forth in Rule 14a-8. Shareholder proposals or recommendations for director nominees submitted in accordance with the BC Act and the New Lionsgate Articles to be presented at an annual general meeting of shareholders must be received by New Lionsgate’s Corporate Secretary at its registered office at 250 Howe Street, 20th Floor, Vancouver, BC V6C 3R8 no later than thirty (30) days prior to the date of the annual general meeting or, in the case of a special meeting, not later than the close of business on the fifteenth day following the first public announcement of the date of the special meeting. Such proposals must comply with the BC Act and the notice and informational requirements of the advance notice procedures for the nomination of directors as described more fully in the New Lionsgate Articles.

Term Limits and New Lionsgate Board Renewal

New Lionsgate has not established term limits, as it believes that directors who will develop insight into New Lionsgate and its operations over time will provide an increasing contribution to the New Lionsgate Board as a whole. To ensure the New Lionsgate Board continues to generate new ideas and operate effectively, the New Lionsgate Nominating and Corporate Governance Committee evaluates individual New Lionsgate Board member performance and take steps as necessary regarding continuing director tenure.

For instructions on how shareholders may submit recommendations for director nominees to the New Lionsgate Nominating and Corporate Governance Committee, see “Directors and Executive Officers—Corporate Governance—Shareholder Communications with the New Lionsgate Board.” The New Lionsgate Nominating and Corporate Governance Committee will assess the director nominees recommended by shareholders using the criteria as described above.

The New Lionsgate Board’s Role in Risk Oversight

New Lionsgate’s management is responsible for communicating material risks to the New Lionsgate Board and its committees, who provide oversight over the risk management practices implemented by management. The New Lionsgate Board and committee reviews occur principally through the receipt of reports from New Lionsgate’s management on these areas of risk and discussions with management regarding risk assessment and risk management. The New Lionsgate Board continues the policies and practices of Lionsgate with respect to risk oversight as described in the section of this prospectus entitled “Business—Environmental, Social Responsibility and Human Capital Matters.”

Code of Conduct and Ethics

New Lionsgate has a Code of Business Conduct and Ethics that applies to all its directors, officers and employees (and, where applicable, to its suppliers, vendors, contractors and agents) and is available on New Lionsgate’s investor relations website at https://investors.lionsgate.com, or may be obtained in print, without charge, by any shareholder upon request to New Lionsgate’s Corporate Secretary. New Lionsgate discloses on its investor relations website any waivers of, or amendments to, the code that apply to New Lionsgate’s Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer or persons performing similar functions. The code is administered by New Lionsgate’s compliance officer, or his/her designee, and New Lionsgate’s Office of the General Counsel, and is overseen by New Lionsgate’s Nominating and Corporate Governance Committee. The New Lionsgate investor relations website and the information contained therein or connected thereto are not incorporated into this prospectus or the registration statement of which this prospectus forms a part, or in any other filings with, or any information furnished or submitted to, the SEC.

 

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Shareholder Communications with the New Lionsgate Board

New Lionsgate recognizes the importance of providing New Lionsgate’s shareholders and interested parties with a means of direct communication with the members of the New Lionsgate Board. Shareholders and interested parties who would like to communicate with the chair of the New Lionsgate Board or New Lionsgate’s non-employee directors are able to do so by writing to the New Lionsgate Board or New Lionsgate’s non-employee directors, care of New Lionsgate’s Corporate Secretary, at New Lionsgate’s principal executive office. The full text of New Lionsgate’s Policy on Shareholder Communications is available on New Lionsgate’s investor relations website at https://investors.lionsgate.com. The New Lionsgate investor relations website and the information to be contained therein or connected thereto are not incorporated into this prospectus or the registration statement of which this prospectus forms a part, or in any other filings with, or any information furnished or submitted to, the SEC.

 

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EXECUTIVE OFFICER AND DIRECTOR COMPENSATION

Compensation Discussion and Analysis

Explanatory Note

Prior to the Separation (defined below), Lionsgate Studios Corp. (formerly trading on the Nasdaq Stock Market under the ticker symbol LION) (“Legacy Lionsgate Studios”) was a subsidiary of Lions Gate Entertainment Corp. (formerly trading on the New York Stock Exchange under the ticker symbols LGF.A and LGF.B) (“Old Lionsgate Parent”), and included the company’s motion picture and television studio operations (collectively referred to as the “Studio Business”).

On May 6, 2025, Old Lionsgate Parent completed the separation of its Studio Business from its STARZ-branded premium subscription platform (the “Starz Business”) through a series of transactions contemplated by an arrangement agreement dated January 29, 2025, as amended on March 12, 2025 (the “Separation”).

As a result, (1) a new Lionsgate Studios Corp. (trading on the New York Stock Exchange under the ticker symbol LION) (herein after referred to as the “Company,” “Lionsgate,” “we,” “us,” or “our”) now holds, directly and through subsidiaries, the Studio Business, and (2) Old Lionsgate Parent, which was renamed Starz Entertainment Corp. (“Starz”) (trading on the Nasdaq Stock Market under the ticker symbol STRZ) now holds, directly and through subsidiaries, the Starz Business.

Following the transactions, the former named executive officers of Old Lionsgate Parent have become the named executive officers of Lionsgate, and the information regarding executive compensation and related matters with respect to such executive officers for Old Lionsgate Parent’s fiscal year ended March 31, 2025 is set forth below in this Compensation Discussion and Analysis.

Accordingly, unless otherwise noted herein, references in this Compensation Discussion and Analysis to:

 

  (i)

the “Company,” “Lionsgate,” “we,” “us,” or “our” means Lions Gate Entertainment Corp. (or Old Lionsgate Parent) prior to completion of the transactions, and new Lionsgate Studios Corp. upon completion of the transactions;

 

  (ii)

the “Company’s common shares” means the former common shares of Lions Gate Entertainment Corp. (or Old Lionsgate Parent), including Class A voting shares, without par value (“Class A voting shares”) and/or Class B non-voting shares, without par value (“Class B non-voting share”) prior to completion of the transactions, and the common shares of new Lionsgate Studios Corp. upon completion of the transactions; and

 

  (iii)

the “Compensation Committee” means the former Compensation Committee of the Board of Directors of Lions Gate Entertainment Corp. (or Old Lionsgate Parent) prior to completion of the transactions, and the Compensation Committee of the Board of Directors of new Lionsgate Studios Corp. upon completion of the transactions.

Named Executive Officers

This Compensation Discussion and Analysis is designed to provide shareholders with an understanding of the Company’s executive compensation philosophy and objectives, and practices. In doing so, it describes the material elements of compensation at the Company awarded to, earned by, or paid to, the individuals who served as our principal executive officer, principal financial officer, and three other most highly compensated executive officers for fiscal 2025 (the “Named Executive Officers”). The Named Executive Officers for fiscal 2025 include the following:

 

Named Executive Officer

   

Position

Jon Feltheimer    Chief Executive Officer
Michael Burns    Vice Chair
James W. Barge    Chief Financial Officer
Brian Goldsmith    Chief Operating Officer
Bruce Tobey    Executive Vice President and General Counsel

 

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Executive Summary

 

LOGO

Who We Are

 

LOGO

 

 

(1) Includes wide-release, multi-platform and direct-to-platform titles. (2) Fiscal year ended March 31, 2025 (3) Includes scripted television, unscripted television, programming syndicated by wholly-owned subsidiaries Debmar/Mercury and Pilgrim Media Group, and distribution as of March 31, 2025. Does not include 3 Arts Entertainment executive-produced series. (4) Average across scripted and unscripted content from fiscal 2019 through March 31, 2025; does not include programming syndicated by Debmar/Mercury. (5) Fiscal year ended March 31, 2025; includes film and television revenues; reported library revenue defined as revenue earned after first cycle of sales which generally includes theatrical revenue, first six months of home entertainment sales, first pay television contract and minimum guarantees from first international sales. (6) Includes created and acquired content.

 

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LOGO

Film Franchises

 

LOGO

 

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LOGO

 

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LOGO

Television Franchises

 

 

LOGO

 

LOGO

 

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LOGO

Select Accomplishments in Fiscal 2025

 

Separation of the Studios Business and the Starz Business

 

Completed the Separation and subsequent launch of Lionsgate Studios Corp. (NYSE: LION)

and Starz Entertainment Corp. (NASDAQ: STRZ) as standalone, publicly-traded companies

 

Record Studio Revenue of

$3.2 Billion in Year and

First $1 Billion+ Quarter

 

Studio segment revenue for fiscal 2025 and $1.1 billion in fiscal 2025 fourth quarter

   

Record Library Revenue of

$956 Million

 

 

Trailing 12-month library revenue; best ever quarterly library revenue of $340 million (fiscal 2025 fourth quarter)

   

Completed Integration of

eOne Entertainment

 

 

Added thousands of titles to library, grew portfolio of brands and franchises, capitalized on Canadian content production incentives

Over $300 Million Motion

Picture Segment Profit

 

 

Over $135 million segment profit in fiscal 2025 fourth quarter was best quarterly performance for Motion Pictures segment in 10 years

   

Key Television

Series Renewals

 

 

The Rookie (for an 8th season on ABC), Ghosts (for 5th and 6th seasons on CBS), The Studio (for a 2nd season on Apple TV+); the Sherri Shepherd show (for a 4th season in syndication); Yellowjackets (for a 4th season on Showtime)

   

STARZ: More than 70% Digital Revenue and Over $200 Million Segment Profit

 

Media Networks segment (STARZ) digital revenue and segment profit for fiscal 2025

 

LOGO

Compensation Program Goals and Principles

 

•   Recruit, retain and inspire top talent in a highly competitive industry

•   Align executive compensation with performance and shareholder interests

•   Foster long-term value creation through a well-balanced compensation framework

•   Maintain appropriate level of “at-risk” compensation

   

•   Maintain a strong “clawback” policy

•   No tax gross-ups on severance or other change in control benefits

•   No repricing or buyouts of underwater stock options/SARs without shareholder approval

•   Utilize “double trigger” change in control provisions that only provide benefits upon qualified terminations in connection with a change in control

 

LOGO

Compensation Committee Practices

 

•   Engage in proactive, transparent, and ongoing investor communication

•   Assess the cost and dilutive impact of stock compensation

•   Utilize relevant peer groups and industry data for compensation decisions

   

•   Apply performance metrics consistently across all employees, including executives

•   Seek guidance from an independent consultant, Pay Governance

 

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LOGO

Components of Executive Compensation

 

Item  

Nature

  

Purpose

  

Basis

Base
Salary		   Fixed; Short-term   Provide degree of financial stability; Retention   Competitive within peer and industry context
Annual
Incentive
Bonus		  

At-risk;

Short-term

  

Reward near-term performance; Promotion and contribution of business strategy;

Ensure competitive compensation

  

Competitive within peer and industry context;

Performance-based, with defined target opportunity

Long-Term
Incentive
Awards		  

At-risk

Long-term

  

Retention;

Reward long-term performance; Align with shareholder interests

   Competitive within peer and industry context; Time and performance-based equity, vesting in tranches over multiple years

 

LOGO

Determination of Annual Incentive Bonuses For Fiscal 2025

 

LOGO

For more information on the compensation of the Named Executive Officers, please see the Summary Compensation Table below.

Shareholder Engagement

We are committed to maintaining a proactive shareholder engagement program that facilitates open, transparent, and ongoing dialogue with our investors and other key stakeholders. Throughout the year, we actively engage with shareholders to solicit their perspectives on a broad range of important topics, including Company performance and long-term strategy, corporate governance practices, executive compensation, and key environmental, social, and governance priorities. These engagements provide valuable insights that help shape our governance practices, refine our strategic direction, and enhance the quality and relevance of our public disclosures. Feedback received from shareholders is regularly communicated to our Board of Directors and relevant committees, ensuring that investor perspectives are meaningfully incorporated into the oversight and decision-making processes of the Company.

 

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Investor Conferences and Meetings

In fiscal 2025, we conducted engagement with 37 of our top 50 shareholders, including many of our largest actively managed institutional investors, representing approximately 81% of the Company’s outstanding common stock (excluding shares held by officers and directors). This outreach underscores our commitment to transparency, responsiveness, and alignment with the interests of our long-term shareholders. Actions we took in response to feedback from our shareholders are noted below.

 

Investor Meetings

 

✓ Held more than 100 virtual and in-person meetings with investors throughout the year, engaging with all of the Company’s analysts and top 25 shareholders.

 

✓ Meetings were led by key members of our executive team, including our Chief Executive Officer, Vice Chair, Chief Financial Officer, Head of Investor Relations, Chair of the Motion Picture Group, Chair of the Television Group, and President, Worldwide Television & Digital Distribution, and also featured participation by members of our Board of Directors, underscoring the Board of Directors’ active role in shareholder engagement and oversight.

   

Investor Conferences

 

✓ Senior members of our management team participated in several high-profile investor conferences, providing valuable opportunities to connect directly with existing and potential investors. These included:

 

•  The Morgan Stanley Tech, Media &Telecom Conference;

 

•  The Deutsche Bank Media, Internet and Telecom Conference;

 

•  Raymond James Institutional Investor Conference;

 

•  UBS Global Media & Communications Conference;

 

•  Wells Fargo TMT Summit;

 

•  Barclays Communications and Content Symposium; and

 

•  The Gabelli Media & Sports Symposium.

 

 

2024 Annual General and Special Meeting of Shareholders

At our 2024 Annual General and Special Meeting of Shareholders, held on April 23, 2025, shareholders demonstrated strong support for our executive compensation program, with approximately 80% of votes cast voted in favor of the Company’s executive compensation program (referred to as a “say-on-pay proposal”). We view this outcome as a validation of our continued efforts to ensure that our compensation practices are performance-based, aligned with shareholder interests, and designed to support the long-term success of the Company.

We remain committed to fostering a culture of accountability, transparency, and active dialogue, and we will continue to prioritize meaningful engagement as a critical component of our corporate governance framework.

 

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Key Actions in Response to Shareholder Engagement

 

Key Actions in Response to Shareholder Engagement   

✓ Eliminated dual-class share structure by consolidating Class A voting shares and Class B non-voting shares into one class of common shares

 

✓ Aligned voting power with economic interests

 

✓ Streamlined capital structure to reduce complexity

 

✓ Increased appeal to both retail and institutional investors

 

✓ Created a more straightforward and accessible investment opportunity

 

✓ Enhanced stock liquidity

  

✓ Fiscal 2025 annual incentive bonuses paid in mix of cash and equity

 

✓ Majority of awards for the Company’s Chief Executive Officer delivered in the form of restricted share units with respect to the Company’s common shares, which vest on the first anniversary of grant

 

✓ Equity-based approach reinforces alignment with shareholder interests and reflects continued focus on long-term value creation

  

✓ Fiscal 2025 grants of annual long-term incentive awards made exclusively in the form of restricted share units

 

✓ Grants made at 85% of target (reflecting actual adjusted OIBDA for fiscal 2025 reaching approximately 85% of plan, as discussed below)

 

✓ Half subject to performance-vesting requirements

 

✓ Reinforces link between executive compensation and achievement of strategic goals

  

✓ Continued to utilize Adjusted OIBDA and segment profit as performance metrics to determine fiscal 2025 annual incentive bonuses

  

✓ Adopted shareholder rights plan

 

✓ Protects interests of all shareholders

 

✓ Enables shareholders to realize value of their investment at a time of significant market volatility

 

✓ Helps ensure Board of Directors’ ability to fulfill fiduciary responsibilities and duties to the Company and its shareholders

  

✓ Amended Company’s Articles to eliminate the ability of chair of a meeting of the Board of Directors to have a second or casting vote in event of a tied vote

Key Features of Our Executive Compensation Program

The Compensation Committee believes that our executive compensation program aligns the interests of the Named Executive Officers with the Company’s long-term strategic direction and the interests of our shareholders. Key features of our program include:

 

  •  

Market-Competitive Pay – compensation decisions are informed by peer group and industry benchmarks.

 

  •  

Performance-Based Compensation – a significant portion of executive pay is “at risk,” with annual incentives and long-term equity awards tied to performance.

 

  •  

Balanced Structure – the program includes a mix of fixed salary, short-term incentives and long-term variable compensation.

 

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  •  

Committee Discretion – the Compensation Committee retains certain discretion in assessing performance and determining payouts under the annual incentive plan and performance-based equity awards.

 

  •  

Limited Perquisites – benefits and perquisites are modest and aligned with market practices.

We maintain employment agreements with Named Executive Officers to promote management stability while adhering to best practices generally favored by shareholders. These agreements:

 

  •  

Exclude “single-trigger” provisions, meaning equity awards and other benefits do not automatically accelerate upon a change in control.

 

  •  

Do not provide tax gross-ups on excess parachute payments.

 

  •  

Allow severance in connection with a change in control only in cases of involuntary terminations or “good reason” terminations, which we consider constructive terminations of employment.

Equity awards for Named Executive Officers are generally determined as part of new or amended employment agreements, specifying the value of grants to be made annually over the term, with the Compensation Committee having discretion to determine the type and terms of such grants each year. While the Company does not typically issue equity grants outside this framework, it may award annual bonuses in cash and/or equity and retains discretion to grant equity awards in other circumstances as deemed appropriate by the Compensation Committee.

Program Objectives

The Company’s executive compensation program is designed to drive long-term shareholder value by attracting, motivating, and retaining top senior talent. The Compensation Committee structures the program to reward sustained financial and operational performance, align executive interests with shareholders, and promote long-term leadership stability. A substantial portion of executive compensation is performance-based, with annual and long-term incentives awarded only when performance targets are met.

Compensation Practices

 

What We Do    What We Don’t Do

✓  Pay for Performance: A significant majority of our executives’ target compensation is “at risk” in the form of annual and long-term incentive awards tied to pre-established performance goals aligned with our short- and long-term objectives and/or the value of our stock price.

   

×   No Tax Gross-ups: We do not provide tax reimbursements or gross-ups on severance or change-in-control payments.

✓  Use Performance Metrics: Our annual bonus and long-term incentive programs incorporate individual, group, and company-wide financial and operational performance measures.

   

×   No Pension Plans or Special Retirement Programs for Executive Officers: We do not offer defined benefit pension plan or supplemental retirement plan for executives.

✓  Risk Mitigation: Our compensation program has provisions to mitigate undue risk, including caps on the maximum level of payouts, a clawback policy, multiple performance metrics and board and management processes to identify risk.

   

×   No Single-Trigger Change in Control Agreements: We do not provide benefits triggered solely by a change in control.

✓  Review of Share Utilization: The Compensation Committee evaluates share utilization levels by reviewing the cost and dilutive impact of stock compensation.

   

×   No Hedging: Executives and directors are prohibited from hedging transactions on Company stock.

 

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What We Do    What We Don’t Do

✓  Competitive Peer Group: Our peer group consists of comparable companies that compete for executive talent and align in revenue, market capitalization, and industry focus.

   

×   No Repricing of Stock Options or SARs: Stock options and SARs cannot be repriced without shareholder approval.

✓  Independent Compensation Consultant: The Compensation Committee engages Pay Governance, an independent consultant, for executive and director compensation guidance.

   

×   No Buyout of Underwater Stock Options or SARs: Underwater stock options and SARs cannot be bought out for cash without shareholder approval.

✓  Limit Perquisites: We limit perquisites to items that we believe serve a reasonable business purpose.

   

×   No Evergreen Provisions. The Lionsgate Studios 2025 Performance Incentive Plan and its predecessor, the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan, do not provide for any automatic increases in the number of shares available for issuance under the plan.

Process for Determining Executive Compensation

Role of the Compensation Committee

The Company’s executive compensation program is administered by the Compensation Committee, which operates pursuant to a written charter. The Compensation Committee, working with management, determines and implements the Company’s executive compensation philosophy, structure, policies and programs, and administers the Company’s compensation and benefit plans. The Compensation Committee is ultimately responsible for determining the compensation arrangements for the Company’s executive officers and reports to the Board on all compensation matters regarding our executives and other key salaried employees.

Role of Management

The Compensation Committee reviews management-provided information in order to help align the executive compensation program with the Company’s business strategies and objectives. At various times during fiscal 2025, the Company’s Chief Executive Officer and other executives attended relevant portions of Compensation Committee meetings to discuss the Company’s strategic objectives and financial performance relevant to the Compensation Committee’s decisions. Generally, the Company’s Chief Executive Officer recommends to the Compensation Committee compensation terms for other executives, considering market data, the Company’s strategy, individual performance and experience. The Compensation Committee reviews these recommendations with the Company’s Chief Executive Officer and either approves or adjusts these recommendations. The Compensation Committee is solely responsible for determining the compensation of the Company’s Chief Executive Officer and the Company’s Vice Chair. No Named Executive Officers participate in decisions regarding their own compensation.

Role of Compensation Consultant

Throughout fiscal 2025, the Compensation Committee engaged Pay Governance as its independent compensation consultant to assist in reviewing and determining the Company’s executive compensation program. Pay Governance provides guidance on compensation policies, practices and decisions, reporting directly to the Compensation Committee. The Compensation Committee has sole authority to retain, terminate and approve the consultant’s fees and terms of engagement.

 

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Consultant Independence

During fiscal 2025, Pay Governance did not perform work for the Company other than pursuant to its engagement by the Compensation Committee. The Compensation Committee has assessed the independence of Pay Governance and concluded that its engagement of Pay Governance does not raise any conflict of interest with the Company or any of its directors or executive officers.

Peer Group Analysis

The Compensation Committee utilizes a peer group to benchmark executive compensation against that of similarly positioned executives at other companies engaged in film production, television programming, digital content creation and live entertainment, in order to help ensure that the Company’s compensation packages are competitive with the broader market and aligned with shareholder interests.

In fiscal 2025, the Compensation Committee engaged Pay Governance to determine a post-Separation peer group for the Company. Pay Governance identified a pool of companies spanning entertainment, cable, streaming, and adjacent industries, which selection was then refined to exclude entities with disproportionately large revenues and to prioritize companies engaged in content creation and distribution. Pay Governance also considered companies referenced by shareholder advisory firms in prior reports, assessed “peer-to-peer” relationships (where multiple peers cited the same entities), and examined “reverse peer” companies (those that had designated the Company as a peer).

Based on this review, Pay Governance recommended a peer group consisting of the following ten companies:

 

Peer Group

   

AMC Networks Inc.

    Madison Square Garden Entertainment Corp.

Electronic Arts Inc.

    Nexstar Media Group, Inc.

Fox Corporation

    Sirius XM Holdings Inc.

Hasbro, Inc.

    Take-Two Interactive Software, Inc.

Live Nation Entertainment, Inc.

    World Wrestling Entertainment, Inc.

Finally, consistent with past practice, Pay Governance also recommended that the Company continue to utilize entertainment industry-specific compensation survey data to benchmark roles that may not be reflected within the Company’s peer group. The participants in this survey include the following:

 

Entertainment Industry Group

   

ABC

    NBCUniversal

Amazon Studios

    Netflix

AMC Networks

    Paramount/Showtime

Apple TV

    Sony Pictures Entertainment

ESPN

    Walt Disney Studios

Mattel

    Warner Bros. Discovery

Use of Market Data

Utilizing peer group and industry survey market data, the Compensation Committee evaluates the amount and proportions of base salary, annual incentive pay, and long-term compensation, including target total direct compensation (defined as base salary, target annual bonus, and the grant date fair value of equity awards granted to the executive during the fiscal year) for select executive officers, including the Named Executive Officers, relative to the compensation of similarly situated executives with these companies.

While this data serves as informative background for compensation decisions, the Compensation Committee doesn’t strictly benchmark compensation against any particular level relative to the Company’s peer group.

 

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Except as otherwise noted in this Compensation Discussion and Analysis, decisions by the Compensation Committee are qualitative, reflecting the Compensation Committee’s business judgment, which is informed by analysis of the members of the Compensation Committee including input from, and data provided by, Pay Governance. The Compensation Committee believes that the compensation opportunities provided to the Named Executive Officers are appropriate in light of competitive considerations, and will modify its programs as appropriate based on ongoing industry trends and the Company’s competitive landscape.

Employment Agreements

We have entered into employment agreements with each of the Named Executive Officers. The terms of each employment agreement are described below under Description of Employment Agreements. Below is a discussion of new employment agreements we entered into with Mr. Feltheimer during fiscal 2025 and with Mr. Burns early in fiscal 2026, as well as an amendment to Mr. Tobey’s agreement early in fiscal 2026. We believe that it is in the best interests of the Company to enter into multiyear employment agreements with the Named Executive Officers as such multiyear agreements are typical in the Company’s industry and assist in retention and recruiting efforts, foster long-term retention, and promote stability among the management team, while still allowing the Compensation Committee to exercise considerable discretion in designing incentive compensation programs and rewarding performance.

Jon Feltheimer

In fiscal 2025, the Compensation Committee engaged Pay Governance to assist the committee in structuring and analyzing terms for a new employment agreement with Mr. Feltheimer, including a proposed increase to his target bonus and annual long-term equity awards. Pay Governance provided an analysis of the proposed compensation structure using compensation levels for Chief Executive Officers in the Company’s then-current peer group, noting that Mr. Feltheimer’s potential target total direct compensation would be positioned between the 27th and 65th percentiles of such group, depending on the grant date value of long-term incentive equity awards.

Accordingly, in August 2024, the Company entered into a new employment agreement with Mr. Feltheimer to continue to serve as the Company’s Chief Executive Officer for a term ending July 31, 2029. The new employment agreement provides for an annual base salary of $1,500,000 and an annual performance bonus based on performance criteria as established by the Compensation Committee, with the target bonus commencing with the Company’s 2025 fiscal year being $7,500,000 and the maximum bonus being 200% of the target amount. Additionally, Mr. Feltheimer will be eligible to receive annual equity awards for the Company’s fiscal years 2026 through 2029 with a target annual grant date value of $10,000,000 (with the actual value to be determined based on the Company’s financial performance for the prior fiscal year against performance targets to be agreed upon by Mr. Feltheimer and the Compensation Committee early in the applicable fiscal year).

The terms of the agreement were established by the Compensation Committee based on its qualitative assessment of Mr. Feltheimer performance, negotiations with Mr. Feltheimer, and taking into account market data provided by Pay Governance. The agreement generally provides that Mr. Feltheimer’s long-term incentive awards (consisting of annual equity awards to be granted during the remaining four-year term of the agreement) would be granted 66% in the form of restricted share units (one-half of which would be subject to time-based vesting and one-half of which would be subject to performance-based vesting) and 34% in the form of stock options (with an exercise price equal to the fair market value on the date of grant), although the Compensation Committee has discretion to change this structure each year. Each of the performance-based awards would vest as to one-third of the shares subject to such award on each of the first, second and third anniversaries of the applicable grant date, subject to the achievement of performance criteria approved by the Compensation Committee in consultation with Mr. Feltheimer for the 12-month period ending on the applicable vesting date. For more information on this agreement, see the Description of Employment Agreements and Potential Payments Upon Termination or Change in Control sections below.

 

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Michael Burns

On May 6, 2025, the Company entered into a new employment agreement with Michael Burns (the “Burns Employment Agreement”), the terms of which were negotiated with Mr. Burns. The term of the Burns Employment Agreement commenced on May 6, 2025 and will end on the third anniversary of such date (the “Burns Expiration Date”). The Burns Employment Agreement provides for Mr. Burns to receive an annual base salary of $500,000 and to be eligible for a discretionary annual bonus to be determined at the discretion of the Compensation Committee. The Burns Employment Agreement also provides for Mr. Burns to participate in the Company’s usual benefit programs for executives at his level, as well as Company-provided life and disability insurance coverage, a car allowance and limited use of the Company’s private aircraft. Pursuant to the Burns Employment Agreement, Mr. Burns will also receive, subject to approval by the Compensation Committee and Mr. Burns’ continued employment through the applicable grant date, a grant of equity-based awards each year during the term of the Burns Employment Agreement, with each annual grant to have an aggregate value of $500,000. Unless otherwise provided by the Compensation Committee, each annual grant will be in the form of performance-based restricted share units, with the number of performance-based restricted share units subject to the award determined by dividing $500,000 by the closing price of the Company’s common shares on the grant date. The annual grants will generally be scheduled to vest in three annual installments, with the vesting of the performance-based restricted share units to be contingent on achievement of performance metrics to be determined by the Compensation Committee in consultation with Mr. Feltheimer for the 12-month period ending on the applicable vesting date. The Burns Employment Agreement also provides that the annual grants may be settled in cash, shares, or a combination thereof, as determined by the Committee.

In the event Mr. Burns’ employment is terminated by the Company without cause or by him for good reason (as such terms are defined in the Burns Employment Agreement), he would be entitled to a cash severance payment equal to the present value of his base salary through the Burns Expiration Date, a cash payment equal to two times his base salary (in lieu of any bonus component), and payment by the Company of his premiums for continued health insurance coverage for up to 18 months following his termination date and for continued life and disability insurance coverage through the Burns Expiration Date. If Mr. Burns’ employment is terminated by the Company without cause or by him for good reason and such termination occurs on or within 12 months following a change in control of the Company (as defined in the Burns Employment Agreement), he would be entitled to the severance benefits described above, except that his cash severance would be the greater of the present value of his base salary through the Burns Expiration Date and $2.6 million. In the event that Mr. Burns’ employment with the Company is terminated by the Company without cause, by him for good reason, or due to his death or disability, his equity awards granted by the Company pursuant to the Burns Employment Agreement, to the extent then outstanding and unvested, would become fully vested upon his termination (and, in the case of a termination without cause or for good reason, if the annual grant for the fiscal year in which his termination occurs has not previously been granted, that annual grant would be made and would fully vest upon his termination). Mr. Burns’ right to receive the severance payments, accelerated vesting, and other severance benefits described above is subject to his execution of a release of claims in favor of the Company.

Additionally, on May 6, 2025, Starz entered into an advisory services agreement with Mr. Burns, wherein Mr. Burns was engaged as an independent contractor to act as a senior advisor to the Chief Executive Officer of Starz, providing strategic guidance to the Chief Executive Officer, with a primary focus on corporate finance, mergers, acquisitions, and related deal structuring transactions

Bruce Tobey

In fiscal 2025, the Compensation Committee engaged Pay Governance to assist the committee in structuring and analyzing terms for an extension of Mr. Tobey’s employment agreement, including a proposed increase to his target bonus, target annual incentive bonus and annual long-term equity awards. Pay Governance provided an analysis of the proposed compensation structure utilizing compensation levels for top legal executives among studios and the Company’s then-current peer group, noting that Mr. Tobey’s potential target total direct compensation would be positioned at around the 34th percentile of the peer group).

 

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Accordingly, on April 9, 2025, the Company entered into an amendment to the Company’s employment agreement with Mr. Tobey, to extend the term of the agreement by two years through March 31, 2028 and approve certain changes in his compensation. Pursuant to the amendment, effective as of April 1, 2025, Mr. Tobey will receive an annual base salary of $1,200,000, and his target annual bonus will be 85% of his base salary, with the amount of the bonus to be determined at the discretion of the Committee in consultation with the Company’s Chief Executive Officer. Mr. Tobey will also continue to be eligible for annual equity awards pursuant to the agreement, with the aggregate grant date value of each annual Grant to be $1,200,000, effective as of April 1, 2025, subject in each case to approval by the Compensation Committee and Mr. Tobey’s continued employment through the applicable grant date, with each annual grant to have the aggregate grant date value indicated above and to consist of restricted share units and/or stock options (or stock appreciation rights) as determined by the Compensation Committee. The awards that comprise each annual grant will generally have a three-year vesting period, subject to such time-based and performance-based vesting requirements as determined by the Compensation Committee. The number of shares subject to each of the awards comprising an annual grant will be determined, in the case of restricted share units awards, by dividing the dollar value allocated to the award by the closing price of the Company’s shares on the grant date and, in the case of options and similar awards, by dividing the dollar value allocated to the award by the per-share value of the award as of the grant date based on the methodology then used by the Company to value options and similar awards for financial statement purposes. The agreement provides that annual grants in the form of restricted share units may be settled in cash, shares, or a combination thereof, as determined by the Compensation Committee. In addition to the compensation described above, the agreement provides for Mr. Tobey to participate in the Company’s benefit programs and perquisites for executives at his level, as those arrangements are in place from time to time. Additionally, upon execution of the agreement, Mr. Tobey was granted 26,511 time-based restricted share units vesting on the one-year anniversary of grant.

The severance provisions of Mr. Tobey’s agreement were not changed by the amendment and are described in the Potential Payments Upon Termination or Change in Control section below.

Compensation Components

The Company’s executive compensation program is generally based on three principal components:

 

  (1)

Base salary;

 

  (2)

Annual incentive bonuses; and

 

  (3)

Long-term incentive awards that are subject to time-based and/or performance-based vesting.

The Company also provides certain perquisites and personal benefits to the Named Executive Officers pursuant to their employment agreements, and severance benefits if the Named Executive Officer’s employment terminates under certain circumstances. In structuring executive compensation packages, the Compensation Committee considers how each component of compensation promotes retention and/or motivates performance by the executive.

Base Salary

We provide executive officers and employees with an annual base salary as part of their fixed compensation. This approach is designed to attract and retain highly qualified executives by ensuring certain predictable compensation levels that reward their continued service. Base salaries are determined at the time of hire or when we enter into an employment agreement, considering market data, peer group and entertainment industry compensation benchmarks, and individual performance. We typically set base salaries below industry peers, with the majority of compensation focused on performance-based incentives and stock-based awards.

 

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The current base salaries of Named Executive Officers are set forth below under Description of Employment Agreements (or, in the case of Messrs. Burns and Tobey, in the description of their employment agreements above). The Compensation Committee believes that the base salary levels of each of the Named Executive Officers are reasonable in view of the Compensation Committee’s assessment of the Company’s peer group data for similar positions and the committee’s assessment of the Company’s overall performance and contribution of those officers to that performance.

Annual Incentive Bonuses

Annual incentive bonuses are designed to motivate executive officers to achieve key financial, operational and individual performance goals that align with the Company’s broader business strategy. Employment agreements with Named Executive Officers typically provide for a target annual incentive bonus amount, with the amount awarded each year determined at the Compensation Committee’s discretion, taking into account the recommendation of the Company’s Chief Executive Officer (other than for himself and the Vice Chair), based on performance criteria established by the Compensation Committee.

Annual incentive awards are governed by a structured, performance-based process designed to align executive compensation with both Company-wide and individual results.

Fiscal Budget and Plan: At the beginning of each fiscal year, an estimated incentive award pool is incorporated into the Company’s annual fiscal budget and plan. This pool reflects aggregate target bonus opportunities available for all eligible employees for such fiscal year, as outlined in their respective employment arrangements.

Funding: The incentive pool is funded—partially or fully—based on the Company’s actual financial performance for that fiscal year. No individual awards are granted unless the pool is funded to some extent.

Allocation: If funding occurs, individual bonus awards are drawn from the available pool. Awards may be pro-rated if the pool is only partially funded.

Performance: Individual bonus awards are determined by the Compensation Committee in its discretion using a framework that evaluates performance across two equally weighted categories:

 

  •  

Corporate performance (50%): Assesses the Company’s overall financial and operational results, including key performance indicators tied to the Company’s strategic objectives and long-term success.

 

  •  

Divisional performance (50%): Assesses results achieved within each operating segment, focusing on financial performance, operational execution, and strategic goal attainment. For the Named Executive Officers, who typically have broad responsibilities across the organization, divisional performance is evaluated in the context of overall Company performance rather than individual business units.

Discretionary Individual Adjustments: While corporate and divisional performance provide the foundation for determining incentive awards, the Compensation Committee retains discretion to consider individual performance and other qualitative factors when finalizing bonus amounts. This discretionary authority enables the committee to make thoughtful adjustments that recognize exceptional contributions, address circumstances not fully reflected in financial results, or account for broader considerations such as an executive’s role, tenure, historical and expected future performance, experience, changes in responsibility, internal equity and retention needs. Discretionary adjustments may be applied in cases where: activities that are accretive or transformative in nature, and expected to enhance and drive long-term value creation, may not be reflected in near-term financial metrics; investments in new businesses or increased investment in current lines of business may position the Company for future growth, despite temporarily impacting short-term performance metrics; and factors outside of management’s control, such as unplanned acquisitions or divestitures, unanticipated programming or business

 

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development opportunities, corporate transactions, material legal matters, or other unforeseen events are not accounted for at the beginning of the fiscal year. By incorporating discretion in this manner, the Compensation Committee ensures that incentive awards remain aligned with both actual performance and the Company’s long-term strategic objectives.

Determination: The final bonus award is determined by applying the average of the executive’s corporate and divisional performance scores to their target bonus amount, subject to the available funds in the bonus pool. The Compensation Committee may then apply discretionary adjustment—upward or downward—to this calculated amount, based on individual performance. This framework is intentionally designed to align executive compensation with both enterprise-wide and individual accomplishments, while maintaining fiscal discipline and ensuring that payouts are closely tied to overall performance outcomes.

Fiscal 2025 Annual Incentive Bonus Targets

Annual incentive bonus target amounts for each of the Named Executive Officers are set as a dollar amount or percentage of base salary, as set forth in their employment agreements.

 

Name

    Fiscal 2025
Target Bonus		  

Jon Feltheimer

    $ 7,500,000  

Michael Burns*

    $ 5,000,000  

James W. Barge

    $ 3,000,000  

Brian Goldsmith

    $ 1,250,000  

Bruce Tobey

    $ 750,000  
 
*

Mr. Burns’ 2025 annual incentive bonus target amount was set at ~85% of Mr. Burns’ annual bonus amount awarded for fiscal 2024.

Fiscal 2025 Performance*

 

 

     Year Ended March 31,  
     2024 Actual      2025 Plan      2025 Actual  
     (amounts in millions)  

Segment Profit

         

Studio Business

         

Motion Picture

    $ 319.4      $ 330.6      $ 307.6  

Television Production

    $ 146.8      $ 215.3      $ 136.5  

Media Networks

    $ 236.4      $ 207.6      $ 202.8  

Intersegment eliminations

    $ (48.9 )     $ (78.8 )     $ (57.0 ) 
  

 

 

     

 

 

     

 

 

  

Total Segment Profit

    $ 653.7      $ 674.7      $ 589.9  

Corporate general and administrative expenses

    $ (136.1 )     $ (145.9 )     $ (123.2 ) 

Unallocated rent cost included in direct operating expense

    $ —       $ —       $ (18.6 ) 
  

 

 

     

 

 

     

 

 

  

Adjusted OIBDA

    $ 517.6      $ 528.8      $ 448.1  
  

 

 

     

 

 

     

 

 

  
 
*

See below for definitions, adjustments and related reconciliations for non-GAAP measures.

 

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✓ Record Library Performance   

Ø All-time high trailing 12-month library revenue of $956 million for fiscal 2025

Ø Record library revenue of $340 million for fourth quarter of fiscal 2025

 

✓ Prepared Lionsgate & STARZ Balance Sheets for Separation   

Ø Grew Studio revenue to a record $3.2 billion in fiscal 2025

Ø Ended fiscal 2025 with first $1 billion revenue quarter in history ($1.1 billion in fourth quarter of fiscal 2025)

Ø Driven by licensing sales of The Rookie to Disney+ and The Chosen to Amazon Prime

 

  

Ø Completed bond exchange ($390 million at Studio, $325 million at STARZ), established two standalone capital structures, including new $300 million term loan A (at STARZ) and $950 million revolving credit facilities ($800 million at Studio, $150 million at STARZ)

 

✓ Strong Value Creation Year, Led by Strategic Initiatives   

Ø Separation of Studio Business and Starz Business completed on May 6, 2025

Ø NYSE: LION, NASDAQ: STRZ trading began on May 7, 2025

Ø Included equity raise, strengthening standalone balance sheets, collapsing two classes of stock into one, establishing governance for both companies and finalizing intercompany agreement for go-forward businesses

 

  

Ø Completed integration of eOne Entertainment

Ø Added thousands of library titles, grew portfolio of brands and franchises with The Rookie, Naked & Afraid and film development rights to Monopoly, and capitalized on Canadian content production incentives

 

✓ Leaning into New Technologies to Drive Efficiency and Savings   

Ø Established first-of-its-kind partnership with AI applied research company Runway

Ø First studio to utilize AI to enhance production, marketing and library distribution efficiency, achieve cost savings and serve as a tool for filmmakers

 

✓ Motion Picture Group Continued to Invest in Diversified Slates with Significant Long-Term Value   

Ø Closed fiscal 2025 with three straight midbudget films to box office success and profitability (Best Christmas Pageant Ever, Den of Thieves 2: Pantera and Flight Risk)

Ø Den of Thieves 2: Pantera and Best Christmas Pageant Ever opened #1 at domestic box office

 

  

Ø Quarterly Motion Picture segment profit of $135 million was the highest in 10 years for quarter ended March 31, 2025

 

  

Ø Accelerated expansion of John Wick Universe

Ø Spinoff Caine in development

Ø John Wick: Chapter 5 and John Wick animated movie in development

Ø Television series John Wick: Under the High Table in development

Ø John Wick AAA game in the works

Ø John Wick Experience opened in Las Vegas

 

 

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Ø Finalized partnership with Blumhouse and James Wan on future Saw movies

 

  

Ø Extended Lionsgate’s pay one theatrical output agreement with Starz through 2028; licensed 2026 through 2028 film slates and select 2025 titles to Amazon Prime for exclusive window

 

✓ Television Group Secured Key Renewals, Adapted Existing IP and Helped Drive Library Growth   

Ø Secured renewals of series including The Rookie (for an 8th season on ABC), Ghosts (for 5th and 6th seasons on CBS) and The Studio (for a 2nd season on Apple TV+); the Sherri Shepherd show (for a 4th season in syndication); Yellowjackets (for a 4th season on Showtime).

 

  

Ø Continued to adapt IP into major television properties with Spartacus: House of Ashur (STARZ), the Twilight TV series Midnight Sun (Netflix), Blue Mountain State (Amazon) and Nurse Jackie (Amazon) in development, production or preparing to launch

 

✓ STARZ Continued Transition into a Focused, State-of-the-Art Streaming Platform

   

Ø STARZ continued successful transition from a primarily linear service to more than 70% digital revenue in fiscal 2025

  

Ø Closed fiscal 2025 with domestic over-the-top subscriber growth of 500,000 in the fourth quarter

  

 

Ø Completed new bundling deals with BET+ and Max on Amazon Prime, AMC+ on Vizio and Britbox

Fiscal 2025 Annual Incentive Bonus Pool

Funding

To determine funding of the annual incentive bonus pool for fiscal 2025, the Compensation Committee selected adjusted OIBDA as the primary measure of the Company’s financial performance. This metric was chosen because it serves as a key performance indicator aligned with the Company’s strategic objectives and long-term success, and is used internally to manage and assess financial performance.

 

     Fiscal 2025 Actual    Fiscal 2025 Plan    Percent of 2025
Actual vs. 2025 Plan

Adjusted OIBDA

    $448.1 million    $528.8 million    ~85%

While actual adjusted OIBDA for fiscal 2025 reached approximately 85% of plan, the Compensation Committee approved funding of only 75% of the proposed annual incentive bonus pool. This downward adjustment reflects the Committee’s view that underperformance in the Studio segment, despite a stronger fiscal 2025 fourth quarter in the Motion Picture segment and consolidated earnings approaching target, warranted a more conservative funding level. The Studio segment’s shortfall had a disproportionate impact on overall financial performance and was a key consideration in the Committee’s decision to moderate the bonus pool funding accordingly.

 

LOGO    Corporate Performance

To determine the Company’s corporate performance measure for fiscal 2025, the Compensation Committee again selected adjusted OIBDA as the primary measure for evaluating the Company’s financial performance for fiscal 2025. Again, even though actual adjusted OIBDA for fiscal 2025 reached approximately 85% of plan, the

 

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Compensation Committee approved a payout of 75% for the corporate performance measure of each executive’s bonus. This downward adjustment reflects the Committee’s recognition of the Company’s stock price and the underperformance in the Studio segment, an area of strategic and financial significance, which together warranted a more measured payout.

 

LOGO    Divisional Performance

To determine divisional performance measures for fiscal 2025, the Compensation Committee reviewed each division’s fiscal 2025 financial performance using segment profit as the principal performance metric.

 

     Fiscal 2025 Actual
Segment Profit		      Fiscal 2025 Plan
Segment Profit		      Percent of 2025
Actual vs. 2025 Plan		  

Studio Business

         

Motion Picture

      $307.6 million        $330.6 million        ~90%  

Television Production

      $136.5 million        $215.3 million        ~65%  

Media Networks

     
 $202.8 million
  
      $207.6 million        ~98%  

Accordingly, the Compensation Committee determined to award the following divisional performance measures for fiscal 2025:

 

  •  

90% as the divisional performance measure for the Motion Picture segment;

 

  •  

65% as the divisional performance measure for the Television Production segment; and

 

  •  

95% as the divisional performance measure for the Media Networks segment.

In reviewing divisional performance for the Named Executive Officers, the Compensation Committee evaluated overall Company performance rather than focusing on any particular division.

Accordingly, the Compensation Committee determined that each Named Executive Officer would be awarded 75% for divisional performance.

 

Fiscal 2025 Annual Incentive Bonuses for Named Executive Officers

Jon Feltheimer

 

Name

    Corporate
Performance		      Divisional
Performance		      Fiscal 2025
Target Bonus		      Fiscal 2025 Bonus  
   Cash      Equity  

Jon Feltheimer

      75%        75%        $7,500,000        $1,200,000        $5,300,000*  
 
*

Award of 662,500 restricted share units that vest on the first anniversary of grant (based on a $8 share price).

Based on the application of the corporate and divisional performance metrics discussed above, each weighted at 75%, Mr. Feltheimer earned a preliminary bonus of $5,625,000. The Compensation Committee, however, then reviewed Mr. Feltheimer’s achievements relative to individual performance goals established at the outset of the fiscal year, to determine whether to exercise discretion to adjust the preliminary bonus amount. The Committee noted the following key contributions:

 

  •  

Separation Execution and Governance Leadership: Orchestrated the successful separation of the Studios Business and Starz Business into two independent, publicly traded entities in May 2025,

 

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including support for the collapse of Old Lionsgate Parent’s dual-class share structure into a single class and creation of separate capital structures, independent boards of directors, and establishment of new corporate governance frameworks for Lionsgate and Starz.

 

  •  

Deliver Record Library Performance. In a challenging environment, led Lionsgate to achieve record library performance with trailing 12-month revenue of $956 million (up 8% relative to fiscal 2024 fourth quarter trailing 12-month library revenue) driven by a best-ever fiscal 2025 fourth quarter through a combination of organic replenishment, distribution of third-party titles, library acquisitions and the rollout of new proprietary FAST and AVOD channels.

 

  •  

Content Strategy and Growth Opportunities: Advanced a robust slate of theatrical releases (including The Hunger Games: Sunrise on the Reaping, The Long Walk, Good Fortune, Now You See Me: Now You Don’t, The Housemaid, The Resurrection of the Christ, Michael, Caine, and the re-imagining of Blair Witch) to replenish the theatrical content pipeline for fiscal 2026, while positioning the studio for accelerated growth and enhanced financial performance in fiscal 2027. In television, in addition to the critical success of The Studio and Ghosts, continuing to strengthen the television portfolio with premium properties such as Spartacus: House of Ashur, The Rainmaker and Robin Hood, while advancing development on high-profile IP such as the Twilight television adaptation Midnight Sun, the John Wick: Under the High Table series and a television adaptation of Bad Moms.

 

  •  

Motion Picture Financial Performance and Operational Efficiency: Lionsgate’s Motion Picture segment revenue for the fourth quarter of fiscal 2025 grew 28%, while segment profit grew 65%, driven by box office success of mid-budget films, an increase in non-theatrical content deliveries, strong library demand and lower print and advertising spend.

 

  •  

Prepared Starz for Separation: At Starz, ended the fiscal 2025 fourth quarter with 12.3 million U.S. over-the-top subscribers, representing sequential growth of 530,000 subscribers (with total U.S. subscribers reaching 18.0 million, an increase of 320,000 from the prior quarter).

The Compensation Committee also engaged Pay Governance to assist it in assessing the fiscal 2025 bonus amount for Mr. Feltheimer. Pay Governance reviewed, among other things, the achievements noted above, other highlights of the Company’s business and strategic performance achieved during fiscal 2025, and the competitive position of Mr. Feltheimer’s total direct compensation (defined as base salary, actual annual bonus, and the grant date fair value of equity awards granted to the executive during the fiscal year) relative to similar positions within the Company’s peer group.

Accordingly, based on this analysis and in recognition of the scope and impact of Mr. Feltheimer’s individual contributions, the Compensation Committee approved for fiscal 2025 a bonus of $6,500,000 (adjusted upward from the preliminary bonus amount, but below target), consisting of $1,200,00 in cash and a time-based award of 662,500 restricted share units (based on an $8 share price, above the then-current trading price of the Company’s common shares, and vesting over one year). The Compensation Committee allocated over 80% of Mr. Feltheimer’s bonus to this time-based equity award in order to further align Mr. Feltheimer’s interests with those of shareholders and reinforce long-term value creation.

Michael Burns

 

Name

    Corporate
Performance		      Divisional
Performance		      Fiscal 2025
Target Bonus		      Fiscal 2025 Bonus  
   Cash      Equity  

Michael Burns

      75%        75%        $5,000,000        $3,500,000        $1,000,000*  
 
*

Award of 125,000 restricted share units that vest on the first anniversary of grant (based on a $8 share price).

Based on the application of the corporate and divisional performance metrics discussed above, each weighted at 75%, Mr. Burns earned a preliminary bonus of $3,750,000. The Compensation Committee, however, then

 

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reviewed Mr. Burns’ achievements relative to individual performance goals established at the outset of the fiscal year, to determine whether to exercise discretion to adjust the preliminary bonus amount. The Committee noted the following key contributions:

 

  •  

Separation Strategy and Execution: Played a central leadership role in the multi-year effort to separate Lionsgate and Starz into two independent, publicly traded entities, commencing with the close of the business combination of the Studios Business with Screaming Eagle Acquisition Corp. and launch of Legacy Lionsgate Studios in May 2024, and ending with the Separation of the Studios Business and Starz Business into two independent, publicly traded entities in May 2025. Served as a driving force behind the transaction’s conception and execution, which included an equity raise from institutional investors in May 2024, creation of separate capital structures for Lionsgate and Starz, the collapse of Old Lionsgate Parent’s dual-class share structure into a single class, and ultimately, helping secure overwhelming shareholder approval for the Separation.

 

  •  

Capital Markets and Financial Strategy: Worked closely with the Company’s executive team to supervise all capital markets activity, with a focus on reducing net debt and lowering the Company’s cost of capital. Leveraged long-standing banking relationships to support financing efforts and strengthen the balance sheets of both Lionsgate and Starz.

 

  •  

M&A and Franchise Development: Contributed to the successful acquisition and integration of eOne Entertainment and played a key role in franchise expansion and monetization strategies, including the development of new projects tied to franchise properties.

 

  •  

Stakeholder Maintained and expanded high-level relationships with institutional investors, rating agencies and strategic partners.

 

  •  

Talent Engagement: Leveraged relationships with top-tier talent and creators to secure new content deals and franchise extensions across platforms.

 

  •  

AI Innovation: Spearheaded groundbreaking partnership with Runway, marking the first collaboration between a Hollywood studio and the leading applied AI research company to develop a custom AI model trained on Lionsgate’s proprietary film and television content.

The Compensation Committee also engaged Pay Governance to assist it in assessing the fiscal 2025 bonus amount for Mr. Burns. Pay Governance reviewed, among other things, the achievements noted above, other highlights of the Company’s business and strategic performance achieved during fiscal 2025, and the competitive position of Mr. Burns’ total direct compensation relative to similar positions within the Company’s peer group.

Accordingly, based on this analysis and in recognition of the scope and impact of Mr. Burns’ individual contributions, the Compensation Committee approved for fiscal 2025 a bonus of $4,500,000 (adjusted upward from the preliminary bonus amount, but below target), consisting of $3,500,000 in cash and a time-based award of 125,000 restricted share units (valued at an $8 share price, above the then-current trading price of the Company’s common shares, and vesting over one year). The Compensation Committee determined that allocating a substantial portion of Mr. Burns’ bonus in cash was appropriate in light of Mr. Burns’ leadership in the strategic execution of the Separation — a unique, non-recurring, complex and transformative transaction requiring sustained engagement, stakeholder coordination, and long-term vision. In contrast, the time-based equity award, vesting over one year, further aligns Mr. Burns’s interests with those of shareholders, reinforces long-term value creation, and reflects his ongoing contributions to the Company’s strategic direction and governance.

James W. Barge

 

Name

    Corporate
Performance		     Divisional
Performance		     Fiscal 2025
Target Bonus		      Fiscal 2025
Cash Bonus		  

James W. Barge

      75 %      75 %    $ 3,000,000      $ 3,000,000  

 

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Based on the application of the corporate and divisional performance metrics discussed above, each weighted at 75%, Mr. Barge earned a preliminary bonus of $2,250,000. The Compensation Committee, however, then reviewed Mr. Barge’s achievements relative to individual performance goals established at the outset of the fiscal year, to determine whether to exercise discretion to adjust the preliminary bonus amount. The Committee noted the following key contributions:

 

  •  

Business Combination Planning and Execution: Served as a principal member of the leadership team which oversaw the preparation and close of the business combination with Screaming Eagle Acquisition Corp. and launch of Legacy Lionsgate Studios in May 2024, which included a capital raise of approximately $300 million in gross proceeds from a consortium of leading investors.

 

  •  

Separation Planning and Execution: Led the financial strategy and execution of all accounting, financial and tax aspects of the separation of the Studio Business and the Starz Business into two independent, publicly traded entities in May 2025, which involved, among other matters, designing and implementing two distinct capital structures for Lionsgate and Starz, each tailored to the operational and financial needs of the respective businesses.

 

  •  

Treasury and Financing Leadership: For the Company, led the successful execution of a $1 billion senior secured amortizing term credit facility based on and secured by the Company’s intellectual property rights primarily associated with certain titles (the “LG IP Credit Facility”), a $340 senior secured amortizing term credit facility based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the Company’s acquisition of eOne Entertainment (the “eOne IP Credit Facility”), a note exchange resulting in $390 million aggregate principal amount of 6.00% senior notes due 2030, and an $800 million revolving credit facility (which may be increased to $1.2 billion). For Starz, oversaw a $300.0 million senior secured term loan credit facility, a $150.0 million senior secured revolving credit facility and $325 million aggregate principal amount of the 5.50% senior notes due 2029. The financings were completed on favorable terms and supported the establishment of two fully independent capital structures, with net debt targets of approximately $1.4 billion and $800 million, respectively.

 

  •  

Liquidity and Working Capital Management: Oversaw the Company’s monetization and production loan programs, expanded banking relationships by adding new lenders enabling more competitive pricing and executed sustainable working capital reductions to improve liquidity and reduce capital needs across the organization.

 

  •  

Cost Efficiency and Procurement: Achieved company-wide cost savings through procurement policy enforcement, vendor contract transitions, and production cost optimization, exceeding annual savings targets.

 

  •  

Organizational Leadership and Succession: Directed succession planning and departmental restructuring across finance, IT, and tax, including onboarding key leadership and achieving cost efficiencies through headcount optimization.

 

  •  

Operational and Infrastructure Support: Provided financial oversight for studio infrastructure investments and supported production planning and resource allocation across multiple locations.

The Compensation Committee also engaged Pay Governance to assist it in assessing the fiscal 2025 bonus amount for Mr. Barge. Pay Governance reviewed, among other things, the achievements noted above, other highlights of the Company’s business and strategic performance achieved during fiscal 2025, and the competitive position of Mr. Barge’s total direct compensation relative to similar positions within the Company’s peer group.

Accordingly, based on this analysis and in recognition of the scope and impact of Mr. Barge’s individual contributions, the Compensation Committee approved for fiscal 2025 a cash bonus of $3,000,000 (adjusted upward from the preliminary bonus amount, but not above target). The Compensation Committee allocated all of Mr. Barge’s bonus in cash in recognition of the successful execution of the Separation — a unique, non-recurring, complex and transformative transaction that required extraordinary effort and expertise.

 

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Brian Goldsmith

 

Name

    Corporate
Performance		      Divisional
Performance		      Fiscal 2025
Target Bonus		      Fiscal 2025 Bonus  
   Cash      Equity  

Brian Goldsmith

      75%        75%        $1,250,000        $1,000,000        $500,000*  
 
*

Award of 62,500 restricted share units that vest on the first anniversary of grant (based on a $8 share price).

Based on the application of the corporate and divisional performance metrics discussed above, each weighted at 75%, Mr. Goldsmith earned a preliminary bonus of $937,500. The Compensation Committee, however, then reviewed Mr. Goldsmith’s achievements relative to individual performance goals established at the outset of the fiscal year, to determine whether to exercise discretion to adjust the preliminary bonus amount. The Committee noted the following key contributions:

 

  •  

Operational Leadership and Integration: Oversaw the continued integration of eOne Entertainment into Lionsgate’s operations, including headcount reductions, accounting system transitions, and streamlining of participations workflows. Led efforts to consolidate music publishing administration across business units, resulting in reduced administrative burden and lower third-party fees. Supported restructuring initiatives in unscripted television and enhanced coordination between business divisions.

 

  •  

Separation Execution and Intercompany Structuring: Played a key leadership role in preparing for the separation of the Studio Business and the Starz Business into two independent, publicly traded entities in May 2025 by finalizing intercompany agreements, leading shared services planning, and overseeing the operational blueprint for the Separation (including transition services agreements, systems separation, data migration, and real estate).

 

  •  

Capital Allocation and Monetization of Non-core Assets: Applied disciplined capital allocation strategies using IRR-based investment thresholds across greenlights, buyouts, and acquisitions. Led multiple accretive participant buyouts, including high-return transactions involving eOne Entertainment and key franchise titles. Negotiated and closed the sale of non-core assets (including sale of the Company’s equity method ownership interest in Spyglass) and advanced consolidation and monetization of music publishing library.

 

  •  

Real Estate Optimization: Executed a comprehensive real estate strategy that included lease terminations, relocations, and consolidations across New York, Los Angeles, London, and Toronto, resulting in significant cost savings and improved space efficiency.

 

  •  

Strategic Transactions and M&A: Managed post-close integration of several film library acquisitions, and oversaw 3 Arts Entertainment’s acquisition of A&A Management, a full service sports and entertainment management company, and OManagement, a boutique talent development firm focused on news media. Shortly after close of the 2025 fiscal year, led the consummation of a partnership with Blumhouse and Atomic Monster to continue and grow the Saw franchise.

 

  •  

Franchise and Library Optimization: Sponsored the renewal and buyout process for library titles, achieving high-return outcomes and eliminating audit risks. Continued development of Lionsgate’s franchise strategy and supported the creation of a centralized process to guide long-term IP monetization.

The Compensation Committee also engaged Pay Governance to assist it in assessing the fiscal 2025 bonus amount for Mr. Goldsmith. Pay Governance reviewed, among other things, achievements noted above, other highlights of the Company’s business and strategic performance achieved during fiscal 2025, and the competitive position of Mr. Goldsmith’s total direct compensation relative to similar positions within the Company’s peer group and certain companies in its entertainment industry group.

Accordingly, based on this analysis and in recognition of the scope and impact of Mr. Goldsmith’s individual contributions, the Compensation Committee approved for fiscal 2025 a bonus of $1,500,000 (adjusted upward

 

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from the preliminary bonus amount and slightly above target), consisting of a $1,000,000 in cash and a time-based award of 62,500 restricted share units (valued at an $8 share price, above the then-current trading price of the Company’s common shares, and vesting over one year). The Compensation Committee approved a bonus for Mr. Goldsmith slightly above target and determined to allocate a larger portion of the bonus to cash noting Mr. Goldsmith’s leadership in managing the operational execution of the Separation — including oversight of organizational readiness, business continuity, systems migration and cross-functional coordination. In contrast, the equity award is intended to align Mr. Goldsmith’s long-term interests with those of shareholders, reinforce accountability, and support continued value creation through ongoing leadership.

Bruce Tobey

 

Name

    Corporate
Performance		      Divisional
Performance		      Fiscal 2025
Target Bonus		      Fiscal 2025 Bonus  
   Cash      Equity  

Bruce Tobey

      75%        75%        $750,000        $1,000,000        $1,000,000*  
 
*

Award of 125,000 restricted share units that vest on the first anniversary of grant (based on a $8 share price).

Based on the application of the corporate and divisional performance metrics discussed above, each weighted at 75%, Mr. Tobey’s earned a preliminary bonus of $562,500. The Compensation Committee, however, then reviewed Mr. Tobey’s achievements relative to individual performance goals established at the outset of the fiscal year, to determine whether to exercise discretion to adjust the preliminary bonus amount. The Committee noted the following key contributions:

 

  •  

Business Combination Planning and Execution: Served as a principal member of the leadership team that oversaw the preparation and close of the business combination with Screaming Eagle Acquisition Corp. and launch of Legacy Lionsgate Studios in May 2024, which included a capital raise of approximately $300 million in gross proceeds from a consortium of leading investors.

 

  •  

Public Company Governance and Oversight: Oversaw legal and compliance matters for both pre-Separation companies (Legacy Lionsgate Studios and Lions Gate Entertainment Corp.), including regulatory filings, board and committee governance and support, and ensuring adherence to regulatory compliance across multiple jurisdictions.

 

  •  

Separation Planning and Execution: Navigated the legal complexities inherent in and led preparation and execution of the legal and regulatory aspects of the separation of the Studio Business and the Starz Business into two independent, publicly traded entities in May 2025. This included structuring and negotiation of all key intercompany and governance agreements (such as the separation agreements employee matters agreements, investor rights agreements, voting agreements and registration rights agreements), directed the preparation and clearance with the Securities and Exchange Commission of several proxy and registration statements related to the Separation, supported the evaluation of the Company’s share class collapse, and provided structuring and legal support for the capital structures created for each entity after the Separation (including execution of the LG IP Facility, the eOne IP Facility, a note exchange, and the negotiation of new post-Separation credit arrangements for each of the Company and Starz).

 

  •  

Corporate and Financing Transactions: Provided legal support for a range of other strategic transactions, including 3 Arts Entertainment’s acquisition of A&A Management and OManagement, amendments to a slate co-financing agreement with Media Capital Technologies, library acquisitions, production loans and monetization arrangements, while managing outside counsel and internal deal execution. Shortly after close of the 2025 fiscal year, led the consummation of a partnership with Blumhouse and Atomic Monster to continue and grow the Saw franchise.

 

  •  

AI Innovation Oversight: Co-led the Company’s AI Steering Committee, evaluated vendor solutions, and established internal protocols for responsible AI use and governance. Led the structuring and negotiation of Lionsgate’s partnership with Runway.

 

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  •  

Litigation and Claims Management: Directed the resolution of key litigation and insurance matters, including third-party claims, internal disputes, and recoveries related to legacy transactions and insurance coverage.

 

  •  

Organizational Leadership and Optimization: Managed and restructured the Company’s legal and business affairs teams in anticipation of separation, reducing outside legal spend, and implementing operational efficiencies through technology and resource alignment.

The Compensation Committee also engaged Pay Governance to assist it in assessing the fiscal 2025 bonus amount for Mr. Tobey. Pay Governance reviewed, among other things, the achievements noted above, other highlights of the Company’s business and strategic performance achieved during fiscal 2025, and the competitive position of Mr. Tobey’s total direct compensation relative to similar positions within the Company’s peer group.

Accordingly, based on this analysis and in recognition of the scope and impact of Mr. Tobey’s individual contributions, the Compensation Committee approved for fiscal 2025 a bonus of $2,000,000 (adjusted upward from the preliminary bonus amount and above target), consisting of $1,000,000 in cash and a time-based award of 125,000 restricted share units (valued at an $8 share price, above the then-current trading price of the Company’s common shares, and vesting over one year). The Compensation Committee approved a bonus for Mr. Tobey above target and determined that allocating half of Mr. Tobey’s bonus in cash was warranted in recognition of Mr. Tobey’s central role in the legal execution of the Separation — a unique, non-recurring, complex and transformative transaction that demanded sustained leadership, technical expertise, and coordination across multiple jurisdictions and counterparties. In contrast, the equity award, which is time-based and vests over one year, is intended to further align Mr. Tobey’s interests with those of shareholders, reward continued service, and reflect the importance of maintaining steady legal and strategic guidance across the Company’s operations.

Long-term Incentive Awards

The Company believes that providing a meaningful equity stake in our business is essential to ensure competitive compensation and aligning executives’ incentives with shareholders’ interests, driving long-term performance. To this end, we have historically made grants of restricted share units, stock options and/or SARs to incentivize executives in driving shareholder value. The Compensation Committee determines these grants based on factors such as:

 

  •  

The executive’s role and overall compensation package;

 

  •  

The executive’s performance in fulfilling individual responsibilities;

 

  •  

Comparative analysis of equity participation among executives at peer group companies; and

 

  •  

The executive’s contribution to the Company’s financial success.

Equity Award Grant Practices

Equity award grants to the Named Executive Officers are set forth in their employment agreements, which generally provide terms for annual grants to be made over the agreement’s term. The Compensation Committee assesses the award terms each year and makes a final determination as to the types and terms of equity awards to be granted to the Named Executive Officers for that year. The number of shares subject to restricted share unit awards is generally determined by dividing the applicable grant date value provided in the employment agreement by the closing price on the grant date, and the number of shares subject to awards of stock options and SARs is generally determined by dividing the applicable grant date value provided in the employment agreement by the per-share fair value of the award on the grant date based on the valuation method and assumptions then generally used by the Company in valuing its options and SARs for financial statement purposes.

The Compensation Committee’s practice has been to grant annual equity awards at its first meeting after July 1 each year. Additionally, the Company may, from time-to-time, grant equity-based awards to executive officers

 

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and other employees as part of annual bonuses, in connection with new-hires or promotions, or in other special circumstances, and retains discretion to grant equity awards from time-to-time when and as the Compensation Committee may determine to be appropriate. The release of material non-public information is not taken into account in determining the timing and terms of equity award grants, and the Company does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.

Prior to the Separation, Old Lionsgate Parent’s equity incentive awards, as described below, were generally made with respect to Class B non-voting shares. However, the Compensation Committee had discretion to provide that awards granted under stock incentive plans to be made with respect to the Class A voting shares rather than the Class B non-voting shares. The discussion below refers to the classes of Old Lionsgate Parent shares that were subject to grants made prior to the Separation. After the Separation, the Company has one class of common shares, and the Company’s equity incentive awards will be made with respect to those common shares.

 

Restricted Share Units   

The Company grants long-term incentive awards to the Named Executive Officers in the form of restricted share units that may be subject to time-based and performance-based vesting requirements. These awards generally relate to Class B non-voting shares, with each unit that vests payable in Class B non-voting shares (although awards may also be structured to be payable in cash based on the value of the underlying shares). Awards of time-based restricted share units vest over a period of several years following the date of grant, aligning executives’ interests with shareholders and promoting retention by maintaining value regardless of share price fluctuations.

 

Awards of performance-based restricted share units also cover multiple years, with portions eligible to vest annually based on Company and individual performance relative to goals set by the Compensation Committee. Before any performance-based restricted share unit is paid, the Compensation Committee must certify that the performance target(s) have been satisfied. The Compensation Committee has discretion to determine the performance target(s) and any other restrictions or other limitations of performance-based restricted share units and may reserve discretion to reduce payments below maximum award limits, enabling these awards to drive annual performance while reinforcing long-term retention. In no event will the award vest as to more than 100% of the shares subject to the award.

Stock Options    A stock option is the right to purchase shares at a future date at a specified price per share. The Company grants stock options to the Named Executive Officers with an exercise price that is equal to (i) the closing price of a Class B non-voting share on the date of grant, and (ii) in certain cases, as a percentage premium to the closing price of a Class B non-voting share on the date of grant. Thus, the Named Executive Officers will realize value on their stock options only if the Company’s shareholders realize value on their shares and, for that reason, the Compensation Committee considers all options to be performance-based awards. The stock options function as a retention incentive for the Company’s executives as the executive generally must remain employed through the vesting period. The maximum term of a stock option is 10 years from the date of grant.
Share Appreciation Rights    A share appreciation right (or SAR) is the right to receive payment of an amount equal to the excess of the fair market value of a Class B non-voting share on the date of exercise of the SAR over the base price of the SAR. The Company has made a portion of its long- term incentive awards to the Named Executive Officers in the form of SARs. Upon exercise of a SAR, the holder receives a payment in cash or shares with a value equal to the excess, if any, of the fair market value of a Class B non-voting share on the date of exercise of the SAR over the base price of the SAR. Because the base price of the SAR is not less than the closing price of a Class B non-voting share on the

 

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   grant date, SARs provide the same incentives as stock options because the holder will realize value on their SARs only if the Company’s share price increases after the date of grant. Thus, similar to stock options, SARs are considered by the Compensation Committee to be performance-based awards. The SARs function as a retention incentive for the Company’s executives as the executive generally must remain employed through the vesting period. The maximum term of a SAR is 10 years from the date of grant.

Granting of Equity Awards in Fiscal 2025

The following equity awards were granted to the Named Executive Officers in fiscal 2025.

These awards consist of annual grants made to Messrs. Feltheimer, Burns, Barge, Goldsmith and Tobey pursuant to their employment agreements. In addition, these awards consist of a portion of certain performance-based awards approved by the Compensation Committee prior to fiscal 2025 that became eligible to vest during fiscal 2025. In the case of these performance-based awards, the award (or a portion thereof) is treated as granted for accounting purposes on the date on which the Compensation Committee determines whether the applicable performance requirements have been met, and the discussion below relates to the vesting tranches of these awards allocated to fiscal 2025 (including the number of shares awarded by the Compensation Committee based on performance during fiscal 2025) or that were allocated to a performance period that ended during fiscal 2025. For more information on these awards, please see the executive compensation tables and narratives that follow this Compensation Discussion and Analysis.

 

•  

In August 2024, the Compensation Committee approved annual grants of restricted share units for fiscal 2025 (one-half of which would be subject to time-based vesting and one-half of which would be subject to performance-based vesting) to each of the Named Executive Officers. Each of these grants is scheduled to vest over a three-year period. The number of shares subject to the time-based grants are shown in the Grants of Plan-Based Awards Table below. As noted above, the performance-based awards are not treated as granted for accounting purposes until the Compensation Committee determines whether the applicable performance requirements have been met, and accordingly, the annual grants made in fiscal 2025 that are subject to performance-based vesting are not reflected in the table.

 

•  

In July 2024, the Compensation Committee determined the vesting of a tranche of awards of performance-based restricted share units granted to Messrs. Feltheimer, Barge and Goldsmith in July 2022, that were eligible to vest during fiscal 2025. The tranches covered 96,811, 54,456 and 56,473 restricted share units, respectively with respect to Class B non-voting shares, that were eligible to vest based on the Compensation Committee’s assessment of the Company’s and the executive’s performance during the 12-month period covered by the tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 and the contributions of Messrs. Feltheimer, Barge and Goldsmith cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 100% of the performance-based restricted share units that were subject to these vesting tranches for Messrs. Feltheimer and Goldsmith, and 90% of the performance-based restricted share units that were subject to this vesting tranche for Mr. Barge, and these tranches are considered granted for accounting purposes upon the date of the Compensation Committee’s determination and are reported in the compensation tables below. However, these tranches of performance-based restricted share units do not vest unless a VWAP Goal (as defined below) is achieved on or before the earlier of (i) the third anniversary of the award date or (ii) the date of termination of the executive’s employment or service with the Company or any of its subsidiaries for any reason. The “VWAP Goal” shall be considered achieved on the date on which the volume weighted average of the closing prices of Class B non-voting shares over a period of twenty (20) consecutive trading days ending on such date is equal to or greater than $14.61, in each case in regular trading on the New York Stock Exchange. The VWAP Goal (if not previously achieved) is deemed to have been achieved in full upon any change in control of the Company, or any other extraordinary transaction

 

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(including, but not limited to, a full or partial spin-off, split-off, issuance of a tracking stock or other transaction by the Company or its subsidiaries). In May 2024, the VWAP Goal was deemed to have been achieved.

 

•  

In July 2024, the Compensation Committee determined the vesting of a tranche covering 199,840 shares of an award of performance-based restricted share units granted to Mr. Feltheimer in July 2023 that was eligible to vest during fiscal 2025 based on the Compensation Committee’s assessment of the Company’s and Mr. Feltheimer’s performance during the 12-month period covered by that tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, and the contributions of Mr. Feltheimer cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 100% of the performance-based restricted share units that were subject to this vesting tranche.

 

•  

In July 2024, the Compensation Committee determined the vesting of a tranche covering 69.944 shares of an award of performance-based restricted share units granted to Mr. Burns in July 2023 that was eligible to vest during fiscal 2025 based on the Compensation Committee’s assessment of the Company’s and Mr. Burns’ performance during the 12-month period covered by that tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, and the contributions of Mr. Burns cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 100% of the performance-based restricted share units that were subject to this vesting tranche.

 

•  

In July 2024, the Compensation Committee determined the vesting of (i) a tranche covering 42,779 shares of an award of performance-based restricted share units granted to Mr. Barge in July 2021 and (ii) a tranche covering 64,948 shares of an award of performance-based restricted share units granted to Mr. Barge in July 2023, in each case, that were eligible to vest during fiscal 2025 based on the Compensation Committee’s assessment of the Company’s and Mr. Barge’s performance during the 12-month period covered by that tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 and the contributions of Mr. Barge cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 90% of the performance-based restricted share units that were subject to these vesting tranches.

 

•  

In July 2024, the Compensation Committee determined the vesting of (i) a tranche covering 39,927 shares of an award of performance-based restricted share units granted to Mr. Goldsmith in July 2021, and (ii) a tranche covering 69,944 shares of an award of performance-based restricted share units granted to Mr. Goldsmith in July 2023, in each case, that were eligible to vest during fiscal 2025 based on the Compensation Committee’s assessment of the Company’s and Mr. Goldsmith’s performance during the 12-month period covered by that tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, and the contributions of Mr. Goldsmith cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 100% of the performance-based restricted share units that were subject to these vesting tranches.

 

•  

In July 2024, the Compensation Committee determined the vesting of a tranche covering 19,984 shares of an award of performance-based restricted share units granted to Mr. Tobey in July 2023 that was eligible to vest during fiscal 2025 based on the Compensation Committee’s assessment of the Company’s and Mr. Tobey’s performance during the 12-month period covered by that tranche. For these purposes, the Compensation Committee reviewed the Company’s corporate performance reflected in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024, and the contributions of Mr. Tobey cited in the Company’s 2024 proxy statement. Accordingly, based on its review, the Compensation Committee approved the vesting of 100% of the performance-based restricted share units that were subject to this vesting tranche.

 

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CEO Equity Award for Fiscal 2026

As noted above, Mr. Feltheimer’s employment agreement entered into in August 2024 provides that he will be eligible to receive annual equity awards for the Company’s fiscal years 2026 through 2029, with a target annual grant date value of $10,000,000 and with the actual value to be determined based on the Company’s financial performance for the prior fiscal year against performance targets to be agreed upon by Mr. Feltheimer and the Compensation Committee early in the applicable fiscal year. For his fiscal 2026 award, Mr. Feltheimer and the Compensation Committee agreed that the award value would be determined based on the Company’s year-over-year adjusted OIBDA growth and revenue growth achieved in fiscal 2025, with the award value ranging from $6,000,000 for threshold performance (defined as a rate of growth higher than -8.0% for either metric or higher than -10.0% for both metrics) to $14,000,000 for maximum performance (defined as a rate of growth higher than 10.0% for one metric and higher than 8.0% for the other metric). The Compensation Committee retained discretion to determine the final award value (including discretion to award a value of more than $14,000,000 if the maximum performance levels were exceeded and discretion to grant an award even if the threshold performance levels were not met). The Compensation Committee could also consider 3-year average growth in addition to year-over-year growth and would also make adjustments for any change in accounting policies, any material corporate transactions (and related costs), and any other extraordinary events occurring during the fiscal year.

Accordingly, in June 2025, the Compensation Committee approved an equity award for Mr. Feltheimer with a grant date value of $8,500,000, representing 85% of the target award. In making this decision, the Compensation Committee considered 3-year average growth and year-over-year growth of adjusted OIBDA and revenue, as well as significant corporate transactions occurring during the fiscal year (most notably, the Separation) to determine whether any adjustment was warranted. Ultimately, however, the Compensation Committee elected to apply the same adjusted OIBDA analysis used in assessing fiscal 2025 annual incentive bonuses, discussed above, without making any additional adjustment.

Severance and Other Benefits upon Termination of Employment

The Company provides severance protections for the Named Executive Officers under their respective employment agreements. The Compensation Committee determines the level of severance benefits on a case-by-case basis, and, in general, considers them an important part of an executive’s compensation, consistent with competitive practices and, particularly in the context of a change in control transaction, playing a valuable role in attracting and retaining key executive officers.

As described in more detail under Potential Payments Upon Termination or Change in Control below, the Named Executive Officers would be entitled to severance benefits under their employment agreements in the event of a termination of employment by the Company “without cause” or, in certain cases, for “good reason,” as such terms are defined in the executive’s employment agreement. The Company has determined that it is appropriate to provide these executives with severance benefits under these circumstances in light of their positions with the Company and as part of their overall compensation package. The cash severance benefits for these executives are generally determined, in the case of Messrs. Feltheimer and Burns, based on their base salary through the remainder of the term covered by their employment agreement and, in the case of the other Named Executive Officers, the greater of 50% of their base salary through the remainder of the term covered by their employment agreement or their base salary for a specified number of months following termination.

The Company also believes that the occurrence, or potential occurrence, of a change in control transaction will create uncertainty regarding the continued employment of our executive officers. This uncertainty results from the fact that many change in control transactions result in significant organizational changes, particularly at the senior executive level. In order to encourage our executive officers to remain employed with the Company during an important time when their prospects for continued employment following the transaction are often uncertain, we provide certain Named Executive Officers with enhanced severance benefits if their employment is

 

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terminated by the Company “without cause” or, in certain cases, by the executive for “good reason” in connection with a change in control. We believe that such enhanced severance benefits the Company and the shareholders by incentivizing the executives to be receptive to potential transactions that are in the best interest of shareholders even if the executives face great personal uncertainty in the change in control context. The cash severance benefits for these executives are generally determined based on their base salary through the remainder of the term covered by their employment agreement (or, if greater, a specified amount in the case of Messrs. Feltheimer and Burns or a specified number of months of base salary following termination in the case of the other Named Executive Officers). In addition, the Company believes it is appropriate to provide these benefits to certain Named Executive Officers (other than Messrs. Feltheimer and Burns) if their employment is terminated in circumstances described above following a change in the senior management of the Company as specified in their respective employment agreements.

As noted above, we do not provide any benefits to the Named Executive Officers that would be payable solely because a change in control occurs or any right to receive a gross-up payment for any parachute payment taxes that may be imposed in connection with a change in control.

See Potential Payments Upon Termination or Change in Control below for more information on the severance benefits provided under the Named Executive Officers’ employment agreements.

Perquisites and Other Benefits

We provide certain Named Executive Officers with limited perquisites and other personal benefits, such as life insurance policy contributions and club membership dues that the Compensation Committee believes are reasonable and consistent with our overall compensation program, to better enable us to attract and retain superior employees for key positions. Additionally, we own an interest in an aircraft through a fractional ownership program for use, from time to time, for film promotion and other corporate purposes. As we maintain this interest for business purposes, we believe that it is reasonable to afford limited personal use of the aircraft consistent with regulations of the Internal Revenue Service, the SEC and the Federal Aviation Administration. Messrs. Feltheimer and Burns reimburse the Company for a portion of the costs incurred for their limited personal use of the aircraft. All of these perquisites are reflected in the All Other Compensation column of the Summary Compensation Table and the accompanying footnotes below.

We have also adopted a nonqualified deferred compensation plan to allow the Named Executive Officers and certain other key employees the opportunity to defer a portion of their compensation without regard to the tax code limitations applicable to tax-qualified plans. The deferred compensation plan is intended to promote retention by providing participants with an opportunity to save for retirement in a tax-efficient manner. Please see the Non-Qualified Deferred Compensation section below for a description of the plan.

Clawback Policy

In accordance with SEC and NYSE requirements, the Compensation Committee has adopted an executive compensation recovery policy regarding the adjustment or recovery of certain incentive awards or payments made to current or former executive officers in the event that we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the securities laws. In general, the policy provides that, unless an exception applies, we will seek to recover compensation that is awarded to an executive officer based on the Company’s attainment of a financial metric during the three-year period prior to the fiscal year in which the restatement occurs, to the extent such compensation exceeds the amount that would have been awarded based on the restated financial results.

Policy with Respect to Section 162(m)

U.S. federal income tax law generally prohibits a publicly held company from deducting compensation paid to a current or former named executive officer that exceeds $1 million during the tax year. Certain awards granted

 

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before November 2, 2017, that were based upon attaining pre-established performance measures that were set by the Compensation Committee under a plan approved by the Company’s shareholders, as well as amounts payable to former executives pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1 million deductibility limit. As one of the factors in its consideration of compensation matters, the Compensation Committee notes this deductibility limitation. However, the Compensation Committee has the flexibility to take any compensation-related actions that it determines are in the best interests of the Company and its shareholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible.

Company’s Compensation Policies and Risk Management

The Compensation Committee has reviewed the design and operation of the Company’s current compensation structures and policies as they pertain to risk and has determined that the Company’s compensation programs do not create or encourage the taking of risks that are reasonably likely to have a material adverse effect on the Company.

Compensation Committee Interlocks and Insider Participation

During fiscal 2025, the Compensation Committee consisted of Messrs. Simm (Chair), Fries, Rachesky, Sloan and Ms. McCaw. No member who served on the Compensation Committee at any time during fiscal 2025 is or has been a former or current executive officer of the Company, or had any relationships requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related-party transactions. None of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director or member of the Compensation Committee during fiscal 2025.

 

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Executive Compensation Information

Summary Compensation Table

The Summary Compensation Table below quantifies the value of the different forms of compensation earned by or awarded to the Named Executive Officers for fiscals 2025, 2024 and 2023. The primary elements of each Named Executive Officer’s total compensation reported in the table are base salary, an annual bonus and long-term equity incentives. The Named Executive Officers also received the other benefits listed in column (i) of the Summary Compensation Table, as further described in footnote 3 to the table.

The Summary Compensation Table should be read in conjunction with the tables and narrative descriptions that follow. The Grants of Plan-Based Awards table and the accompanying description of the material terms of equity awards granted in fiscal 2025 provide information regarding the long-term equity incentives awarded to the Named Executive Officers in fiscal 2025. The Outstanding Equity Awards at Fiscal 2025 Year-End and Option Exercises and Stock Vested tables provide further information on the Named Executive Officers’ potential realizable value and actual value realized with respect to their equity awards.

Summary Compensation — Fiscals 2025, 2024 and 2023

 

Name and Principal
Position(a)

   Fiscal
Year
(b)		     Salary
($) (c)		     Bonus
($)(1) (d)		     Stock
Awards
($)(2) (e)		     Option
Awards
($)(2) (f)		     Non-Equity
Incentive Plan
Compensation
($)(1) (g)		     Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (h)		     All Other
Compensation
($)(3) (i)		     Total
($) (j)		  

Jon Feltheimer

     2025     $ 1,500,000     $ 1,200,000     $ 6,727,032     $ 0     $ 0     $ 0     $ 396,200     $ 9,823,232  

Chief Executive

     2024     $ 1,500,000     $ 11,000,000     $ 5,427,902     $ 0     $ 0     $ 0     $ 286,046     $ 18,213,948  

Officer

     2023     $ 1,500,000     $ 10,000,000     $ 9,750,004 *    $ 0     $ 0     $ 0     $ 278,405     $ 21,528,409  

Michael Burns

     2025     $ 1,000,000     $ 3,500,000     $ 3,134,034     $ 0     $ 0     $ 0     $ 91,950     $ 7,725,984  

Vice Chair

     2024     $ 1,000,000     $ 6,000,000     $ 1,749,999     $ 0     $ 0     $ 0     $ 86,643     $ 8,836,642  
    2023     $ 1,000,000     $ 5,500,000     $ 3,500,005 *    $ 0     $ 0     $ 0     $ 98,975     $ 10,098,980  

James W. Barge

     2025     $ 1,250,000     $ 3,000,000     $ 2,858,023     $ 0     $ 0     $ 0     $ 18,144     $ 7,126,167  

Chief Financial

     2024     $ 1,166,667     $ 3,500,000     $ 3,033,711     $ 911,481     $ 0     $ 0     $ 15,236     $ 8,627,095  

Officer

     2023     $ 1,000,000     $ 3,000,000     $ 5,965,724 *    $ 891,066     $ 0     $ 0     $ 14,285     $ 10,871,075  

Brian Goldsmith

     2025     $ 1,250,000     $ 1,000,000     $ 2,876,475     $ 0     $ 0     $ 0     $ 16,384     $ 5,142,859  

Chief Operating

     2024     $ 1,250,000     $ 1,875,000     $ 3,019,557     $ 0     $ 0     $ 0     $ 14,122     $ 6,158,679  

Officer

     2023     $ 1,125,000     $ 1,625,000     $ 3,648,468 *    $ 184,629     $ 0     $ 0     $ 18,802     $ 6,601,899  

Bruce Tobey

     2025     $ 1,000,000     $ 1,000,000     $ 719,363     $ 0     $ 0     $ 0     $ 15,836     $ 2,735,199  

Executive Vice

     2024     $ 1,000,000     $ 1,250,000     $ 599,996     $ 0     $ 0     $ 0     $ 25,015     $ 2,875,011  

President and General Counsel

     2023     $ 19,231     $ 0     $ 249,999     $ 0     $ 0     $ 0     $ 0     $ 269,230  
 
**

As explained in note (1) below, these amounts include the value of equity awards granted early in fiscal 2023 as a portion of the executive’s fiscal 2022 annual incentive bonus as follows: for Mr. Feltheimer, $7,200,002 in stock awards; for Mr. Burns, $3,500,005 in stock awards; for Mr. Barge, $3,199,998 in stock awards; and for Mr. Goldsmith, $900,003 in stock awards.

(1)

In accordance with SEC rules, any portion of a Named Executive Officer’s annual bonus that the Compensation Committee determined would be paid in the form of an equity award is reported in the Summary Compensation Table as compensation for the fiscal year in which the award was approved by the Compensation Committee (i.e., the year after the year in which the bonus was earned). For fiscal 2025, the bonus for each Named Executive’s Officer (other than Mr. Barge) was awarded partly in cash and partly in the form of equity-based awards with a one-year vesting schedule. Accordingly, the cash portion of each bonus awarded for fiscal 2025 performance was reported in the “Bonus” column in the Summary Compensation Table for fiscal 2025, and the grant date fair value of the equity awards granted to each executive as part of their fiscal 2025 bonus will be reported as compensation for fiscal 2026 in the Summary Compensation Table in the Company’s 2026 annual proxy statement. For fiscal 2022, each Named Executive’s Officer’s bonus was awarded partly in cash and partly in the form of equity-based awards with a one-year vesting schedule. Accordingly, the cash portion of each bonus awarded for fiscal 2022 performance was reported in the “Bonus” column in the Summary Compensation Table for fiscals 2022 in prior years’ proxy statement, and the grant date fair

 

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  value of the equity awards granted to each executive as part of their fiscal 2022 bonus is reported herein as compensation for fiscal 2023. For fiscal 2023 and fiscal 2024, each Named Executive’s Officer’s bonus was awarded in cash, and the full amount is reported in the “Bonus” column for those years.
(2)

The amounts reported in columns (e) and (f) reflect the fair value of these awards on the grant date as determined under the principles used to calculate the value of equity awards for purposes of the Company’s financial statements. The fair value of an option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes). The fair value of a stock award is determined based on the market value of the stock award on the date of grant. Under SEC rules, the entire grant date value of these awards is reported as compensation for the Named Executive Officer for the fiscal year in which the award was granted. As described in the Compensation Discussion and Analysis above under Long-Term Incentive Awards, the Compensation Committee has approved certain grants of restricted share units to each of the Named Executive Officers that would vest based on such company and/or individual performance criteria determined by the Compensation Committee in consultation with Mr. Feltheimer for each of the 12-month performance periods covered by these awards (with a tranche of each award being allocated to each of the performance periods for that award). The grant date for accounting purposes for each portion of the award occurs at the end of the applicable performance period when it is determined whether the performance criteria applicable to that portion of the award have been met. Under SEC rules, the value of equity awards is reported as compensation for the fiscal year in which the grant date (as determined for accounting purposes) occurs. Accordingly, to the extent the Compensation Committee determined during a particular fiscal year the performance level achieved for a particular performance period under the award, the portion of the award that relates to that performance period is reported as compensation for the fiscal year in which the determination was made.

(3)

The following table outlines the amounts included in All Other Compensation in column (i) of the Summary Compensation Table for the Named Executive Officers in fiscal 2025:

 

Name

    401(k)
Contribution		      Term Life
Insurance
Premiums(a)		      Severance/
Retirement		      Automobile
Allowance		      Miscellaneous(b)      Disability
Benefits		      Total  

Jon Feltheimer

    $ 13,800      $ 835      $ 0      $ 0      $ 380,547      $ 1,018      $ 396,200  

Michael Burns

    $ 13,800      $ 1,018      $ 0      $ 13,332      $ 62,782      $ 1,018      $ 91,950  

James W. Barge

    $ 16,108      $ 1,018      $ 0      $ 0      $ 0      $ 1,018      $ 18,144  

Brian Goldsmith

    $ 13,800      $ 1,566      $ 0      $ 0      $ 0      $ 1,018      $ 16,384  

Bruce Tobey

    $ 13,800      $ 1,018      $ 0      $ 0      $ 0      $ 1,018      $ 15,836  
 
(a)

The Company is not the beneficiary of the life insurance policies, and the premiums that the Company pays are taxable as income to the applicable officer. This insurance is not split-dollar life insurance.

(b)

For Mr. Feltheimer, the amount in this column for fiscal 2025 includes $14,050 in club membership dues, $46,881 in security service costs, and $319,616 in incremental costs for the personal use of the company-leased aircraft (net of approximately $71,700 reimbursed to the Company by Mr. Feltheimer). For Mr. Burns, the amount in this column for fiscal 2025 includes $62,782 in incremental costs for the personal use of the company-leased aircraft (net of approximately $17,850 reimbursed to the Company by Mr. Burns). Personal use of the aircraft is valued using an incremental cost method that takes into account variable cost per flight hour, as well as other direct operating costs to the Company, including fuel costs, crew fees and travel expenses, trip-related repairs and maintenance, landing fees, and other direct operating costs. Incremental costs do not include certain fixed costs that do not change based on usage (e.g., maintenance not related to personal trips, flight crew salaries, and depreciation).

Description of Employment Agreements

We have entered into employment agreements with each of the Named Executive Officers. Key terms of these employment agreements are briefly described below. Provisions of these agreements relating to post-termination of employment benefits are discussed below under Potential Payments Upon Termination or Change in Control.

For Messrs. Burns and Tobey, the following summary is based upon employments agreement in effect during fiscal year 2025. As noted above, Messrs. Burns and Tobey entered into new employment agreements on May 6, 2025, and April 9, 2025, respectively, the terms of which are described above. See “—Employment Agreements” above.

 

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Jon Feltheimer   Employment Agreement:   August 8, 2024
  Title:   Chief Executive Officer
  Term Ending:   July 31, 2029
  Base Salary:   $1,500,000
  Bonus:   Eligible for an annual incentive bonus to be determined at the full discretion of the Compensation Committee, with a target of $7,500,000 and maximum bonus being 200% of the target amount; any portion that exceeds $1,500,000 for a particular year may be paid in the form of fully vested existing common stock.
  Other Benefits:   Eligible to participate in the Company’s usual benefit programs for executives at the same level, as well as company-provided life and disability insurance coverage, reasonable club membership dues, and limited use of the Company’s private aircraft.
 

Annual Equity

Awards:

   Eligible to receive annual grants as to common shares each year from fiscal 2026 through fiscal 2029 with a grant date value of $10,000,000, with the actual value of the annual grant to be determined by the Compensation Committee each year based on the Company’s financial performance for the prior fiscal year against performance targets to be agreed upon by Mr. Feltheimer and the Compensation Committee early in the applicable fiscal year, each with a three-year vesting period and to consist of restricted share units and/or stock options (or SARs) as determined by the Compensation Committee.
Michael Burns   Employment Agreement:   December 20, 2020
  Title:   Vice Chair
  Term Ending:   October 30, 2024
  Base Salary:   $1,000,000
  Bonus:   Eligible for an annual incentive bonus to be determined at the full discretion of the Compensation Committee, with a target of 75% of base salary. Any portion that exceeds $1,500,000 for a particular year may be paid in the form of either an award of existing common stock or a stock option to purchase existing common stock, as determined by the Compensation Committee (any such award to be fully vested on grant and the number of shares subject to such award to be determined based on the Company’s then-current share price and, in the case of a stock option, the assumptions then used to value stock options for purposes of the Company’s financial reporting).
  Other Benefits:   Eligible to participate in the Company’s usual benefit programs for executives at the same level, as well as company-provided life and disability insurance coverage, and limited use of the Company’s private aircraft.

 

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James W. Barge   Employment Agreement:   As of August 1, 2023
  Title:   Chief Financial Officer
  Term Ending:   July 31, 2026
  Base Salary:   $1,250,000
  Bonus:   Eligible for an annual incentive bonus to be determined at the full discretion of the Compensation Committee in consultation with the Company’s Chief Executive Officer, with a target amount two hundred forty percent (240%) of his base salary.
  Other Benefits:   Eligible to participate in the Company’s usual benefit programs for executives at the same level.
  Annual Equity Awards:   Eligible to receive annual grants as to common shares each year from fiscal 2024 through fiscal 2026 with a grant date value of $3,750,000, each with a three-year vesting period and to consist of restricted share units and/or options (or SARs) as determined by the Compensation Committee.
  Consulting Agreement:   Effective as of August 1, 2026, a one-year consulting agreement for finance consulting services to the Company for the monthly rate of $41,666.67.
Brian Goldsmith   Employment Agreement:   October 1, 2020
  Title:   Chief Operating Officer
  Term Ending:   September 30, 2025
  Base Salary:   $1,250,000
  Bonus:   Eligible for an annual incentive bonus to be determined at the full discretion of the Compensation Committee in consultation with the Company’s Chief Executive Officer, with a target of 100% of base salary.
  Other Benefits:   Eligible to participate in the Company’s usual benefit programs for executives at the same level.
  Annual Equity Awards:   Eligible to receive annual grants as to common shares each year from fiscal 2024 through fiscal 2026 with a grant date value of $3,500,000, each with a three-year vesting period and to consist of restricted share units and/ or stock options (or SARs) as determined by the Compensation Committee.
Bruce Tobey   Employment Agreement:   March 27, 2023
  Title:   Executive Vice President and General Counsel
  Term Ending:   March 26, 2026
 

Base Salary:

  

$1,000,000

  Bonus:   Eligible for an annual incentive bonus to be determined at the full discretion of the Compensation Committee in consultation with the Company’s Chief Executive Officer, with a target of 75% of base salary.
  Other Benefits:   Eligible to participate in the Company’s usual benefit programs for executives at the same level.

 

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  Annual Equity Awards:   Eligible to receive annual grants as to shares each year for fiscal 2024 through fiscal 2026 with a grant date value of $1,000,000, each with a three-year vesting period and to consist of restricted share units and/or stock options (or SARs) as determined by the Compensation Committee.
  Equity Award:   Received grant in April 2025 as to Class B non-voting shares of 26,511 time-vesting restricted share units, with a three-year vesting period.

Grants of Plan-Based Awards

The following table presents information regarding the incentive awards granted to the Named Executive Officers during fiscal 2025. Each of the equity-based awards was granted under the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan (the “2023 Plan”), which, after the Separation, was succeeded by the Lionsgate Studios Corp. 2025 Performance Incentive Plan (the “2025 Plan”) and approved by shareholders. Detailed information on each equity award is presented in the narrative that follows the table.

Grants of Plan-Based Awards — Fiscal 2025

 

Name
(a)

   Grant
Date (b)*		     Estimated future payouts
under
non-equity incentive plan
awards		     Estimated future payouts under
equity incentive plan awards		     All
Other
Stock
Awards:
Numbers
of
Shares
of Stock
or Units
(#) (i)		     All Other
Options
Awards:
Number of
Securities
Underlying
Options
(#) (j)		     Exercise
or Base
Price of
Option
Awards
($/sh)
(k)		     Grant
Date Fair
Value of
Stock and
Option
Awards
($)(1) (l)		  
  Threshold
($) (c)		     Target
($) (d)		     Maximum
($) (e)		     Threshold
(#) (f)		     Target
(#) (g)		     Maximum
(#) (h)		  

Jon Feltheimer

     7/15/2024       —        —        —        —        96,811       —        —        —        —      $ 808,372  
    7/15/2024       —        —        —        —        199,840       —        —        —        —      $ 1,668,664  
    8/1/2024       —        —        —        —        —        —        535,264       —        —      $ 4,249,996  

Michael Burns

     7/15/2024       —        —        —        —        69,944       —        —        —        —      $ 584,032  
    8/1/2024       —        —        —        —        —        —        321,159       —        —      $ 2,550,002  

James W. Barge

     7/15/2024       —        —        —        —        38,501       —        —        —        —      $ 321,483  
    7/15/2024       —        —        —        —        54,456       —        —        —        —      $ 454,708  
    7/15/2024       —        —        —        —        58,453       —        —        —        —      $ 488,083  
    8/1/2024       —        —        —        —        —        —        200,724       —        —      $ 1,593,749  

Brian Goldsmith

     7/15/2024       —        —        —        —        39,927       —        —        —        —      $ 333,390  
    7/15/2024       —        —        —        —        56,473       —        —        —        —      $ 471,550  
    7/15/2024       —        —        —        —        69,944       —        —        —        —      $ 584,032  
    8/1/2024       —        —        —        —        —        —        187,343       —        —      $ 1,487,503  

Bruce Tobey

     7/15/2024       —        —        —        —        19,984       —        —        —        —      $ 166,866  
    8/1/2024       —        —        —        —        —        —        69,584       —        —      $ 552,497  
 
*

These awards were granted with respect to Class B non-voting shares.

(1)

The amounts reported in column (l) reflect the fair value of these awards on the grant date as determined under the principles used to calculate the value of equity awards for purposes of the Company’s financial statements. For a discussion of the assumptions and methodologies used to value the awards reported in column (l), see footnote (2) to the Summary Compensation Table.

Each of the equity-based awards reported in the Grants of Plan-Based Awards table was granted under, and is subject to, the terms of the 2023 Plan. The 2023 Plan is administered by the Compensation Committee, which has authority to interpret the plan provisions and make all required determinations under the plan. This authority includes, subject to the provisions of the 2023 Plan, selecting participants and determining the type(s) of award(s) that they are to receive, determining the number of shares that are to be subject to awards and the terms and conditions of awards, including the price (if any) to be paid for the shares or the award, accelerating or extending the vesting or exercisability or extending the term of any or all outstanding awards, making certain adjustments to an outstanding award and authorizing the conversion, succession or substitution of an award, determining the

 

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manner in which the purchase price of an award or the Company’s common shares may be paid, making required proportionate adjustments to outstanding awards upon the occurrence of certain corporate events such as reorganizations, mergers and stock splits, and making provisions to ensure that any tax withholding obligations incurred in respect of awards are satisfied. Awards granted under the plan are generally only transferable to a beneficiary of a Named Executive Officer upon his or her death or, in certain cases, to family members for tax or estate planning purposes

Under the terms of the 2023 Plan, a change in control of the Company does not automatically trigger vesting of the awards then outstanding under the plan. If there is a change in control, each participant’s outstanding awards granted under the plan will generally be assumed by the successor company, unless the Compensation Committee provides that the award will not be assumed and will become fully vested and, in the case of stock options, exercisable. Any stock options that become vested in connection with a change in control will generally terminate to the extent they are not exercised prior to the change in control.

As described below under Potential Payments upon Termination or Change in Control, certain equity awards granted to the Named Executive Officers are subject to accelerated vesting under the terms of their respective employment agreements in the event of a termination of their employment under certain circumstances.

Restricted Share Units

Columns (g) and (i) in the table above report awards of restricted share units granted to the Named Executive Officers during fiscal 2025, including tranches of certain performance-based awards that are treated as granted during fiscal 2025 under applicable accounting rules. Each restricted share unit represents a contractual right to receive, upon vesting of the unit, payment equal to the value of Class B non-voting shares (typically in an equal number of Class B non-voting shares, but the Compensation Committee has the discretion to settle the units in cash or shares of Class A voting shares). The Named Executive Officer does not have the right to vote or dispose of the restricted share units, but will be credited with additional share units under the award as dividend equivalents based on the amount of dividends (if any) paid by the Company during the term of the award on a number of Class B non-voting shares equal to the number of outstanding and unpaid restricted share units then subject to the award. Such dividend equivalents will be paid only if and when vesting requirements applicable to the underlying share units are met.

Time-Based Units

For Messrs. Feltheimer, Burns, Barge, Goldsmith and Tobey, the awards of 535,264, 321,159, 200,724, 187,343 and 69,584 Class B non-voting shares, respectively, made in August 2024 and reported in column (i) in the table above, represent annual grants of time-based restricted share units. These awards are subject to a three-year vesting schedule, subject to the executive’s continued employment through the vesting dates.

Performance-Based Units

Column (g) in the table above reports awards of performance share units that are treated as granted to the Named Executive Officers during fiscal 2025 under applicable accounting rules. Performance share units are similar to the restricted share units described above, except that they are subject to performance based vesting conditions as well as time-based vesting.

For Messrs. Feltheimer, Barge and Goldsmith, the awards of 96,811, 54,456 and 56,473 Class B non-voting shares, respectively, made in July 2024, and reported in column (g) in the table above, represent the portion (100% for Messrs. Feltheimer and Goldsmith and 90% for Mr. Barge) of awards of restricted share units that vested with respect to performance only based on Messrs. Feltheimer’s, Barge’s, Goldsmith’s and the Company’s performance, respectively. These awards were originally approved by the Compensation Committee in July 2022, and cover a three-year period ending in July 2025, with one-third of the total award being eligible to vest

 

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based on Messrs. Feltheimer’s, Barge’s, Goldsmith’s and the Company’s respective performance over a specified 12-month period. Each grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Messrs. Feltheimer’s, Barge’s, Goldsmith’s and the Company’s respective performance are reflected in the table above. However, none of the performance-based restricted share units vest unless a VWAP Goal (as defined below) is achieved on or before the earlier of (i) the third anniversary of the award date or (ii) the date of termination of the executive’s employment or service with the Company or any of its subsidiaries for any reason. The “VWAP Goal” shall be considered achieved on the date on which the volume weighted average of the closing prices of Class B non-voting shares over a period of twenty (20) consecutive trading days ending on such date is equal to or greater than $14.61, in each case in regular trading on the New York Stock Exchange. The VWAP Goal (if not previously achieved) is deemed to have been achieved in full upon any change in control of the Company, or any other extraordinary transaction (including, but not limited to, a full or partial spin-off, split-off, issuance of a tracking stock or other transaction by the Company or its subsidiaries). In May 2024, the VWAP Goal was deemed to have been achieved.

For Mr. Feltheimer, the award of 199,840 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 100% of the portion of an award of restricted share units that vested based on Mr. Feltheimer’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2023 and covers a three-year period ending in July 2026, with one-third of the total award being eligible to vest based on Mr. Feltheimer’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Feltheimer’s and the Company’s performance are reflected in the table above.

For Mr. Burns, the award of 69,944 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 100% of the portion of an award of restricted share units that vested based on Mr. Burns’ and the Company’s performance. This award was originally approved by the Compensation Committee in July 2023 and covers a three-year period ending in July 2026, with one-third of the total award being eligible to vest based on Mr. Burns’ and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Burns’ and the Company’s performance are reflected in the table above.

For Mr. Barge, the award of 38,501 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 90% of the portion of an award of restricted share units that vested based on Mr. Barge’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2021 and covers a three-year period ending in July 2024, with one-third of the total award being eligible to vest based on Mr. Barge’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Barge’s and the Company’s performance are reflected in the table above.

For Mr. Barge, the award of 58,453 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 90% of the portion of an award of restricted share units that vested based on Mr. Barge’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2023 and covers a three-year period ending in July 2026, with one-third of the total award being eligible to vest based on Mr. Barge’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as

 

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granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Barge’s and the Company’s performance are reflected in the table above.

For Mr. Goldsmith, the award of 39,927 Class B non-voting shares made in July 2024 and reported in column (g) in the table above, represents 100% of the portion of an award of restricted share units that vested based on Mr. Goldsmith’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2021 and covers a three-year period ending in July 2024, with one-third of the total award being eligible to vest based on Mr. Goldsmith’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Goldsmith’s and the Company’s performance are reflected in the table above.

For Mr. Goldsmith, the award of 69,944 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 100% of the portion of an award of restricted share units that vested based on Mr. Goldsmith’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2023 and covers a three-year period ending in July 2026, with one-third of the total award being eligible to vest based on Mr. Goldsmith’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Goldsmith’s and the Company’s performance are reflected in the table above.

For Mr. Tobey, the award of 19,984 Class B non-voting shares made in July 2024, and reported in column (g) in the table above, represents 100% of the portion of an award of restricted share units that vested based on Mr. Tobey’s and the Company’s performance. This award was originally approved by the Compensation Committee in July 2023 and covers a three-year period ending in July 2026, with one-third of the total award being eligible to vest based on Mr. Tobey’s and the Company’s performance over a specified 12-month period. This grant is treated as three separate annual awards for accounting purposes and, in each case, is treated as granted for accounting purposes on the date the Compensation Committee determines the level of performance achieved for the particular performance period. Accordingly, only the units eligible to vest during fiscal 2025 based on Mr. Tobey’s and the Company’s performance are reflected in the table above.

 

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Outstanding Equity Awards

The following table presents information regarding the outstanding equity awards held by each of the Named Executive Officers as of March 31, 2025, including the vesting dates for the portions of these awards that had not vested as of that date.

Outstanding Equity Awards at Fiscal 2025 Year-End

 

    Option Awards     Stock Awards  

Name(a)

   Securities
Covered
By
Award		     Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(b)		     Numbers of
Securities
Underlying
Unexercised
Options (#)
Unexercisable		     Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)(d)		     Option
Exercise
Price
($)(e)		     Option
Expiration
Date(f)		     Number of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)(g)		     Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)(h)		     Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#)(i)		     Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($)(1)(j)		  

Jon Feltheimer

     LGF.A       565,037       —        —      $ 20.37       10/11/2026       —        —        —        —   
    LGF.B       565,037       —        —      $ 19.69       10/11/2026       —        —        —        —   
    LGF.A       565,037       —        —      $ 25.46       10/11/2026       —        —        —        —   
    LGF.B       565,037       —        —      $ 24.61       10/11/2026       —        —        —        —   
    LGF.B       125,000       —        —      $ 23.02       6/7/2028       —        —        —        —   
    LGF.B       125,000       —        —      $ 28.78       6/7/2028       —        —        —        —   
    LGF.B       2,000,000       —        —      $ 8.17       8/21/2030       —        —        —        —   
    LGF.B       —        —        —        —        —        96,811 (2)    $ 766,743       —        —   
    LGF.B       —        —        —        —        —        399,680 (3)    $ 3,165,466       —        —   
    LGF.B       —        —        —        —        —        535,264 (4)    $ 4,239,291       —        —   

Michael Burns

     LGF.A       425,476       —        —      $ 24.59       11/3/2026       —        —        —        —   
    LGF.B       425,476       —        —      $ 23.77       11/3/2026       —        —        —        —   
    LGF.A       425,476       —        —      $ 19.68       11/3/2026       —        —        —        —   
    LGF.B       425,476       —        —      $ 19.02       11/3/2026       —        —        —        —   
    LGF.B       106,594       —        —      $ 23.02       6/7/2028       —        —        —        —   
    LGF.B       106,594       —        —      $ 28.78       6/7/2028       —        —        —        —   
    LGF.B       1,155,000       —        —      $ 8.51       12/18/2030       —        —        —        —   
    LGF.B       —        —        —        —        —        139,888 (3)    $ 1,107,913       —        —   
    LGF.B       —        —        —        —        —        321,159 (4)    $ 2,543,579       —        —   

James W. Barge

     LGF.B       850,000       —        —      $ 25.22       12/28/2026       —        —        —        —   
    LGF.B       95,000       —        —      $ 23.02       6/7/2028       —        —        —        —   
    LGF.B       1,271,052       —        —      $ 8.66       9/26/2029       —        —        —        —   
    LGF.B       —        —        —        —        —        60,507 (2)    $ 479,215       —        —   
    LGF.B       —        —        —        —        —        129,896 (3)    $ 1,028,776       —        —   
    LGF.B       —        —        —        —        —        200,724 (4)    $ 1,589,734       —        —   

Brian Goldsmith

     LGF.A       132,657       —        —      $ 39.16       11/13/2025       —        —        —        —   
    LGF.B       132,657       —        —      $ 37.86       11/13/2025       —        —        —        —   
    LGF.B       95,000       —        —      $ 23.02       6/7/2028       —        —        —        —   
    LGF.B       315,372       —        —      $ 18.11       11/12/2028       —        —        —        —   
    LGF.B       404,530       —        —      $ 11.99       7/1/2029       —        —        —        —   
    LGF.B       —        —        —        —        —        56,473 (2)    $ 447,266       —        —   
    LGF.B       —        —        —        —        —        139,888 (3)    $ 1,107,913       —        —   
    LGF.B       —        —        —        —        —        187,343 (4)    $ 1,483,757       —        —   

Bruce Tobey

     LGF.B       —        —        —        —        —        8,837 (5)    $ 69,989       —        —   
    LGF.B       —        —        —        —        —        39,968 (3)    $ 316,547       —        —   
    LGF.B       —        —        —        —        —        69,584 (4)    $ 551,105       —        —   
 
(1)

The dollar amounts shown in columns (h) and (j) are determined by multiplying either the number of Class A voting shares or units (LGF.A) or Class B non-voting shares or units (LGF.B) reported in columns (g) and (i), respectively, by $8.85 and $7.92, respectively, the closing price of LGF.A and LGF.B on March 31, 2025 (the last trading day of fiscal 2025).

(2)

The unvested portion of this award is scheduled to vest on July 27, 2025.

 

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(3)

The unvested portion of this award is scheduled to vest in two equal annual installments on July 3, 2025 and July 3, 2026.

(4)

The unvested portion of this award is scheduled to vest in three equal annual installments on July 1, 2025, July 1, 2026 and July 1, 2027.

(5)

The unvested portion of this award is scheduled to vest on March 27, 2026.

Option Exercises and Stock Vested

The following table presents information regarding the exercise of options and SARs by the Named Executive Officers during fiscal 2025 and the vesting during fiscal 2025 of other stock awards previously granted to the Named Executive Officers.

Option Exercises and Stock Vested — Fiscal 2025

 

     Securities
Covered by
Award		      Option Awards      Stock Awards  

Name(a)

    Number of
Shares
Acquired on
Exercise (#)(b)		      Value
Realized on
Exercise
($)(1)(c)		      Number of
Shares
Acquired on
Vesting
(#)(d)		      Value
Realized on
Vesting
($)(1)(e)		  

Jon Feltheimer

      LGF.B        —       $ —         690,113      $ 5,845,728  

Michael Burns

      LGF.B        —       $ —         33,333      $ 332,330  
     LGF.B        —       $ —         139,888      $ 1,179,256 (2) 

James W. Barge

      LGF.B        —       $ —         380,151      $ 3,207,844  

Brian Goldsmith

      LGF.B        —       $ —         389,161      $ 3,278,638  

Bruce Tobey

      LGF.B        —       $ —         60,970      $ 509,217  
 
(1)

The dollar amounts shown in column (c) above for option awards are determined by multiplying (i) the number of shares of existing common stock to which the exercise of the option related by (ii) the difference between the per-share closing price of the applicable class of shares of existing common stock to on the date of exercise and the exercise price of the stock options. The dollar amounts shown in column (e) above for stock awards are determined by multiplying the number of shares or units, as applicable, that vested by the per-share closing price of the applicable class of shares of existing common stock on the vesting date.

(2)

Reflects value settled in cash.

Non-Qualified Deferred Compensation

We permit the Named Executive Officers and certain other key employees to elect to receive a portion of their compensation reported in the Summary Compensation Table above on a deferred basis under our Deferred Compensation Plan. Under the plan, we are also permitted to make additional discretionary contributions with respect to amounts deferred under the plan.

For cash amounts deferred under the plan, the participant may elect one or more measurement funds to be used to determine investment gains or losses to be credited to his or her account balance, including certain mutual funds. Amounts may be deferred until a specified date, retirement or other termination of service, disability or death. At the participant’s election, compensation deferred until a specified date or termination of service may be paid as a lump sum or in annual installments as specified in the plan document. If the participant’s employment terminates due to death or disability, the participant’s deferred compensation balance will be paid in a single lump sum. Emergency hardship withdrawals are also permitted under the plan.

As of March 31, 2025, none of the Named Executive Officers had deferred any amount under the plan, and the Company had not made any contributions with respect to any Named Executive Officer under the plan.

Potential Payments Upon Termination or Change in Control

The following section describes the benefits that may become payable to the Named Executive Officers in connection with a termination of their employment with us pursuant to the terms of their respective employment

 

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agreements with the Company. In addition to the benefits described below, outstanding equity-based awards held by the Named Executive Officers may also be subject to accelerated vesting in connection with a change in control of the Company under the terms of our equity incentive plans if the awards are not assumed or otherwise continued upon the transaction, as noted under Grants of Plan-Based Awards above. None of the Named Executive Officers are entitled to any reimbursement or gross-up payment for any excise taxes imposed under Section 280G of the U.S. Internal Revenue Code of 1986. The Named Executive Officers also do not have a right to voluntarily terminate employment (other than for “good reason” in certain cases) following a change in control and receive severance and are not entitled to any “single-trigger” vesting of equity awards or other benefits upon a change in control unless the executive’s employment terminates in the circumstances described below. In each case, the Named Executive Officer’s right to receive the severance benefits described below in connection with a termination of the executive’s employment (other than as a result of death or disability) is subject to his execution of a release of claims in favor of the Company.

For Messrs. Burns and Tobey, the following summary is based upon employments agreement in effect during fiscal year 2025. As noted above, Messrs. Burns and Tobey entered into new employment agreements on May 6, 2025, and April 9, 2025, respectively, the terms of which are described above. See “—Employment Agreements” above.

 

Jon Feltheimer   

Severance Benefits — Termination of Employment. In the event Mr. Feltheimer’s employment is terminated by the Company “without cause” or by him for “good reason” (as such terms are defined in Mr. Feltheimer’s employment agreement), Mr. Feltheimer would be entitled to a cash severance payment equal to the present value of his base salary through July 31, 2029, as well as payment of his premiums for continued health coverage for up to 18 months (or such longer period as provided by state law) following his termination and his premiums for continued life and disability insurance through July 31, 2029. In addition, Mr. Feltheimer would be entitled to payment of the target amount of his annual bonus for the fiscal year in which his termination occurs. Mr. Feltheimer’s equity awards granted by the Company prior to his termination, to the extent then outstanding and unvested, would become fully vested upon his termination (and if an annual grant for the fiscal year in which his termination occurs has not previously been granted, that annual grant would be made and would fully vest upon his termination).

 

Severance Benefits — Termination of Employment in Connection with Change in Control. If Mr. Feltheimer’s employment is terminated by the Company “without cause” or by him for “good reason” and such termination occurs on or within 12 months following a change in control of the Company (as such terms are defined in Mr. Feltheimer’s employment agreement), Mr. Feltheimer would be entitled to the

  

severance benefits described above, except that his cash severance would be the greater of the present value of his base salary through July 31, 2029 and $6.0 million.

 

Severance Benefits — Death or Disability. In the event Mr. Feltheimer’s employment with the Company terminates due to his death or “disability” (as such term is defined in Mr. Feltheimer’s employment agreement), the equity awards granted by the Company pursuant to Mr. Feltheimer’s employment agreement, to the extent then outstanding and unvested, would become fully vested as of the date of such termination. In addition, in the event Mr. Feltheimer’s employment with the Company terminates due to his disability, the Company will continue to pay the premiums for his continued life and disability insurance through July 31, 2029.

 

Retirement Benefits. If Mr. Feltheimer retires from his employment with the Company on at least six months written notice (or his employment continues through July 31, 2029 and terminates for any reason thereafter), his outstanding and unvested

 

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   equity awards granted by the Company pursuant to his employment agreement prior to his retirement will continue to vest following his retirement date, and his vested options or SARs would be exercisable for five years following his retirement (or, if earlier, until the expiration date of the award).
Michael Burns   

Severance Benefits — Termination of Employment. In the event Mr. Burns’ employment is terminated by the Company “without cause” or by him for “good reason” (as such terms are defined in Mr. Burns’ employment agreement), Mr. Burns would be entitled to a lump sum cash severance payment equal to the present value of his remaining base salary through October 30, 2024, a prorated amount of the annual bonus that Mr. Burns would have received for the fiscal year in which his termination occurs, as well as payment of his premiums for continued health coverage for up to six months following his termination and payment for continued life and disability insurance through October 30, 2024. In addition, Mr. Burns’ equity awards granted by the Company pursuant to his employment agreement, to the extent then outstanding and unvested, would become fully vested upon his termination.

 

Severance Benefits — Termination of Employment in Connection with Change in Control. If Mr. Burns’ employment is terminated by the Company “without cause” or by him for “good reason” and such termination occurs on or within 12 months following a change in control of the Company (as such terms are defined in Mr. Burns’ employment agreement), Mr. Burns would be entitled to the severance benefits described above, except that his lump sum cash severance would be the greater of the present value of his remaining base salary through October 30, 2024 or $3.5 million.

 

Severance Benefits — Death or Disability. In the event Mr. Burns’ employment with the Company terminates due to his death or “disability” (as such term is defined in Mr. Burns’ employment agreement), his equity awards granted by the Company pursuant to Mr. Burns’ employment agreement, to the extent then outstanding and unvested, would become fully vested as of the date of such termination.

James W. Barge    Severance Benefits — Termination of Employment. In the event that Mr. Barge’s employment is terminated by the Company “without cause” (as such term is defined in Mr. Barge’s employment agreement), Mr. Barge will be entitled to a lump sum cash severance payment equal to the greater of (i) 50% of his base salary for the remainder of the term of the agreement or (ii) 18 months of his base salary, a prorated amount of the annual bonus that Mr. Barge would have received for the fiscal year in which his termination occurs, and payment of his COBRA premiums for up to 18 months. Additionally, in the event Mr. Barge’s employment is terminated by the Company “without cause”, or if Mr. Barge resigns for “good reason” within 12 months following a change in control or “change in management” (as such terms are defined in Mr. Barge’s employment agreement), (1) any portion of the equity awards granted under Mr. Barge’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 12 months following his termination date will accelerate and be fully vested on his termination date, and (2) 50% of any portion of the equity awards granted under Mr. Barge’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest more than 12 months and less than 24 months following his termination date will accelerate and be fully vested on his termination date.
   Severance Benefits — Termination of Employment in Connection with Change in Control. In the event that Mr. Barge’s employment is terminated by the Company

 

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“without cause” or by him for “good reason” and such termination occurs on or within 12 months following a change in control or a “change in management” of the Company (as such terms are defined in Mr. Barge’s employment agreement), Mr. Barge would be entitled to the severance benefits described above, except that his lump sum cash severance payment would be equal to the greater of 100% of his base salary for the remainder of the term and 18 months of his base salary. Additionally, in the event Mr. Barge’s employment is terminated by the Company “without cause” on or within 12 months following a change in control, (a) any portion of the equity awards granted under Mr. Barge’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) will accelerate and be fully vested on his termination date and (b) Mr. Barge will be entitled to receive a payment equal to 50% of the value of each portion of the annual equity award grants provided in his employment agreement (as referred to above under “Description of Employment Agreements”) that has not previously been granted and is otherwise scheduled to be granted after his termination date under the terms of his agreement, with the value of each annual grant for these purposes to be based on the grant date value of the award and such payment to be made in cash or, at the Company’s election, common shares.

 

Severance Benefits — Death or Disability. In the event Mr. Barge’s employment is terminated due to his death or “disability” (as such term is defined in Mr. Barge’s employment agreement), Mr. Barge will be entitled to receive a prorated bonus for the fiscal year in which his termination occurs. In addition, Mr. Barge’s equity awards granted by the Company pursuant to his employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 24 months following his termination date will accelerate and be fully vested on his termination.

Brian Goldsmith    Severance Benefits — Termination of Employment. In the event Mr. Goldsmith’s employment is terminated by the Company “without cause” (as such term is defined in Mr. Goldsmith’s employment agreement), Mr. Goldsmith will be entitled to a lump sum severance payment equal to the greater of (i) 50% of his salary for the remainder of the term of the agreement or (ii) 18 months of his base salary, a prorated discretionary bonus for the fiscal year in which his termination occurs, and payment of COBRA premiums for up to 18 months. Additionally, in the event Mr. Goldsmith’s employment is terminated by the Company “without cause” or if Mr. Goldsmith resigns for “good reason” within 12 months following a change in control or “change in management” (as such terms are defined in Mr. Goldsmith’s employment agreement), (i) any portion of equity awards granted under Mr. Goldsmith’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 12 months following his termination date will accelerate and become fully vested, and (ii) 50% percent of any portion of equity awards granted under Mr. Goldsmith’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest more than 12 months and less than 24 months following his termination date will accelerate and become fully vested. Moreover, if Mr. Goldsmith’s employment is terminated at the end of the term of the agreement because the Company does not offer to extend the term or offers to extend the term on terms that would constitute “good reason” under the agreement, Mr. Goldsmith would be entitled to a severance payment equal to 12 months of his base salary, in addition to the pro-rated discretionary bonus and payment of COBRA premiums noted above. In addition, any portion of equity awards granted under Mr. Goldsmith’s employment agreement (to

 

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the extent such awards have been granted prior to his termination and are then outstanding) that is scheduled to vest within 12 months following his termination date will accelerate and be fully vested on his termination date.

 

Severance Benefits — Termination of Employment in Connection with Change in Control. In the event Mr. Goldsmith’s employment is terminated by the Company “without cause” or by him for “good reason” within twelve (12) months following the date of a change in control or a “change in management” (as such terms are defined in Mr. Goldsmith’s employment agreement), Mr. Goldsmith would be entitled to the severance benefits described above, except that his lump sum cash severance payment would be equal to the greater of 100% of his base salary for the remainder of the term and 18 months of his base salary. Additionally, in the event Mr. Goldsmith’s employment is terminated by the Company “without cause” on or within 12 months following a change in control, (a) any portion of the equity awards granted under Mr. Goldsmith’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) will accelerate and be fully vested on his termination date and (b) Mr. Goldsmith will be entitled to receive a payment equal to 50% of the value of each portion of the annual equity award grants provided in his employment agreement (as referred to above under “Description of Employment Agreements”) that has not previously been granted and is otherwise scheduled to be granted after his termination date under the terms of his agreement, with the value of each annual grant for these purposes to be based on the grant date value of the award and such payment to be made in cash or, at the Company’s election, in common shares.

 

Severance Benefits — Death or Disability. In the event Mr. Goldsmith’s employment is terminated due to his death or “disability” (as such term is defined in Mr. Goldsmith’s employment agreement), Mr. Goldsmith will be entitled to receive a prorated discretionary bonus for the fiscal year in which his termination occurs and payment of his COBRA premiums for up to 18 months. In addition, Mr. Goldsmith’s equity awards granted by the Company pursuant to his employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 24 months following his termination date will accelerate and be fully vested on his termination.

Bruce Tobey    Severance Benefits — Termination of Employment. In the event that Mr. Tobey’s employment is terminated by the Company “without cause” (as such term is defined in Mr. Tobey’s employment agreement), Mr. Tobey will be entitled to a lump sum severance payment equal to the greater of (i) 50% of his base salary for the remainder of the term of the agreement or (ii) 18 months of his base salary, a prorated amount of the bonus that Mr. Tobey would have received for the fiscal year in which his termination occurs, and payment of his COBRA premiums for up to 18 months. Additionally, in the event Mr. Tobey’s employment is terminated by the Company “without cause” or if Mr. Tobey resigns for “good reason” within 12 months following a change in control or “change in management” (as such terms are defined in Mr. Tobey’s employment agreement), (1) any portion of the equity awards granted under Mr. Tobey’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 12 months following his termination date will accelerate and be fully vested on his termination date, and (2) 50% of any portion of the equity awards granted under Mr. Tobey’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest more than 12 months and less than 24 months following his termination date will

 

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   accelerate and be fully vested on his termination date. Moreover, if Mr. Tobey’s employment is terminated at the end of the term of the agreement because the Company does not offer to extend the term or offers to extend the term on terms that would constitute “good reason” under the agreement, Mr. Tobey would be entitled to a severance payment equal to 12 months of his base salary, in addition to the pro-rated bonus and payment of COBRA premiums noted above. In addition, any portion of equity awards granted under Mr. Tobey’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that is scheduled to vest within 12 months following his termination date will accelerate and be fully vested on his termination date.
  

Severance Benefits — Termination of Employment in Connection with Change in Control. In the event that Mr. Tobey’s employment is terminated by the Company “without cause” or by him for “good reason” and such termination occurs on or within 12 months following a change in control or a “change in management” of the Company (as such terms are defined in Mr. Tobey’s employment agreement), Mr. Tobey would be entitled to the severance benefits described above, except that his lump sum cash severance payment would be equal to the greater of 100% of his base salary for the remainder of the term and 18 months of his base salary. Additionally, in the event Mr. Tobey’s employment is terminated by the Company “without cause” on or within 12 months following a change in control, (a) any portion of the equity awards granted under Mr. Tobey’s employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) will accelerate and be fully vested on his termination date and (b) Mr. Tobey will be entitled to receive a payment equal to 50% of the value of each portion of the annual equity award grants provided in his employment agreement (as referred to above under “Description of Employment Agreements”) that has not previously been granted and is otherwise scheduled to be granted after his termination date under the terms of his agreement, with the value of each annual grant for these purposes to be based on the grant date value of the award and such payment to be made in cash or, at the Company’s election, in common shares.

 

Severance Benefits — Death or Disability. In the event Mr. Tobey’s employment is terminated due to his death or “disability” (as such term is defined in Mr. Tobey’s employment agreement), Mr. Tobey will be entitled to receive a prorated bonus for the fiscal year in which his termination occurs. In addition, Mr. Tobey’s equity awards granted by the Company pursuant to his employment agreement (to the extent such awards have been granted prior to his termination and are then outstanding) that are scheduled to vest within 24 months following his termination date will accelerate and be fully vested on his termination.

 

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Estimated Severance and Change in Control Benefits

Severance Benefits. The following chart presents our estimate of the dollar value of the benefits each of the Named Executive Officers would have been entitled to receive, had his employment terminated under the circumstances described above (other than in connection with a change in control of the Company) on March 31, 2025 (with the value of equity awards calculated based on the $8.85 and $7.92 closing prices of Class A voting shares and Class B non-voting shares, respectively, on March 31, 2025, the last trading day of fiscal 2025). Since this hypothetical termination would have occurred on the last day of the fiscal year, no pro-rata bonus was included in the cash severance in the charts below.

 

     Termination by Lionsgate Without Cause(1)  

Name

    Cash
Severance		     Equity
Acceleration(2)		      Insurance
Premiums		     Total  

Jon Feltheimer

    $ 5,568,149     $ 26,342,999      $ 547,011 (3)    $ 32,458,159  

Michael Burns

    $ —  (4)    $ 7,302,984      $ 20,374 (5)    $ 7,323,358  

James W. Barge

    $ 1,875,000     $ 4,091,329      $ 61,123 (5)    $ 6,027,452  

Brian Goldsmith

    $ 1,875,000     $ 4,040,158      $ 61,123 (5)    $ 5,976,281  

Bruce Tobey

    $ 1,500,000     $ 1,095,914      $ 61,123 (5)    $ 2,657,037  
 
(1)

As described above, Messrs. Feltheimer and Burns would also be entitled to these benefits pursuant to their respective employment agreements if their employment is terminated by the executive for good reason.

(2)

These columns report the intrinsic value of the unvested portions of each executive’s awards that would accelerate in the circumstances. For stock options and SARs, this value is calculated by multiplying the amount (if any) by which the closing price of the applicable class of the Company’s common shares on the last trading day of the fiscal year exceeds the exercise price or base price of the award by the number of shares subject to the accelerated portion of the award. No value is included in the table for stock options and SARs with a per-share exercise price that is greater than or equal to the closing price of the applicable class of the Company’s shares on the last trading day of the fiscal year. For restricted share unit awards, this value is calculated by multiplying the closing price of the applicable class of the Company’s common shares on the last trading day of the fiscal year by the number of units subject to the accelerated portion of the award.

(3)

Includes $61,123 for payment of COBRA premiums and $485,888 for payment of continued life and disability insurance premiums.

(4)

As described above, the term of Mr. Burns’ prior employment agreement expired on October 30, 2024, and he and the Company did not enter into a new employment agreement until May 6, 2025. Under his prior agreement, if his employment were terminated without cause or for good reason, he would be entitled to severance equal to the present value of his remaining base salary through the end of the term of the agreement. Accordingly, he would not have been entitled to any cash severance if his employment with the Company had terminated in these circumstances on March 31, 2025 as the agreement did not provide for a minimum severance amount and the term of the agreement had expired on October 30, 2024.

(5)

Includes payment of COBRA premiums.

 

     Termination Due to Executive’s Death or
Disability		  

Name

    Equity
Acceleration(1)		     Insurance
Premiums		     Total  

Jon Feltheimer

    $ 16,342,999     $ 547,011 (2)    $ 16,890,010  

Michael Burns

    $ 7,302,984 (4)    $ 20,374 (3)    $ 7,323,358  

James W. Barge

    $ 5,135,629     $ 61,123 (3)    $ 5,196,752  

Brian Goldsmith

    $ 5,088,698     $ 61,123 (3)    $ 5,149,821  

Bruce Tobey

    $ 1,437,889     $ 61,123 (3)    $ 1,499,012  
 
(1)

See note (2) to the table above for the valuation of these benefits.

(2)

Includes $61,123 for payment of COBRA premiums for a termination due to executive’s death or disability, and $485,888 payment of continued life and disability insurance premiums for a termination due to executive’s disability.

 

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(3)

Includes payment of COBRA premiums.

(4)

As described above, the term of Mr. Burns’ prior employment agreement expired on October 30, 2024, and he and the Company did not enter into a new employment agreement until May 6, 2025. This amount includes amounts payable under the terms of the prior agreement if his employment with the Company had terminated under these circumstances on March 31, 2025.

Change in Control Severance Benefits. The following chart presents our estimate of the dollar value of the benefits each of the Named Executive Officers would have been entitled to receive had a change in control of the Company, or, in the case of Messrs. Barge, Goldsmith and Tobey, a change in management of the Company, occurred on March 31, 2025 and the executive’s employment with us had terminated by the Company without cause or by the executive for good reason as described above on such date. See note (2) to the table above for the valuation of equity award acceleration.

 

Name

    Cash
Severance(1)		     Equity
Acceleration		     Insurance
Premiums		     Total  

Jon Feltheimer

    $ 6,115,160     $ 26,342,999     $ 547,011 (2)    $ 33,005,170  

Michael Burns

    $ 3,500,000 (3)    $ 7,302,984     $ 20,374 (4)    $ 10,823,358  

James W. Barge

    $ 5,625,000     $ 6,195,452 (5)    $ 61,123 (4)    $ 11,881,575  

Brian Goldsmith

    $ 3,625,000     $ 6,077,871 (5)    $ 61,123 (4)    $ 9,763,994  

Bruce Tobey

    $ 2,000,000     $ 1,805,293 (5)    $ 61,123 (4)    $ 3,866,416  
 
(1)

For Messrs. Barge, Goldsmith and Tobey, this amount includes 50% of the grant date value of the annual equity awards provided for in the executive’s employment agreement as described above that had not been granted as of March 31, 2025.

(2)

Includes $61,123 for payment of COBRA premiums and $485,888 for payment of continued life and disability insurance premiums.

(3)

As described above, the term of Mr. Burns’ prior employment agreement expired on October 30, 2024, and he and the Company did not enter into a new employment agreement until May 6, 2025. This amount includes severance payable under the terms of the prior agreement if his employment with the Company had terminated under these circumstances on March 31, 2025.

(4)

Includes payment of COBRA premiums.

(5)

For Messrs. Barge, Goldsmith, and Tobey, the equity acceleration value reported in this table only applies to a termination without cause. If such executives’ employment had been terminated for good reason on or within 12 months following a change in control or a “change in management,” the equity acceleration value would be the same as described above for a termination without cause not in connection with a change in control. A change in management in these Named Executive Officers’ employment agreements would generally occur when both Messrs. Feltheimer and Burns are no longer employed by the Company.

Pay Ratio Disclosure

Pursuant to the Securities Exchange Act of 1934, as amended, we are required to disclose in this prospectus the ratio of the total annual compensation of our Chief Executive Officer to the median of the total annual compensation of all of our employees (excluding our Chief Executive Officer). Based on SEC rules for this disclosure and applying the methodology described below, we have determined that our Chief Executive Officer’s total compensation for fiscal 2025 was $9,823,232, and the median of the total compensation of all of our employees (excluding our Chief Executive Officer) for fiscal 2025 was $131,000. Accordingly, we estimate the ratio of our Chief Executive Officer’s total compensation for fiscal 2025 to the median of the total compensation of all of our employees (excluding our Chief Executive Officer) for fiscal 2025 to be 75 to 1.

We have selected March 31, 2025, which is a date within the last three months of fiscal 2025, as the date to be used to identify the Company’s median employee. To find the median of the annual total compensation of all the Company’s employees (excluding the Company’s Chief Executive Officer), we used the amount of each employee’s total cash compensation (i.e., base salary, wages, overtime and bonus) from the Company’s payroll

 

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records. In making this determination, we did not annualize compensation for those employees who did not work for the Company for the entire fiscal year. We also did not make any cost-of-living adjustments in identifying the median employee. We believe total cash compensation for all employees will be an appropriate measure because total cash compensation data is readily available, and the Company considers this a reasonable measure of employees’ overall compensation.

As of March 31, 2025, we had a total of 1,613 employees, of whom 1,322 were based in the U.S. and 291 were based outside of the U.S. In making the determination of the median employee, we did not include 5 employees based in Australia, 3 employees based in China, 38 employees based in India, 1 employee based in Indonesia, 2 employees based in Luxembourg and 3 employees based in Spain, in accordance with SEC rules permitting exclusion of a de minimis number of non-U.S. employees (so that all U.S.-based employees and 239 employees based outside of the U.S. were included in this determination).

This pay ratio is an estimate calculated in a manner consistent with SEC rules based on the methodology described above. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions. As such, the pay ratio reported by other companies may not be comparable to the pay ratio to be reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

 

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Director Compensation

Compensation Program

For fiscal 2025, the Company’s non-employee directors were compensated as follows:

 

Type of Compensation

    Amount  

Annual Equity Retainer

    $ 150,000  

Annual Cash Retainer

    $ 100,000  

Annual Board Chair Retainer

    $ 52,000  

Annual Audit & Risk Committee Chair Retainer

    $ 30,000  

Annual Compensation Committee Chair Retainer

    $ 30,000  

Annual Nominating and Corporate Governance Committee Chair Retainer

    $ 20,000  

The annual equity retainer consisted of an award of restricted share units granted under the 2023 Stock Incentive Plan with a grant date value of $150,000 granted on November 29, 2024 (with $75,000 of the value based on the closing price of Class A voting shares on the date of grant and $75,000 of the value based on the closing price of Class B non-voting shares on the date of grant, and the number of units rounded to the nearest whole unit). The restricted share units will vest after one year following the date of grant (or, if earlier, the date of the annual general meeting of shareholders in the year after the year of grant).

The annual cash retainer and other retainers set forth in the table above were paid, at the director’s election, in all cash, 50% in cash and 50% in the form of shares of common stock (with 50% paid in Class A voting shares and 50% in Class B non-voting shares), or 100% in the form of shares of common stock (with 50% paid in Class A voting shares and 50% in Class B non-voting shares). Retainers were paid in two installments, with the number of shares of common stock delivered in payment of any retainer determined by dividing the dollar amount of the retainer paid in the form of shares of common stock by the closing price of common stock (either Class A voting shares or Class B non-voting shares, as applicable) on the date of payment, and such shares being fully vested at the time of payment.

Pursuant to the Company’s policies, non-employee directors were also reimbursed for reasonable expenses incurred in the performance of their duties.

For fiscal 2026, the Company’s non-employee directors will be compensated as follows:

 

Type of Compensation

    Amount  

Annual Equity Retainer

    $ 150,000  

Annual Cash Retainer

    $ 100,000  

Annual Board Chair Retainer

    $ 52,000  

Annual Audit & Risk Committee Chair Retainer

    $ 30,000  

Annual Compensation Committee Chair Retainer

    $ 30,000  

Annual Nominating and Corporate Governance Committee Chair Retainer

    $ 20,000  

The annual equity retainer will consist of an award of restricted share units granted under the Company’s equity incentive plan then in effect with a grant date value of $150,000 granted annually on the date of the Company’s annual general meeting of shareholders (with the value based on the closing price of the Company’s common shares on the date of grant, and the number of units rounded to the nearest whole unit). The restricted share units will vest after one (1) year following the date of grant (or, if earlier, the date of the annual general meeting of shareholders in the year after the year of grant) and are paid in an equivalent number of the Company’s common shares. The Board retains discretion to provide for the award to instead be granted as a fixed amount of cash subject to the same vesting terms. The Board may also provide non-employee directors an election to defer payment of their vested awards in accordance with applicable tax law.

 

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The annual cash retainer and other retainers set for in the table above will be paid, at the director’s election, in all cash, 50% in cash and 50% in the form of the Company’s common shares, or 100% in the form of the Company’s common shares. The Board retains discretion to provide for the retainers for one or more directors to be paid in a different mix of cash and the Company’s common shares as it determines appropriate. The retainers are paid in two (2) installments each year and, if applicable, the number of the Company’s common shares to be delivered in payment of the retainer are determined by dividing the dollar amount of the retainer to be paid by the closing price of the Company’s common shares on the date of payment, and fully vested at the time of payment.

Pursuant to the Company’s policies, Non-Employee Directors will also be reimbursed for reasonable expenses incurred in the performance of their duties.

The Board (or any committee of the Board within the authority delegated to it) has the right to amend the Company’s director compensation policy from time to time.

Director Onboarding and Education

Upon a new director’s appointment to the Board, an orientation is conducted by senior management and current Board members aiming to acquaint new directors with the Company’s business strategies, vital financial aspects, core values encompassing ethics and compliance, corporate governance practices, and key policies.

Additionally, the Company actively supports the ongoing education of its Board members, covering expenses for relevant continuing education programs.

Fiscal 2025 Director Compensation

The following table presents information regarding compensation earned or paid to each of the Company’s non-employee directors for services rendered during fiscal 2025. Messrs. Feltheimer and Burns, who were employed by the Company, did not receive any compensation for their services on the Board.

 

Name
(a)

   Fees
Earned or
Paid in
Cash
($)(1)
(b)		     Stock
Awards
($)(2)(3)
(c)		     Option
Awards
($)(3)
(d)		     Non-Equity
Incentive Plan
Compensation
($)
(e)		     Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)		     All Other
Compensation
($)
(g)		     Total
($)
(h)		  

Mignon Clyburn

   $ 100,000     $ 149,998     $ —      $ —      $ —      $ —      $ 249,998  

Gordon Crawford

   $ 120,000     $ 149,998     $ —      $ —      $ —      $ —      $ 269,998  

Emily Fine

   $ 100,000     $ 149,998     $ —      $ —      $ —      $ —      $ 249,998  

Michael T. Fries

   $ 291,666     $ —      $ —      $ —      $ —      $ —      $ 291,666  

John D. Harkey, Jr.

   $ 100,000     $ 149,998     $ —      $ —      $ —      $ —      $ 249,998  

Susan McCaw

   $ 100,000     $ 149,998     $ —      $ —      $ —      $ —      $ 249,998  

Yvette Ostolaza

   $ 120,000     $ 149,998     $ —      $ —      $ —      $ —      $ 269,998  

Mark H. Rachesky, M.D.

   $ 172,000     $ 149,998     $ —      $ —      $ —      $ —      $ 321,998  

Daryl Simm

   $ 130,000     $ 149,998     $ —      $ —      $ —      $ —      $ 279,998  

Hardwick Simmons

   $ 130,000     $ 149,998     $ —      $ —      $ —      $ —      $ 279,998  

Harry E. Sloan

   $ 100,000     $ 149,998     $ —      $ —      $ —      $ —      $ 249,998  
 
(1)

The amounts reported in column (b) represent director annual retainer and chair fees, for fiscal 2025, paid, at the director’s election, either 50% in cash and 50% in the form of existing common stock, 100% in the form of common stock, or 100% in cash, as described above. The value of the common shares is calculated using the closing price of shares of common stock on the date of payment. Retainers and fees are paid twice a year. During fiscal 2025, the Company’s non-employee directors who elected to receive 50% of their

 

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  retainers and fees in the form of common shares received the following number of shares: Ms. Clyburn, 3,213 shares, Mr. Simm, 4,177 shares and Mr. Simmons, 4,177 shares. During fiscal 2025, the Company’s non-employee directors who elected to receive 100% of their retainers and fees in the form of common shares received the following number of shares: Mr. Crawford, 7,712 shares, Ms. Fine, 6,426 shares, Mr. Harkey, 11,627 shares, Ms. Ostolaza, 7,712 shares, Dr. Rachesky, 11,052 shares, and Mr. Sloan, 6,426 shares. For fiscal 2025, the Board determined that Mr. Fries and Ms. McCaw would receive 100% of their cash retainer and fees in the form of cash. Additionally, the Board determined that Mr. Fries would receive 100% of his equity retainer in the form of cash (so that the amount reported in this column for Mr. Fries includes cash received in lieu of any equity award).
(2)

Each non-employee director then in office received a grant of 9,102 restricted share units with respect to Class A voting shares and 10,176 restricted share units with respect to Class B non-voting shares units on November 29, 2024 (other than Mr. Fries, who receives cash in lieu of equity grants). The amounts reported in column (c) reflect the fair value of these awards on the grant date as determined under the principles used to calculate the value of equity awards for purposes of the Company’s financial statements. The fair values of the restricted share units are determined based on the market value of the shares on the date of grant.

(3)

The following table presents the number of unvested stock awards held by each of the Company’s non-employee directors as of March 31, 2025. No non-employee directors held any outstanding option awards as of that date.

 

     Number of Unvested
Restricted
 Share Units as of March 31, 2025 

Director

    LGF.A    LGF.B

Mignon Clyburn

        9,913        11,037

Gordon Crawford

        9,913        11,037

Emily Fine

        9,913        11,037

Michael T. Fries

        —         — 

John D. Harkey, Jr.

        9,102        10,176

Susan McCaw

        9,913        11,037

Yvette Ostolaza

        9,913        11,037

Mark H. Rachesky, M.D.

        9,913        11,037

Daryl Simm

        9,913        11,037

Hardwick Simmons

        9,913        11,037

Harry E. Sloan

        9,913        11,037

Climate Risk Exposure and Awareness

As a content-driven entertainment company, our core operations do not involve manufacturing, large-scale physical infrastructure, or resource-intensive industrial processes. As such, we have limited direct exposure to climate-related physical and transitional risks compared to companies in more carbon-intensive sectors.

Nonetheless, we recognize the growing importance of climate awareness and environmental responsibility in corporate governance. We remain mindful of the broader implications of climate change, including potential impacts on our facilities, supply chain partners, production logistics, and evolving stakeholder expectations.

While climate-related risks are not currently material to our business, we continue to monitor regulatory developments, industry best practices, and stakeholder perspectives. We also consider opportunities to reduce our environmental footprint—such as promoting sustainable production practices, managing energy usage across our operations, and engaging with partners who share our commitment to environmental responsibility.

 

Climate Policies   

•  In all our offices, we prioritize efforts to prevent pollution, and to conserve, recover, and recycle materials, water and energy wherever possible.

 

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•  Our productions distribute documents electronically to minimize paper consumption and waste and limit the use of single-use plastics.

 

•  Our productions follow best practices featured in the Producers Guild of America and Sustainable Production Alliance’s Green Production Guide, which are designed to reduce the film, television, and streaming industry’s carbon footprint and environmental impact.

 

•  Our U.S. productions encourage the employment of green vendors that provide sustainable goods and services for film, television and streaming productions.

 

•  We prioritize vendors whose dedication to operating business in a responsible and sustainable manner directly aligns with those of Lionsgate.

Lionsgate Studios Corp.

Use Of Non-GAAP Financial Measures

This prospectus presents the following important financial measures utilized by New Lionsgate that are not all financial measures defined by generally accepted accounting principles (“GAAP”). New Lionsgate uses non-GAAP financial measures, among other measures, to evaluate the operating performance of its business. These non-GAAP financial measures are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP.

Adjusted OIBDA: Adjusted OIBDA is defined as operating income (loss) before adjusted depreciation and amortization (“OIBDA”), adjusted for adjusted share-based compensation, purchase accounting and related adjustments, restructuring and other costs, certain charges (benefits) related to the COVID-19 global pandemic, certain programming and content charges as a result of management changes and/or changes in strategy, and unusual gains or losses (such as goodwill and intangible asset impairment), when applicable.

 

  •  

Adjusted depreciation and amortization represents depreciation and amortization as presented on Lionsgate’s consolidated statement of operations, less the depreciation and amortization related to the amortization of purchase accounting and related adjustments associated with recent acquisitions. Accordingly, the full impact of the purchase accounting is included in the adjustment for “purchase accounting and related adjustments”, described below.

 

  •  

Adjusted share-based compensation represents share-based compensation excluding the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements, which are included in restructuring and other expenses, when applicable.

 

  •  

Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable.

 

  •  

COVID-19 related charges or benefits include incremental costs associated with the pausing and restarting of productions including paying/hiring certain cast and crew, maintaining idle facilities and equipment costs, and when applicable, certain motion picture and television impairments and development charges associated with changes in performance expectations or the feasibility of completing the project resulting from circumstances associated with the COVID-19 global pandemic, net of insurance recoveries, which are included in direct operating expense, when applicable. In addition, the costs include early or contractual marketing spends for film releases and events that have been canceled or delayed and will provide no economic benefit, which are included in distribution and marketing expense, when applicable.

 

  •  

Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in recent acquisitions. These adjustments include the non-cash charge for the amortization of the recoupable portion of the purchase price and the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment, all of which are accounted for as compensation and are included in general and administrative expense.

 

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Adjusted OIBDA is calculated similar to how New Lionsgate defines segment profit and managed and evaluated its segment operations. Segment profit also excludes corporate general and administrative expense.

Total Segment Profit and Studio Business Segment Profit: New Lionsgate presents the sum of its Motion Picture and Television Production segment profit as its “Studio Business” segment profit. Total segment profit and Studio Business segment profit, when presented outside of the segment information and reconciliations included in New Lionsgate’s consolidated financial statements, is considered a non-GAAP financial measure, and should be considered in addition to, not as a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP. New Lionsgate uses this non-GAAP measure, among other measures, to evaluate the aggregate operating performance of its business.

New Lionsgate believes the presentation of total segment profit and Studio Business segment profit is relevant and useful for investors because it allows investors to view total segment performance in a manner similar to the primary method used by New Lionsgate’s management and enables them to understand the fundamental performance of Lionsgate’s businesses before non-operating items. Total segment profit and Studio Business segment profit is considered an important measure of New Lionsgate’s performance because it reflects the aggregate profit contribution from New Lionsgate’s segments, both in total and for the Studio Business and represents a measure, consistent with New Lionsgate’s segment profit, that eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of New Lionsgate’s businesses, are infrequent in occurrence, and in some cases are non-cash expenses. Not all companies calculate segment profit or total segment profit in the same manner, and segment profit and total segment profit as defined by New Lionsgate may not be comparable to similarly titled measures presented by other companies due to differences in the methods of calculation and excluded items.

Overall: These measures are non-GAAP financial measures as defined in Regulation G promulgated by the SEC and are in addition to, not a substitute for, or superior to, measures of financial performance prepared in accordance with United States GAAP.

New Lionsgate uses these non-GAAP measures, among other measures, to evaluate the operating performance of its business. New Lionsgate believes these measures provide useful information to investors regarding its results of operations before non-operating items. Adjusted OIBDA is considered an important measure of New Lionsgate’s performance because this measure eliminates amounts that, in management’s opinion, do not necessarily reflect the fundamental performance of New Lionsgate’s businesses, are infrequent in occurrence, and in some cases are non-cash expenses.

These non-GAAP measures are commonly used in the entertainment industry and by financial analysts and others who follow the industry to measure operating performance. However, not all companies calculate these measures in the same manner and the measures as presented may not be comparable to similarly titled measures presented by other companies due to differences in the methods of calculation and excluded items.

A general limitation of these non-GAAP financial measures is that they are not prepared in accordance with U.S. generally accepted accounting principles. These measures should be reviewed in conjunction with the relevant GAAP financial measures and are not presented as alternative measures of operating income, as determined in accordance with GAAP. Reconciliations of the adjusted metrics utilized to their corresponding GAAP metrics are provided below.

 

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Lions Gate Entertainment Corp.

Reconciliation of Operating Income (Loss) to Adjusted OIDBA and Total Segment Profit

The following table reconciles the GAAP measure, operating income (loss) to the non-GAAP measures, Adjusted OIBDA and Total Segment Profit:

 

     Year Ended March 31,  
     2024
Actual		     2025
Plan		      2025
Actual		  
     (amounts in millions)  

Operating income (loss)

    $ (938.8 )    $ 248.1      $ (68.1 ) 

Goodwill and intangible asset impairment(1)

      663.9       —         —   

Adjusted depreciation and amortization(2)

      50.1       34.6        33.8  

Restructuring and other(3)

      508.5       15.0        253.5  

COVID-19 related benefits(4)

      (1.0 )      —         (3.1 ) 

Adjusted share-based compensation expense(5)

      81.2       86.3        69.0  

Purchase accounting and related adjustments(6)

      153.7       144.8        163.0  
  

 

 

    

 

 

     

 

 

  

Adjusted OIBDA

    $ 517.6     $ 528.8      $ 448.1  

Corporate general and administrative expenses

      136.1       145.9        123.2  

Unallocated rent cost included in direct operating expense(7)

      —        —         18.6  
  

 

 

    

 

 

     

 

 

  

Total Segment Profit

    $ 653.7     $ 674.7      $ 589.9  
  

 

 

    

 

 

     

 

 

  
 
(1)

In fiscal 2024, amounts reflect the goodwill impairment charge of $493.9 million and $170.0 million for impairment of indefinite-lived trade names, both related to the Media Networks reporting unit, recorded in the second quarter ended September 30, 2023.

 

(2)

Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the non-cash fair value adjustments to property and equipment and intangible assets acquired in recent acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:

 

     2024
Actual		      2025
Plan		      2025
Actual		  

Depreciation and amortization

    $ 192.2      $ 165.5      $ 188.1  

Less: Amount included in purchase accounting and related adjustments

      (142.1 )       (130.9 )       (154.3 ) 
  

 

 

     

 

 

     

 

 

  

Adjusted depreciation and amortization

    $ 50.1      $ 34.6      $ 33.8  
  

 

 

     

 

 

     

 

 

  

 

(3)

Restructuring and other includes restructuring and severance costs, certain transaction and other costs, and certain unusual items, when applicable, as shown in the table below:

 

     2024
Actual		      2025
Plan		      2025
Actual		  

Restructuring and other:

         

Content and other impairments(a)

    $ 377.3      $ 0.7      $ 162.4  

Severance(b)

         

Cash

      37.2        —         35.2  

Accelerated vesting on equity awards

      9.4        —         5.4  
  

 

 

     

 

 

     

 

 

  

Total severance costs

      46.6        —         40.6  

Transaction and other costs (benefits)(c)

      84.6        14.3        50.5  
  

 

 

     

 

 

     

 

 

  
   $ 508.5      $ 15.0      $ 253.5  
  

 

 

     

 

 

     

 

 

  

 

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  (a)

Media Networks Restructuring: In fiscal 2023, the Company began a plan to restructure its Media Networks international business, and during the fiscal years ended March 31, 2024 and 2025, the Company continued executing its restructuring plan, which included exiting all international territories except for Canada and India, and included an evaluation of the programming on Starz’s domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value. The Company has incurred impairment charges from the inception of the Media Networks restructuring plan through March 31, 2025 amounting to $880.1 million. As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the fiscal years ended March 31, 2025 and 2024 of $136.3 million and $364.5 million, respectively.

Content and Other Impairments: Content and other impairments in the fiscal year ended March 31, 2025 also include content impairments of $7.7 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. In addition, amounts in the fiscal year ended March 31, 2025 also include impairments of certain operating lease right-of-use and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company primarily related to the integration of eOne. Content and other impairments in the fiscal year ended March 31, 2024 also include $12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. The lease impairments reflects a decline in market conditions since the inception of the leases impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease assets, and the carrying value.

 

  (b)

Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives. During the fiscal year ended March 31, 2025, in connection with the Company’s current restructuring plan, approximately 8% of its eligible U.S. employees elected to take advantage of voluntary severance and early retirement packages. A total of approximately $26.0 million in severance expense was incurred under the voluntary severance program and was recognized in restructuring and other in the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2024, amounts were due to restructuring activities including integration of the acquisition of eOne, Media Networks international restructuring and our Motion Picture and Television Production segments.

 

  (c)

Transaction and other costs in the fiscal years ended March 31, 2025 and 2024 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters. In fiscal 2025 and fiscal 2024, amounts include costs associated with the separation of the Starz Business from the Studio Business, and acquisition and integration costs related to the acquisition of eOne. In fiscal 2024, amounts also include $49.2 million associated with the acquisition of additional interest in 3 Arts Entertainment. Due to the new arrangement representing a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million, representing the excess of the fair value of the modified award over amounts previously expensed. In addition, transaction and other costs in fiscal 2024 includes approximately $16.6 million of a loss associated with a theft at a production of a 51% owned consolidated entity. In the quarter ended March 31, 2025, the Company recognized a benefit of $3.1 million for insurance recoveries related to the loss. The Company also expects to recover a portion of the loss from the noncontrolling interest holders of this entity. In fiscal 2025 and 2024, transaction and other costs also include a benefit of $7.1 million and $5.4 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the Starz international restructuring.

 

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(4)

Amounts include incremental costs incurred, if any, due to circumstances associated with the COVID-19 global pandemic, net of recoveries. In the fiscal years ended March 31, 2025 and 2024, recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense.

 

(5)

The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:

 

    2024
Actual		     2025
Plan		      2025
Actual		  

Total share-based compensation expense

   $ 90.6     $ 86.3      $ 74.4  

Less: Amount included in restructuring and other(a)

     (9.4 )      —        (5.4 ) 
 

 

 

    

 

 

     

 

 

  

Adjusted share-based compensation

   $ 81.2     $ 86.3      $ 69.0  
 

 

 

    

 

 

     

 

 

  
 
  (a)

Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of certain vesting schedules for equity awards pursuant to certain severance arrangements.

 

(6)

Purchase accounting and related adjustments primarily represent the amortization of non-cash fair value adjustments to certain assets acquired in acquisitions. The following sets forth the amounts included in each line item in the financial statements:

 

    2024
Actual		      2025
Plan		      2025
Actual		  

Purchase accounting and related adjustments:

        

General and administrative expense(a)

   $ 11.6      $ 13.9      $ 8.7  

Depreciation and amortization

     142.1        130.9        154.3  
 

 

 

     

 

 

     

 

 

  
  $ 153.7      $ 144.8      $ 163.0  
 

 

 

     

 

 

     

 

 

  
 
  (a)

In the fiscal years ended March 31, 2025 and 2024, these adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment. Amounts in fiscal 2024 also include the amortization of the recoupable portion of the purchase price (through May 2023) related to 3 Arts Entertainment. These amounts are accounted for as compensation and are included in general and administrative expense, as presented in the table below. The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.

 

(7)

Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.

 

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NEW LIONSGATE COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is comprised of Michael T. Fries, Susan McCaw, Mark H. Rachesky and Harry E. Sloan. New Lionsgate does not presently expect that any member of the Compensation Committee will be an officer or employee of New Lionsgate at any time during his or her respective service on such committee.

 

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PLAN OF DISTRIBUTION

In connection with the Transactions, outstanding awards granted under LGEC’s equity compensation programs converted into adjusted awards composed, in part, of awards in respect of New Lionsgate new common shares, as described under the heading “The Transactions — Treatment of Lionsgate Equity Awards.” The portion of the adjusted awards that are based on New Lionsgate new common shares were granted by New Lionsgate under the Plans, in accordance with the terms of the Employee Matters Agreement. The registration statement of which this prospectus forms a part only covers shares of New Lionsgate new common shasres that may be acquired upon exercise of options or stock appreciation rights to purchase shares of New Lionsgate new common shares that were granted under the Plans to former employees of LGEC and its subsidiaries (including New Lionsgate), who are not current employees or consultants of New Lionsgate or Starz, and any such individuals’ donees, pledgees, permitted transferees, assignees, successors and others who come to hold any such equity award. The registration statement does not cover any shares of New Lionsgate new common shares issued pursuant to the awards that were granted to any individual who, upon completion of the Transactions, is employed by, providing consulting services to, or serving on the board of directors of, New Lionsgate, nor does it cover any other awards that New Lionsgate may grant under its equity compensation plans in the future.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

New Lionsgate Related Person Transaction Policy

New Lionsgate recognizes that transactions it may conduct with any of its directors, director nominees or executive officers may present potential or actual conflicts of interest and create the appearance that decisions are based on considerations other than New Lionsgate’s best interests and those of its shareholders. New Lionsgate has established, and the New Lionsgate Board has adopted, a written Related Person Transactions Policy to monitor transactions, arrangements or relationships, including any indebtedness or guarantee of indebtedness, in which New Lionsgate and any of the following have an interest: (i) any person who is or was an executive officer, director, or director nominee of New Lionsgate at any time since the beginning of New Lionsgate’s last fiscal year; (ii) a person who is or was an immediate family member (as defined in the policy) of an executive officer, director, or director nominee at any time since the beginning of New Lionsgate’s last fiscal year; (iii) any person who, at the time of the occurrence or existence of the transaction, is greater than 5% beneficial owner of New Lionsgate new common shares; (iv) any person who, at the time of the occurrence or existence of the transaction, is an immediate family member (as defined in the policy) of the greater than 5% beneficial owner of New Lionsgate new common shares; or (v) any firm, corporation or other entity in which any of the foregoing persons is employed or is a partner or principal or in which such person has a 10% or greater beneficial ownership interest (which we refer to as a “related person”). The policy covers any transaction where the aggregate amount is expected to exceed $120,000 in which a related person has a direct or indirect material interest.

The full text of the New Lionsgate Related Person Transaction Policy is available on New Lionsgate’s investor relations website at http://investors.lionsgate.com/governance/governance-documents or may be obtained in print, without charge, by any shareholder upon request to New Lionsgate’s Corporate Secretary.

Ignite, LLC

In April 2004, a wholly-owned subsidiary of Lionsgate entered into agreements (as amended) with Ignite, LLC (“Ignite”) for distribution rights to certain films. Mr. Burns owns a 65.45% interest in Ignite, and Mr. Simmons owns a 24.24% interest in Ignite. During the year ended March 31, 2025, $0.2 million was paid to Ignite under these agreements (2024 - $0.3 million; 2023 - $0.4 million).

Sponsor Option Agreement

On May 13, 2024, Lionsgate consummated the transactions contemplated by the Business Combination Agreement. Mr. Sloan was the Chairman of Screaming Eagle and owned, directly or indirectly, a material interest in Eagle Equity Partners V, LLC, a Delaware limited liability company, the Screaming Eagle sponsor. Mr. Sloan recused himself from the decisions to approve the business combination.

In connection with the Business Combination, SEAC received an aggregate of $1.00 and 2,200,000 options (the “SEAC Sponsor Options”) each of which entitled SEAC Sponsor to purchase one SEAC Class A Ordinary Share at $0.0001 per share (the “Sponsor Option Agreement”). The SEAC Sponsor Options became options to purchase Lionsgate’s common shares pursuant to the terms of the Sponsor Option Agreement. New Lionsgate assumed in writing all of the obligations under and in accordance with the Sponsor Option Agreement pursuant to an amendment thereto, under which the SEAC Sponsor Options became exercisable for 2,177,191 common shares of New Lionsgate, which is attached hereto as Exhibit 10.19.

Letter Agreement. On July 9, 2009, Lionsgate entered into a letter agreement (as amended from time to time, the “MHR Letter Agreement”) with Dr. Rachesky. The MHR Letter Agreement provided, subject to certain terms and conditions, including that Dr. Rachesky and certain of his affiliates hold at least 8,192,246 common shares of Lionsgate, subject to equitable adjustment (which amount represented approximately 7% of Lionsgate’s

 

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common shares outstanding as of May 22, 2009), that in the event Lionsgate enters into an agreement with any other person, or invites or receives a proposal, in either case which relates to the matters addressed by the MHR Letter Agreement, and that has terms or conditions that are more favorable to such other person or more restrictive to Lionsgate than the terms or conditions set forth in the MHR Letter Agreement or the Registration Rights Agreement with MHR Fund Management (as described below), then Lionsgate will offer Dr. Rachesky and certain of his affiliates the opportunity to enter into an agreement on the same terms and conditions or, as the case may be, make a competing proposal which shall be considered by Lionsgate in good faith before deciding whether to execute any such other agreement. New Lionsgate assumed all of the obligations under and in accordance with the Letter Agreement.

Investor Rights Agreements

On May 6, 2025, New Lionsgate entered into an investor rights agreement with MHR Fund Management LLC and affiliated funds (“MHR Fund Management”), Liberty Global Ventures Limited and Liberty Global Ltd. (collectively, “Liberty”), (as amended from time to time, the “New Lionsgate Investor Rights Agreement”). The New Lionsgate Investor Rights Agreement provides that, among other things, (i) for so long as funds affiliated with MHR Fund Management beneficially own at least 10,000,000 of New Lionsgate’s then outstanding common shares in the aggregate, New Lionsgate will include three (3) designees of MHR Fund Management (at least one of whom will be an independent director and will be subject to approval by the New Lionsgate Board) on its slate of director nominees for election at each future annual general and special meeting of New Lionsgate’s shareholders, (ii) for so long as funds affiliated with MHR Fund Management beneficially own at least 7,500,000, but less than 10,000,000, of New Lionsgate’s then outstanding common shares in the aggregate, New Lionsgate will include two designees of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of New Lionsgate’s shareholders and (iii) for so long as funds affiliated with MHR Fund Management beneficially own at least 5,000,000, but less than 7,500,000, of New Lionsgate’s then outstanding common shares in the aggregate, New Lionsgate will include one designee of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of New Lionsgate’s shareholders. Dr. Rachesky, Ms. Fine and Mr. Harkey were appointed as the designees of MHR Fund Management to the New Lionsgate Board pursuant to the New Lionsgate Investor Rights Agreement. In addition, the New Lionsgate Investor Rights Agreement provides that for so long as Liberty (together with certain of its affiliates) beneficially owns at least 5,000,000 of New Lionsgate’s then outstanding common shares in the aggregate, New Lionsgate will include one designee of Liberty on its slate of director nominees for election to the New Lionsgate Board at each future annual general meeting of New Lionsgate’s shareholders. Mr. Fries was appointed as the designee of Liberty to the New Lionsgate Board under the New Lionsgate Investor Rights Agreement.

In addition, under the New Lionsgate Investor Rights Agreement, New Lionsgate has also agreed to provide MHR Fund Management and Liberty with certain pre-emptive rights on shares that New Lionsgate may issue in the future for cash consideration.

Under the New Lionsgate Investor Rights Agreement, Liberty (together with certain of its affiliates) has agreed that if it sells or transfers any of its LGEC common shares to a shareholder or group of shareholders that beneficially own 5% or more of New Lionsgate’s then outstanding common shares, or that would result in a person or group of persons beneficially owning 5% or more of New Lionsgate’s then outstanding common shares, any such transferee would have to agree to the restrictions and obligations set forth in the New Lionsgate Investor Rights Agreement, including transfer restrictions, subject to certain exceptions set forth in the New Lionsgate Investor Rights Agreement.

Voting Agreement

On May 6, 2025, New Lionsgate entered into a voting agreement with Liberty and MHR Fund Management (as amended from time to time, the “New Lionsgate Voting Agreement”). Under the New Lionsgate Voting

 

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Agreement, Liberty has agreed to vote, in any vote of New Lionsgate’s shareholders on a merger, amalgamation, plan of arrangement, consolidation, business combination, third party tender offer, asset sale or other similar transaction involving New Lionsgate or any of its subsidiaries (and any proposal relating to the issuance of capital, increase in the authorized capital or amendment to any constitutional documents in connection with any of the foregoing), all of the common shares beneficially owned by them (together with certain of their affiliates) in excess of 18.5% of New Lionsgate’s outstanding voting power in the aggregate in the same proportion as the votes cast by other shareholders.

In addition, each of Liberty and MHR Fund Management (together with certain of their affiliates) has agreed that as long as any of them have the right to nominate at least one representative to the New Lionsgate Board, each of them will vote all of New Lionsgate new common shares owned by them (together with certain of their affiliates) in favor of each of the other’s respective nominees to the New Lionsgate Board, subject to certain exceptions set forth in the New Lionsgate Voting Agreement.

Under the New Lionsgate Voting Agreement, Liberty (together with certain of its affiliates) has also agreed that if it sells or transfers any of its common shares to a shareholder or group of shareholders that beneficially own 5% or more of New Lionsgate new common shares, or that would result in a person or group of persons beneficially owning 5% or more of New Lionsgate new common shares, any such transferee would have to agree to the New Lionsgate Voting Agreement, subject to certain exceptions set forth in the New Lionsgate Voting Agreement.

Registration Rights Agreements

On May 6, 2025, New Lionsgate entered into a registration rights agreement with each of MHR Fund Management and Liberty (together with certain of their affiliates). The two registration rights agreements described in the foregoing are referred to herein as the “New Lionsgate Registration Rights Agreements.”

Each New Lionsgate Registration Rights Agreement provides that the applicable investor is entitled to two demand registration rights to request that New Lionsgate register all or a portion of their common shares. In addition, in the event that New Lionsgate proposes to register any of New Lionsgate’s equity securities or securities convertible into or exchangeable for New Lionsgate’s equity securities, either for its own account or for the account of other security holders, the applicable investor will be entitled to certain “piggyback” registration rights allowing them to include their shares in such registration, subject to customary limitations. As a result, whenever New Lionsgate proposes to file a registration statement under the Securities Act, other than with respect to a registration statement on Forms S-4 or S-8 or certain other exceptions, the applicable investor will be entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.

The registration rights described above of Liberty will terminate on the first anniversary of the date that Liberty (together with certain of its affiliates) both (i) beneficially owns less than 5,713,774 common shares (which amount, for the avoidance of doubt, represents approximately 2% of New Lionsgate new common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the New Lionsgate Board. The registration rights described above of the applicable affiliates of MHR Fund Management will terminate on the first anniversary of the date that they both (i) beneficially own less than 28,568,868 common shares (which amount, for the avoidance of doubt, represents approximately 10% of New Lionsgate new common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the New Lionsgate Board.

The foregoing descriptions of the MHR Letter Agreement, the New Lionsgate Investor Rights Agreement, the New Lionsgate Voting Agreement and the New Lionsgate Registration Rights Agreements is not meant to be complete and is qualified by reference to the full text of each of the MHR Letter Agreement, the New Lionsgate Investor Rights Agreement, the New Lionsgate Voting Agreement and the New Lionsgate Registration Rights Agreements, respectively, which are filed as exhibits to New Lionsgate’s Annual Report on Form 10-K for the

 

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year ended March 31, 2025 and are attached hereto as Exhibit 10.14, Exhibit 10.15 and Exhibits 10.16 – 10.17, respectively.

Transactions with Equity Method Investees

In the ordinary course of business, New Lionsgate is involved in related party transactions with equity method investees. These related party transactions primarily relate to the licensing and distribution of New Lionsgate’s films and television programs and the lease of a studio facility owned by a former equity-method investee, for which the impact on New Lionsgate’s consolidated balance sheets and consolidated statements of operations is as shown in the tables below.

 

     March 31,  
      2025        2024   
     (Amounts in millions)  

Consolidated Balance Sheets

      

Accounts receivable

    $ 8.7      $ 8.1  

Investment in films and television programs

      1.1        2.2  
  

 

 

     

 

 

  

Total due from related parties

    $ 9.8      $ 10.3  
  

 

 

     

 

 

  

Accounts payable(1)

    $ 17.6      $ 16.8  

Participations and residuals, current

      11.1        5.5  

Participations and residuals, noncurrent

      1.8        1.3  

Deferred revenue, current

      0.1        0.1  
  

 

 

     

 

 

  

Total due to related parties

    $ 30.6      $ 23.7  
  

 

 

     

 

 

  

 

     Year Ended March 31,  
      2025        2024        2023   
     (Amounts in millions)  

Consolidated Statements of Operations

         

Revenues

    $ 3.3      $ 3.0      $ 4.8  

Direct operating expense

    $ 4.6      $ 5.0      $ 8.3  

Distribution and marketing expense

    $ 3.0      $ 0.8      $ 0.4  

 

 
(1)

Amounts primarily represent production related advances due to certain of its equity method investees.

Arrangement Agreement

Lionsgate, LG Studios, New Lionsgate and LG Sirius have entered into the Arrangement Agreement, which provides for the implementation of the Plan of Arrangement that resulted in the separation of the LG Studios Business from the Starz Business through the Transactions.

The following is a summary of certain material terms and conditions of the Arrangement Agreement. This summary may not contain all of the information about the Arrangement Agreement that is important to shareholders and is qualified in its entirety by the full text of the Arrangement Agreement, which is filed as Exhibit 2.1 to the registration statement of which this prospectus is a part. Shareholders are urged to read the Arrangement Agreement in its entirety.

Covenants Regarding the Arrangement

The Arrangement Agreement contains covenants of the parties thereto that they will, subject to the terms of the Arrangement Agreement, use their respective commercially reasonable efforts to implement the Arrangement; and (ii) satisfy the conditions precedent to the completion of the Arrangement.

 

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Conditions Precedent

The Transactions were subject to certain conditions precedent, including approval of the Lionsgate Transactions Proposal by the shareholders of Lionsgate and approval of the LG Studios Reorganization Proposal by the shareholders of LG Studios. For additional information on the conditions precedent, see “The Transactions—Conditions to the Transactions”.

Amendments

The Arrangement Agreement provides that, subject to the provisions of the Interim Orders, the Final Order, the Plan of Arrangement, and applicable law, at any time and from time to time before the Arrangement Effective Time, the Arrangement Agreement and the Plan of Arrangement may be amended, modified, or supplemented by written agreement of the parties thereto without further notice to or approval on the part of Lionsgate’s shareholders and LG Studios’ shareholders.

Separation Agreement

Transfer of Assets and Assumption of Liabilities

The Separation Agreement identifies the assets that were transferred or retained, the liabilities that were assumed or retained, and the contracts that were transferred or retained, to or by New Lionsgate as part of the separation of the LG Studios Business from the Starz Business, and provides for when and how these transfers, assumptions and retentions occurred. In particular, the Separation Agreement provides that, among other things, subject to the terms and conditions contained therein:

 

  •  

assets of either party or its subsidiaries, other than certain assets related to the Starz Business, be transferred to or retained by New Lionsgate and its applicable subsidiaries; and

 

  •  

certain liabilities of either party or its subsidiaries, other than certain liabilities of either party or its subsidiaries related to the Starz Business (the “Starz Liabilities”), which we refer to as the “New Lionsgate Liabilities,” be transferred to or retained by New Lionsgate and its applicable subsidiaries.

Except as expressly set forth in the Separation Agreement or any Ancillary Agreement, neither Starz nor New Lionsgate has made any representation or warranty as to the assets, business or liabilities transferred, assumed retained as part of the separation of the LG Studios Business from the Starz Business, as to any approvals or notifications required in connection with the transfers, as to the value of or the freedom from any security interests of any of the assets transferred, as to the absence or presence of any defenses or right of setoff or freedom from counterclaim with respect to any claim or other asset of either of New Lionsgate or Starz, or as to the legal sufficiency of any document or instrument delivered to convey title to any asset or thing of value to be transferred in connection with the Transactions. All assets have been transferred on an “as is,” “where is” basis, and the respective transferees bear the economic and legal risks that any conveyance will prove to be insufficient to vest in the transferee good and marketable title, free and clear of all security interests, that any necessary consents or governmental approvals are not obtained, or that any requirements of law, agreements, security interests or judgments were or are not complied with.

Information in this prospectus with respect to the assets and liabilities of the parties to the Transactions following the completion of the Transactions is presented based on the allocation of such assets and liabilities pursuant to the Separation Agreement or any other Ancillary Agreement, unless the context otherwise requires.

The Separation Agreement provides that in the event that the transfer of certain assets and liabilities (or a portion thereof) to New Lionsgate or Starz, as applicable, did not occur at the Arrangement Effective Time, then until such assets or liabilities (or a portion thereof) are able to be transferred, New Lionsgate or Starz, as applicable, will hold such assets on behalf and for the benefit of the transferee and will pay, perform and discharge such liabilities, for which the transferee will reimburse New Lionsgate or Starz, as applicable, for all commercially reasonable payments made in connection with the performance and discharge of such liabilities.

 

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The foregoing summary does not purport to describe all of the terms of the Separation Agreement and is qualified in its entirety by reference to the complete text of the Separation Agreement, which is filed as Exhibit [2.3] to this prospectus and is incorporated herein by reference.

The Arrangement

The Arrangement Agreement and the Plan of Arrangement, together with the Separation Agreement and the Ancillary Agreements, also govern the rights and obligations of the parties thereto regarding the arrangement.

At the Arrangement Effective Time:

 

  •  

LGEC shareholders first received in exchange for each outstanding LGEC Class A share that they held:

 

  •  

One (1) New Lionsgate Class A share; and

 

  •  

One (1) New Lionsgate Class C preferred share;

 

  •  

LGEC shareholders first received, in exchange for each outstanding LGEC Class B share that they held:

 

  •  

One (1) New Lionsgate Class B share; and

 

  •  

One (1) New Lionsgate Class C preferred share.

 

  •  

LGEC changed its name to Starz Entertainment Corp. and created a new class of voting common shares, the Starz common shares.

 

  •  

New Lionsgate created a new class of common shares without par value (the “New Lionsgate new common shares”) and New Lionsgate shareholders (formerly LGEC shareholders) received, in exchange for each:

 

  •  

New Lionsgate Class A share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class A share in the Initial Share Exchange, one and twelve one-hundredths (1.12) New Lionsgate new common shares and one and twelve one-hundredths (1.12) Starz common shares;

 

  •  

New Lionsgate Class B share they held, together with each New Lionsgate Class C preferred share they held and which was issued in exchange for an LGEC Class B share in the Initial Share Exchange, one (1) New Lionsgate new common share and one (1) Starz common share.

Such exchange transactions by LGEC shareholders are collectively referred to as the “Second Share Exchange.”

 

  •  

As a result of the steps described above, each of New Lionsgate and Starz have a single class of “one share, one vote” common shares.

 

  •  

Following the Second Share Exchange, pursuant to the Reverse Stock Split, the Starz common shares were consolidated on a 15-to-1 basis, such that every fifteen (15) Starz common shares were consolidated into one (1) Starz common share.

 

  •  

LG Studios shareholders, other than New Lionsgate and dissenting shareholders, tranferred to New Lionsgate each LG Studios common share, without par value (“LG Studios common shares”), they held and such shareholders received, in exchange for each such LG Studios common share so transferred, a number of New Lionsgate new common shares equal to the product of the LG Studios Consideration Shares divided by the LG Studios Flip Shares (the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equaled the aggregate number of LG Studios common shares obtained when the LG Studios Flip Percentage was multiplied by the quotient of (a) the aggregate number of New Lionsgate new common shares issued to New Lionsgate shareholders (formerly LGEC

 

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shareholders) in the Second Share Exchange divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equaled the quotient, expressed as a percentage, of (1) LG Studios Flip Shares divided by (2) the total number of LG Studios common shares issued and outstanding immediately prior to the Arrangement Effective Time. Such transactions by LG Studios shareholders are collectively referred to as the “LG Studios Flip.” The LG Studios Reorganization Ratio was determined to be 0.989632 and approximately 34,880,006 New Lionsgate new common shares were issued to LG Studios shareholders in the Transactions. The LG Studios common shares were delisted from Nasdaq and deregistered under the Exchange Act.

 

  •  

New Lionsgate changed its name to “Lionsgate Studios Corp.”

 

  •  

LG Studios changed its name to “Lionsgate Studios Holding Corp.”

Pursuant to the Separation Agreement, the consummation of the arrangement was subject to satisfaction (or waiver by Lionsgate in its sole and absolute discretion) of certain conditions. These conditions are described under “Conditions to the Transactions.”

Claims

Except as expressly set forth in the Separation Agreement or any Ancillary Agreement, in general each party to the Separation Agreement assumed liability for all pending, threatened and unasserted legal matters related to its own business or its assumed or retained liabilities and agreed to indemnify the other party for any liability to the extent arising out of or resulting from such assumed or retained legal matters.

Releases

Pursuant to the Separation Agreement, Starz and its affiliates released and discharged New Lionsgate and its affiliates from all liabilities assumed by Starz as part of the Transactions, except as expressly set forth in the Separation Agreement. New Lionsgate and its affiliates released and discharged Starz and its affiliates from all liabilities retained by New Lionsgate and its affiliates as part of the Transactions, except as expressly set forth in the Separation Agreement.

These releases do not extend to obligations or liabilities under any agreements between the parties to the Transactions that remain in effect following the completion of the Transactions, which agreements include the Separation Agreement and the other agreements described under “Certain Relationships and Related Party Transactions.”

Indemnification

In the Separation Agreement, Starz agreed to indemnify, defend and hold harmless New Lionsgate, each of its affiliates, and each of its affiliates’ directors, officers and employees, from and against all liabilities relating to, arising out of or resulting from:

 

  •  

the Starz Liabilities;

 

  •  

Starz’s failure or the failure of any other person to pay, perform or otherwise promptly discharge any of the Starz Liabilities, in accordance with their respective terms, whether prior to, at or after the Transactions;

 

  •  

except to the extent relating to any New Lionsgate Liability, any guarantee, indemnification or contribution obligation for the benefit of Starz by New Lionsgate that survives the Transactions;

 

  •  

any breach by Starz of the Separation Agreement or any of the Ancillary Agreements; and

 

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  •  

any untrue statement or alleged untrue statement or omission or alleged omission of material fact relating to Starz in the registration statement on Form S-4 (as amended or supplemented), the joint proxy statement/ prospectus included on Form S-4 and Form 424B3 or public filings or annual or quarterly reports following the date of the Transactions.

New Lionsgate agreed to indemnify, defend and hold harmless Starz, each of Starz’s affiliates and each of Starz’s affiliates’ directors, officers and employees from and against all liabilities relating to, arising out of or resulting from:

 

  •  

the New Lionsgate Liabilities;

 

  •  

the failure of New Lionsgate or any other person to pay, perform or otherwise promptly discharge any of the New Lionsgate Liabilities in accordance with their respective terms whether prior to, at or after the Transactions;

 

  •  

except to the extent relating to any Starz Liability, any guarantee, indemnification or contribution obligation for the benefit of New Lionsgate by Starz that survived the Transactions;

 

  •  

any breach by New Lionsgate of the Separation Agreement or any of the Ancillary Agreements; and

 

  •  

any untrue statement or alleged untrue statement or omission or alleged omission of material fact relating to New Lionsgate in the registration statement on Form S-4 (as amended or supplemented), the joint proxy statement/prospectus included on Form S-4 and Form 424B3, or public filings or annual or quarterly reports following the date of the Transactions.

The Separation Agreement also establishes procedures with respect to claims subject to indemnification and related matters. Indemnification with respect to taxes, and the procedures related thereto, is governed by the Tax Matters Agreement (as amended by the Tax Matters Agreement Amendment).

Insurance

The Separation Agreement provides for the allocation between the parties thereto of rights and obligations under existing insurance policies with respect to occurrences prior to the Transactions and set forth procedures for the administration of insured claims and related matters.

Further Assurances

In addition to the actions specifically provided for in the Separation Agreement, except as otherwise set forth therein or in any Ancillary Agreement, Starz and New Lionsgate agreed in the Separation Agreement to use reasonable best efforts, prior to, on and after the Arrangement Effective Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws, regulations and agreements to consummate and make effective the transactions contemplated by the Separation Agreement and the ancillary agreements.

Dispute Resolution

The Separation Agreement contains provisions that govern, except as otherwise provided in any ancillary agreement, the resolution of disputes, controversies or claims that may arise between Starz and New Lionsgate related to the Transactions and that are unable to be resolved through good faith discussions between Starz and New Lionsgate. These provisions contemplate that efforts will be made to resolve disputes, controversies and claims by escalation of the matter to executives of the parties in dispute. If such efforts are not successful, one of the parties in dispute may submit the dispute, controversy or claim to nonbinding mediation or, if such nonbinding mediation is not successful, binding alternative dispute resolution, subject to the provisions of the Separation Agreement.

 

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Expenses

Except as expressly set forth in the Separation Agreement or in any ancillary agreement, the party incurring the expense is responsible for all costs and expenses incurred in connection with the Transactions incurred prior to the Arrangement Effective Time, including costs and expenses relating to legal and tax counsel, financial advisors and accounting advisory work related to the Transactions. Except as expressly set forth in the Separation Agreement or in any ancillary agreement, or as otherwise agreed in writing by Starz and New Lionsgate, all costs and expenses incurred in connection with the Transactions after the completion of the Transactions must also be paid by the party incurring such cost and expense.

Other Matters

Other matters governed by the Separation Agreement include approvals and notifications of transfer, termination of intercompany agreements, shared contracts, financial information certifications, transition committee provisions, confidentiality, access to and provision of records, privacy and data protection, production of witnesses, privileged matters, and financing arrangements.

Amendment and Termination

The Separation Agreement provides that no provision of the Separation Agreement or any ancillary agreement may be waived, amended, supplemented or modified by a party without the written consent of the party against whom it is sought to enforce such waiver, amendment supplement or modification.

The Separation Agreement may not be terminated, except by an agreement in writing signed each of the parties thereto or as otherwise required by applicable law.

Employee Matters Agreement

New Lionsgate and Starz entered into an employee matters agreement prior to the Arrangement Effective Time to allocate liabilities and responsibilities relating to employment matters, employee compensation and benefits plans and programs and other related matters. The Employee Matters Agreement governs certain compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of each company.

The Employee Matters Agreement provides that, unless otherwise specified, New Lionsgate is responsible for liabilities associated with employees who are employed by New Lionsgate following the Arrangement Effective Time and former employees whose last employment was with the LG Studios Business, and Starz is responsible for liabilities associated with employees who are employed by Starz following the Arrangement Effective Time and former employees whose last employment was with Starz Business.

The Employee Matters Agreement also governs the terms of equity-based awards granted by LGEC prior to the Arrangement Effective Time. See “The Transactions—Treatment of Lionsgate Equity Awards.”

The foregoing summary does not purport to describe all of the terms of the Employee Matters Agreement and is qualified in its entirety by reference to the complete text of the Employee Matters Agreement, which is filed as Exhibit 10.4 to this prospectus and is incorporated herein by reference.

Tax Matters Agreement

In connection with the Business Combination, on May 9, 2024, LGEC and LG Studios entered into a tax matters agreement (the “Tax Matters Agreement”) that governs the respective rights, responsibilities and obligations of the parties thereto with respect to tax liabilities and benefits, tax attributes, certain indemnification

 

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rights with respect to tax matters, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes. In connection with the Transactions, prior to the Arrangement Effective Time, New Lionsgate became a party to the Tax Matters Agreement, pursuant to an amendment to the Tax Matters Agreement (the “Tax Matters Agreement Amendment”).

The foregoing summary does not purport to describe all of the terms of the Tax Matters Agreement and is qualified in its entirety by reference to the complete text of the Tax Matters Agreement and the Tax Matters Agreement Amendment, which are filed as Exhibit 10.1 and Exhibit 10.2, respectively, to this prospectus and are incorporated herein by reference.

Transition Services Agreement

In connection with the Transactions, New Lionsgate and Starz entered into a transition services agreement pursuant to which New Lionsgate and Starz and their respective affiliates provide to each other, on an interim, transitional basis, various services intended to support business continuity, facilitate operational integration, and ensure an efficient and orderly transition of responsibilities, systems and process following the consummation of the Transactions. The transition services agreement includes services related to production (such as music creative/supervision), certain finance, accounting, legal, information technology, human resources, investor relations, employee benefits and other services. The transition services agreement specifies the fees payable for these services, which are based on arm’s-length negotiations and generally billed on the basis of hourly rates. In general, the services began on the date of the completion of the Transactions and cover a period as early as three (3) months following completion of the Transactions (which may include certain investor relations and music creative/supervision services) and generally not expected to exceed thirteen (13) months following the completion of the Transactions (which may include certain IT and human resources services).

The foregoing summary does not purport to describe all of the terms of the transition services agreement and is qualified in its entirety by reference to the complete text of the Transition Services Agreement, which is filed as Exhibit 10.3 to this prospectus and is incorporated herein by reference.

Other Commercial Arrangements

New Lionsgate and Starz continue to be parties to certain commercial agreements, which presently include: (i) master originals content licensing agreements that will license SVOD and pay television rights to Starz for certain New Lionsgate owned first-run original series for the U.S. and Canada; (ii) library license agreements that will license SVOD and pay television rights to Starz for certain New Lionsgate owned library series and film content for the U.S. and Canada; (iii) a multiyear pay 1 television output arrangement, granting Starz an exclusive U.S. pay television/SVOD license for Lionsgate- or Summit-branded films theatrically released in the U.S.; and (iv) a distribution agreement authorizing New Lionsgate to globally distribute on an exclusive basis off-platform linear, on-demand, and transactional rights to certain original series owned by Starz (subject to holdbacks to preserve periods of exclusivity for Starz’s platforms). At least in the near term, Starz is likely to continue to be a significant customer of New Lionsgate. See “Risk Factors—Risks Related to New Lionsgate and the LG Studios Business.”

In connection with original programming, Starz licenses from Lionsgate exclusive SVOD and pay television rights to certain original series for exhibition in the U.S. and Canada. For each such original series, these licenses generally cover all episodes produced during the initial production season and multiple consecutive production seasons subsequently commissioned by Starz, plus a number of years thereafter, and involve certain holdbacks and restrictions over Lionsgate’s exploitation of the series. License fees are typically a negotiated percentage of the budget of the original series. Starz continues to contract with New Lionsgate’s Television Production segment (in addition to other independent studios and production companies) to produce and deliver original programming that will appear on Starz’s services. This original programming may be either exclusively licensed to or, in certain instances, owned by Starz.

 

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In addition to the business relationships between Starz and New Lionsgate relating to first-run original series, Starz licenses library content from New Lionsgate for exhibition in the U.S. and Canada. Under the library license agreements between Starz and New Lionsgate, Starz holds SVOD and pay television rights to exhibit older, previously released theatrical films and other programming during certain exhibition window periods. These exhibition windows are of varying lengths depending on the title and territory, with certain windows for library programming in the U.S. currently extending through at least 2028. The amounts Starz pays for library content generally reflect an amount per movie, series or other programming commensurate with the commercial quality (e.g., utility and perceived popularity) of the content being licensed.

Starz also has an exclusive multiyear output licensing agreement with New Lionsgate for New Lionsgate films theatrically released in the U.S. starting January 1, 2022, resulting in exclusive Pay 1 output title windows running through at least 2030. Starz enjoys SVOD and pay television exclusivity in the U.S. during all of its exhibition windows in this licensing agreement. However, there are periods between Starz’s windows when New Lionsgate can license the content to third parties. License fees paid by Starz to New Lionsgate for these licenses are determined by a pricing grid that is based on each film’s box office performance (subject to maximum amounts payable per movie and a cap on the number of movies that can be put to Starz each year).

New Lionsgate is the distributor of certain original series owned by Starz under the terms of an exclusive multi-year distribution agreement. This agreement, which continues following the Transactions, authorizes New Lionsgate to distribute off-network rights to Starz-owned series globally, subject to certain holdbacks and restrictions. Starz receives the amounts generated by such licenses for the Starz-owned series, subject to the reimbursement of distribution costs and a distribution fee retained by New Lionsgate.

 

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DESCRIPTION OF MATERIAL INDEBTEDNESS AND FILM RELATED OBLIGATIONS

The following summary sets forth information based on New Lionsgate’s financing arrangements in effect upon completion of the Transactions. The definitive material agreements set forth the definitive terms of the financing arrangements. See “Risk Factors—Risks Related to the Transactions—The definitive agreements with respect to the material indebtedness of New Lionsgate have not yet been entered into and are subject to change.”

New Lionsgate Credit Facility

On May 6, 2025, in connection with the consummation of the Transactions, New Lionsgate entered into a new credit agreement (the “New Lionsgate Credit Agreement”) with LGTV, as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent.

The New Lionsgate Credit Agreement provides for an $800.0 million senior secured revolving credit facility, which facility may be increased to a total amount not in excess of $1,200.0 million, subject to the terms and conditions set forth therein. Availability of funds under the New Lionsgate Credit Agreement is subject to a borrowing base. The New Lionsgate Credit Agreement and commitments thereunder will mature on the date that is five years after the closing date of the facility. Borrowings under the New Lionsgate Credit Agreement will bear interest at a rate per annum equal to, at LGTV’s option, either Term SOFR (subject to a 0.00% floor) or a base rate, in each case plus a margin of 2.50% for SOFR loans and 1.50% for base rate loans. LGTV will pay a commitment fee equal to 0.375% per annum in respect of unutilized commitments thereunder.

Borrowings under the New Lionsgate Credit Agreement may be used for working capital needs and other general corporate purposes, including the financing of permitted acquisitions and investments and to fund the development, production and acquisition costs of motion pictures and episodic series and other transactions not prohibited by the terms thereof.

LGTV’s obligations under the New Lionsgate Credit Agreement are guaranteed by New Lionsgate and substantially all of its wholly owned restricted subsidiaries and secured by substantially all assets of LGTV and the guarantors, in each case subject to certain customary exceptions.

The New Lionsgate Credit Agreement contains certain customary affirmative and negative covenants that limit the ability of New Lionsgate and its restricted subsidiaries, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, asset sales and acquisitions, pay dividends and make other restricted payments and enter into transactions with affiliates.

The New Lionsgate Credit Agreement also contains events of default customary for financings of this type, including relating to a change of control.

In addition, the New Lionsgate Credit Agreement requires New Lionsgate to maintain a Liquidity Ratio (as defined in the New Lionsgate Credit Agreement) of no less than 1.10 to 1.00 as of the last day of each fiscal quarter.

The foregoing description does not purpose to be complete and is qualified in its entirety by reference to the full text of the New Lionsgate Credit Agreement filed as an exhibit to the Current Report on Form 8-K filed on May 6, 2025 and incorporated herein by reference.

Exchange Notes

On May 6, 2025, in connection with the consummation of the Transactions, LGTV as successor issuer, assumed by way of that certain Supplemental Indenture No. 7 (“Supplemental Indenture No. 7”) all of Starz

 

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Capital Holdings 1, Inc.’s (formerly known as Lions Gate Capital Holdings 1, Inc.) obligations under that certain indenture, dated as of May 8, 2024 (as amended, restated, supplemented, or otherwise modified from time to time, the “Exchange Notes Indenture”), among Starz Capital Holdings 1, Inc., as initial issuer, the guarantors from time to time party thereto and U.S. Bank Trust Company, National Association, as trustee, and the 6.000% Exchange Notes issued thereunder (the “Exchange Notes”).

Pursuant to the terms of Supplemental Indenture No. 7, LGTV agreed to assume and perform as primary obligor all obligations of the initial issuer under the Exchange Notes Indenture and the Exchange Notes and the initial issuer was released and discharged from all obligations thereunder.

Following consummation of the Transactions, the Exchange Notes bear interest at 6.000% per annum payable semi-annually and mature April 15, 2030.

The Exchange Notes are redeemable at LGTV’s option in whole at any time, or in part from time to time, at the following redemption prices (expressed as a percentage of the face value of the Exchange Notes), plus accrued and unpaid interest, if any, to, but not including the redemption date: (i) on or after the closing date of the Transactions until, but excluding, the one-year anniversary thereof, 103.0%; (ii) on or after the one-year anniversary of the Transactions until, but excluding the two-year anniversary thereof, 102.0%; (iii) on or after the two-year anniversary of the Transactions until, but excluding the three-year anniversary thereof, 101.0%; (iv) on or after the three-year anniversary of the Transactions and thereafter, 100%.

The foregoing descriptions of the Exchange Notes Indenture, Exchange Notes and Supplemental Indenture No. 7 do not purport to be complete and are qualified in their entirety by reference to the full text of each of the Exchange Notes Indenture and Supplemental Indenture filed as Exhibits 4.1 and 4.1.7 hereto, respectively, and incorporated herein by reference.

IP Facilities

Lionsgate had outstanding certain intellectual property credit facilities (the “IP Facilities”), which remained in place as obligations of New Lionsgate following completion of the Transactions. The IP Facilities currently include an approximately $340 million senior secured amortizing term credit facility (the “eOne IP Credit Facility”) and an approximately $1.0 billion senior secured amortizing term credit facility (the “LG IP Credit Facility”).

eOne IP Credit Facility

New Lionsgate currently has outstanding a senior secured amortizing term credit facility based on and secured by New Lionsgate’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition. The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. The eOne IP Credit Facility is subject to quarterly required principal payments of $8.5 million, with the balance payable at maturity. Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum. The eOne IP Credit Facility matures on July 3, 2029. As of March 31, 2025, there was $323 million outstanding under the eOne IP Credit Facility.

LG IP Credit Facility

New Lionsgate currently has outstanding a senior secured amortizing term credit facility based on and secured by New Lionsgate’s intellectual property rights primarily associated with certain titles. The maximum principal amount of the LG IP Credit Facility is $1.0 billion, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. The LG IP Credit Facility is subject to quarterly required principal payments of $25.0 million, with the balance payable at maturity. Advances under the LG IP

 

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Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum. The LG IP Credit Facility matures on September 30, 2029. As of March 31, 2025, there was $978.8 million outstanding under the LG IP Credit Facility.

Film Library Facility

Lionsgate has outstanding a certain senior secured amortizing term credit facility (the “Film Library Facility”) based on and secured by the collateral consisting solely of certain of Lionsgate’s rights in certain acquired library titles, which remained in place as an obligation of New Lionsgate following completion of the Transactions. The maximum principal amount of the Film Library Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. The cash flows generated from the exploitation of the rights will be applied to repay the Film Library Facility subject to certain cumulative minimum guaranteed payment amounts.

Advances under the Film Library Facility bear interest at a rate equal to, at New Lionsgate’s option, SOFR plus 0.11% to 0.26% depending on the SOFR term (i.e., one or three months) plus 2.25% per annum (with a SOFR floor of 0.25%) or the base rate plus 1.25% per annum. The Film Library Facility matures on July 30, 2027. As of March 31, 2025, there was $75.9 million outstanding under the Film Library Facility.

Production Loans

Lionsgate has outstanding certain individual and multi-title loans for the production of film and television programs (the “Production Loans”), which remained in place as obligations of New Lionsgate following completion of the Transactions.

The majority of the Production Loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily SOFR-based interest. As of March 31, 2025, there were $1,395.4 million of Production Loans outstanding, of which $1,254.8 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e. film or television show), and $140.6 million are unsecured.

Production Tax Credit Facility

Lionsgate has outstanding a non-recourse senior secured revolving credit facility (the “Production Tax Credit Facility”) based on and secured by collateral consisting solely of certain of New Lionsgate’s tax credit receivables, which remained in place as an obligation of New Lionsgate following completion of the Transactions.

As of March 31, 2025, the maximum principal amount of the Production Tax Credit Facility was $280.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to New Lionsgate by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility.

As of March 31, 2025, tax credit receivables amounting to $357.8 million represented collateral related to the Production Tax Credit Facility. Advances under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10% plus 1.50% per annum or the base rate plus 0.50% per annum. The Production Tax Credit Facility matures on January 27, 2028. In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million. As of March 31, 2025, there was $280.0 million outstanding under the Production Tax Credit Facility, and there were no amounts available under the Production Tax Credit Facility.

 

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Backlog Facility and Other

Backlog Facility

Lionsgate has outstanding a committed secured revolving credit facility (the “Backlog Facility”) based on and secured by collateral consisting solely of certain of New Lionsgate’s fixed fee or minimum guarantee contracts where cash will be received in the future, which remained in place as an obligation of New Lionsgate following completion of the Transactions.

As of March 31, 2025, the maximum principal amount of the Backlog Facility was $175.0 million, subject to the amount of eligible collateral contributed to the facility. Advances under the Backlog Facility bear interest at a rate equal to Term SOFR plus 0.10% to 0.25% depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15% per annum. The applicable margin is subject to a potential increase to either 1.25% or 1.50% based on the weighted average credit quality rating of the collateral contributed to the facility. In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility. The facility maturity date is up to two years, 90 days after the revolving period ends, currently August 28, 2027. As of March 31, 2025, there was $135.7 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility.

Other

Lionsgate has outstanding other loans, which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements, which remained in place as obligations of New Lionsgate following completion of the Transactions.

Outstanding loan balances under these “other” loans must be repaid with any cash collections from the underlying collateral if and when received by New Lionsgate, and may be voluntarily repaid at any time without prepayment penalty fees. As of March 31, 2025, there was $103.2 million outstanding under the “other” loans, with contractual repayment dates in July 2025 and October 2025. As of March 31, 2025, accounts receivable, amounting to $36.2 million, and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2025, amounting to $86.1 million, represented collateral related to the “other” loans.

 

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Summary

See below a summary chart of the New Lionsgate material indebtedness and film related obligations as of March 31, 2025 on a historical and pro forma basis:

 

     As of March 31, 2025  
     Historical
Lionsgate		      Historical
Lionsgate
Studios Corp.		      Pro
Forma(1)
New
Lionsgate		  
     (Amounts in millions)  

Principal amounts of corporate debt:

         

Revolving credit facilities

    $ —       $ —       $ —   

Intercompany revolver

      —         81.6        —   

Term Loan A

      314.4        314.4        —   

Existing Notes and Exchange Notes(2)

      715.0        —         389.9  

IP Credit Facilities

      1,301.8        1,301.8        1,301.8  

New revolving credit facilities(3)

      —         —         —   
  

 

 

     

 

 

     

 

 

  

Total corporate debt

      2,331.2        1,697.8        1,691.7  

Film related obligations

      2,081.1        1,990.2        1,990.2  
  

 

 

     

 

 

     

 

 

  

Total indebtedness

    $ 4,412.3      $ 3,688.0      $ 3,681.9  
  

 

 

     

 

 

     

 

 

  
 
(1)

Amounts set forth on a pro forma basis give effect to the pro forma adjustments included in the Unaudited Pro Forma Condensed Consolidated Financial Information of New Lionsgate.

(2)

Of the $715.0 million historical Lionsgate Existing Notes and Exchange Notes, New Lionsgate assumed $389.9 million of the obligations outstanding under the Exchange Notes pursuant to Supplemental Indenture No. 7 and $325.1 million of the Existing Notes remained as obligations of Starz following completion of the Transactions.

(3)

In connection with the completion of the Transactions, New Lionsgate entered into the New Lionsgate Credit Agreement, which provides for an $800.0 million senior secured revolving credit facility.

 

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EXPERTS

Lions Gate Entertainment Corp.

The consolidated financial statements of Lions Gate Entertainment Corp. at March 31, 2025 and 2024, and for each of the three years in the period ended March 31, 2025, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

Lionsgate Studios Corp.

The consolidated financial statements of Lionsgate Studios Corp. at March 31, 2025 and 2024, and for each of the three years in the period ended March 31, 2025, appearing in this Prospectus and Registration Statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

LEGAL MATTERS

The validity of New Lionsgate common shares issued in connection with the Transactions was passed upon by Dentons Canada LLP.

 

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WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC under the Securities Act with respect to the shares of New Lionsgate new common shares being offered as contemplated by this prospectus. This prospectus is a part of, and does not contain all of the information set forth in, the registration statement and the exhibits and schedules to the registration statement. For further information with respect to New Lionsgate and New Lionsgate new common shares, please refer to the registration statement, including its exhibits and schedules. Statements made in this prospectus relating to any contract or other document filed as an exhibit to the registration statement include the material terms of such contract or other document. However, such statements are not necessarily complete, and you should refer to the exhibits attached to the registration statement for copies of the actual contract or document. You may review a copy of the registration statement, including its exhibits and schedules, on the Internet website maintained by the SEC at www.sec.gov and the Internet website maintained by the Canadian Securities Administrators at https://www.sedarplus.ca. Copies of documents filed with the SEC and the Canadian Securities Administrators by New Lionsgate may be obtained free of charge on their respective websites at https://investors.lionsgate.com and https://investors.lionsgate.com. Information contained on or connected to any website referenced in this prospectus is not incorporated into this prospectus or the registration statement of which this prospectus forms a part, or in any other filings with, or any information furnished or submitted to, the SEC or the Canadian Securities Administrators.

As a result of the Transactions, New Lionsgate is subject to the information and reporting requirements of the Exchange Act and, in accordance with the Exchange Act, files periodic reports, proxy statements and other information with the SEC.

We intend to furnish holders of New Lionsgate new common shares with annual reports containing consolidated financial statements prepared in accordance with GAAP and audited and reported on, with an opinion expressed, by an independent registered public accounting firm.

You should rely only on the information contained in this prospectus or to which this prospectus has referred you. We have not authorized any person to provide you with different information or to make any representation not contained in this prospectus.

 

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P1YP5YP1YP1YP1YP7YP7YP1YP1YP1Yhttp://www.lion.com/20250331#DirectOperatingCost http://www.lion.com/20250331#RestructuringAndOtherItemshttp://www.lion.com/20250331#DirectOperatingCost http://www.lion.com/20250331#RestructuringAndOtherItemshttp://fasb.org/us-gaap/2024#OtherAssetsCurrenthttp://fasb.org/us-gaap/2024#OtherAssetsCurrenthttp://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherAssetsNoncurrenthttp://fasb.org/us-gaap/2024#AccruedLiabilitiesCurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2024#OtherLiabilitiesNoncurrent
CONSOLIDATED FINANCIAL STATEMENTS
Index to Financial Statements
Lions Gate Entertainment Corp.
    
Page
Number
  
Audited Consolidated Financial Statements
   
    
F-2
  
    
F-4
  
    
F-5
  
    
F-6
  
    
F-7
  
    
F-8
  
    
F-9
  
Lionsgate Studios Corp.
   
Audited Consolidated Financial Statements
   
    
F-84
  
    
F-86
  
    
F-87
  
    
F-88
  
    
F-89
  
    
F-90
  
    
F-91
  
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Lionsgate Studios Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lions Gate Entertainment Corp. (the Company) as of March 31, 2025 and 2024, the related consolidated statements of operations, comprehensive loss, equity (deficit) and cash flows for each of the three years in the period ended March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) and in accordance with auditing standards generally accepted in the United States of America, the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 30, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 
F-2
Table of Contents
  
Pre-release
Film Impairments
Description of the Matter
    As disclosed in Note 1 to the consolidated financial statements, Investment in Films and Television Programs is stated at the lower of unamortized cost or estimated fair value. As disclosed in Note 3 to the consolidated financial statements, total impairment charges on investment in films and television programs related to theatrical films were $19.7 million for the year ended March 31, 2025 and the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million at March 31, 2025.
   Auditing the Company’s impairment evaluation for theatrical films prior to release is challenging and subjective as the key assumptions in the analysis include estimates of future anticipated revenues and box office performance, which may differ from future actual results. These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews.
How We Addressed the Matter in Our Audit
    We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s theatrical impairment review process. For example, we tested controls over management’s review of unreleased theatrical films for indicators of impairment and management’s determination of the significant assumptions mentioned above.
   To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, evaluating unreleased theatrical films for indicators of impairment and testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above. For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, we evaluated test audience results when available, and we considered the historical accuracy of management’s estimates. We also performed sensitivity analyses to evaluate the potential changes in the expected profitability of unreleased films resulting from reasonable changes in the assumptions.
 
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2001.
Los Angeles, California
May 30, 2025
 
F-3
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LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED BALANCE SHEETS
 
    
March 31,
2025
    
March 31,
2024
  
    
(Amounts in millions)
  
ASSETS
     
Cash and cash equivalents
    $ 223.7   $ 314.0
Accounts receivable, net
      636.5     753.0
Other current assets
      375.8     396.5
  
 
 
    
 
 
  
Total current assets
      1,236.0     1,463.5
Investment in films and television programs and program rights, net
      2,913.1     2,762.2
Property and equipment, net
      82.7     88.5
Investments
      77.8     74.8
Intangible assets, net
      836.8     991.8
Goodwill
      808.5     811.2
Other assets
      867.2     900.7
  
 
 
    
 
 
  
Total assets
    $ 6,822.1   $ 7,092.7
  
 
 
    
 
 
  
LIABILITIES
     
Accounts payable
    $ 310.1   $ 327.6
Content related payables
      134.5     190.0
Other accrued liabilities
      269.7     355.1
Participations and residuals
      670.2     678.4
Film related obligations
      1,708.7     1,393.1
Debt - short term portion
      134.0     860.3
Deferred revenue
      240.1     187.6
  
 
 
    
 
 
  
Total current liabilities
      3,467.3     3,992.1
Debt
      2,157.2     1,619.7
Participations and residuals
      409.3     435.1
Film related obligations
      365.1     544.9
Other liabilities
      493.0     556.4
Deferred revenue
      169.1     118.4
Deferred tax liabilities
      20.1     13.3
  
 
 
    
 
 
  
Total liabilities
      7,081.1     7,279.9
Commitments and contingencies (Note 17)
     
Redeemable noncontrolling interest
      93.7     123.3
EQUITY (DEFICIT)
     
Class A voting common shares, no par value, 500.0 shares authorized, 83.7 shares issued (March 31, 2024 - 83.6 shares issued)
      674.7     673.6
Class B
non-voting
common shares, no par value, 500.0 shares authorized, 156.8 shares issued (March 31, 2024 - 151.7 shares issued)
      2,522.1     2,474.4
Accumulated deficit
      (3,534.1 )      (3,576.7 ) 
Accumulated other comprehensive income
      72.6     116.0
  
 
 
    
 
 
  
Total Lions Gate Entertainment Corp. shareholders’ equity (deficit)
      (264.7 )      (312.7 ) 
Noncontrolling interests
      (88.0 )      2.2
  
 
 
    
 
 
  
Total equity (deficit)
      (352.7 )      (310.5 ) 
  
 
 
    
 
 
  
Total liabilities, redeemable noncontrolling interests and equity (deficit)
    $ 6,822.1   $ 7,092.7
  
 
 
    
 
 
  
See accompanying notes.
 
F-
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LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
    
Year Ended March 31,
  
    
2025
    
2024
    
2023
  
    
(Amounts in millions, except per share amounts)
  
Revenues
    $ 3,947.9   $ 4,016.9   $ 3,854.8
Expenses:
       
Direct operating
      2,352.1     2,189.2     2,312.5
Distribution and marketing
      776.9     911.4     801.7
General and administration
      445.4     490.5     531.1
Depreciation and amortization
      188.1     192.2     180.3
Restructuring and other
      253.5     508.5     411.9
Goodwill and intangible asset impairment
      —        663.9     1,475.0
  
 
 
    
 
 
    
 
 
  
Total expenses
      4,016.0     4,955.7     5,712.5
  
 
 
    
 
 
    
 
 
  
Operating loss
      (68.1 )      (938.8 )      (1,857.7 ) 
Interest expense
      (283.6 )      (269.8 )      (221.2 ) 
Interest and other income
      15.1     22.1     6.4
Other losses, net
      (19.0 )      (26.9 )      (26.9 ) 
Gain (loss) on extinguishment of debt
      (7.5 )      19.9     57.4
Gain on investments, net
      —        3.5     44.0
Equity interests income
      4.3     8.7     0.5
  
 
 
    
 
 
    
 
 
  
Loss before income taxes
      (358.8 )      (1,181.3 )      (1,997.5 ) 
Income tax benefit (provision)
      (14.8 )      65.0     (21.3 ) 
  
 
 
    
 
 
    
 
 
  
Net loss
      (373.6 )      (1,116.3 )      (2,018.8 ) 
Less: Net loss attributable to noncontrolling interests
      11.6     13.4     8.6
  
 
 
    
 
 
    
 
 
  
Net loss attributable to Lions Gate Entertainment Corp. shareholders
    $ (362.0 )    $ (1,102.9 )    $ (2,010.2 ) 
  
 
 
    
 
 
    
 
 
  
Per share information attributable to Lions Gate Entertainment Corp. shareholders:
       
Basic net loss per common share
    $ (1.49 )    $ (4.77 )    $ (8.82 ) 
  
 
 
    
 
 
    
 
 
  
Diluted net loss per common share
    $ (1.49 )    $ (4.77 )    $ (8.82 ) 
  
 
 
    
 
 
    
 
 
  
Weighted average number of common shares outstanding:
       
Basic
      238.9     233.6     227.9
Diluted
      238.9     233.6     227.9
See accompanying notes.
 
F-
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LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
 
    
Year Ended March 31,
  
    
2025
    
2024
    
2023
  
    
(Amounts in millions)
  
Net loss
    $ (373.6 )    $ (1,116.3 )    $ (2,018.8 ) 
Foreign currency translation adjustments, net of tax
      (6.7 )      (1.1 )      (1.9 ) 
Net unrealized gain (loss) on cash flow hedges, net of tax
      (28.9 )      (3.8 )      93.5
  
 
 
    
 
 
    
 
 
  
Comprehensive loss
      (409.2 )      (1,121.2 )      (1,927.2 ) 
Less: Comprehensive loss attributable to noncontrolling interests
      15.1     13.4     8.6
  
 
 
    
 
 
    
 
 
  
Comprehensive loss attributable to Lions Gate Entertainment Corp. shareholders
    $ (394.1 )    $ (1,107.8 )    $ (1,918.6 ) 
  
 
 
    
 
 
    
 
 
  
See accompanying notes.
 
F-
6
Table of Contents
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)
 
   
Class A Voting
Common Shares
    
Class B
Non-Voting

Common Shares
    
Accumulated
Deficit
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Total LGEC
Shareholders’
Equity
(Deficit)
    
Non-controlling

Interests (a)
    
Total
Equity
(Deficit)
  
   
Number
    
Amount
    
Number
    
Amount
  
   
(Amounts in millions)
  
Balance at March 31, 2022
     83.3   $ 668.2     142.0   $ 2,353.8   $ (369.7 )    $ 29.3   $ 2,681.6   $ 1.8   $ 2,683.4
Exercise of stock options
     —        —        0.4     3.8     —        —        3.8     —        3.8
Share-based compensation, net of share cancellations for taxes
     0.2     3.8     3.5     73.1     —        —        76.9     —        76.9
Issuance of common shares
     —        0.3     —        0.2     —        —        0.5     —        0.5
Noncontrolling interests
     —        —        —        —        —        —        —        (0.9 )      (0.9 ) 
Net loss
     —        —        —        —        (2,010.2 )      —        (2,010.2 )      0.6     (2,009.6 ) 
Other comprehensive income
     —        —        —        —        —        91.6     91.6     —        91.6
Redeemable noncontrolling interests adjustments
     —        —        —        —        (59.7 )      —        (59.7 )      —        (59.7 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2023
     83.5   $ 672.3     145.9   $ 2,430.9   $ (2,439.6 )    $ 120.9   $ 784.5   $ 1.5   $ 786.0
Exercise of stock options
     —        —        —        0.5     —        —        0.5     —        0.5
Share-based compensation, net of share cancellations for taxes
     —        0.8     5.8     42.5     —        —        43.3     —        43.3
Issuance of common shares
     0.1     0.5     —        0.5     —        —        1.0     —        1.0
Noncontrolling interests
     —        —        —        —        —        —        —        (0.8 )      (0.8 ) 
Net loss
     —        —        —        —        (1,102.9 )      —        (1,102.9 )      1.5     (1,101.4 ) 
Other comprehensive income
     —        —        —        —        —        (4.9 )      (4.9 )      —        (4.9 ) 
Redeemable noncontrolling interests adjustments
     —        —        —        —        (34.2 )      —        (34.2 )      —        (34.2 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2024
     83.6   $ 673.6     151.7   $ 2,474.4   $ (3,576.7 )    $ 116.0   $ (312.7 )    $ 2.2   $ (310.5 ) 
Exercise of stock options
     —        —        0.1     0.7     —        —        0.7     —        0.7
Share-based compensation, net of share cancellations for taxes
     0.1     0.9     5.0     46.8     —        —        47.7     —        47.7
Issuance of common shares
     —        0.2     —        0.2     —        —        0.4     —        0.4
Sale of noncontrolling interest in Legacy Lionsgate Studios Corp. (see Note 2)
     —        —        —        —        389.7     (11.3 )      378.4     (100.2 )      278.2
Noncontrolling interests (see Note 11)
     —        —        —        —        —        —        —        33.6     33.6
Distributions to noncontrolling interests
     —        —        —        —        —        —        —        (10.2 )      (10.2 ) 
Net loss
     —        —        —        —        (362.0 )      —        (362.0 )      (9.9 )      (371.9 ) 
Other comprehensive loss
     —        —        —        —        —        (32.1 )      (32.1 )      (3.5 )      (35.6 ) 
Redeemable noncontrolling interests adjustments
     —        —        —        —        14.9     —        14.9     —        14.9
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2025
     83.7   $ 674.7     156.8   $ 2,522.1   $ (3,534.1 )    $ 72.6   $ (264.7 )    $ (88.0 )    $ (352.7 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(a)
Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 11).
See accompanying notes.
 
F-
7
Table of Contents
LIONS GATE ENTERTAINMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
   
Year Ended March 31,
  
   
2025
    
2024
    
2023
  
   
(Amounts in millions)
  
Operating Activities:
      
Net loss
   $ (373.6 )    $ (1,116.3 )    $ (2,018.8 ) 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
      
Depreciation and amortization
     188.1     192.2     180.3
Amortization of films and television programs and program rights
     1,722.4     1,577.9     1,665.3
Amortization of debt financing costs and other
non-cash
interest
     27.4     28.3     25.7
Non-cash
share-based compensation
     74.4     90.6     102.0
Other
non-cash
items
     46.2     53.4     69.2
Goodwill and intangible asset impairment
     —        663.9     1,475.0
Non-cash
charge from the modification of an equity award (see Note 11)
     —        49.2     —   
Content and other impairments
     162.4     377.3     385.2
(Gain) loss on extinguishment of debt
     7.5     (19.9 )      (57.4 ) 
Equity interests income
     (4.3 )      (8.7 )      (0.5 ) 
Gain on investments, net
     —        (3.5 )      (44.0 ) 
Deferred income taxes
     5.3     (18.5 )      (5.3 ) 
Changes in operating assets and liabilities:
      
Proceeds from the termination of interest rate swaps
     —        —        188.7
Accounts receivable, net
     188.6     95.6     (140.6 ) 
Investment in films and television programs and program rights, net
     (1,968.6 )      (1,409.3 )      (1,979.2 ) 
Other assets
     (69.1 )      (1.7 )      (41.9 ) 
Accounts payable and accrued liabilities
     (163.8 )      (136.3 )      (2.9 ) 
Participations and residuals
     (37.8 )      29.0     145.4
Content related payables
     (69.7 )      (45.6 )      (35.1 ) 
Deferred revenue
     98.6     (0.8 )      (25.4 ) 
 
 
 
    
 
 
    
 
 
  
Net Cash Flows Provided By (Used In) Operating Activities
     (166.0 )      396.8     (114.3 ) 
 
 
 
    
 
 
    
 
 
  
Investing Activities:
      
Net proceeds from purchase price adjustments for eOne acquisition (see Note 2)
     12.0     —        —   
Purchase of eOne, net of cash acquired (see Note 2)
     —        (331.1 )      —   
Proceeds from the sale of equity method and other investments
     1.5     5.2     46.3
Investment in equity method investees and other
     (2.0 )      (13.3 )      (17.5 ) 
Distributions from equity method investees and other
     —        0.8     1.9
Acquisition of assets (film library and related assets)
     (35.0 )      —        —   
Increase in loans receivable
     —        (3.7 )      —   
Repayment of loans receivable
     1.6     —        —   
Capital expenditures
     (31.1 )      (34.7 )      (49.0 ) 
 
 
 
    
 
 
    
 
 
  
Net Cash Flows Used In Investing Activities
     (53.0 )      (376.8 )      (18.3 ) 
 
 
 
    
 
 
    
 
 
  
Financing Activities:
      
Debt - borrowings, net of debt issuance and redemption costs
     4,235.0     3,145.0     1,523.0
Debt - repurchases and repayments
     (4,443.3 )      (2,672.8 )      (1,880.8 ) 
Film related obligations - borrowings
     2,296.2     2,010.6     1,688.6
Film related obligations - repayments
     (2,179.3 )      (2,215.4 )      (1,073.0 ) 
Sale of noncontrolling interest in Legacy Lionsgate Studios Corp. (see Note 2)
     281.7     —        —   
Settlement of financing component of interest rate swaps
     —        —        (134.5 ) 
Purchase of noncontrolling interest
     (7.4 )      (194.6 )      (36.5 ) 
Distributions to noncontrolling interest
     (10.3 )      (1.7 )      (7.6 ) 
Exercise of stock options
     0.7     0.5     3.8
Tax withholding required on equity awards
     (29.1 )      (32.0 )      (19.2 ) 
 
 
 
    
 
 
    
 
 
  
Net Cash Flows Provided By Financing Activities
     144.2     39.6     63.8
 
 
 
    
 
 
    
 
 
  
Net Change In Cash, Cash Equivalents and Restricted Cash
     (74.8 )      59.6     (68.8 ) 
Foreign Exchange Effects on Cash, Cash Equivalents and Restricted Cash
     (5.0 )      (1.2 )      (2.8 ) 
Cash, Cash Equivalents and Restricted Cash - Beginning Of Period
     371.4     313.0     384.6
 
 
 
    
 
 
    
 
 
  
Cash, Cash Equivalents and Restricted Cash - End Of Period
   $ 291.6   $ 371.4   $ 313.0
 
 
 
    
 
 
    
 
 
  
See accompanying notes.
 
F-
8
Table of Contents
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business, Basis of Presentation and Significant Accounting Policies
Description of Business
Prior to the Starz Separation, as further discussed below, Lions Gate Entertainment Corp. (the “Company,” “Old Lionsgate,” “Lions Gate,” “we,” “us” or “our”) encompassed world-class motion picture and television studio operations aligned with the STARZ premium global subscription platform to bring a unique and varied portfolio of entertainment to consumers around the world. The Company’s film, television, subscription and location-based entertainment businesses are backed by a more
than 20,000-title
library and a valuable collection of iconic film and television franchises.
Starz Separation
On May 6, 2025, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”), the separation of the businesses of Lionsgate Studios Corp. (“Legacy Lionsgate Studios”), of which the Company owned approximately 87.8% and which encompasses the Company’s motion picture and television studio operations, and the STARZ-branded premium subscription platform business was completed (the “Starz Separation”). As a result of the Arrangement Agreement, the
pre-transaction
shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and herein after referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 21).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”), due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with Lionsgate following the completion of the Starz Separation, Lionsgate (which holds the Lionsgate Studio Business) is considered the accounting spinnor or divesting entity and Starz (which holds the Starz Business) is considered the accounting spinnee or divested entity. As a result, Old Lionsgate will be the accounting predecessor to Lionsgate and the pro rata distribution of the Starz Business will be recorded through equity with no gain or loss recorded. The Starz Business will be reflected as discontinued operations in the financial statements of Lionsgate following the completion of the Starz Separation, beginning with the first quarter ended June 30, 2025. For periods following the Starz Separation, Lionsgate will reflect the historical financial position and results of operations of Old Lionsgate and as such, Old Lionsgate’s consolidated financial statements as of March 31, 2025 and 2024 and for each of the three years in the period ended March 31, 2025 are included herein.
Basis of Presentation
Generally Accepted Accounting Principles
These consolidated financial statements have been prepared in accordance with U.S. GAAP.
Principles of Consolidation
The accompanying consolidated financial statements of the Company include the accounts of Old Lionsgate and its majority-owned and controlled subsidiaries. The Company reviews its relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made that the Company is the primary beneficiary, then the entity is consolidated.
 
F-
9
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
All significant intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs; estimates of future viewership used for the amortization of licensed program rights; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; fair value of assets and liabilities for allocation of the purchase price of companies and assets acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs and licensed program rights, goodwill and intangible assets. Actual results could differ from such estimates.
Reclassifications
Certain amounts presented in prior years have been reclassified to conform to the current year’s presentation.
Significant Accounting Policies
Revenue Recognition
The Company’s Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places. The Company’s Media Networks segment generates revenue primarily from the distribution of the Company’s STARZ premium subscription video services.
Revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities such as sales tax and value-added tax.
In the ordinary course of business, the Company’s reportable segments enter into transactions with one another. The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.
Licensing Arrangements.
 The Company’s content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties.
Fixed Fee or Minimum Guarantees:
 The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered
 
F-1
0
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.
Sales or Usage Based Royalties:
 Sales or usage based royalties represent amounts due to the Company based on the “sale” or “usage” of the Company’s content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and satisfied (or partially satisfied). Generally, when the Company licenses completed content with standalone functionality (such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements are generally not reported to the Company until after the close of the reporting period. The Company records revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry.
Revenues by Market or Product Line.
 The following describes the revenues generated by market or product line. Theatrical revenues are included in the Motion Picture segment; home entertainment, television, international and other revenues are applicable to both the Motion Picture and Television Production segments; Media Networks programming revenues are included in the Media Networks segment.
 
  •  
Theatrical.
 Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a
picture-by-picture
basis (distributed by the Company directly in the United States and through a
sub-distributor
in Canada). Revenue from the theatrical release of feature films are treated as sales or usage- based royalties, are recognized as revenue starting at the exhibition date and are based on the Company’s participation in box office receipts of the theatrical exhibitor. Theatrical revenues also include revenues from licenses to
direct-to-platform
customers where the initial license of a motion picture is to a
direct-to-platform
customer.
 
  •  
Home Entertainment.
 Home entertainment consists of Digital Media and Packaged Media.
 
  •  
Digital Media.
 Digital media includes digital transaction revenue sharing arrangements
(pay-per-view
and
video-on-demand
platforms, electronic sell through (“EST”), and digital rental) and licenses of content to digital platforms for a fixed fee.
Digital Transaction Revenue Sharing Arrangements:
 Primarily represents revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a
title-by-title
basis. These digital media platforms generate revenue from rental and EST arrangements, such as
download-to-own,
download-to-rent,
and
video-on-demand.
These revenue sharing arrangements are recognized as sales or usage based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above.
Licenses of Content to Digital Platforms:
 Primarily represents the licensing of content to
subscription-video-on-demand
(“SVOD”) or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.
 
F-11
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  •  
Packaged Media.
 Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s,
Blu-ray,
4K Ultra HD, referred to as “Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).
 
  •  
Television
.
 Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and
non-fiction
programming. Television revenues also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform or the traditional pay window for a motion picture is licensed to an SVOD platform. Television revenues include fixed fee arrangements as well as arrangements in which the Company earns advertising revenue from the exploitation of certain content on television networks. Revenues associated with a title, right, or window from television licensing arrangements are recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun.
 
  •  
International.
 International revenues are derived from (1) licensing of the Company’s productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a
territory-by-territory
basis; (2) the direct distribution of the Company’s productions, acquired films, and the Company’s catalog product and libraries of acquired titles in the United Kingdom; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and
non-fiction
programming. License fees and minimum guarantee amounts associated with title, window, media or territory, are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company’s customer generating a royalty due to the Company has occurred.
 
  •  
Other.
 Other revenues are derived from the licensing of the Company’s film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions and executive producer fees earned related to talent management.
Revenues from the licensing of film and television content and the sales and licensing of music are recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes or logos) is recognized over the corresponding license term. Commissions are recognized as such services are provided.
 
  •  
Media Networks - Programming Revenues.
 Media Networks’ revenues are primarily derived from the domestic distribution of the Company’s STARZ branded premium subscription video services through
over-the-top
(“OTT”) streaming platforms and distributors, on a
direct-to-consumer
basis through the Starz App and through U.S. and Canada multichannel video programming distributors (“MVPDs”), including cable operators, satellite television providers, and telecommunications companies (collectively “Distributors”) (in the aggregate, “Starz Networks”). Media Networks revenues also include revenue from the OTT distribution of the Starz subscription video services outside the United States and Canada (in the aggregate, “Other”). The Starz Networks platforms together with the Other platforms are referred to as the “Starz Platforms”.
Pursuant to the Company’s distribution agreements, revenues are primarily based on a fee based on the number of subscribers who receive the Company’s services or based on other factors (variable fee
 
F-12
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
arrangements), or to a lesser extent, may be based on a monthly fixed fee or minimum guarantee, subject to nominal annual escalations. The Company also generates revenue through the distribution of its SVOD service directly to consumers through the Starz App.
The variable distribution fee arrangements represent sales or usage based royalties, which are recognized over the period of such sales or usage by the Company’s distributor, which is the same period that the content is provided to the distributor. Estimates of revenue generated, but not yet reported to the Company by its distribution partners, are made based on an estimated number of subscribers using historical trends and recent reporting. Other fixed fee or minimum guarantee programming revenue is recognized over the contract term based on the continuous delivery of the content to the distributor. Subscribers through the Starz App are billed in advance of the start of their monthly or annual membership and revenues are recognized ratably over each applicable membership period.
Deferred Revenue.
 Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.
Deferred revenue also relates to customer payments that are made in advance of when the Company fulfills its performance obligation and recognizes revenue. This primarily occurs under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates, and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements do not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company’s risk of customer
non-performance
and incentivize the customer to exploit the Company’s content.
See Note 12 for further information.
Accounts Receivable.
 Payment terms vary by location and type of customer and the nature of the licensing arrangement. However, other than certain multi-year license arrangements, payments are generally due within 60 days after revenue is recognized. For certain multi-year licensing arrangements, primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of its performance obligation and the receipt of payment to be greater than a year, a significant financing component is present. In these cases, such payments are discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component is recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one year or less.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash deposits at financial institutions and investments in money market mutual funds.
Restricted Cash
At March 31, 2025, the Company had restricted cash of $67.9 million, primarily representing amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations (March 31, 2024 - $57.4 million). Restricted cash is included within “other current assets” and “other
non-current
assets” on the consolidated balance sheets (see Note 19).
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Investment in Films and Television Programs and Licensed Program Rights
Investment in Films and Television Programs:
General.
 Investment in films and television programs includes the unamortized costs of films and television programs, a portion of which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution), and a portion of which are monetized as part of a film group (i.e., primarily content internally produced by our Television Production segment for our Media Networks segment).
Recording Cost.
 Costs of acquiring and producing films and television programs and of acquired libraries are capitalized when incurred. For films and television programs produced by the Company, capitalized costs include all direct production and financing costs, capitalized interest and production overhead. For the years ended March 31, 2025, 2024, and 2023, total capitalized interest was $37.9 million, $21.0 million, and $28.1 million, respectively. For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.
Amortization.
 Costs of acquiring and producing films and television programs and of acquired libraries that are monetized individually are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs.
For investment in films and television programs monetized as a group, see further discussion below under
 Licensed Program Rights
 for a description of amortization of costs monetized as a group.
Ultimate Revenue.
 Ultimate revenue includes estimates over a period not to exceed ten years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed ten years following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.
Development.
 Films and television programs in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment unless the fair value of the project exceeds its carrying cost.
Licensed Program Rights:
General.
 Licensed program rights include content licensed from third parties that is monetized as part of a film group for distribution on Media Networks distribution platforms. Licensed content is comprised of films or series that have been previously produced by third parties and the Company retains specified airing rights over a contractual term. Program licenses typically have fixed terms and require payments during the term of the license.
Recording Cost.
 The cost of licensed content is capitalized when the cost is known or reasonably determinable, the license period for programs has commenced, the program materials have been accepted by the Company in accordance with the license agreements, and the programs are available for the first showing.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Licensed programming rights may include rights to more than one exploitation window under the Company’s output and library agreements. For films with multiple windows, the license fee is allocated between the windows based upon the proportionate estimated fair value of each window which generally results in the majority of the cost allocated to the first window on newer releases.
Certain license agreements and productions may include additional ancillary rights in addition to the rights for exploitation on the Starz Platforms. A portion of the cost of these licenses and the cost of produced content, is allocated between the programming rights for exploitation on the Starz Platforms and investment in film and television programs for exploitation outside of the Starz Platforms in ancillary markets (e.g., home entertainment, digital platforms, television, etc.) based on the relative fair value of those markets. The estimates of fair value for the allocation between windows of exploitation on the Starz Platforms and ancillary markets is based on historical experience of the values of similar titles licensed in subsequent windows and estimates of future revenues in ancillary markets.
Amortization.
 The cost of licensed program rights for films and television programs (including original series) are generally amortized on a
title-by-title
or
episode-by-episode
basis using an accelerated or straight-line method based on the expected and historical viewership patterns or the current and anticipated number of exhibitions over the license period or estimated life for owned or produced programs. The number of exhibitions is estimated based on the number of exhibitions allowed in the agreement (if specified) and the expected usage of the content. Participations and residuals are expensed in line with the amortization of production costs.
Changes in management’s estimate of the anticipated exhibitions and viewership patterns of films and original series on our platforms could result in the earlier recognition of our programming costs than anticipated.
Impairment Assessment for Investment in Films and Television Programs and Licensed Program Rights:
General.
 A film group or individual film or television program is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film or film group is less than its unamortized cost. A film group represents the unit of account for impairment testing for a film or license agreement for program material when the film or license agreement is expected to be predominantly monetized with other films and/or license agreements instead of being predominantly monetized on its own. A film group is defined as the lowest level at which identifiable cash flows are largely independent of the cash flows of other films and/or license agreements.
Content Monetized Individually.
 For content that is predominantly monetized individually (primarily investment in film and television programs related to the Motion Picture and Television Production segments), whenever events or changes in circumstances indicate that the fair value of the individual film may be less than its unamortized costs, the unamortized costs of the individual film are compared to the estimated fair value of the individual film. The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess.
Content Monetized as a Group.
 For content that is predominantly monetized as a group (primarily licensed program rights in the Media Networks segment and internally produced programming, as discussed above), whenever events or changes in circumstances indicate that the fair value of the film group may be less than its unamortized costs, the aggregate unamortized costs of the group are compared to the present value of the discounted cash flows of the group using the lowest level for which identifiable cash flows are independent of other produced and licensed content. The Company’s film groups are generally aligned with the Company’s
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
networks and digital content offerings domestically (i.e, Starz Networks) and internationally by territory or groups of territories, where content assets are shared across the various territories. If the unamortized costs of the film group exceed the present value of discounted cash flows, an impairment charge is recorded for the excess and allocated to individual titles based on the relative carrying value of each title in the group. Content removed from the service and abandoned is written down to its fair value, if any, determined using a discounted cash flow approach.
Valuation Assumptions.
 The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 10). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.
Property and Equipment, net
Property and equipment is carried at cost less accumulated depreciation. Depreciation is provided for on a straight line basis over the following useful lives:
 
Distribution equipment    3 - 7 years
Computer equipment and software    3 - 5 years
Furniture and equipment    5 - 7 years
Leasehold improvements    Lease term or the useful life, whichever is shorter
Land    Not depreciated
The Company periodically reviews and evaluates the recoverability of property and equipment. Where applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue estimates. If appropriate and where deemed necessary, a reduction in the carrying amount is recorded based on the difference between the carrying amount and the fair value based on discounted cash flows.
Leases
The Company determines if an arrangement is a lease at its inception. The expected term of the lease used for computing the lease liability and
right-of-use
(“ROU”) asset and determining the classification of the lease as operating or financing may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company also elected to not separate lease components from
non-lease
components across all lease categories. Instead, each separate lease component and
non-lease
component are accounted for as a single lease component.
Operating Leases.
 Operating lease ROU assets, representing the Company’s right to use the underlying asset for the lease term, are included in the “Other assets -
non-current”
line item in the Company’s consolidated balance sheets. Operating lease liabilities, representing the present value of the Company’s obligation to make payments over the lease term, are included in the “Other accrued liabilities” and “Other liabilities -
non-current”
line items in the Company’s consolidated balance sheets. The Company has entered into various short-term operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the Company’s consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
Finance Leases.
 The Company did not have any finance leases during the years ended March 31, 2025, 2024 or 2023.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The present value of the lease payments is calculated using a rate implicit in the lease, when readily determinable. However, as most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments for the majority of its leases.
Variable lease payments that are based on an index or rate are included in the measurement of ROU assets and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities.
Investments
Investments include investments accounted for under the equity method of accounting, and equity investments with and without readily determinable fair value.
Equity Method Investments:
 The Company uses the equity method of accounting for investments in companies in which it has a minority equity interest and the ability to exert significant influence over operating decisions of the companies. Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is treated as a flow-through entity.
Under the equity method of accounting, the Company’s share of the investee’s earnings (losses) are included in the “equity interests income” line item in the consolidated statements of operations. The Company records its share of the net income or loss of most equity method investments on a one quarter lag and, accordingly, during the years ended March 31, 2025, 2024, and 2023, the Company recorded its share of the income or loss generated by these entities for the years ended December 31, 2024, 2023 and 2022, respectively.
Dividends and other distributions from equity method investees are recorded as a reduction of the Company’s investment. Distributions received up to the Company’s interest in the investee’s retained earnings are considered returns on investments and are classified within cash flows from operating activities in the consolidated statements of cash flows. Distributions from equity method investments in excess of the Company’s interest in the investee’s retained earnings are considered returns of investments and are classified within cash flows provided by investing activities in the consolidated statements of cash flows.
Other Equity Investments:
 Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common stock, or does not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value. If an equity investment’s fair value is not readily determinable, the Company will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees’ securities that are identical or similar to the Company’s investments in the investee. The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss).
Impairments of Investments:
 The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.
For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, the Company evaluates information available (e.g., budgets, business plans,
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment.
Goodwill
At March 31, 2025, the carrying value of goodwill was $808.5 million. Goodwill is allocated to the Company’s reporting units, which are its operating segments or one level below its operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. The Company’s reporting units for purposes of goodwill impairment testing at March 31, 2025 were Motion Picture, Media Networks (no remaining goodwill balance), and our Television and Talent Management businesses, both of which are part of our Television Production segment.
Goodwill is not amortized, but is reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is
more-likely-than-not
that the fair value of a reporting unit is less than its carrying value. The Company performs its annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit of whether or not it is
more-likely-than-not
that the fair value is less than the carrying value of the reporting unit. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company.
A quantitative assessment requires determining the fair value of the Company’s reporting units. The determination of the fair value of each reporting unit utilizes discounted cash flows (“DCF”) analyses and market-based valuation methodologies, which represent Level 3 fair value measurements. Fair value determinations require considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates, and are sensitive to changes in these underlying assumptions and factors.
Goodwill Impairment Assessments:
Fiscal 2025.
 For the Company’s annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, the Company performed quantitative goodwill impairment assessments for all our reporting units with a remaining goodwill balance (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company’s reporting units. Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units significantly exceeded the carrying values for all of our reporting units with a remaining goodwill balance. See Note 6 for further information.
Fiscal 2024.
 In the second quarter of fiscal 2024, due to the continuing difficult macro and microeconomic conditions, industry trends, and their impact on the performance and projected cash flows of the Media Networks segment, including its growth in subscribers and revenue worldwide, and the expanded restructuring activities
 
F-
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
discussed in Note 15, along with recent market valuation multiples, the Company updated its quantitative impairment assessment for its Media Networks reporting unit goodwill based on the most recent data and expected growth trends. In performing its quantitative impairment assessment, the fair value of the Company’s reporting units was estimated by using a combination of DCF analyses and market-based valuation methodologies. Based on its quantitative impairment assessment, the Company determined that the fair value of the Media Networks reporting unit which was previously disclosed as a reporting unit “at risk” of impairment, was less than its carrying value (after the impairment write-down of its indefinite-lived intangible assets discussed in Note 6). The analysis resulted in a goodwill impairment charge of $493.9 million in the second quarter of fiscal 2024, representing all of the remaining Media Networks reporting unit goodwill, which is recorded in the “goodwill and intangible asset impairment” line item in the consolidated statements of operations.
For the Company’s annual goodwill impairment test for fiscal 2024, the Company performed qualitative goodwill impairment assessments for all our reporting units with a remaining goodwill balance (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment). Our qualitative assessment considered the market price of the Company’s common shares, the recent performance of these reporting units, and updated forecasts of performance and cash flows, as well as the current micro and macroeconomic environments in relation to the current and expected performance of these reporting units, and industry considerations, and determined that since the date of the most recent quantitative assessment performed over these reporting units, there were no events or circumstances that rise to a level that would
more-likely-than-not
reduce the fair value of those reporting units below their carrying values; therefore, a quantitative goodwill impairment analysis was not required for these reporting units.
Fiscal 2023.
 In the second quarter of fiscal 2023, the Company updated its quantitative impairment assessment for all of its reporting units using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company’s reporting units, and determined that the fair value of its reporting units exceeded the carrying values for all of its reporting units, except the Media Networks reporting unit which had been previously disclosed as a reporting unit “at risk” of impairment. The analysis resulted in a goodwill impairment charge of $1.475 billion in the second quarter of fiscal 2023, related to the Company’s Media Networks reporting unit goodwill, which is recorded in the “goodwill and intangible asset impairment” line item in the consolidated statement of operations. Since the impairment charge reduced the carrying value of the Media Networks reporting unit to its fair value, at September 30, 2022 the fair value and carrying value of the Media Networks reporting unit were equal and thus it continued to be considered “at risk” of impairment.
Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability of goodwill in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from the Company’s business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in the Company’s goodwill impairment tests, and ultimately impact the estimated fair value of the Company’s reporting units may include the global economy; consumer consumption levels of the Company’s content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; the duration and potential impact of strikes of unions on our ability to produce, acquire and distribute our content; the commercial success of the Company’s television programming and motion pictures; the Company’s continual contractual relationships with its customers; and changes in consumer behavior. If our assumptions are not realized, it is possible that additional impairment charges may need to be recorded in the future.
 
F-
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Intangible Assets
Finite-Lived.
 At March 31, 2025, the carrying value of the Company’s finite-lived intangible assets was $836.8 million. The Company’s finite-lived intangible assets primarily relate to customer relationships associated with U.S. MVPDs, including cable operators, satellite television providers and telecommunications companies (“Traditional Affiliate”), which amounted to $764.9 million. The amount of the Company’s customer relationship asset related to these Traditional Affiliate relationships reflects the estimated fair value of these customer relationships determined in connection with the acquisition of Starz on December 8, 2016, net of amortization recorded since the date of the Starz acquisition. Beginning October 1, 2023, the Company’s finite-lived intangible assets also include the trade names previously accounted for as indefinite-lived intangible assets.
Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 15 years. The Starz Traditional Affiliate customer relationship intangible asset is amortized in the proportion that current period revenues bear to management’s estimate of future revenue over the remaining estimated useful life of the asset, which results in greater amortization in the earlier years of the estimated useful life of the asset than the latter years.
Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the remaining useful life of an asset to the carrying value of the asset. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value.
The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of our finite-lived intangible assets. For fiscal 2025, due to changes in the industry related to the migration from linear to OTT and
direct-to-consumer
consumption, the Company reduced the useful life of its finite-lived intangible asset related to the Media Networks customer relationships associated with U.S. MVPDs from 16 years to 14 years. This resulted in an increase to amortization expense of $8.3 million for the fiscal year ended March 31, 2025 with a corresponding reduction of income before income taxes, net loss, and net loss attributable to Lions Gate Entertainment Corp. shareholders. This resulted in an increase to basic and diluted net loss per share for the fiscal year ended March 31, 2025 by $0.03 per share. There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes.
Indefinite-Lived Intangibles Other Than Goodwill.
 Through September 30, 2023, the Company’s in
d
efinite-lived intangible assets consisted of trade names representing the estimated fair value of the Starz brand name determined in connection with the acquisition of Starz as of December 8, 2016, amounting to $250.0 million related to the Media Networks reporting unit before the impairment charge recorded in the second quarter of fiscal 2024 discussed in Note 6. Indefinite-lived intangible assets are not amortized, but are reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is
more-likely-than-not
that the fair value of an indefinite-lived intangible asset is less than its carrying value. An indefinite-lived intangible asset impairment loss would be recognized for the amount that the carrying amount of an indefinite-lived intangible asset exceeds its fair value. As of March 31, 2025 and 2024, the Company did not have any indefinite-lived intangible assets.
 
F-2
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Prints, Advertising and Marketing Expenses
The costs of prints, advertising and marketing expenses are expensed as incurred.
Certain of Starz’s affiliation agreements require Starz to provide marketing support to the distributor based upon certain criteria as stipulated in the agreements. Marketing support includes cooperative advertising and marketing efforts between Starz and its distributors such as cross channel, direct mail and point of sale incentives. Marketing support is recorded as an expense and not a reduction of revenue when Starz has received a direct benefit and the fair value of such benefit is determinable.
Advertising expenses for the year ended March 31, 2025 were $585.6 million (2024 — $692.6 million, 2023 — $610.7 million) which were recorded as distribution and marketing expenses in the accompanying consolidated statements of operations.
Income Taxes
Income taxes are accounted for using an asset and liability approach for financial accounting and reporting for income taxes and recognition and measurement of deferred assets are based upon the likelihood of realization of tax benefits in future years. Under this method, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established when management determines that it is more likely than not that some portion or all of the net deferred tax asset, on a
jurisdiction-by-jurisdiction
basis, will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment.
From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty and judgment is required in assessing and estimating the tax consequences of these transactions. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination, based on their technical merits. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.
Government Assistance
The Company has access to government programs that are designed to promote film and television production and distribution in certain foreign countries. The Company also has access to similar programs in certain states within the U.S. that are designed to promote film and television production in those states.
Tax credits earned with respect to expenditures on qualifying film and television productions are recorded as a reduction to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 3 and Note 19).
Foreign Currency Translation
Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized and realized gains and losses are included in the consolidated statements of operations.
 
F-2
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Foreign company assets and liabilities in foreign currencies are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Foreign company revenue and expense items are translated at the average rate of exchange for the fiscal year. Gains or losses arising on the translation of the accounts of foreign companies are included in accumulated other comprehensive income or loss, a separate component of shareholders’ equity.
Derivative Instruments and Hedging Activities
Derivative financial instruments are used by the Company in the management of its foreign currency and interest rate exposures. The Company’s policy is not to use derivative financial instruments for trading or speculative purposes.
The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate and interest rate risks. All derivative financial instruments are recorded at fair value in the consolidated balance sheets (see Note 10). The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income or loss and included in unrealized gains (losses) on cash flow hedges until the underlying hedged item is recognized in earnings. The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive income or loss to net income or net loss when the underlying hedged item is recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings. See Note 18 for further discussion of the Company’s derivative financial instruments.
Share-Based Compensation
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide service. See Note 13 for further discussion of the Company’s share-based compensation.
Transfers of Financial Assets
The Company enters into arrangements to sell certain financial assets (i.e., monetize its trade accounts receivables). For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the Company and the purchaser must have control of the asset. Determining whether all the requirements have been met includes an evaluation of legal considerations, the extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. When the true sales criteria are met, the Company derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale. The proceeds from these arrangements with third party purchasers are reflected as cash provided by operating activities in the consolidated statements of cash flows. If the sales criteria are not met, the transfer is considered a secured borrowing and the financial asset remains on the consolidated balance sheets with proceeds from the sale recognized as debt and recorded as cash flows from financing activities in the consolidated statements of cash flows. See Note 19 for discussion of the Company’s accounts receivable monetization.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Net Loss Per Share
Basic net loss per share is calculated based on the weighted average common shares outstanding for the period. Basic and diluted net loss per share for the years ended March 31, 2025, 2024 and 2023 is presented below:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions, except per share amounts)
  
Basic and Diluted Net Loss Per Common Share:
         
Numerator:
         
Net loss attributable to Old Lions Gate Entertainment Corp. shareholders
    $ (362.0 )     $ (1,102.9 )     $ (2,010.2 ) 
Recovery (accretion) of redeemable noncontrolling interest
      5.0      (11.9 )       —   
  
 
 
     
 
 
     
 
 
  
Net loss attributable to Old Lions Gate Entertainment Corp. shareholders after recovery (accretion) of redeemable noncontrolling interest
    $ (357.0 )     $ (1,114.8 )     $ (2,010.2 ) 
  
 
 
     
 
 
     
 
 
  
Denominator:
         
Weighted average common shares outstanding
      238.9      233.6      227.9
  
 
 
     
 
 
     
 
 
  
Basic and diluted net loss per common share
    $ (1.49 )     $ (4.77 )     $ (8.82 ) 
  
 
 
     
 
 
     
 
 
  
As a result of the net loss in the fiscal years ended March 31, 2025, 2024 and 2023, the dilutive effect of the share purchase options, restricted share units (“RSUs”) and restricted stock, and contingently issuable shares were considered anti-dilutive and, therefore, excluded from diluted net loss per share. The weighted average anti-dilutive shares excluded from the calculation due to the net loss for the fiscal years ended March 31, 2025, 2024 and 2023 totaled 2.7 million, 2.9 million and 2.9 million, respectively.
Additionally, for the years ended March 31, 2025, 2024 and 2023, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because their inclusion would have had an anti-dilutive effect regardless of net income or loss in the period.
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Anti-dilutive shares issuable
         
Share purchase options
      16.8      17.1      23.0
Restricted share units
      3.0      1.9      2.2
Other issuable shares
      4.2      4.2      3.5
  
 
 
     
 
 
     
 
 
  
Total weighted average anti-dilutive shares issuable excluded from diluted net loss per common share
      24.0      23.2      28.7
  
 
 
     
 
 
     
 
 
  
Recent Accounting Pronouncements
Accounting Guidance Adopted in Fiscal 2025
Segment Reporting:
 In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2023-07,
 Improvements to Reportable Segment Disclosures (Topic 280)
. The amendments in this update expanded disclosures about a public entity’s reportable segments and requires
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker (“CODM”) uses reported segment profit or loss information in assessing segment performance and allocating resources. This ASU was effective for the Company beginning with these financial statements issued for the fiscal year ended March 31, 2025, and the Company has applied this guidance to all periods presented (see Note 16).
Accounting Guidance Not Yet Adopted
Income Taxes:
 In December 2023, the FASB issued ASU
2023-09,
 Income Taxes (Topic 740): Improvements to Income Tax Disclosures,
 requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, the guidance requires all entities to disaggregate disclosures by jurisdiction on the amount of income taxes paid (net of refunds received), income or loss from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations. This guidance is effective for fiscal years beginning after December 15, 2024, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2026. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
Income Statement:
 In November 2024, the FASB issued ASU
2024-03,
 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic
220-40):
Disaggregation of Income Statement Expenses (Subtopic
220-40),
 requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for fiscal years beginning after December 15, 2026, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2028 and interim reporting periods beginning in fiscal 2029, with early adoption permitted. The disclosures required under the ASU can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
Business Combinations:
 In May 2025, the FASB issued ASU
2025-03,
 Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity,
 requiring an entity involved in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs
805-10-55-12
through
55-15
to determine which entity is the accounting acquirer. This guidance is effective for fiscal years beginning after December 15, 2026, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2028 and interim reporting periods beginning in fiscal 2029, with early adoption permitted. The amendments are required to be applied prospectively to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
2. Acquisitions
Acquired Library
On June 5, 2024, the Company invested approximately $35.0 million for a 51% members’ interest in a newly formed limited liability company, CP LG Library Holdings, LLC (“CP LG”), with the Company designated as the managing member of CP LG. CP LG used the funds received from the Company, along with funds invested by the 49% member, to acquire a library of 46 films for approximately $68.6 million. Also on June 5, 2024, the Company entered into a distribution agreement with CP LG to distribute the titles in the
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
acquired library. The purchase included the film library (of which $48.3 million of the purchase price was allocated to investment in film and television programs for the film library), accounts receivable and certain liabilities associated with the film library, most notably participations and residuals liabilities.
The Company determined that CP LG is a VIE for which it is the primary beneficiary and is consolidated under the applicable accounting guidance as the Company has the power to direct the significant activities and the right to receive benefits and obligation to absorb losses of CP LG. The Company concluded that the acquired library and related assets and liabilities was not a business and therefore, accounted for the acquisition as an initial consolidation of a VIE that is not a business under the applicable accounting guidance. There was no gain or loss recognized upon initial consolidation of the VIE as the sum of the fair value of the consideration paid and noncontrolling interest equaled the fair value of the net assets on the acquisition date. See Note 11 for the noncontrolling interest recorded related to CP LG.
As of March 31, 2025, the consolidated balance sheet included assets and liabilities of CP LG totaling $63.3 million (which is primarily comprised of investment in film and television programs) and $7.7 million, respectively. The assets and liabilities of CP LG primarily consist of accounts receivable, investment in film and television programs, and participations and residuals.
Business Combination Agreement
On May 13, 2024, the Company consummated the business combination agreement (the “Business Combination Agreement”) with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of the Company (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of the Company (“StudioCo”) and other affiliates of SEAC (the “Closing”). Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continues the existing business operations of StudioCo, which consists of the Studio Business of Old Lionsgate. The “Studio Business” consists of the businesses of Old Lionsgate’s Motion Picture and Television Production segments, together with substantially all of Old Lionsgate’s corporate general and administrative functions and costs. Legacy Lionsgate Studios became a separate publicly traded company and its common shares commenced trading on Nasdaq under the symbol “LION” on May 14, 2024.
In connection with and prior to the Business Combination, the Company and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Studio Separation”).
Following the transaction, approximately 87.8% of the total shares of Legacy Lionsgate Studios were held by Old Lionsgate, while former SEAC public shareholders and founders and common equity financing investors own approximately 12.2% of Legacy Lionsgate Studios. In addition to establishing Legacy Lionsgate Studios as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to the Company, including $254.3 million in private investments in public equities (“PIPE”) financing, which amount excludes an aggregate of approximately $20.0 million that remains due from a PIPE Investor that subscribed for common shares. The net proceeds were used to partially pay down amounts outstanding under the Term Loan A and Term Loan B pursuant to the Old Lionsgate Credit Agreement (see Note 7).
 
F-2
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Business Combination has been accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, SEAC was treated as the acquired company and the Studio Business was treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing stock for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio Business equity. The historical net assets of SEAC were stated at fair value, which approximates historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of the Studio Business. Prior to the Starz Separation, the Studio Business was a consolidated subsidiary of the Old Lionsgate.
In connection with the Business Combination, as described above, approximately 12.2% of the Legacy Lionsgate Studios common shares were issued to the SEAC public shareholders and founders and other common equity financing investors in exchange for net proceeds of $278.2 million. The following table reconciles the gross proceeds to the net proceeds reflected in the consolidated statement of cash flows and the consolidated statement of equity (deficit):
 
    
(Amounts in millions)
  
Total gross cash proceeds
    $ 330.0
Less: SEAC warrant exchange payment 
(1)
      (12.5 ) 
Less: Transaction costs
      (39.3 ) 
  
 
 
  
Net proceeds from the sale of noncontrolling interest in Legacy Lionsgate Studios Corp. per the consolidated statement of equity (deficit)
      278.2
Add: Transaction costs accrued and not paid, net of transaction costs previously paid
      3.5
  
 
 
  
Net cash proceeds from the sale of noncontrolling interest in Legacy Lionsgate Studios per the consolidated statement of cash flows
    $ 281.7
  
 
 
  
 
(1)
Prior to the Closing, each of the then issued and outstanding whole warrants of SEAC, sold as part of SEAC’s initial public offering (the “SEAC Public Warrants”) was automatically exchanged for $0.50 in cash pursuant to the terms of an amendment to the agreement governing the SEAC Public Warrants. As of the Closing, no SEAC Public Warrants were outstanding.
The Company recorded a reduction of noncontrolling interest in shareholders’ equity (deficit) of $100.2 million and a reduction of accumulated other comprehensive income of $11.3 million for the issuance of the Legacy Lionsgate Studios common shares, which was based upon the 12.2% ownership interest in the carrying value of Legacy Lionsgate Studios. The reduction in noncontrolling interest was due to the negative carrying value of Legacy Lionsgate Studios as of May 13, 2024, partially offset by an amount allocated to certain options described below. The difference between the net cash proceeds and the amounts recorded as noncontrolling interest and accumulated other comprehensive income was reflected as a reduction of accumulated deficit in the consolidated statement of shareholders’ equity (deficit). See Note 11.
In connection with the Business Combination, 2,200,000 options (the “Sponsor Options”) to receive Legacy Lionsgate Studios common shares, were issued to certain noncontrolling interest holders, with an exercise price of $0.0001 per share. The Sponsor Options will become exercisable (i) on or after the date on which the trading price of Legacy Lionsgate Studios common shares (as adjusted for share splits, share dividends, reorganizations,
 
F-
26
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
recapitalizations and the like) equals or exceeds $16.05 per share or (ii) if a Change of Control (as defined in the sponsor option agreement) occurs, subject to certain conditions. The Company has recorded the Sponsor Options as part of the noncontrolling interest recorded.
eOne Acquisition
On December 27, 2023, the Company, and its subsidiaries, Lions Gate Entertainment Inc., a Delaware corporation (“LGEI”), and Lions Gate International Motion Pictures S.à.r.l., a Luxembourg société à responsabilité limitée (“LGIMP” and, with the Company and LGEI, collectively the “Buyers”), completed the acquisition of all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business from Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”) dated August 3, 2023. The aggregate cash purchase price was approximately $373.1 million. The acquisition of eOne, a film and television production and distribution company, builds the Company’s film and television library, strengthens the Company’s scripted and unscripted television business, and continues to expand the Company’s presence in Canada and the U.K.
The acquisition was accounted for under the acquisition method of accounting, with the financial results of eOne included in the Company’s consolidated results from December 27, 2023. Revenues and loss before income taxes from eOne for the period from December 27, 2023 through March 31, 2024 amounted to approximately $113.8 million and $4.9 million, respectively. The Company incurred approximately $1.0 million and $9.4 million of acquisition-related costs that were expensed in restructuring and other during the fiscal years ended March 31, 2025 and 2024, respectively.
Allocation of Purchase Consideration.
 The Company has made an allocation of the purchase price of eOne to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as follows:
 
    
(Amounts in millions)
  
Cash and cash equivalents
    $ 54.1
Accounts receivable
      293.2
Investment in films and television programs
      370.2
Property and equipment
      14.0
Intangible assets
      4.0
Other assets
(1)
      172.4
Accounts payable and accrued liabilities
      (69.3 ) 
Content related payables
      (38.8 ) 
Participations and residuals
(1)
      (202.9 ) 
Film related obligations
(1)
      (105.8 ) 
Other liabilities and deferred revenue
(1)
      (130.9 ) 
  
 
 
  
Fair value of net assets acquired
      360.2
Goodwill
      12.9
  
 
 
  
Purchase price consideration
    $ 373.1
  
 
 
  
 
(1)
Includes current and
non-current
amounts.
The goodwill amount reflected in the table above arises from the opportunity for strengthening the Company’s global distribution infrastructure and enhanced positioning for motion picture and television projects and selling opportunities. The goodwill will not be amortized for financial reporting purposes, and will not be
 
F-
27
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
deductible for federal tax purposes. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow (DCF) analyses, and thus represent Level 3 fair value measurements.
Investment in films and television programs includes the fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the fair value of films and television programs in production,
pre-production
and development. For investment in films and television programs, the fair value was estimated based on forecasted cash flows discounted to present value at a rate commensurate with the risk of the assets. Titles that were released less than three years prior to the acquisition date (December 27, 2023) were valued individually and will be amortized using the individual film forecast method, based on the ratio of current period revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”). Titles released more than three years prior to the acquisition date were valued as part of a library and will be amortized on a straight-line basis over the estimated useful life of 5 years to 10 years.
The intangible assets acquired include trade names with a weighted average estimated useful life of 5 years. The fair value of the trade names was estimated based on the present value of the hypothetical cost savings that could be realized by the owner of the trade names as a result of not having to pay a stream of royalty payments to another party. These cost savings were calculated based on a DCF analysis of the hypothetical royalty payment that a licensee would be required to pay in exchange for use of the trade names, reduced by the tax effect realized by the licensee on the royalty payments.
Other fair value adjustments were made to property and equipment and
right-of-use
lease assets to reflect the fair value of certain assets upon acquisition.
Deferred taxes, net of any required valuation allowance, were adjusted to record the deferred tax impact of acquisition accounting adjustments primarily related to amounts allocated to film and television programs, other intangible assets, and certain property and equipment,
right-of-use
lease assets, and other liabilities.
The fair value of eOne’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, participations and residuals, film related obligations and other liabilities were estimated to approximate their book values.
Pro Forma Statement of Operations Information.
 The following unaudited pro forma condensed consolidated statement of operations information presented below illustrates the results of operations of the Company as if the acquisition of eOne as described above occurred on April 1, 2023. The unaudited pro forma condensed consolidated financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisition had occurred on April 1, 2023, nor is it indicative of future results. The statement of operations information below includes (i) the statement of operations of eOne for the nine months ended December 27, 2023 combined with the Company’s statement of operations for the fiscal year ended March 31, 2024 (which includes the operations of eOne since the December 27, 2023 acquisition date).
 
    
Year Ended
  
    
March 31,
  
    
2024
  
    
(Amounts in millions)
  
Revenues
    $ 4,410.5
Net loss attributable to Lions Gate Entertainment Corp. shareholders
    $ (1,385.9 ) 
 
F-2
8
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The unaudited pro forma condensed consolidated financial information includes, where applicable, adjustments for (i) reductions in amortization expense from the fair value adjustments to investment in films and television programs, (ii) reduction in amortization expense related to acquired intangible assets, (iii) reduction in depreciation expense from the fair value of property and equipment, (iv) transaction costs and other
one-time
non-recurring
costs, (v) increase in interest expense resulting from financing the acquisition with borrowings under the Company’s revolving credit facility, (vi) elimination of intercompany activity between eOne and the Company, and (vii) associated
tax-related
impacts of adjustments. These pro forma adjustments are based on available information as of the date hereof and upon assumptions that the Company believes are reasonable to reflect the impact of the acquisition of eOne on the Company’s historical financial information on a supplemental pro forma basis. The unaudited pro forma condensed consolidated statement of operations information does not include adjustments related to integration activities, operating efficiencies or cost savings. In addition, the unaudited pro forma condensed consolidated financial information for the year ended March 31, 2024 includes an impairment of goodwill and trade name of $296.2 million which was reflected in the statement of operations of eOne for the nine months ended December 27, 2023.
The results of operations of eOne were reflected beginning December 27, 2023, in the Motion Picture and Television Production reportable segments of the Company.
3. Investment in Films and Television Programs and Licensed Program Rights
Total investment in films and television programs and licensed program rights by predominant monetization strategy is as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Investment in Films and Television Programs:
      
Individual Monetization
(1)(2)
      
Released, net of accumulated amortization
    $ 822.7    $ 878.3
Completed and not released
      135.1      225.4
In progress
      663.4      469.2
In development
      76.6      65.7
  
 
 
     
 
 
  
     1,697.8      1,638.6
  
 
 
     
 
 
  
Film Group Monetization
      
Released, net of accumulated amortization
    $ 535.8      497.1
Completed and not released
      301.9      170.1
In progress
      116.6      179.0
In development
      17.7      4.3
  
 
 
     
 
 
  
     972.0      850.5
  
 
 
     
 
 
  
Licensed program rights, net of accumulated amortization
      243.3      273.1
  
 
 
     
 
 
  
Investment in films and television programs and program rights, net
    $ 2,913.1    $ 2,762.2
  
 
 
     
 
 
  
 
(1)
At March 31, 2025, the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million.
(2)
Production tax credits reduced total investment in films and television programs by $243.6 million and $112.2 million during the years ended March 31, 2025 and 2024, respectively, which resulted in a reduction of direct operating expense related to the amortization of investment in films and television programs cost of approximately $112.0 million and $70.6 million for the years ended March 31, 2025 and 2024, respectively.
 
F-
29
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
At March 31, 2025, acquired film and television libraries have remaining unamortized costs of $235.7 million, which are monetized individually and are being amortized on a straight-line basis or the individual-film-forecast method over a weighted average remaining period of approximately 13.3 years (March 31, 2024 - unamortized costs of $223.1 million).
Amortization of investment in film and television programs and licensed program rights by predominant monetization strategy is as follows, and was included in direct operating expense in the consolidated statement of operations:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Amortization expense:
         
Individual monetization
    $ 1,177.7    $ 907.1    $ 951.2
Film group monetization
      307.7      382.0      330.0
Licensed program rights
      237.0      288.8      384.1
  
 
 
     
 
 
     
 
 
  
   $ 1,722.4    $ 1,577.9    $ 1,665.3
  
 
 
     
 
 
     
 
 
  
The table below summarizes estimated future amortization expense for the Company’s investment in film and television programs and licensed program rights as of March 31, 2025:
 
    
Year Ending
  
    
March 31,
  
    
2026
     
2027
     
2028
  
    
(Amounts in millions)
  
Estimated future amortization expense:
         
Released investment in films and television programs:
         
Individual monetization
    $ 290.2    $ 158.6    $ 137.3
Film group monetization
    $ 194.9    $ 105.7    $ 66.2
Licensed program rights
    $ 124.3    $ 20.0    $ 12.9
Completed and not released investment in films and television programs:
         
Individual monetization
    $ 90.4      n/a        n/a  
Film group monetization
    $ 107.6      n/a        n/a  
Impairments.
 Investment in films and television programs and licensed program rights includes write-downs to fair value. The following table sets forth impairments by segment and the line item in our consolidated statement of operations they are recorded in for the fiscal years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Impairments by segment:
         
Included in direct operating expense
(1)
:
         
Motion Picture
    $ 19.7    $ 34.6    $ 6.2
Television Production
      6.7      8.4      4.6
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Impairments not included in segment operating results
(2)
:
         
Included in restructuring and other
      143.4      377.3      379.3
  
 
 
     
 
 
     
 
 
  
   $ 169.8    $ 420.3    $ 390.1
  
 
 
     
 
 
     
 
 
  
 
(1)
Impairments included in direct operating expense are included in the amortization expense amounts reflected in the table further above which presents amortization of investment in film and television programs and licensed program rights by predominant monetization strategy.
(2)
Represents charges primarily related to the Media Networks restructuring plan initiatives. Amounts in fiscal 2025 also include content impairments of $7.7 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. Amounts in fiscal 2024 also include $12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. See Note 15 and Note 16 for further information.
4. Property and Equipment
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Distribution equipment
    $ 19.3    $ 19.3
Leasehold improvements
      66.0      66.1
Property and equipment
      25.4      26.0
Computer equipment and software
      265.7      236.1
  
 
 
     
 
 
  
     376.4      347.5
Less accumulated depreciation and amortization
      (294.9 )       (260.2 ) 
  
 
 
     
 
 
  
     81.5      87.3
Land
      1.2      1.2
  
 
 
     
 
 
  
   $ 82.7    $ 88.5
  
 
 
     
 
 
  
During the year ended March 31, 2025, depreciation expense amounted to $33.0 million (2024 - $49.9 million; 2023 - $40.1 million).
5. Investments
The Company’s investments consisted of the following:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Investments in equity method investees
    $ 68.1    $ 68.4
Other investments
(1)
      9.7      6.4
  
 
 
     
 
 
  
   $ 77.8    $ 74.8
  
 
 
     
 
 
  
 
(1)
Other investments represents equity investments without readily determinable fair values.
 
F-3
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Equity Method Investments:
The Company has investments in various equity method investees with ownership percentages ranging from approximately 6% to 49%. These investments include:
Spyglass.
 Spyglass is a global premium content company, focused on developing, producing, financing and acquiring motion pictures and television programming across all platforms for worldwide audiences. On April 17, 2025, the Company sold its equity method ownership interest in Spyglass. See Note 21 for further information.
STARZPLAY Arabia.
 STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription
video-on-demand
service in the Middle East and North Africa. On October 17, 2022, the Company sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $43.4 million, and the Company recorded a gain of $43.4 million on the sale which is included in gain on investments in the Company’s consolidated statements of operations. Subsequent to the transaction, the Company continues to hold a minority ownership interest in STARZPLAY Arabia.
Roadside Attractions
. Roadside Attractions is an independent theatrical distribution company.
Pantelion Films.
 Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S.
42.
 42 is a fully integrated management and production company, producing film, television and content, representing actors, writers, directors, comedians, presenters, producers, casting directors and media book rights; with offices in London and Los Angeles.
Other.
 In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees.
6. Goodwill and Intangible Assets
Goodwill
Changes in the carrying value of goodwill by reporting segment were as follows:
 
    
Motion
Picture
     
Television
Production
     
Media
Networks
     
Total
  
    
(Amounts in millions)
  
Balance as of March 31, 2023
    $ 393.7    $ 401.9    $ 493.9    $ 1,289.5
Acquisition of eOne (see Note 2)
      1.0      4.8      —         5.8
Impairment
(1)
      —         —         (493.9 )       (493.9 ) 
Measurement period adjustments
(2)
      3.9      5.9      —         9.8
  
 
 
     
 
 
     
 
 
     
 
 
  
Balance as of March 31, 2024
    $ 398.6    $ 412.6    $ —     $ 811.2
Measurement period adjustments
(3)
      (1.7 )       (1.0 )       —         (2.7 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Balance as of March 31, 2025
    $ 396.9    $ 411.6    $ —     $ 808.5
  
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
See Note 1,
 Goodwill Impairment Assessments
, for further information on the goodwill impairments recorded in fiscal 2024 and 2023 related to the Media Networks segment. As of March 31, 2025 and March 31, 2024, accumulated goodwill impairment losses totaled $1.969 billion, related to the Media Networks reporting unit.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
(2)
Fiscal 2024:
 Measurement period adjustments in fiscal 2024 for the acquisition of eOne reflect an increase to goodwill of $9.8 million resulting from a net decrease in estimated fair value of the net assets acquired. The decrease in the estimated fair value of the net assets acquired consisted of net decreases to accounts receivable and other assets of $11.4 million and $12.4 million, respectively, partially offset by a net increase to investment in films and television programs of $4.0 million, and net decreases to content related payables of $1.9 million, accrued liabilities of $3.8 million, participations and residuals of $1.9 million, and deferred revenue of $2.4 million.
(3)
Fiscal 2025:
 Measurement period adjustments in fiscal 2025 for the acquisition of eOne reflect a decrease to goodwill of $2.7 million resulting from an adjustment to the purchase price related to a settlement of certain working capital items of $12.0 million partially offset by a net decrease in the estimated fair value of the net assets acquired. The decrease in the estimated fair value of the net assets acquired consisted of a net decrease to accounts receivable of $5.6 million, a net decrease in investment in films and television programs of $1.6 million, net increases to content related payables of $3.4 million, participations and residuals of $1.0 million, and accrued and other liabilities of $1.9 million, partially offset by a net increase to other assets of $4.2 million.
Intangible Assets
Finite-Lived Intangible Assets.
 Finite-lived intangible assets consisted of the following:
 
    
March 31, 2025
     
March 31, 2024
  
    
Gross
Carrying
Amount
     
Accumulated
Amortization
     
Net
Carrying
Amount
     
Gross
Carrying
Amount
     
Accumulated
Amortization
     
Net
Carrying
Amount
  
    
(Amounts in millions)
  
Finite-lived intangible assets subject to amortization:
                  
Customer relationships
(1)
    $ 1,852.0    $ 1,087.1    $ 764.9    $ 1,852.0    $ 942.9    $ 909.1
Trademarks and trade names
(2)
      87.6      16.0      71.6      87.6      7.1      80.5
Other
      23.9      23.6      0.3      23.9      21.7      2.2
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
   $ 1,963.5    $ 1,126.7    $ 836.8    $ 1,963.5    $ 971.7    $ 991.8
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Customer relationships primarily represent Starz affiliation agreements with distributors.
(2)
Amounts as of March 31, 2024 include the Starz trade names previously accounted for as indefinite-lived intangible assets, see below for further information.
Amortization expense associated with the Company’s intangible assets for the years ended March 31, 2025, 2024 and 2023 was approximately $155.1 million, $142.3 million, and $140.2 million, respectively. Amortization expense remaining relating to intangible assets for each of the years ending March 31, 2026 through 2030 is estimated to be approximately $165.0 million, $152.6 million, $142.6 million, $133.8 million, and $125.7 million, respectively.
Fiscal 2024 Intangible Asset Impairment.
 During the second quarter of fiscal 2024, due to the events and their impact discussed in Note 1 related to the Media Networks reporting unit, the Company performed a quantitative impairment assessment of its indefinite-lived Starz trade names. The fair value of the Company’s indefinite-lived trade names was estimated based on the present value of the hypothetical cost savings that could be realized by the owner of the trade names as a result of not having to pay a stream of royalty payments to another party. These cost savings were calculated based on a DCF analysis of the hypothetical royalty payment that a licensee would be required to pay in exchange for use of the trade names, reduced by the tax effect realized
 
F-3
3
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
by the licensee on the royalty payments. Based on the quantitative impairment assessment of the trade names, the Company recorded an impairment charge of $170.0 million in the second quarter of fiscal 2024 related to the Company’s Starz business, which was recorded in the “goodwill and intangible asset impairment” line item in the consolidated statement of operations.
After performing its quantitative impairment assessment, the Company then reassessed the estimated useful life of the trade names with a remaining carrying value of $80.0 million at September 30, 2023 (net of the impairment charge discussed above). The Company concluded that based upon the most recent factors, including current macro and microeconomic conditions, market competition and historical Company and industry trends, the trade names now have a finite estimated remaining useful life of 10 years. Accordingly, beginning October 1, 2023, the trade names are being accounted for as finite-lived intangible assets and amortized over their estimated remaining useful life. This resulted in an increase to amortization expense of $4.0 million for the fiscal year ended March 31, 2024 with a corresponding reduction of income before income taxes, net loss, and net loss attributable to Lions Gate Entertainment Corp. shareholders. This resulted in an increase to basic and diluted net loss per share for the fiscal year ended March 31, 2024 by $0.02 per share. There was no tax benefit from the change due to changes in the Company’s valuation allowance on deferred taxes.
As of March 31, 2025 and 2024, the Company did not have any indefinite-lived intangible assets.
7. Debt
Total debt of the Company, excluding film related obligations, was as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Corporate debt:
      
Revolving Credit Facility
(1)
    $ —     $ 575.0
Term Loan A
(1)
      314.4      399.3
Term Loan B
      —         819.2
5.5% Senior Notes and Exchange Notes
(2)
      715.0      715.0
eOne IP Credit Facility
      323.0      —   
LG IP Credit Facility
      978.8      —   
  
 
 
     
 
 
  
Total corporate debt
      2,331.2      2,508.5
Unamortized debt issuance costs
      (40.0 )       (28.5 ) 
  
 
 
     
 
 
  
Total debt, net
      2,291.2      2,480.0
Less current portion
      (134.0 )       (860.3 ) 
  
 
 
     
 
 
  
Non-current
portion of debt
    $ 2,157.2    $ 1,619.7
  
 
 
     
 
 
  
 
(1)
In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Revolving Credit Facility and Term Loan A were repaid in full. See
 Starz Separation
 below and Note 21 for further information.
(2)
In connection with the Starz Separation, a wholly owned subsidiary of Lionsgate assumed the Exchange Notes and the initial issuer was released and discharged from all obligations thereunder. See
 Starz Separation
 below and Note 21 for further information.
 
F-3
4
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2025:
 
    
Maturity Date
     
Year Ending March 31,
  
Debt Type
   
2026
     
2027
     
2028
     
2029
     
2030
     
Thereafter
     
Total
  
           
(Amounts in millions)
  
Revolving Credit Facility
(1)
      April 2026      $ —     $ —       $ —       $ —       $ —       $ —       $ —   
Term Loan A
(1)
      April 2026        —         314.4      —         —         —         —         314.4
5.5% Senior Notes and Exchange Notes
      April 2029        —         —         —         —         715.0      —         715.0
eOne IP Credit Facility
      July 2029        34.0      34.0      34.0      34.0      187.0      —         323.0
LG IP Credit Facility
      September 2029        100.0      100.0      100.0      100.0      578.8      —         978.8
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
      $ 134.0    $ 448.4    $ 134.0    $ 134.0    $ 1,480.8    $ —         2,331.2
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
Less aggregate unamortized debt issuance costs
 
      (40.0 ) 
  
 
 
  
                        $ 2,291.2
                       
 
 
  
 
(1)
In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Revolving Credit Facility and Term Loan A were repaid in full. See
 Starz Separation
 below and Note 21 for further information.
(2)
In connection with the Starz Separation, a wholly owned subsidiary of Lionsgate assumed the Exchange Notes and the initial issuer was released and discharged from all obligations thereunder. See
 Starz Separation
 below and Note 21 for further information.
Senior Credit Facilities (Revolving Credit Facility, Term Loan A and Term Loan B)
Revolving Credit Facility Availability of Funds
 & Commitment Fee.
 The revolving credit facility provides for borrowings and letters of credit up to an aggregate of $1.25 billion, and at March 31, 2025 there was $1.25 billion available. There were no letters of credit outstanding at March 31, 2025. However, borrowing levels are subject to certain financial covenants as discussed below. The Company is required to pay a quarterly commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on the achievement of certain leverage ratios, as defined in the credit and guarantee agreement dated December 8, 2016, as amended (the “Old Lionsgate Credit Agreement”), on the total revolving credit facility of $1.25 billion less the amount drawn.
Maturity Date:
 
  •  
Revolving Credit Facility
 & Term Loan A:
 April 6, 2026. See
 Starz Separation
 below.
 
  •  
Term Loan B:
 In November 2024, the Company paid in full the term loan B facility due March 24, 2025 (the “Term Loan B”). See the “Other Debt Transactions” section below.
Interest:
 
  •  
Revolving Credit Facility
 & Term Loan A:
 The Revolving Credit Facility and term loan A facility due April 2026 (the “Term Loan A”) bear interest at a rate per annum equal to SOFR plus 0.10% plus 1.75% margin (or an alternative base rate plus 0.75%), with a SOFR floor of zero. The margin is subject to potential increases of up to 50 basis points (two increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Old Lionsgate Credit Agreement (effective interest rate of 6.17% as of March 31, 2025, before the impact of interest rate swaps, see Note 18 for interest rate swaps).
 
F-3
5
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  •  
Term Loan B:
 The Term Loan B bore interest at a rate per annum equal to SOFR plus 0.10% plus 2.25% margin, with a SOFR floor of zero (or an alternative base rate plus 1.25% margin).
Required Principal Payments:
 
  •  
Term Loan A:
 Quarterly principal payments, at quarterly rates of 1.75% and increasing to 2.50% beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity.
The Term Loan A also requires mandatory prepayments in connection with certain asset sales, subject to certain significant exceptions, as defined in the Old Lionsgate Credit Agreement.
Optional Prepayment:
 
  •  
Revolving Credit Facility
 & Term Loan A:
 The Company may voluntarily prepay the Revolving Credit Facility and Term Loan A at any time without premium or penalty.
Security.
 The Senior Credit Facilities are guaranteed by the guarantors named in the Old Lionsgate Credit Agreement and are secured by a security interest in substantially all of the assets of Old Lionsgate and the Guarantors (as defined in the Old Lionsgate Credit Agreement), subject to certain exceptions.
Covenants.
 The Senior Credit Facilities contain representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings and which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Revolving Credit Facility and the Term Loan A and are tested quarterly. As of March 31, 2025, the Company was in compliance with all applicable covenants.
Change in Control.
 The Company may also be subject to an event of default upon a change in control (as defined in the Old Lionsgate Credit Agreement) which, among other things, includes a person or group acquiring ownership or control in excess of 50% of the Company’s common shares.
Starz Separation.
 In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Old Lionsgate Credit Agreement, were repaid in full and all commitments thereunder were terminated. See Note 21.
5.5% Senior Notes and Exchange Notes
Interest:
 Bears interest at 5.5% annually (payable semi-annually in arrears on April 15 and October 15 of each year, commencing on October 15, 2021). See
 Changes Upon Separation of the Starz Business from the Studio Business
 below for further information.
Maturity Date:
 April 15, 2029. See
 Changes Upon Separation of the Starz Business from the Studio Business
 below for further information.
Optional Redemption:
 
(i)
On or after April 15, 2024, the Company may redeem the 5.5% Senior Notes and Exchange Notes in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Such redemption prices are as follows (as a percentage of the principal amount redeemed): (i) on or after April 15, 2024 - 102.750%; (ii) on or after April 15, 2025 -101.375%; and (iii) on or after April 15, 2026 - 100%. See
 Changes Upon Separation of the Starz Business from the Studio Business
 below for further information.
 
F-
36
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Security.
 The 5.5% Senior Notes and Exchange Notes are unsubordinated, unsecured obligations of the Company.
Covenants.
 The Exchange Notes contain certain restrictions and covenants that, subject to certain exceptions, limit the Company’s ability to incur additional indebtedness, pay dividends or repurchase the Company’s common shares, make certain loans or investments, and sell or otherwise dispose of certain assets subject to certain conditions, among other limitations. As of March 31, 2025, the Company was in compliance with all applicable covenants.
Change in Control.
 The occurrence of a change of control will be a triggering event requiring the Company to offer to purchase from holders all of the Exchange Notes, at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase. In addition, certain asset dispositions will be triggering events that may require the Company to use the excess proceeds from such dispositions to make an offer to purchase the Exchange Notes at 100% of their principal amount, plus accrued and unpaid interest, if any, to the date of purchase.
Changes Upon Separation of the Starz Business from the Studio Business.
 On May 8, 2024, an indirect, wholly-owned subsidiary of the Company issued $389.9 million aggregate principal amount of 5.5% senior notes due 2029 (the “Exchange Notes”) in exchange for an equivalent amount of the existing 5.5% Senior Notes due 2029 (the “Existing Notes”). The Exchange Notes initially bear interest at 5.5% annually and mature April 15, 2029, with the interest rate increasing to 6.0% and the maturity date extending to April 15, 2030 effective upon completion of the Starz Separation. On or after the Separation Closing Date, as defined in the indenture to the Exchange Notes, the Company may redeem the Exchange Notes, in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date. Such redemption prices are as follows (as a percentage of the principal amount redeemed): (i) on or after the Separation Closing Date until, but excluding, the
one-year
anniversary thereof - 103.0%; (ii) on or after the
one-year
anniversary of the Separation Closing Date until, but excluding the
two-year
anniversary thereof - 102.0%; (iii) on or after the
two-year
anniversary of the Separation Closing Date until, but excluding the three-year anniversary thereof - 101.0%; (iv) on or after the three-year anniversary of the Separation Closing Date and thereafter - 100%. The Exchange Notes were initially guaranteed by all existing obligors under the Existing Notes, and upon completion of the Starz Separation, the Exchange Notes became guaranteed exclusively by entities which are part of Lionsgate, see Note 21.
eOne IP Credit Facility.
 In July 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “eOne IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition. The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. The eOne IP Credit Facility is subject to quarterly required principal payments of $8.5 million, beginning November 14, 2024, with the balance payable at maturity. Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum (effective interest rate of 6.57% as of March 31, 2025, before the impact of interest rate swaps, see Note 18 for interest rate swaps). The eOne IP Credit Facility matures on July 3, 2029.
LG IP Credit Facility.
 In September 2024, certain subsidiaries of the Company entered into a $455.0 million senior secured amortizing term credit facility (the “LG IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles. In November 2024 and December 2024, the Company closed amendments which increased the maximum principal amount of the LG IP Credit Facility to $850.0 million, and in March 2025, the Company closed an amendment which increased the maximum principal amount of the LG IP Credit Facility to $1.0 billion, subject to the amount of collateral
 
F-
37
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
available, which is based on the valuation of unsold rights from the libraries. As of March 31, 2025, the LG IP Credit Facility is subject to quarterly required principal payments of $25.0 million, with the balance payable at maturity. Advances under the LG IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum (effective interest rate of 6.57% as of March 31, 2025, before the impact of interest rate swaps, see Note 18 for interest rate swaps). The LG IP Credit Facility matures on September 30, 2029.
Capacity to Pay Dividends
At March 31, 2025, the capacity to pay dividends under the Senior Credit Facilities, and the 5.5% Senior Notes and Exchange Notes significantly exceeded the amount of the Company’s accumulated deficit or net loss, and therefore the Company’s net loss of $373.6 million and accumulated deficit of $3,534.1 million were deemed free of restrictions from paying dividends at March 31, 2025.
Other Debt Transactions:
Fiscal 2025:
Term Loan A and Term Loan B Prepayment.
 In May 2024, the Company used the proceeds from the equity issuance associated with the Business Combination (Note 2) to prepay $84.9 million principal amount of the Term Loan A and $214.1 million of the Term Loan B, together with accrued and unpaid interest thereon.
In September 2024, the Company used the proceeds from the LG IP Credit Facility to prepay $355.1 million principal amount of the Term Loan B, together with accrued and unpaid interest thereon.
In November 2024, the Company used the proceeds from the increase in the LG IP Credit Facility to pay in full the remaining $250.0 million principal amount of the Term Loan B, together with accrued and unpaid interest thereon.
Fiscal 2024:
Senior Notes Repurchases.
 In the fiscal year ended March 31, 2024, the Company repurchased $85.0 million principal amount of the 5.5% Senior Notes for $61.4 million, together with accrued and unpaid interest.
Fiscal 2023:
Senior Notes Repurchases.
 In the fiscal year ended March 31, 2023, the Company repurchased $200.0 million principal amount of the 5.5% Senior Notes for $135.0 million, together with accrued and unpaid interest.
Term Loan A Prepayment.
 In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the Term Loan A due March 22, 2023 of $193.6 million, together with accrued and unpaid interest.
 
F-
38
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Gain (Loss) on Extinguishment of Debt
During the fiscal years ended March 31, 2025, 2024 and 2023, the Company recorded a gain (loss) on extinguishment of debt related to the transactions described above as summarized in the table below.
 
    
Year Ended
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Gain (Loss) on Extinguishment of Debt:
         
Term Loan A and B prepayments
    $ (1.8 )     $ —       $ (1.3 ) 
Senior Notes exchange and repurchases
(1)
      (5.7 )       21.2      58.7
Production loan prepayment
(2)
      —         (1.3 )       —   
  
 
 
     
 
 
     
 
 
  
   $ (7.5 )     $ 19.9    $ 57.4
  
 
 
     
 
 
     
 
 
  
 
(1)
The 5.5% Senior Notes Exchange was considered a modification of terms since the present value of the cash flows after the amendment differed by less than a
10
% change from the present value of the cash flows on a
creditor-by-creditor
basis prior to the amendment. Accordingly, the unamortized debt issuance costs are being amortized over the applicable term of the debt and the third-party costs of $4.9 million were expensed as a loss on extinguishment of debt in the fiscal year ended March 31, 2025.
(2)
Represents issuance costs written off in connection with the early prepayment of certain production loans (see Note 8).
8. Film Related
Obligations
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Film related obligations:
      
Production Loans
    $ 1,395.4    $ 1,292.2
Production Tax Credit Facility
      280.0      260.0
Programming Notes
      90.9      —   
Backlog Facility and Other
      238.9      287.3
Film Library Facility
      75.9      109.9
  
 
 
     
 
 
  
Total film related obligations
      2,081.1      1,949.4
Unamortized issuance costs
      (7.3 )       (11.4 ) 
  
 
 
     
 
 
  
Total film related obligations, net
      2,073.8      1,938.0
Less current portion
      (1,708.7 )       (1,393.1 ) 
  
 
 
     
 
 
  
Total
non-current
film related obligations
    $ 365.1    $ 544.9
  
 
 
     
 
 
  
 
F-3
9
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth future annual repayment of film related obligations as of March 31, 2025:
 
    
Year Ending March 31,
  
    
2026
     
2027
     
2028
     
2029
     
2030
     
Thereafter
     
Total
  
    
(Amounts in millions)
  
Production Loans
    $ 1,395.4    $ —       $ —       $ —       $ —       $ —       $ 1,395.4
Production Tax Credit Facility
      —         —         280.0      —         —         —         280.0
Programming Notes
      90.9      —         —         —         —         —         90.9
Backlog Facility and Other
      185.1      —         53.8      —         —         —         238.9
Film Library Facility
(1)
      37.3      38.6      —         —         —         —         75.9
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
   $ 1,708.7    $ 38.6    $ 333.8    $ —       $ —       $ —       $ 2,081.1
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
Less unamortized issuance costs
                        (7.3 ) 
                    
 
 
  
                     $ 2,073.8
                    
 
 
  
 
(1)
Repayment dates are based on the projected future cash flows generated from the exploitation of the rights, subject to a minimum guaranteed payment amount, as applicable (see further information below).
Production Loans.
 Production loans represent individual and multi-title loans for the production of film and television programs that the Company produces. The majority of the Company’s production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily SOFR-based interest at a weighted average rate of 5.66% (before the impact of interest rate swaps, see Note 18 for interest rate swaps). Production loans amounting to $1,254.8 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e. film or television show), and $140.6 million are unsecured.
Production Tax Credit Facility.
 In January 2021, as amended in February 2025, the Company entered into a
non-recourse
senior secured revolving credit facility (the “Production Tax Credit Facility”) based on and secured by collateral consisting solely of certain of the Company’s tax credit receivables.
As of March 31, 2025, the maximum principal amount of the Production Tax Credit Facility was $280.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. As of March 31, 2025, tax credit receivables amounting to $357.8 million represented collateral related to the Production Tax Credit Facility. Advances under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10% plus 1.50% per annum or the base rate plus 0.50% per annum (effective interest rate of 5.92% at March 31, 2025). The Production Tax Credit Facility matures on January 27, 2028. As of March 31, 2025, there were no amounts available under the Production Tax Credit Facility. In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million, see Note 21.
Programming Notes
.
 Programming notes represent individual unsecured loans for the licensing of film and television programs that the Company licenses, related to the Company’s Media Networks business. The Company’s programming notes have contractual repayment dates in April 2025, and incur SOFR-based interest at a weighted average rate of 6.51%.
 
F-4
0
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Film Library Facility.
 In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “Film Library Facility”) based on and secured by the collateral consisting solely of certain of the Company’s rights in certain acquired library titles. The maximum principal amount of the Film Library Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. The cash flows generated from the exploitation of the rights will be applied to repay the Film Library Facility subject to cumulative minimum guaranteed payment amounts as set forth below:
 
Cumulative Period
From September 29,
2022 Through:
   
Cumulative Minimum
Guaranteed Payment
Amounts
   
Payment Due Date
    
(in millions)
     
September 30, 2025
    $91.1    November 14, 2025
September 30, 2026
    $121.4    November 14, 2026
July 30, 2027
    $161.9    July 30, 2027
Advances under the Film Library Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11% to 0.26% depending on the SOFR term (i.e., one or three months) plus 2.25% per annum (with a SOFR floor of 0.25%) or the base rate plus 1.25% per annum (effective interest rate of 6.74% at March 31, 2025). The Film Library Facility matures on July 30, 2027.
Backlog Facility and Other:
Backlog Facility.
 In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the “Backlog Facility”) based on and secured by collateral consisting solely of certain of the Company’s fixed fee or minimum guarantee contracts where cash will be received in the future. As of March 31, 2025, the maximum principal amount of the Backlog Facility was $175.0 million, subject to the amount of eligible collateral contributed to the facility. Advances under the Backlog Facility bear interest at a rate equal to Term SOFR plus 0.10% to 0.25% depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15% per annum. The applicable margin is subject to a potential increase to either 1.25% or 1.50% based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 5.57% at March 31, 2025). In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility (see Note 21). The facility maturity date is up to 2 years, 90 days after the revolving period ends, currently August 28, 2027. As of March 31, 2025, there was $135.7 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2024 - $175.0 million outstanding).
Other.
 The Company has other loans, which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements. Outstanding loan balances under these “other” loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees. As of March 31, 2025, there was $103.2 million outstanding (March 31, 2024 - $112.3 million outstanding) under the “other” loans, incurring SOFR-based interest at a weighted average rate of 5.88%, with contractual repayment dates in July 2025 and October 2025. As of March 31, 2025, accounts receivable amounting to $36.2 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2025 amounting to $86.1 million represented collateral related to the “other” loans.
 
F-4
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Table of Contents
LIONS
GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
9. Leases
The Company has operating leases primarily for office space, studio facilities, and other equipment. The Company’s leases have remaining lease terms of up to approximately 12.25 years.
The components of lease cost were as follows:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Operating lease cost
(1)
    $ 76.3    $ 61.4    $ 48.4
Short-term lease cost
(2)
      161.2      96.2      145.0
Variable lease cost
(3)
      5.5      3.4      3.1
  
 
 
     
 
 
     
 
 
  
Total lease cost
    $ 243.0    $ 161.0    $ 196.5
  
 
 
     
 
 
     
 
 
  
 
(1)
Operating lease cost amounts primarily represent the amortization of
right-of-use
assets and are included in the “other
non-cash
items” line of the consolidated statements of cash flows. Amounts include costs capitalized during the period for leased assets used in the production of film and television programs.
(2)
Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions and are capitalized when incurred.
(3)
Variable lease cost primarily consists of insurance, taxes, maintenance and other operating costs.
Supplemental balance sheet information related to leases was as follows:
 
Category
   
Balance Sheet
Location
     
March 31,
2025
     
March 31,
2024
  
Operating Leases
   
 
(Amounts in millions)
 
Right-of-use
assets
      Other assets -
non-current
  
 		    $ 331.4      388.8
     
 
 
     
 
 
  
Lease liabilities (current)
      Other accrued
liabilities		  
 		    $ 53.8      53.4
Lease liabilities
(non-current)
      Other liabilities
-
non-current
  
 		      336.4      385.1
     
 
 
     
 
 
  
      $ 390.2      438.5
     
 
 
     
 
 
  
 
    
March 31,
2025
    
March 31,
2024
  
Weighted average remaining lease term (in years):
 
Operating leases
      8.5       9.0  
Weighted average discount rate:
 
Operating leases
      5.36 %      5.24 % 
 
F-4
2
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The expected future payments relating to the Company’s lease liabilities at March 31, 2025 are as follows:
 
    
Operating
Leases
  
    
(Amounts in millions)
  
Year ending March 31, 2026
    $ 68.0
2027
      63.4
2028
      61.4
2029
      52.4
2030
      42.9
Thereafter
      202.5
  
 
 
  
Total lease payments
      490.6
Less imputed interest
      (100.4 ) 
  
 
 
  
Total
    $ 390.2
  
 
 
  
As of March 31, 2025, the Company has entered into certain leases that have not yet commenced primarily related to studio facilities, for which construction related to those leases has not yet been completed. The leases are for terms up to 12.25 years, commencing upon completion of construction (currently expected to be ranging from calendar years 2025 to 2026). The leases include an option to extend the initial term for an additional 10 years to 12 years. The total minimum lease payments under these leases in aggregate are approximately $245.0 million.
10. Fair Value Measurements
Fair Value
Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair Value Hierarchy
Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance and standards establish three levels of inputs that may be used to measure fair value:
 
  •  
Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
  •  
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
 
  •  
Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
 
F-4
3
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2025 and 2024:
 
    
March 31, 2025
    
March 31, 2024
  
    
Level 1
     
Level 2
    
Total
    
Level 1
     
Level 2
    
Total
  
    
(Amounts in millions)
  
Assets:
   
Forward exchange contracts (see Note 18)
    $ —       $ 1.8   $ 1.8   $ —       $ —      $ —   
Interest rate swaps (see Note 18)
      —         —        —        —          35.6     35.6
Liabilities:
               
Forward exchange contracts (see Note 18)
      —         —        —        —         (2.8 )      (2.8 ) 
Interest rate swaps (see Note 18)
      —         (3.1 )      (3.1 )      —         —        —   
The following table sets forth the carrying values and fair values of the Company’s outstanding debt and film related obligations at March 31, 2025 and 2024:
 
    
March 31, 2025
     
March 31, 2024
  
    
(Amounts in millions)
  
    
Carrying
Value
     
Fair Value
(1)
     
Carrying Value
     
Fair Value
(1)
  
           
(Level 2)
            
(Level 2)
  
Revolving Credit Facility
    $ —       $ —       $ 569.9    $ 575.0
Term Loan A
      313.4      312.9      396.6      397.3
Term Loan B
      —         —         816.9      818.1
5.5% Senior Notes and Exchange Notes
      699.9      623.7      696.6      536.2
eOne IP Credit Facility
      317.6      323.0      —         —   
LG IP Credit Facility
      962.9      978.8      —         —   
Production Loans
      1,393.9      1,395.4      1,286.2      1,292.2
Production Tax Credit Facility
      276.2      280.0      258.7      260.0
Programming Notes
      90.9      90.9      —         —   
Backlog Facility and Other
      238.4      238.9      285.4      287.3
Film Library Facility
      74.4      75.9      107.6      109.9
 
(1)
The Company measures the fair value of its outstanding debt and interest rate swaps using discounted cash flow techniques that use observable market inputs, such as SOFR-based yield curves, swap rates, and credit ratings (Level 2 measurements).
The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable, content related payables, other accrued liabilities, and other liabilities. The carrying values of these financial instruments approximated the fair values at March 31, 2025 and 2024.
11. Noncontrolling Interests
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets) primarily relate to 3 Arts Entertainment and Pilgrim Media Group (prior to the acquisition of additional interest in July 2024), as further described below.
Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or
 
F-4
4
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any. The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings or accumulated deficit.
The table below presents the reconciliation of changes in redeemable noncontrolling interests:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Beginning balance
    $ 123.3    $ 343.6    $ 321.2
Net loss attributable to redeemable noncontrolling interests
      (1.7 )       (14.9 )       (9.2 ) 
Noncontrolling interests discount accretion
      —         —         13.2
Adjustments to redemption value
      (5.0 )       83.4      78.4
Other
(1)
      —         (93.2 )       1.7
Cash contributions (distributions)
      0.5      (1.0 )       (6.6 ) 
Purchase of noncontrolling interest
      (23.4 )       (194.6 )       (55.1 ) 
  
 
 
     
 
 
     
 
 
  
Ending balance
    $ 93.7    $ 123.3    $ 343.6
  
 
 
     
 
 
     
 
 
  
 
(1)
In fiscal 2024, amounts represent the reclassification of a portion of the 3 Arts Entertainment redeemable noncontrolling interest from mezzanine equity to a liability, as further described below.
3 Arts Entertainment:
Accounting Prior to Acquisition of Additional Interest in January 2024.
 As of March 31, 2023, the Company had a redeemable noncontrolling interest representing 49% of 3 Arts Entertainment. The noncontrolling interest was subject to put and call options at fair value that were exercisable during the year ended March 31, 2024. The put and call options were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company, the noncontrolling interest holder’s interest prior to the modification discussed below was included in redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets.
The noncontrolling interest holders are employees of 3 Arts Entertainment. Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling interest holders’ participation in the put and call proceeds was based on the noncontrolling interest holders’ performance during the period. Further, if the employment of a noncontrolling interest holder is terminated, under certain circumstances, their participation in distributions cease and the put and call value was discounted from the fair value of their equity ownership percentage. Accordingly, earned distributions were accounted for as compensation and were being expensed within general and administrative expense as incurred. Additionally, the amount of the put and call proceeds subject to the discount was accounted for as compensation, and amortized within general and administrative expense and reflected as an addition to redeemable noncontrolling interest over the vesting period which ended in November 2022.
A portion of the purchase price of the controlling interest in 3 Arts Entertainment, up to $38.3 million, was recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3 Arts Entertainment acquisition and related agreements. Accordingly, $38.3 million was initially recorded as a deferred compensation arrangement within other current and
non-current
assets and was amortized in general and administrative expenses over the five-year period ended May 29, 2023.
 
F-4
5
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Acquisition of Additional Interest.
 On January 2, 2024, the Company closed on the acquisition of an additional 25% of 3 Arts Entertainment representing approximately half of the noncontrolling interest for $194.1 million. In addition, the Company purchased certain profit interests held by certain managers and entered into certain option rights agreements, which replaced the put and call rights under the previous arrangement by providing noncontrolling interest holders the right to sell to the Company and the Company the right to purchase their remaining (24%) interest beginning in January 2027.
The purchase of the additional 25% interest in 3 Arts Entertainment for $194.1 million was recorded as a reduction of noncontrolling interest which had previously been adjusted to its redemption value, which equaled fair value. At the completion of the purchase, a portion of the noncontrolling interest continued to be considered compensatory, as it was subject to forfeiture provisions upon termination of employment under certain circumstances, and the remaining portion represented the noncontrolling interest holders’ fully vested equity interest. Under the new arrangement, the holders’ right to sell their interest to the Company, and the Company’s right to purchase the noncontrolling interest, are based on a formula-based amount (i.e., a fixed EBITDA multiple), subject to a minimum purchase price, rather than being based on fair value. Since the redemption features described above were based on a formula using a fixed multiple, the compensatory portion of the noncontrolling interest is now considered a liability award, and as a result, during the fourth quarter of fiscal 2024, approximately $93.2 million was reclassified from mezzanine equity to a liability, and is reflected in “other
liabilities—non-current”
in the consolidated balance sheet at March 31, 2024. In addition, because the new arrangement represented a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million in the year ended March 31, 2024, representing the excess of the fair value of the modified award over amounts previously expensed. This incremental expense was reflected in “restructuring and other” in the consolidated statements of operations, and as a reduction of accumulated deficit in shareholders’ equity, reflected in the “redeemable noncontrolling interests adjustments” line item in the consolidated statements of equity (deficit).
The redeemable noncontrolling interest balance related to 3 Arts Entertainment reflects the fully vested equity portion of the noncontrolling interest, which remains classified as redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets due to the purchase and sale rights beginning in 2027 which were determined to be embedded in the noncontrolling interest, and are outside the control of the Company. The redeemable noncontrolling interest is being adjusted to its redemption value through accumulated deficit through the sale or purchase right date in January 2027. Subsequent to the January 2024 transactions noted above, changes in the carrying value of the redeemable noncontrolling interest are reflected in the calculation of basic and diluted net income or loss per common share attributable to Lions Gate Entertainment Corp. shareholders, if dilutive, or to the extent the adjustments represent recoveries of amounts previously reflected in the computation of basic and diluted net income or loss per common share attributable to Lions Gate Entertainment Corp. shareholders (see Note 1).
The liability component of the noncontrolling interest is reflected at its estimated redemption value, with any changes in estimated redemption value recognized as a charge or benefit in general and administrative expense in the consolidated statements of operations over the vesting period (i.e., the period from January 2, 2024 to the sale or purchase right date in January 2027). Earned distributions continue to be accounted for as compensation since such amounts are allocated to the holders based on performance, and are being expensed within general and administrative expense as incurred.
Pilgrim Media Group:
Accounting Prior to Acquisition of Additional Interest in July 2024.
 As of March 31, 2022, the Company had a redeemable noncontrolling interest representing 37.5% of Pilgrim Media Group. The noncontrolling
 
F-
46
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
interest was subject to put and call options, such that the noncontrolling interest holder had a right to put and the Company had a right to call a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group, at fair value, exercisable for thirty (30) days beginning November 12, 2022. On November 14, 2022 the noncontrolling interest holder exercised the right to put a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group. In February 2023, the Company paid $36.5 million as settlement of the exercised put option, and recorded a reduction to redeemable noncontrolling interest of $55.1 million representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the settlement of the put recorded as a reduction to accumulated deficit of $18.6 million. The noncontrolling interest holder had a right to put and the Company had a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable for thirty (30) days beginning November 12, 2024, as amended. Prior to the Company’s acquisition of the remaining interest discussed below, the noncontrolling interest was presented as a redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets, due to put and call options which were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company.
Acquisition of Additional Interest.
 In July 2024, the Company acquired the noncontrolling interest holder’s remaining 12.5% of Pilgrim Media Group for approximately $13.5 million, and recorded a reduction to redeemable noncontrolling interest of $23.4 million, representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the remaining interest recorded as a reduction to accumulated deficit of $9.9 million.
Other:
The Company has other immaterial redeemable noncontrolling interests.
Non-Redeemable
Noncontrolling Interests
The Company has other noncontrolling interests that are not redeemable, which are classified in shareholder’s equity on the Company’s consolidated balance sheets. These noncontrolling interests include:
Legacy Lionsgate Studios:
In connection with the Business Combination discussed in Note 2, on May 13, 2024, the Company recorded a noncontrolling interest representing approximately 12.2% of Legacy Lionsgate Studios amounting to a reduction of noncontrolling interest in shareholders’ equity (deficit) of $100.2 million, due to the negative carrying value of Legacy Lionsgate Studios at May 13, 2024, partially offset by an amount allocated to certain options. See Note 2 for further information.
Other:
In connection with the Company’s investment in CP LG and acquisition of the acquired library and related assets and liabilities discussed in Note 2, on June 5, 2024, the Company recorded a noncontrolling interest representing approximately 49% of CP LG amounting to $33.6 million ($27.3 million at March 31, 2025). See Note 2 for further information.
In addition, the Company has other immaterial noncontrolling interests that are not redeemable.
 
F-
47
Table of Contents
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
12. Revenue
Revenue by Segment, Market or Product Line
The table below presents revenues by segment, market or product line for the fiscal years ended March 31, 2025, 2024 and 2023. The Motion Picture and Television Production segments include the revenues of eOne from the acquisition date of December 27, 2023 (see Note 2).
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Revenue by Type:
         
Motion Picture
         
Theatrical
    $ 154.1    $ 226.5    $ 120.7
Home Entertainment
         
Digital Media
      598.2      652.3      527.5
Packaged Media
      60.0      84.0      70.5
  
 
 
     
 
 
     
 
 
  
Total Home Entertainment
      658.2      736.3      598.0
Television
      347.3      274.4      217.8
International
      401.5      391.0      365.0
Other
      28.6      28.1      22.2
  
 
 
     
 
 
     
 
 
  
Total Motion Picture revenues
      1,589.7      1,656.3      1,323.7
Television Production
         
Television
      1,069.4      788.5      1,144.3
International
      248.2      228.8      277.7
Home Entertainment
         
Digital Media
      184.0      240.6      241.7
Packaged Media
      4.1      2.0      3.3
  
 
 
     
 
 
     
 
 
  
Total Home Entertainment
      188.1      242.6      245.0
Other
      100.1      70.2      93.1
  
 
 
     
 
 
     
 
 
  
Total Television Production revenues
      1,605.8      1,330.1      1,760.1
Media Networks - Programming Revenues
         
Domestic
(1)
      1,356.3      1,382.7      1,413.1
International
      15.8      193.7      133.4
  
 
 
     
 
 
     
 
 
  
     1,372.1      1,576.4      1,546.5
Intersegment eliminations
      (619.7 )       (545.9 )       (775.5 ) 
  
 
 
     
 
 
     
 
 
  
Total revenues
    $ 3,947.9    $ 4,016.9    $ 3,854.8
  
 
 
     
 
 
     
 
 
  
 
(1)
During the first quarter of the fiscal year ended March 31, 2025, the Company changed the presentation of Media Networks programming revenues to reflect revenues from Canada in the “Domestic” line item above in order to be consistent with how management is now reviewing the Media Networks segment. Revenues from Canada of $17.3 million and $17.3 million, respectively, for the fiscal years ended March 31, 2024 and March 31, 2023 were reclassified to “Domestic” from “International” in the table above to conform to the current period presentation.
 
F-
48
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Remaining Performance Obligations
Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2025 are as follows:
 
    
Year Ending March 31,
                
    
2026
     
2027
     
2028
     
Thereafter
     
Total
  
    
(Amounts in millions)
  
Remaining Performance Obligations
    $ 974.1    $ 376.3    $ 128.7    $ 50.7    $ 1,529.8
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
The above table does not include estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licenses of intellectual property. The revenues included in the above table include all fixed fee contracts regardless of duration.
Revenues of $269.7 million, including variable and fixed fee arrangements, were recognized during the year ended March 31, 2025 from performance obligations satisfied prior to March 31, 2024. These revenues were primarily associated with the distribution of television and theatrical product in electronic sell-through and
video-on-demand
formats, and to a lesser extent, the distribution of theatrical product in the domestic and international markets related to films initially released in prior periods.
Accounts Receivable, Contract Assets and Deferred Revenue
The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue (see Note 1). See the consolidated balance sheets or Note 19 for accounts receivable, contract assets and deferred revenue balances at March 31, 2025 and 2024.
Accounts Receivable.
 Accounts receivable are presented net of estimated credit losses. The Company estimates credit losses for accounts receivable based on historical experience for the respective risk categories and current and future expected economic conditions. To assess collectability, the Company analyzes market trends, economic conditions, the aging of receivables and customer specific risks, and records an allowance for estimated credit losses expected over the lifetime of the receivables in direct operating expense.
The Company performs ongoing credit evaluations and monitors its credit exposure through active review of customers’ financial condition, aging of receivable balances, historical collection trends, and expectations about relevant future events that may significantly affect collectability. The Company generally does not require collateral for its trade accounts receivable.
Changes in the allowance for accounts receivable consisted of the following:
 
    
March 31, 2024
     
Recoveries
    
Other
(1)
     
Uncollectible

accounts written-off
    
March 31,
2025
  
    
(Amounts in millions)
  
Provision for credit losses
    $ 7.2    $ (1.9 )    $ 2.5    $ (1.7 )    $ 6.1
 
(1)
Represents a measurement period adjustment to the fair value of accounts receivable acquired in the acquisition of eOne (see Note 2).
Contract Assets.
 Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables). Amounts relate primarily to contractual payment holdbacks in cases in which the Company is required to deliver additional episodes or seasons of television
 
F-
49
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the Company’s customers’ audit rights to expire. See Note 19 for contract assets at March 31, 2025 and 2024.
Deferred Revenue.
 Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. Deferred revenue as of March 31, 2025 increased as compared to March 31, 2024 due to the receipt of customers’ payments for certain motion pictures and television programs prior to the Company satisfying the corresponding performance obligation (i.e., completion and delivery of the motion pictures and television programs, and the start of the customers’ exploitation rights). The change in deferred revenue was also impacted by the industry strikes which has affected the timing of content deliveries. Revenues of $180.2 million were recognized during the year ended March 31, 2025, related to the balance of deferred revenue at March 31, 2024.
13. Capital Stock
(a) Common Shares
The Company had 500 million authorized Class A voting shares and 500 million authorized Class B
non-voting
shares, at March 31, 2025 and March 31, 2024.
The table below outlines common shares reserved for future issuance:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Stock options and share appreciation rights (SARs) outstanding
      18.3      20.7
Restricted share units and restricted stock — unvested
      14.4      13.4
Common shares available for future issuance
      10.5      15.4
  
 
 
     
 
 
  
Shares reserved for future issuance
      43.2      49.5
  
 
 
     
 
 
  
(b) Share Repurchases
On February 2, 2016, the Company’s Board of Directors authorized the Company to increase its previously announced share repurchase plan from a total authorization of $300 million to $468 million. During the fiscal years ended March 31, 2025, 2024 and 2023, the Company did not repurchase any common shares. To date, approximately $288.1 million common shares have been repurchased, leaving approximately $179.9 million of authorized potential repurchases.
(c) Share-based Compensation
General.
 The Company has a performance incentive plan (the “2023 Plan”), as amended, which provides for granting awards which include stock options, share appreciation rights, restricted stock, restricted share units, stock bonuses and other forms of awards granted or denominated in the Company’s Class A voting shares and the Company’s Class B
non-voting
shares (“Common Shares”) or units of Common Shares, as well as certain cash bonus awards. Persons eligible to receive awards under the 2023 Plan include directors of the Company, officers or employees of the Company or any of its subsidiaries, and certain consultants and advisors to the Company or any of its subsidiaries.
Stock options are generally granted at exercise prices equal to or exceeding the market price of the Company’s Common Shares at the date of grant. Substantially all stock options vest ratably over one to five years from the grant date based on continuous service and expire seven to ten years from the date of grant.
 
F-5
0
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Restricted stock and restricted share units generally vest ratably over one to three years based on continuous service. The Company satisfies stock option exercises and vesting of restricted stock and restricted share units with newly issued shares.
The measurement of all share-based awards uses a fair value method and the recognition of the related share-based compensation expense in the consolidated financial statements is recorded over the requisite service period. Further, the Company estimates forfeitures for share-based awards that are not expected to vest. As share-based compensation expense recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.
Share-Based Compensation Expense.
 The Company recognized the following share-based compensation expense during the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Compensation Expense:
         
Stock options
    $ 0.8    $ 2.2    $ 7.0
Restricted share units and other share-based compensation
      67.5      77.5      86.8
Share appreciation rights
      0.7      1.5      4.0
  
 
 
     
 
 
     
 
 
  
     69.0      81.2      97.8
Impact of accelerated vesting on equity awards
(1)
      5.4      9.4      4.2
  
 
 
     
 
 
     
 
 
  
Total share-based compensation expense
    $ 74.4    $ 90.6    $ 102.0
Tax impact
(2)
      (14.0 )       (18.6 )       (18.4 ) 
  
 
 
     
 
 
     
 
 
  
Reduction in net income
    $ 60.4    $ 72.0    $ 83.6
  
 
 
     
 
 
     
 
 
  
 
(1)
Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.
(2)
Represents the income tax benefit recognized in the statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.
Share-based compensation expense, by expense category, consisted of the following:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Share-Based Compensation Expense:
         
Direct operating
    $ 2.9    $ 2.8    $ 1.7
Distribution and marketing
      0.8      0.8      0.7
General and administration
      65.3      77.6      95.4
Restructuring and other
      5.4      9.4      4.2
  
 
 
     
 
 
     
 
 
  
   $ 74.4    $ 90.6    $ 102.0
  
 
 
     
 
 
     
 
 
  
 
F-5
1
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Stock Options
The following table sets forth the stock option, and share appreciation rights (“SARs”) activity during the year ended March 31, 2025:
 
   
Stock Options and SARs
  
   
Class A Voting Shares
    
Class B
Non-Voting
Shares
  
   
Number of

Shares
    
Weighted-

Average
Exercise
Price
    
Weighted-

Average
Remaining
Contractual
Term
(years)
    
Aggregate
Intrinsic
Value
    
Number
of
Shares
    
Weighted-

Average
Exercise
Price
    
Weighted-

Average
Remaining
Contractual
Term
(years)
    
Aggregate
Intrinsic
Value
  
   
(Amounts in millions, except for weighted-average exercise price and years)
  
Outstanding at March 31, 2024
     2.4   $ 22.96           18.3     $ 13.73      
Granted
     —        —            — 
(1)
 		   $ 7.12      
Exercised
     —        —            (0.1 )    $ 5.86      
Forfeited or expired
     (0.1 )    $ 20.26           (2.2 )    $ 14.67      
 
 
 
    
 
 
        
 
 
    
 
 
      
Outstanding at March 31, 2025
     2.3   $ 23.09       1.52     $ 0.1     16.0     $ 13.66       4.19     $ 0.7
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Vested or expected to vest at March 31, 2025
     2.3   $ 23.09       1.52     $ 0.1     15.9     $ 13.67       4.18     $ 0.7
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Exercisable at March 31, 2025
     2.3   $ 23.09       1.52     $ 0.1     15.6     $ 13.77       4.12     $ 0.7
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(1)
Represents less than 0.1 million shares.
The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes). The following table presents the weighted average grant-date fair value of options granted in the years ended March 31, 2025, 2024 and 2023, and the weighted average applicable assumptions used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the years then ended:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
Weighted average fair value of grants
      $3.87        $4.63        $4.56  
Weighted average assumptions:
         
Risk-free interest rate
(1)
      4.2%       
4.3% - 4.5%
     
2.8% - 3.7%
Expected option lives (in years)
(2)
      7 years       
3.3 - 7 years
       
3.5 - 7 years
  
Expected volatility for options
(3)
      47%       
46% - 47%
        44%  
Expected dividend yield
(4)
      0%        0%        0%  
 
(1)
The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied against the expected term of the option at the time of the grant.
(2)
The expected term of options granted represents the period of time that options granted are expected to be outstanding.
(3)
Expected volatilities are based on implied volatilities from traded options on the Company’s shares, historical volatility of the Company’s shares and other factors.
(4)
The expected dividend yield is estimated by dividing the expected annual dividend by the market price of the Company’s shares at the date of grant.
 
F-5
2
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The total intrinsic value of options exercised during the year ended March 31, 2025 was $0.2 million (2024 — $0.2 million, 2023 — $1.2 million).
During the year ended March 31, 2025, less than 0.1 million shares (2024 — less than 0.1 million shares, 2023 — less than 0.1 million) were cancelled to fund withholding tax obligations upon exercise of options.
Restricted Share Units
The following table sets forth the restricted share unit and restricted stock activity during the year ended March 31, 2025:
 
   
Restricted Share Units and Restricted Stock
  
   
Class A Voting
Shares
    
Weighted-Average

Grant-Date Fair
Value
    
Class B
Non-Voting

Shares
    
Weighted-Average

Grant-Date Fair
Value
  
   
(Amounts in millions, except for weighted-average grant date fair
value)
  
Outstanding at March 31, 2024
     0.1   $ 9.27       13.3   $ 8.71  
Granted
     0.1   $ 8.24       10.5   $ 7.98  
Vested
     (0.1 )    $ 9.20       (8.3 )    $ 8.79  
Forfeited
     —        —        (1.2 )    $ 8.29  
 
 
 
    
 
 
    
 
 
    
 
 
  
Outstanding at March 31, 2025
     0.1   $ 8.39       14.3   $ 8.16  
 
 
 
    
 
 
    
 
 
    
 
 
  
The fair values of restricted share units and restricted stock are determined based on the market value of the shares on the date of grant. The total fair value of restricted share units and restricted stock on the date of vesting during the year ended March 31, 2025 was $57.1 million (2024 - $58.1 million, 2023 - $42.4 million).
The following table summarizes the total remaining unrecognized compensation cost as of March 31, 2025 related to
non-vested
stock options and restricted stock and restricted share units and the weighted average remaining years over which the cost will be recognized:
 
    
Total
Unrecognized
Compensation
Cost
     
Weighted
Average
Remaining
Years
  
    
(Amounts in millions)
         
Stock Options
    $ 0.9      0.7  
Restricted Share Units and Restricted Stock
      57.7      1.5  
  
 
 
     
Total
    $ 58.6   
  
 
 
     
Under the Company’s stock option and long term incentive plans, the Company withholds shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted share units and restricted stock. During the year ended March 31, 2025, 3.5 million shares (2024 — 3.9 million shares, 2023 — 2.2 million shares) were withheld upon the vesting of restricted share units and restricted stock.
 
F-5
3
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Company becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the stock options and restricted share units when vesting or exercise occurs, the restrictions are released and the shares are issued. Restricted share units are forfeited if the employees are terminated prior to vesting.
The Company recognized excess tax deficiencies of $3.6 million associated with its equity awards in its tax provision for the year ended March 31, 2025 (2024 — deficiencies of $12.0 million, 2023 — deficiencies of $11.3 million).
Other Share-Based Compensation
Pursuant to the terms of certain employment agreements, during the year ended March 31, 2025, the Company granted the equivalent of $2.3 million (2024 - $2.3 million, 2023 - $2.3 million) in shares to certain employees through the term of their employment contracts, which were recorded as compensation expense in the applicable period. Pursuant to this arrangement, for the year ended March 31, 2025, the Company issued 0.3 million shares (2024 - 0.2 million shares, 2023 - 0.3 million shares), net of shares withheld to satisfy minimum tax withholding obligations.
14. Income Taxes
The components of pretax income (loss), net of intercompany eliminations, are as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
United States
    $ (362.5 )     $ (1,389.9 )     $ (2,218.6 ) 
International
      3.7      208.6      221.1
  
 
 
     
 
 
     
 
 
  
   $ (358.8 )     $ (1,181.3 )     $ (1,997.5 ) 
  
 
 
     
 
 
     
 
 
  
The Company’s current and deferred income tax provision (benefits) are as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Current provision (benefit):
   
Federal
    $ 4.4    $ (62.5 )     $ 11.9
States
      (4.4 )       1.7      (0.4 ) 
International
      9.5      14.3      15.1
  
 
 
     
 
 
     
 
 
  
Total current provision (benefit)
    $ 9.5    $ (46.5 )     $ 26.6
  
 
 
     
 
 
     
 
 
  
Deferred provision (benefit):
   
Federal
    $ 9.0    $ (6.6 )     $ (7.7 ) 
States
      (0.7 )       (11.9 )       (0.1 ) 
International
      (3.0 )       —         2.5
  
 
 
     
 
 
     
 
 
  
Total deferred provision (benefit)
      5.3      (18.5 )       (5.3 ) 
  
 
 
     
 
 
     
 
 
  
Total provision (benefit) for income taxes
    $ 14.8    $ (65.0 )     $ 21.3
  
 
 
     
 
 
     
 
 
  
 
F-5
4
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S. federal statutory income tax rate of 21% in its reconciliation of the statutory rate to its reported income tax provision (benefit). The Company’s income tax provision (benefit) differs from the 21% U.S. federal statutory income tax rate applied to income (loss) before taxes due to the mix of earnings generated across the various jurisdictions in which operations are conducted, in addition to the tax deductions generated through the Company’s capital structure.
The differences between income taxes expected at U.S. federal statutory income tax rates and the tax provision (benefits) are as set forth below:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Income taxes computed at Federal statutory rate
    $ (75.3 )     $ (248.1 )     $ (419.5 ) 
Foreign affiliate dividends
      (6.7 )       (27.3 )       (35.4 ) 
Foreign operations subject to different income tax rates
      18.5      41.2      48.2
State income tax
      (5.0 )       (9.6 )       (0.5 ) 
Gain on sale of assets
      8.4      —         —   
Nondeductible goodwill impairment
      —         101.9      304.3
Remeasurements of originating deferred tax assets and liabilities
      (684.5 )       (78.3 )       13.6
Permanent differences
      2.3      1.0      2.3
Nondeductible share based compensation
      0.8      2.5      2.3
Nondeductible officers compensation
      4.2      7.7      9.8
Non-controlling
interest in partnerships
      2.8      18.6      1.8
Uncertain tax benefits
      1.4      (70.0 )       5.3
Other
      2.1      (0.9 )       1.9
Changes in valuation allowance
      745.8      196.3      87.2
  
 
 
     
 
 
     
 
 
  
Total provision (benefit) for income taxes
    $ 14.8    $ (65.0 )     $ 21.3
  
 
 
     
 
 
     
 
 
  
For the fiscal years ended March 31, 2025, 2024 and 2023, the Company’s income tax provision (benefit) includes certain foreign affiliate dividends that can be received in its Canadian jurisdiction without being subject to income tax under local law. As a result of an internal capital restructuring during a prior fiscal year, the Company generated a net operating loss carryforward under local income tax law in another foreign jurisdiction which was offset by a valuation allowance based on the Company’s assessment, and which is being absorbed by taxable income annually.
 
F-5
5
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
 
    
March 31, 2025
     
March 31, 2024
  
    
(Amounts in millions)
  
Deferred tax assets:
      
Net operating losses
    $ 1,286.3    $ 624.4
Foreign tax credits
      49.0      64.9
Investment in film and television programs
      54.0      34.2
Accrued compensation
      43.9      54.3
Operating leases - liabilities
      89.7      99.0
Other assets
      58.0      57.7
Reserves
      20.6      22.9
Interest
      266.0      201.0
  
 
 
     
 
 
  
Total deferred tax assets
      1,867.5      1,158.4
Valuation allowance
      (1,589.1 )       (808.3 ) 
  
 
 
     
 
 
  
Deferred tax assets, net of valuation allowance
      278.4      350.1
Deferred tax liabilities:
      
Intangible assets
      (189.4 )       (222.4 ) 
Operating leases - assets
      (77.2 )       (88.9 ) 
Other
      (31.9 )       (52.1 ) 
  
 
 
     
 
 
  
Total deferred tax liabilities
    $ (298.5 )     $ (363.4 ) 
  
 
 
     
 
 
  
Net deferred tax liabilities
    $ (20.1 )     $ (13.3 ) 
  
 
 
     
 
 
  
The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to U.S. federal, state and foreign net operating loss carryforwards (“NOLs”), U.S. federal foreign tax credit carryforwards, and carryforwards of U.S. federal and state interest expenses limited in their deduction under the Internal Revenue Code and similar state and local statutes. In its assessment, the Company has concluded there to be sufficient uncertainty regarding the future realization of these deferred tax assets
The table below presents the changes in the deferred tax valuation allowances:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Beginning balance
    $ 808.3    $ 455.7    $ 362.8
Changes in valuation allowance
      745.8      196.3      87.2
Other 
(1)
      35.0      156.3      5.7
  
 
 
     
 
 
     
 
 
  
Ending balance
    $ 1,589.1    $ 808.3    $ 455.7
  
 
 
     
 
 
     
 
 
  
 
(1)
Valuation allowance adjustments recorded in other comprehensive income are primarily associated with hedging activity. Amounts for the years ended March 31, 2025 and March 31, 2024 also include opening balances of $23.0 million and $187.0 million, respectively, due to the acquisition of eOne on December 27, 2023.
 
F-
56
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
As of March 31, 2025, the Company had U.S. federal NOLs of approximately $1,311.2 million available to reduce future U.S. federal income taxes, certain of which expire beginning in 2037 through 2038. As of March 31, 2025, the Company had state NOLs of approximately $1,230.3 million available to reduce future state income taxes which expire in varying amounts beginning in 2026. As of March 31, 2025, the Company had Canadian NOLs of $332.2 million which will expire beginning in 2030. As of March 31, 2025, the Company had Luxembourg NOLs of $3,354.6 million which will expire beginning in 2036. As of March 31, 2025 the Company had Spanish loss carryforwards of $95.6 million which will expire beginning in 2036. As of March 31, 2025 the Company had U.K. NOLs of $64.9 million with no expiration. As of March 31, 2025, the Company had other foreign jurisdiction NOLs of $47.5 million which will expire beginning in 2028. In addition, as of March 31, 2025, the Company had U.S. federal credit carryforwards related to foreign taxes paid of approximately $49.0 million to offset future U.S. federal income taxes that will expire beginning in 2026.
The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “other liabilities” in the consolidated balance sheets. As of March 31, 2025 and 2024, the total amount of gross unrecognized tax benefits, exclusive of interest and penalties, was $0.4 million and $12.1 million, respectively, which, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s gross amount of unrecognized tax benefits, exclusive of interest and penalties, are summarized as follows:
 
    
Amounts
in millions
  
Gross unrecognized tax benefits at March 31, 2022 (liability as of March 31, 2022)
    $ 70.2
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      0.2
Decreases related to prior year tax positions
      —   
Settlements
      (4.3 ) 
Lapse in statute of limitations
      (1.2 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2023 (liability as of March 31, 2023)
      64.9
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      8.9
Decreases related to prior year tax positions
      —   
Settlements
      (60.7 ) 
Lapse in statute of limitations
      (1 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2024 (liability as of March 31, 2024)
      12.1
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      2.0
Decreases related to prior year tax positions
      (2.0 ) 
Settlements
      (2.6 ) 
Lapse in statute of limitations
      (1.4 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2025 (liability as of March 31, 2025)
    $ 8.1
  
 
 
  
The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision (benefit). For the years ended March 31, 2025, 2024, and 2023, the Company recognized as a charge or (benefit)
 
F-
57
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
for interest and penalties related to uncertain tax positions of $(4.2) million, $(8.9) million, and $5.0 million, respectively. The liability for accrued interest and penalties amounted to $2.0 million and $7.0 million as of March 31, 2025 and 2024, respectively.
The Company estimates that it is reasonably possible that the liability for unrecognized tax benefits will decrease in the next twelve months by $0.8 million, inclusive of interest and penalties, as a result of projected audit settlements in certain jurisdictions.
The Company is subject to taxation in the U.S. and various state, local, and foreign jurisdictions. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward and make adjustments up to the amount of the NOLs. While the Company is in various stages of inquiry and examination with certain taxing authorities and believes that its tax positions will more likely than not be sustained, it is nonetheless possible that future obligations related to these matters could arise. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from an examination.
15. Restructuring and Other
Restructuring and other includes restructuring and severance costs, and certain transaction and other costs, when applicable. During the years ended March 31, 2025, 2024 and 2023, the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below. The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Restructuring and other:
         
Content and other impairments
(1)
    $ 162.4    $ 377.3    $ 385.2
Severance
(2)
      40.6      46.6      22.2
COVID-19
related charges included in restructuring and other
      —         —         0.1
Transaction and other costs (benefits)
(3)
      50.5      84.6      4.4
  
 
 
     
 
 
     
 
 
  
Total Restructuring and Other
      253.5      508.5      411.9
  
 
 
     
 
 
     
 
 
  
Other unusual charges not included in restructuring and other or the Company’s operating segments:
         
Programming and content charges included in direct operating expense
(4)
      —         —         7.0
COVID-19
related benefit included in direct operating expense
(5)
      (3.1 )       (1.0 )       (11.6 ) 
Unallocated rent cost included in direct operating expense
(6)
      18.6      —         —   
  
 
 
     
 
 
     
 
 
  
Total restructuring and other and other unusual charges not included in restructuring and other
    $ 269.0    $ 507.5    $ 407.3
  
 
 
     
 
 
     
 
 
  
 
(1)
Media Networks Restructuring:
 In fiscal 2023, the Company began a plan to restructure its Media Networks international business, and during the fiscal years ended March 31, 2024 and 2025, the Company continued executing its restructuring plan, which included exiting all international territories except for Canada and
 
F-
58
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  India, and included an evaluation of the programming on Starz’s domestic and international platforms, resulting in certain programming being removed from those platforms and written down to fair value.
The Company has incurred impairment charges from the inception of the Media Networks restructuring plan through March 31, 2025 amounting to $880.1 million. As a result of these restructuring initiatives, the Company recorded content impairment charges related to the Media Networks segment in the fiscal years ended March 31, 2025, 2024 and 2023 of $136.3 million, $364.5 million, and $379.3 million, respectively.
As the Company continues to evaluate the Media Networks business and its current restructuring plan in relation to the current micro and macroeconomic environment and the announced plan to separate the Company’s Starz business (i.e., Media Networks segment) and Studio Business (i.e., Motion Picture and Television Production segments), including further strategic review of content performance and its strategy on a
territory-by-territory
basis, the Company may decide to expand its restructuring plan and exit additional territories or remove certain content off its platform in the future. The Company may incur additional content impairment and other restructuring charges as it continues to execute its restructuring plan.
Content and Other Impairments:
 Content and other impairments in the fiscal year ended March 
31
,
2025
also include content impairments of $
7.7
 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. In addition, amounts in the fiscal year ended March 
31
,
2025
also include impairments of certain operating lease
right-of-use
and leasehold improvement assets related to the Television Production segment associated with facility leases that will
no
longer be utilized by the Company primarily related to the integration of eOne.

Content and other impairments in the fiscal year ended March 
31
,
2024
also include $
12.8
 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne.

Content and other impairments in the fiscal year ended March 
31
,
2023
also include an impairment of operating leases
right-of-use
asset related to the Studio business and corporate facilities amounting to $
5.8
 million associated with a portion of a facility lease that will
no
longer be utilized by the Company.
The lease impairments reflects a decline in market conditions since the inception of the leases impacting potential sublease opportunities, and represents the difference between the estimated fair value, which was determined based on the expected discounted future cash flows of the lease assets, and the carrying value.
(2)
Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives. During the fiscal year ended March 31, 2025, in connection with the Company’s current restructuring plan, approximately 8% of its eligible U.S. employees elected to take advantage of voluntary severance and early retirement packages. A total of approximately $26.0 million in severance expense was incurred under the voluntary severance program and was recognized in restructuring and other in the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2024, amounts were due to restructuring activities including integration of the acquisition of eOne, Media Networks international restructuring and our Motion Picture and Television Production segments.
(3)
Transaction and other costs in the fiscal years ended March 31, 2025, 2024 and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters. In fiscal 2025 and fiscal 2024, amounts include costs associated with the separation of the Starz Business from the Studio Business, and acquisition and integration costs related to the acquisition of eOne. In fiscal 2024, amounts also include $49.2 million associated with the acquisition of additional interest in 3 Arts Entertainment. Due to the new arrangement representing a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million, representing the excess of the fair value of the modified award over amounts previously expensed (see Note 11 for further information). In addition, transaction and other costs in fiscal 2024 includes approximately $16.6 million of a loss associated with a theft at a production of 
 
F-
59
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
a 51% owned consolidated entity. In the quarter ended March 31, 2025, the Company recognized a benefit of $3.1 million for insurance recoveries related to the loss. The Company also expects to recover a portion of the loss from the noncontrolling interest holders of this entity. In fiscal 2025 and 2024, transaction and other costs also include a benefit of
$7.1 million and $5.4 million associated with an arrangement to migrate subscribers in some of the exited territories to a third-party in connection with the Starz international restructuring. In fiscal 2023, transaction and other costs include a benefit of $11.0 million for a settlement of a legal matter related to the Media Networks segment.
(4)
Amounts represent certain unusual programming and content charges. In the fiscal year ended March 31, 2023, the amounts represent development costs written off as a result of changes in strategy across the Company’s theatrical slate in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment. These charges are excluded from segment results and included in amortization of investment in film and television programs in direct operating expense on the consolidated statement of operations.
(5)
Amounts include incremental costs incurred, if any, due to circumstances associated with the
COVID-19
global pandemic, net of recoveries. In the fiscal years ended March 31, 2025, 2024 and 2023, recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense. Insurance recoveries in the fiscal years 2025, 2024 and 2023 were $3.1 million, $1.2 million and $14.1 million, respectively. The fiscal 2023 benefit also included bad debt recoveries.
(6)
Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.
Changes in the restructuring and other severance liability were as follows for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended

March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Severance liability
         
Beginning balance
    $ 23.6    $ 8.7    $ 1.5
Accruals
(2)
      35.2      37.2      18.0
Severance payments
      (33.6 )       (22.3 )       (10.8 ) 
  
 
 
     
 
 
     
 
 
  
Ending balance
(1)
    $ 25.2    $ 23.6    $ 8.7
  
 
 
     
 
 
     
 
 
  
 
(1)
As of March 31, 2025, the remaining severance liability of approximately $25.2 million is expected to be paid in the next 12 months.
(2)
Excludes $5.4 million, $9.4 million, and $4.2 million in the fiscal years ended March 31, 2025, 2024 and 2023, respectively, of accelerated vesting on equity awards.
16. Segment Information
The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company’s internal management structure, and the financial information that is evaluated regularly by the Company’s CODM in deciding how to allocate resources to an individual segment and in assessing performance. Our Chief Executive Officer (“CEO”) is the CODM.
The Company has three reportable business segments: (1) Motion Picture, (2) Television Production and (3) Media Networks. The Company refers to its Motion Picture and Television Production segments collectively as the Studio Business.
 
F-6
0
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Studio Business:
Motion Picture.
 Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.
Television Production.
 Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and
non-fiction
programming. Television Production includes the licensing of Starz original series productions to Starz Networks and to Starz platforms outside of the U.S. and Canada, and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment.
Media Networks Business:
Media Networks.
 Media Networks consists of the following product lines (i) Starz Networks, which includes the domestic distribution of STARZ branded premium subscription video services through OTT platforms, on a
direct-to-consumer
basis through the Starz App, and through Distributors; and (ii) Other, which represents revenues primarily from the OTT distribution of the Company’s Starz subscription video services outside of the U.S. and Canada.
In the ordinary course of business, the Company’s reportable segments enter into transactions with one another. The most common types of intersegment transactions include licensing motion pictures or television programming (including Starz original productions) from the Motion Picture and Television Production segments to the Media Networks segment. While intersegment transactions are treated like third-party transactions to determine segment performance, the revenues (and corresponding expenses, assets, or liabilities recognized by the segment that is the counterparty to the transaction) are eliminated in consolidation and, therefore, do not affect consolidated results.
Segment information is presented in the table below. The Motion Picture and Television Production segments include the results of operations of eOne from the acquisition date of December 27, 2023 (see Note 2).
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Segment revenues
         
Studio Business:
         
Motion Picture
    $ 1,589.7    $ 1,656.3    $ 1,323.7
Television Production
      1,605.8      1,330.1      1,760.1
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      3,195.5      2,986.4      3,083.8
Media Networks
      1,372.1      1,576.4      1,546.5
Intersegment eliminations
      (619.7 )       (545.9 )       (775.5 ) 
  
 
 
     
 
 
     
 
 
  
     3,947.9      4,016.9      3,854.8
Intersegment revenues
         
Studio Business:
         
Motion Picture
      203.3      128.2      44.2
Television Production
      416.4      417.7      731.3
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      619.7      545.9      775.5
Media Networks
      —         —         —   
  
 
 
     
 
 
     
 
 
  
     619.7      545.9      775.5
 
F-6
1
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Segment direct operating expenses
         
Studio Business:
         
Motion Picture
      824.2      796.0      666.5
Television Production
      1,369.3      1,090.1      1,541.5
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      2,193.5      1,886.1      2,208.0
Media Networks
      702.1      795.5      846.8
Intersegment eliminations
      (561.9 )       (494.2 )       (740.1 ) 
  
 
 
     
 
 
     
 
 
  
     2,333.7      2,187.4      2,314.7
Segment distribution and marketing
         
Studio Business:
         
Motion Picture
      357.8      427.0      270.9
Television Production
      38.1      35.3      33.3
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      395.9      462.3      304.2
Media Networks
      381.0      451.1      496.5
Intersegment eliminations
      (0.8 )       (2.8 )       0.3
  
 
 
     
 
 
     
 
 
  
     776.1      910.6      801.0
Gross contribution
         
Studio Business:
         
Motion Picture
      407.7      433.3      386.3
Television Production
      198.4      204.7      185.3
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      606.1      638.0      571.6
Media Networks
      289.0      329.8      203.2
Intersegment eliminations
      (57.0 )       (48.9 )       (35.7 ) 
  
 
 
     
 
 
     
 
 
  
     838.1      918.9      739.1
Segment general and administration
         
Studio Business:
         
Motion Picture
      100.1      113.9      109.8
Television Production
      61.9      57.9      51.9
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      162.0      171.8      161.7
Media Networks
      86.2      93.4      96.4
  
 
 
     
 
 
     
 
 
  
     248.2      265.2      258.1
Segment profit
         
Studio Business:
         
Motion Picture
      307.6      319.4      276.5
Television Production
      136.5      146.8      133.4
  
 
 
     
 
 
     
 
 
  
Total Studio Business
      444.1      466.2      409.9
Media Networks
      202.8      236.4      106.8
Intersegment eliminations
      (57.0 )       (48.9 )       (35.7 ) 
  
 
 
     
 
 
     
 
 
  
   $ 589.9    $ 653.7    $ 481.0
  
 
 
     
 
 
     
 
 
  
The Company’s primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (segment revenues, less segment direct operating and segment distribution and marketing expense) less segment general and administration expenses. Segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content
 
F-6
2
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
strategy, certain benefits related to the
COVID-19
global pandemic, unallocated rent cost and purchase accounting and related adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management, including the CODM, and enables them to understand the fundamental performance of the Company’s businesses. The CODM uses segment profit to evaluate the operating performance of the Company’s segments, to inform decisions for planning and forecasting, and for the allocation of resources.
The reconciliation of total segment profit to the Company’s loss before income taxes is as follows:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Company’s total segment profit
    $ 589.9    $ 653.7    $ 481.0
Corporate general and administrative expenses
(1)
      (123.2 )       (136.1 )       (122.9 ) 
Adjusted depreciation and amortization
(2)
      (33.8 )       (50.1 )       (40.2 ) 
Restructuring and other
      (253.5 )       (508.5 )       (411.9 ) 
Goodwill and intangible asset impairment
      —         (663.9 )       (1,475.0 ) 
COVID-19
related benefit included in direct operating expense
(3)
      3.1      1.0      11.6
Programming and content charges
(4)
      —         —         (7.0 ) 
Unallocated rent cost included in direct operating expense
(5)
      (18.6 )       —         —   
Adjusted share-based compensation expense
(6)
      (69.0 )       (81.2 )       (97.8 ) 
Purchase accounting and related adjustments
(7)
      (163.0 )       (153.7 )       (195.5 ) 
  
 
 
     
 
 
     
 
 
  
Operating loss
      (68.1 )       (938.8 )       (1,857.7 ) 
Interest expense
      (283.6 )       (269.8 )       (221.2 ) 
Interest and other income
      15.1      22.1      6.4
Other gains (losses), net
      (19.0 )       (26.9 )       (26.9 ) 
Gain (loss) on extinguishment of debt
      (7.5 )       19.9      57.4
Gain on investments, net
      —         3.5      44.0
Equity interests income
      4.3      8.7      0.5
  
 
 
     
 
 
     
 
 
  
Loss before income taxes
    $ (358.8 )     $ (1,181.3 )     $ (1,997.5 ) 
  
 
 
     
 
 
     
 
 
  
 
(1)
Corporate general and administrative expenses include certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.
(2)
Adjusted depreciation and amortization represents depreciation and amortization as presented on our consolidated statements of operations less the depreciation and amortization related to the
non-cash
fair
 
F-6
3
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  value adjustments to property and equipment and intangible assets acquired in acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Depreciation and amortization
    $ 188.1    $ 192.2    $ 180.3
Less: Amount included in purchase accounting and related adjustments
      (154.3 )       (142.1 )       (140.1 ) 
  
 
 
     
 
 
     
 
 
  
Adjusted depreciation and amortization
    $ 33.8    $ 50.1    $ 40.2
  
 
 
     
 
 
     
 
 
  
 
(3)
Amounts represent the incremental costs, if any, included in direct operating expense resulting from circumstances associated with the
COVID-19
global pandemic, net of recoveries (see Note 15). These benefits are excluded from segment operating results.
(4)
Programming and content charges represent certain charges included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results (see Note 15 for further information).
(5)
Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.
(6)
The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Total share-based compensation expense
    $ 74.4    $ 90.6    $ 102.0
Less:
         
Amount included in restructuring and other
(i)
      (5.4 )       (9.4 )       (4.2 ) 
  
 
 
     
 
 
     
 
 
  
Adjusted share-based compensation
    $ 69.0    $ 81.2    $ 97.8
  
 
 
     
 
 
     
 
 
  
 
  (i)
Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.
 
(7)
Purchase accounting and related adjustments primarily represent the amortization of
non-cash
fair value adjustments to certain assets acquired in acquisitions. The following sets forth the amounts included in each line item in the financial statements:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Purchase accounting and related adjustments:
         
Direct operating
    $ —     $ —     $ 0.7
General and administrative expense
(i)
      8.7      11.6      54.7
Depreciation and amortization
      154.3      142.1      140.1
  
 
 
     
 
 
     
 
 
  
   $ 163.0    $ 153.7    $ 195.5
  
 
 
     
 
 
     
 
 
  
 
  (i)
In the fiscal years ended March 31, 2025, 2024 and 2023, these adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts
 
F-6
4
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  Entertainment. Amounts in fiscal 2024 and 2023 also include the amortization of the recoupable portion of the purchase price (through May 2023) related to 3 Arts Entertainment. Amounts in fiscal 2023 also include the
non-cash
charges for the accretion of the noncontrolling interest discount related to 3 Arts Entertainment (through November 2022). These amounts are accounted for as compensation and are included in general and administrative expense, as presented in the table below. The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Amortization of recoupable portion of the purchase price
    $ —     $ 1.3    $ 7.7
Noncontrolling interest discount amortization
      —         —         13.2
Noncontrolling equity interest in distributable earnings
      8.7      10.3      33.8
  
 
 
     
 
 
     
 
 
  
   $ 8.7    $ 11.6    $ 54.7
  
 
 
     
 
 
     
 
 
  
See Note 12 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2025, 2024, and 2023.
The following table reconciles segment general and administration to the Company’s total consolidated general and administration expense:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
General and administration
         
Segment general and administrative expenses
    $ 248.2    $ 265.2    $ 258.1
Corporate general and administrative expenses
      123.2      136.1      122.9
Share-based compensation expense included in general and administrative expense
      65.3      77.6      95.4
Purchase accounting and related adjustments
      8.7      11.6      54.7
  
 
 
     
 
 
     
 
 
  
   $ 445.4    $ 490.5    $ 531.1
  
 
 
     
 
 
     
 
 
  
The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Assets
      
Motion Picture
    $ 1,867.4    $ 1,851.4
Television Production
      2,279.3      2,347.8
Media Networks
      2,041.8      2,036.7
Other unallocated assets
(1)
      633.6      856.8
  
 
 
     
 
 
  
   $ 6,822.1    $ 7,092.7
  
 
 
     
 
 
  
 
(1)
Other unallocated assets primarily consist of cash, other assets and investments.
 
F-6
5
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth acquisition of investment in films and television programs and program rights, as broken down by segment for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Acquisition of investment in films and television programs and program rights
         
Motion Picture
    $ 642.3    $ 416.6    $ 483.6
Television Production
      1,024.1      712.8      1,082.0
Media Networks
      946.7      852.8      1,173.0
Intersegment eliminations
      (644.5 )       (572.9 )       (759.4 ) 
  
 
 
     
 
 
     
 
 
  
   $ 1,968.6    $ 1,409.3    $ 1,979.2
  
 
 
     
 
 
     
 
 
  
The following table sets forth capital expenditures, as broken down by segment for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Capital expenditures
         
Motion Picture
    $ —     $ —     $ — 
Television Production
      0.3      0.3      0.3
Media Networks
      17.6      24.8      42.5
Corporate
(1)
      13.2      9.6      6.2
  
 
 
     
 
 
     
 
 
  
   $ 31.1    $ 34.7    $ 49.0
  
 
 
     
 
 
     
 
 
  
 
(1)
Represents unallocated capital expenditures primarily related to the Company’s corporate headquarters.
Revenue by geographic location, based on the location of the customers, with no other foreign country individually comprising greater than 10% of total revenue, is as follows:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Revenue
         
Canada
    $ 79.7    $ 76.9    $ 63.1
United States
      3,071.3      3,140.1      3,129.8
Other foreign
      796.9      799.9      661.9
  
 
 
     
 
 
     
 
 
  
   $ 3,947.9    $ 4,016.9    $ 3,854.8
  
 
 
     
 
 
     
 
 
  
 
F-
66
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Long-lived assets by geographic location are as follows:
 
    
March 31, 2025
     
March 31, 2024
  
    
(Amounts in millions)
  
Long-lived assets
(1)
      
United States
    $ 3,200.5    $ 3,063.2
Other foreign
      126.7      176.3
  
 
 
     
 
 
  
   $ 3,327.2    $ 3,239.5
  
 
 
     
 
 
  
 
(1)
Long-lived assets represents total assets less the following: current assets, investments, long-term receivables, interest rate swaps, intangible assets, goodwill and deferred tax assets.
For the year ended March 31, 2025, the Company had revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $922.0 million, primarily related to the Company’s Media Networks and Motion Picture segments (2024 - revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $831.0 million, primarily related to the Company’s Media Networks and Motion Picture segments; 2023 - revenue from one individual customer which represented greater than 10% of consolidated revenues, amounting to $766.6 million, primarily related to the Company’s Media Networks and Motion Picture segments).
As of March 31, 2025, the Company had accounts receivable due from two customers which individually represented greater than 10% of consolidated accounts receivable, and amounted to 11.8% and 10.3% of total consolidated accounts receivable (current and
non-current)
at March 31, 2025, or gross accounts receivable of approximately $83.8 million and $72.8 million, respectively. As of March 31, 2024, the Company had accounts receivable due from one customer which individually represented greater than 10% of consolidated accounts receivable, and amounted to 11.6% of total consolidated accounts receivable (current and
non-current)
at March 31, 2024, or gross accounts receivable of approximately $100.9 million.
17. Commitments and Contingencies
Commitments
The following table sets forth our future annual repayment of contractual commitments as of March 31, 2025:
 
    
Year Ending March 31,
  
    
2026
     
2027
     
2028
     
2029
     
2030
     
Thereafter
     
Total
  
    
(Amounts in millions)
  
Contractual commitments by expected repayment date
(off-balance
sheet arrangements)
                     
Film related obligations commitments
(1)
    $ 378.0    $ 189.5    $ 6.0    $ —     $ —     $ —     $ 573.5
Interest payments
(2)
      171.3      139.3      106.0      95.1      23.4      —         535.1
Other contractual obligations
      134.1      73.6      42.5      33.6      25.0      154.9      463.7
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Total future commitments under contractual obligations
(3)
    $ 683.4    $ 402.4    $ 154.5    $ 128.7    $ 48.4    $ 154.9    $ 1,572.3
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
 
(1)
Film related obligations commitments are not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition and include the following items:
 
  (i)
Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film.
 
F-
6
7
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  (ii)
Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future.
  (iii)
Program rights commitments represent contractual commitments under programming license agreements related to films that are not available for exhibition until some future date (see below for further details).
  (iv)
Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment.
(2)
Includes cash interest payments on our corporate debt and film related obligations, based on the applicable SOFR interest rates at March 31, 2025, net of payments and receipts from the Company’s interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.
(3)
Not included in the amounts above are $90.7 million included in other
liabilities-non
current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest and $93.7 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 11).
The Company has an exclusive multiyear post
pay-one
output licensing agreement with Universal for live-action films theatrically released in the U.S. starting January 1, 2022. The Universal agreement provides the Company with rights to exhibit these films immediately following their
pay-one
windows. The Company is unable to estimate the amounts to be paid under the Universal agreement for films that have not yet been released in theaters, however, such amounts are expected to be significant.
Multiemployer Benefit Plans.
 The Company contributes to various multiemployer pension plans under the terms of collective bargaining agreements that cover its union-represented employees. The Company makes periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements and laws but does not sponsor or administer these plans. The risks of participating in these multiemployer pension plans are different from single-employer pension plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in certain of these multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan, which is referred to as a withdrawal liability; and (iii) actions taken by a participating employer that lead to a deterioration of the financial health of a multiemployer pension plan may result in the unfunded obligations of the multiemployer pension plan to be borne by its remaining participating employers.
The Company does not participate in any multiemployer benefit plans that are considered to be individually significant to the Company, and as of March 31, 2025, all except one of the largest plans in which the Company participates were funded at a level of 80% or greater. The other plan, the Motion Picture Industry Pension Plan, was funded at 72.1% for the 2024 plan year, but was not considered to be in endangered, critical, or critical and declining status in the 2024 plan year. Total contributions made by the Company to multiemployer pension and other benefit plans for the years ended March 31, 2025, 2024 and 2023 were $106.1 million, $59.9 million, and $102.0 million, respectively.
 
F-
68
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Contingencies
From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business.
The Company establishes an accrued liability for claims and legal proceedings when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.
As of March 31, 2025, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it currently expects will, individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations or cash flows.
18. Financial Instruments
(a) Credit Risk
Concentration of credit risk with the Company’s customers is limited due to the Company’s customer base and the diversity of its sales throughout the world. The Company performs ongoing credit evaluations and maintains a provision for potential credit losses. The Company generally does not require collateral for its trade accounts receivable.
(b) Derivative Instruments and Hedging Activities
Forward Foreign Exchange Contracts
The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are recorded in direct operating expense. Gains and losses realized upon settlement of the foreign exchange contracts that are designated as hedges are amortized to direct operating expense on the same basis as the production expenses being hedged.
As of March 31, 2025, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 24 months from March 31, 2025):
 
March 31, 2025
 
Foreign Currency
  
Foreign Currency
Amount
 
  
 
  
US Dollar Amount
 
  
Weighted Average
Exchange Rate
Per $1 USD
 
 
  
(Amounts in millions)
 
  
 
  
(Amounts in millions)
 
  
 
 
Euro
     
40.7
     
EUR
     
in exchange for
   
$
43.6
     
0.92
     
EUR
  
Canadian Dollar
     
15.5
     
CAD
     
in exchange for
   
$
10.6
     
1.40
     
CAD
  
Mexican Peso
     
69.5
     
MXN
     
in exchange for
   
$
3.4
     
20.63
     
MXN
  
Hungarian Forint
     
6,000.0
     
HUF
     
in exchange for
   
$
16.0
     
374.00
     
HUF
  
New Zealand Dollar
     
6.4
     
NZD
     
in exchange for
   
$
3.9
     
1.66
     
NZD
  
 
F-
69
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Interest Rate Swaps
The Company is exposed to the impact of interest rate changes primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows. The Company primarily uses
pay-fixed
interest rate swaps to facilitate its interest rate risk management activities, which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings.
Pay-fixed
swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur. Changes in the fair value of interest rate swaps that are not designated as hedges are recorded in interest expense (see further explanation below).
Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows. However, due to a financing component (debt host) on a portion of our previously outstanding interest rate swaps, the cash flows related to these contracts are classified as financing activities through the date of termination.
Designated Cash Flow Hedges.
 As of March 31, 2024, the Company had the following
pay-fixed
interest rate swaps, which were designated as cash flow hedges outstanding (all related to the Company’s SOFR-based debt, see Note 7 and Note 8), and were terminated in December 2024, as further described below.
 
Effective Date
   
Notional
Amount
     
Fixed

Rate
Paid
    
Maturity Date
        
    
(in millions)
                     
May 23, 2018
    $ 300.0      2.915 %      March 24, 2025    
May 23, 2018
    $ 700.0      2.915 %      March 24, 2025      
(1
 
)
 
June 25, 2018
    $ 200.0      2.723 %      March 23, 2025      
(1
 
)
 
July 31, 2018
    $ 300.0      2.885 %      March 23, 2025      
(1
 
)
 
December 24, 2018
    $ 50.0      2.744 %      March 23, 2025      
(1
 
)
 
December 24, 2018
    $ 100.0      2.808 %      March 23, 2025      
(1
 
)
 
December 24, 2018
    $ 50.0      2.728 %      March 23, 2025      
(1
 
)
 
  
 
 
         
Total
    $ 1,700.0       
  
 
 
         
 
(1)
Represents the
re-designated
swaps as described in the Fiscal 2023 Transactions section below that were previously not designated cash flow hedges at March 31, 2022.
In December 2024, the Company terminated all of its
pay-fixed
interest rate swaps which were outstanding at March 31, 2024, as shown in the table above. As a result of the termination, the Company received approximately $9.4 million, which was recorded as a reduction of the interest rate swap asset values, and represents the amount of unrealized gains recorded in accumulated other comprehensive income related to the terminated interest rate swaps which will be amortized as a reduction of interest expense through the remaining term of the terminated swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded to interest expense at that time. The receipt of approximately $9.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities.
During the fiscal year ended March 31, 2025, the Company entered into the following
pay-fixed
interest rate swaps, which have been designated as cash flow hedges outstanding (all related to the Company’s SOFR-based debt, see Note 7 and Note 8).
 
F-7
0
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Designated Cash Flow Hedges at March
 31, 2025:
 
Effective Date
   
Notional
Amount
     
Fixed
Rate
Paid
    
Maturity Date
  
    
(in millions)
               
August 15, 2024
    $ 65.0      4.045 %      September 15, 2026  
August 15, 2024
    $ 77.5      3.803 %      August 15, 2026  
August 15, 2024
    $ 77.5      3.810 %      September 15, 2026  
December 15, 2024
    $ 125.0      3.970 %      December 15, 2026  
January 31, 2025
    $ 100.0      4.060 %      January 31, 2027  
February 14, 2025
    $ 282.8      4.097 %      February 14, 2027  
  
 
 
       
Total
    $ 727.8     
  
 
 
       
Fiscal 2023 Transactions
:
 In May 2022, the Company terminated certain of its previous interest rate swap contracts (the “Terminated Swaps”). As a result of the terminations, the Company received approximately $56.4 million. Simultaneously with the termination of the Terminated Swaps, the Company
re-designated
all other swaps previously not designated as cash flow hedges of variable rate debt.
The receipt of approximately $56.4 million as a result of the termination was recorded as a reduction of the asset values of the derivatives amounting to $188.7 million and a reduction of the financing component (debt host) of the Terminated Swaps amounting to $131.3 million. At the time of the termination of the Terminated Swaps, there was approximately $180.4 million of unrealized gains recorded in accumulated other comprehensive income (loss) related to these Terminated Swaps. This amount will be amortized as a reduction of interest expense through the remaining term of the swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded as a reduction to interest expense at that time. In addition, the liability amount of $6.8 million for the
re-designated
swaps at the
re-designation
date will be amortized as a reduction of interest expense throughout the remaining term of the
re-designated
swaps, unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.
The receipt of approximately $56.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million).
 
F-7
1
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Financial Statement Effect of Derivatives
Consolidated statement of operations and comprehensive income (loss):
 The following table presents the
pre-tax
effect of the Company’s derivatives on the accompanying consolidated statements of operations and comprehensive income (loss) for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
         
Forward exchange contracts
         
Gain (loss) recognized in accumulated other comprehensive income (loss)
    $ 3.4    $ (5.8 )     $ 1.7
Gain (loss) reclassified from accumulated other comprehensive income (loss) into direct operating expense
      (1.2 )       (0.3 )       (0.3 ) 
Interest rate swaps
         
Gain (loss) recognized in accumulated other comprehensive income (loss)
    $ (0.6 )     $ 36.3    $ 81.1
Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense
      28.6      41.8      1.4
Derivatives not designated as cash flow hedges:
         
Interest rate swaps
         
Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense
    $ 4.3    $ (7.2 )     $ (11.8 ) 
Total direct operating expense on consolidated statements of operations
    $ 2,352.1    $ 2,189.2    $ 2,312.5
Total interest expense on consolidated statements of operations
    $ 283.6    $ 269.8    $ 221.2
Consolidated balance sheets:
 The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 10). Pursuant to the Company’s accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its consolidated balance sheets. As of March 31, 2025 and 2024, there were no swaps outstanding that were subject to a master netting arrangement.
 
F-7
2
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
As of March 31, 2025 and 2024, the Company had the following amounts recorded in the accompanying consolidated balance sheets related to the Company’s use of derivatives:
 
    
March 31, 2025
  
    
Other Current Assets
     
Other Liabilities
(non-current)
  
    
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
      
Forward exchange contracts
    $ 1.8    $ — 
Interest rate swaps
      —         3.1
  
 
 
     
 
 
  
Fair value of derivatives
    $ 1.8    $ 3.1
  
 
 
     
 
 
  
 
    
March 31, 2024
  
    
Other Current Assets
     
Other Accrued
Liabilities
  
    
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
      
Forward exchange contracts
    $ —     $ 2.8
Interest rate swaps
      35.6      —   
  
 
 
     
 
 
  
Fair value of derivatives
    $ 35.6    $ 2.8
  
 
 
     
 
 
  
As of March 31, 2025, based on the current release schedule, the Company estimates approximately $1.1 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income (loss) will be reclassified into earnings during the
one-year
period ending March 31, 2026.
As of March 31, 2025, the Company estimates approximately $26.4 million of gains recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the
one-year
period ending March 31, 2026.
19. Additional Financial Information
The following tables present supplemental information related to the consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of investments that are readily convertible into cash. Cash equivalents are carried at cost, which approximates fair value. The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because the Company uses quoted market prices to measure the fair value of these investments (see Note 10). The Company monitors concentrations of credit risk with respect to cash and cash equivalents by placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term, highly-rated instruments or investment funds holding similar instruments. As of March 31, 2025, the Company’s cash and cash equivalents were held in bank depository accounts.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows at
 
F-7
3
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
March 31, 2025 and 2024. At March 31, 2025 and 2024, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations.
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Cash and cash equivalents
    $ 223.7    $ 314.0
Restricted cash included in other current assets
      67.9      43.7
Restricted cash included in other
non-current
assets
      —         13.7
  
 
 
     
 
 
  
Total cash, cash equivalents and restricted cash
    $ 291.6    $ 371.4
  
 
 
     
 
 
  
Accounts Receivable Monetization
Under the Company’s accounts receivable monetization programs, the Company has entered into (1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions, as further described below. Under these programs, the Company transfers receivables to purchasers in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the statements of cash flows. The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred. The loss is reflected in the “other gains (losses), net” line item on the consolidated statements of operations. The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the years ended March 31, 2025, 2024 and 2023.
Individual Monetization Agreements.
 The Company enters into individual agreements to monetize trade accounts receivable. The third-party purchasers have no recourse to other assets of the Company in the event of
non-payment
by the customers. The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Carrying value of receivables transferred and derecognized
    $ 1,300.4    $ 1,413.2    $ 1,405.9
Net cash proceeds received
      1,280.0      1,385.9      1,382.7
Loss recorded related to transfers of receivables
      20.4      27.3      23.2
At March 31, 2025, the outstanding amount of receivables derecognized from the Company’s consolidated balance sheets, but which the Company continues to service, related to the Company’s individual agreements to monetize trade accounts receivable was $574.2 million (March 31, 2024 - $613.4 million).
Pooled Monetization Agreement.
 In December 2019, the Company entered into a revolving agreement, as amended in July 2023, to transfer up to $100.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which matured on October 1, 2023. As customers paid their balances, the Company would transfer additional receivables into the program. The transferred receivables were fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company. The third-party purchasers had no recourse to other assets of the Company in the event of
non-payment
by the customers.
 
F-7
4
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the years ended March 31, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2024
     
2023
  
    
(Amounts in millions)
  
Gross cash proceeds received for receivables transferred and derecognized
    $ 22.2    $ 167.0
Less amounts from collections reinvested under revolving agreement
      (9.1 )       (94.3 ) 
  
 
 
     
 
 
  
Proceeds from new transfers
      13.1      72.7
Collections not reinvested and remitted or to be remitted
      (13.4 )       (66.6 ) 
  
 
 
     
 
 
  
Net cash proceeds received (paid or to be paid)
(1)
    $ (0.3 )     $ 6.1
Carrying value of receivables transferred and derecognized 
(2)
    $ 22.1    $ 164.8
Obligations recorded
    $ 2.1    $ 5.9
Loss recorded related to transfers of receivables
    $ 2.0    $ 3.7
 
(1)
During the year ended March 31, 2024, the Company voluntarily repurchased $46.0 million of receivables previously transferred. In addition, during the year ended March 31, 2023, the Company repurchased $27.4 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.
(2)
Receivables net of unamortized discounts on long-term,
non-interest
bearing receivables.
At March 31, 2025 and March 31, 2024, there were no outstanding receivables derecognized from the Company’s consolidated balance sheet, for which the Company continues to service, related to the pooled monetization agreement.
Other Assets
The composition of the Company’s other assets is as follows as of March 31, 2025 and 2024:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Other current assets
      
Prepaid expenses and other
(1)
    $ 59.7    $ 58.2
Restricted cash
      67.9      43.7
Contract assets
      61.4      59.9
Interest rate swap assets
      —         35.6
Tax credits receivable
      186.8      199.1
  
 
 
     
 
 
  
   $ 375.8    $ 396.5
  
 
 
     
 
 
  
 
F-7
5
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Other
non-current
assets
      
Prepaid expenses and other
    $ 23.0    $ 21.6
Restricted cash
      —         13.7
Accounts receivable
(2)
      65.7      111.7
Contract assets
(2)
      11.3      3.2
Tax credits receivable
      435.8      361.7
Operating lease
right-of-use
assets
      331.4      388.8
  
 
 
     
 
 
  
   $ 867.2    $ 900.7
  
 
 
     
 
 
  
 
(1)
Includes home entertainment product inventory which consists of Packaged Media and is stated at the lower of cost or market value
(first-in,
first-out
method). Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses.
(2)
Unamortized discounts on long-term,
non-interest
bearing receivables were $7.0 million and $6.2 million at March 31, 2025 and 2024, respectively, and unamortized discounts on contract assets were $1.1 million and $0.3 million at March 31, 2025 and 2024, respectively.
Content Related Payables
Content related payables include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed.
Other Accrued Liabilities
Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $80.8 million and $147.4 million at March 31, 2025 and 2024, respectively.
Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in the components of accumulated other comprehensive income (loss), net of tax. During the years ended March 31, 2025, 2024 and 2023, there was no income tax expense or benefit reflected in other comprehensive income (loss) due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.
 
    
Foreign currency translation
adjustments
     
Net unrealized gain (loss)
on cash flow hedges
     
Total
  
    
(Amounts in millions)
  
March 31, 2022
    $ (19.7 )     $ 49.0    $ 29.3
Other comprehensive loss
      (1.9 )       82.8      80.9
Reclassifications to net loss
(1)
      —         10.7      10.7
  
 
 
     
 
 
     
 
 
  
March 31, 2023
      (21.6 )       142.5      120.9
Other comprehensive income
      (1.1 )       30.5      29.4
Reclassifications to net loss
(1)
      —         (34.3 )       (34.3 ) 
  
 
 
     
 
 
     
 
 
  
 
F-
76
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
Foreign currency translation
adjustments
     
Net unrealized gain (loss)
on cash flow hedges
     
Total
  
    
(Amounts in millions)
  
March 31, 2024
      (22.7 )       138.7      116.0
Other comprehensive income (loss)
      (5.4 )       5.0      (0.4 ) 
Reclassifications to net loss
(1)
      —         (31.7 )       (31.7 ) 
Reclassifications to noncontrolling interest
(2)
      5.3      (16.6 )       (11.3 ) 
  
 
 
     
 
 
     
 
 
  
March 31, 2025
    $ (22.8 )     $ 95.4    $ 72.6
  
 
 
     
 
 
     
 
 
  
 
(1)
Represents a loss of $1.2 million included in direct operating expense and a gain of $32.9 million included in interest expense on the consolidated statement of operations in the year ended March 31, 2025 (2024 - loss of $0.3 million included in direct operating expense and a gain of $34.6 million included in interest expense; 2023 - loss of $0.3 million included in direct operating expense and loss of $10.4 million included in interest expense) (see Note 18).
(2)
Represents amounts reclassified in connection with the noncontrolling interest recorded for the proportionate ownership interest in the carrying value of Legacy Lionsgate Studios (see Note 2).
Supplemental Cash Flow Information
Interest paid during the fiscal year ended March 31, 2025 amounted to $256.5 million (2024 — $242.5 million; 2023 — $196.7 million).
Income taxes paid during the fiscal year ended March 31, 2025 amounted to net tax paid of $20.5 million (2024 — net tax paid of $25.8 million; 2023 — net tax paid of $29.1 million).
Significant
non-cash
transactions during the fiscal years ended March 31, 2025, 2024 and 2023 include certain interest rate swap agreements, which are discussed in Note 18, “Financial Instruments”.
There were no significant
non-cash
investing or financing activities for the fiscal years ended March 31, 2025, 2024 and 2023.
Supplemental cash flow information related to leases was as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Cash paid for amounts included in the measurement of lease liabilities:
         
Operating cash flows for operating leases
    $ 79.5    $ 55.5    $ 42.3
Right-of-use
assets obtained in exchange for new lease obligations:
         
Operating leases
    $ 7.4    $ 172.1    $ 12.4
Increase in
right-of-use
assets and lease liability due to a reassessment event:
         
Operating leases - increase in
right-of-use
assets
    $ 2.8    $ 103.6    $ 33.0
Operating leases - increase in lease liability
    $ 2.8    $ 103.6    $ 33.0
 
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Table of Contents
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
20. Related Party Transactions
Ignite, LLC
In April 2004, a wholly-owned subsidiary of the Company entered into agreements (as amended) with Ignite, LLC (“Ignite”) for distribution rights to certain films. Michael Burns, the Vice Chair and a director of the Company, owns a 65.45% interest in Ignite, and Hardwick Simmons, a director of the Company, owns a 24.24% interest in Ignite. During the year ended March 31, 2025, $0.2 million was paid to Ignite under these agreements (2024 - $0.3 million; 2023 - $0.4 million).
Sponsor Option Agreement
On May 13, 2024, Old Lionsgate consummated the transactions contemplated by the Business Combination Agreement. Harry E. Sloan, a member of the Company’s Board of Directors, was the Chairman of SEAC and owned, directly or indirectly, a material interest in Eagle Equity Partners V, LLC, a Delaware limited liability company, the SEAC sponsor. Mr. Sloan recused himself from the decisions to approve the business combination.
In connection with the Business Combination, SEAC received an aggregate of $1.00 and 2,200,000 Sponsor Options each of which entitled SEAC Sponsor to purchase one SEAC Class A Ordinary Share at $0.0001 per share (the “Sponsor Option Agreement”). The Sponsor Options became options to purchase Old Lionsgate’s common shares pursuant to the terms of the Sponsor Option Agreement. Lionsgate assumed in writing all of the obligations under and in accordance with the Sponsor Option Agreement pursuant to an amendment thereto under which the SEAC Sponsor Options became exercisable for 2,177,191 common shares of Lionsgate.
Letter Agreement
On July 9, 2009, Old Lionsgate entered into a letter agreement (as amended from time to time, the “MHR Letter Agreement”) with Dr. Mark H. Rachesky, the Chairman of the Company’s Board of Directors. The MHR Letter Agreement provided, subject to certain terms and conditions, including that Dr. Rachesky and certain of his affiliates hold at least 8,192,246 common shares of Old Lionsgate, subject to equitable adjustment (which amount represented approximately 7% of Old Lionsgate’s common shares outstanding as of May 22, 2009), that in the event Old Lionsgate enters into an agreement with any other person, or invites or receives a proposal, in either case which relates to the matters addressed by the MHR Letter Agreement, and that has terms or conditions that are more favorable to such other person or more restrictive to Old Lionsgate than the terms or conditions set forth in the MHR Letter Agreement or the Registration Rights Agreement with MHR Fund Management (as described below), then Old Lionsgate will offer Dr. Rachesky and certain of his affiliates the opportunity to enter into an agreement on the same terms and conditions or, as the case may be, make a competing proposal which shall be considered by Old Lionsgate in good faith before deciding whether to execute any such other agreement. Lionsgate assumed all of the obligations under and in accordance with the Letter Agreement.
Investor Rights Agreement
On May 6, 2025, Lionsgate entered into an investor rights agreement with MHR Fund Management LLC and affiliated funds (“MHR Fund Management”), Liberty Global Ventures Limited and Liberty Global Ltd. (collectively, “Liberty”) (as amended from time to time, the “Investor Rights Agreement”). The Investor Rights Agreement provides that, among other things, (i) for so long as funds affiliated with MHR Fund Management beneficially own at least 10,000,000 of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include three (3) designees of MHR Fund Management (at least one of whom will be an independent director and will be subject to approval by the Lionsgate Board of Directors) on its slate of director nominees for
 
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8
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
election at each future annual general and special meeting of Lionsgate’s shareholders, (ii) for so long as funds affiliated with MHR Fund Management beneficially own at least 7,500,000, but less than 10,000,000, of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include two designees of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of Lionsgate’s shareholders, and (iii) for so long as funds affiliated with MHR Fund Management beneficially own at least 5,000,000, but less than 7,500,000, of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include one designee of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of Lionsgate’s shareholders. Dr. Rachesky, Emily Fine and John D. Harkey, Jr. were appointed as the designees of MHR Fund Management to the Lionsgate Board of Directors pursuant to the Investor Rights Agreement.
In addition, the Investor Rights Agreement provides that for so long as Liberty (together with certain of its affiliates) beneficially own at least 5,000,000 of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include one designee of Liberty on its slate of director nominees for election to the Lionsgate Board of Directors at each future annual general meeting of Lionsgate’s shareholders. Michael T. Fries was appointed as the designee of Liberty to the Lionsgate Board of Directors under the Investor Rights Agreement.
In addition, under the Investor Rights Agreement, Lionsgate has also agreed to provide MHR Fund Management and Liberty Management with certain
pre-emptive
rights on shares that Lionsgate may issue in the future for cash consideration.
Under the Investor Rights Agreement, Liberty (together with certain of its affiliates) has agreed that if it sells or transfers any of its common shares to a shareholder or group of shareholders that beneficially own 5% or more of Lionsgate’s then outstanding common shares, or that would result in a person or group of persons beneficially owning 5% or more of Lionsgate’s then outstanding common shares, any such transferee would have to agree to the restrictions and obligations set forth in the Investor Rights Agreement, including transfer restrictions, subject to certain exceptions set forth in the Investor Rights Agreement.
Voting Agreement
On May 6, 2025, Lionsgate entered into a voting agreement with Liberty and MHR Fund Management (as amended from time to time, the “Voting Agreement”). Under the Voting Agreement, Liberty has agreed to vote, in any vote of Lionsgate’s shareholders on a merger, amalgamation, plan of arrangement, consolidation, business combination, third party tender offer, asset sale or other similar transaction involving Lionsgate or any of its subsidiaries (and any proposal relating to the issuance of capital, increase in the authorized capital or amendment to any constitutional documents in connection with any of the foregoing), all of the common shares beneficially owned by them (together with certain of their affiliates) in excess of 18.5% of Lionsgate’s outstanding voting power in the aggregate in the same proportion as the votes cast by other shareholders.
In addition, each of Liberty and MHR Fund Management (together with certain of their affiliates) has agreed that as long as any of them have the right to nominate at least one representative to the Lionsgate Board of Directors, each of them will vote all of Lionsgate’s common shares owned by them (together with certain of their affiliates) in favor of each of the other’s respective nominees to the Lionsgate Board of Directors, subject to certain exceptions set forth in the Voting Agreement.
Under the Voting Agreement, Liberty (together with certain of its affiliates) has also agreed that if it sells or transfers any of its common shares to a shareholder or group of shareholders that beneficially own 5% or more of Lionsgate’s common shares, or that would result in a person or group of persons beneficially owning 5% or more of Lionsgate’s common shares, any such transferee would have to agree to the Voting Agreement, subject to certain exceptions set forth in the Lionsgate Voting Agreement.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Registration Rights Agreements
On May 6, 2025, Lionsgate entered into a registration rights agreement with each of MHR Fund Management and Liberty (together with certain of their affiliates). The two registration rights agreements described in the foregoing are referred to herein as the “Registration Rights Agreements.”
Each Registration Rights Agreement provides that the applicable investor is entitled to two demand registration rights to request that Lionsgate register all or a portion of their common shares. In addition, in the event that Lionsgate proposes to register any of Lionsgate’s equity securities or securities convertible into or exchangeable for Lionsgate’s equity securities, either for its own account or for the account of other security holders, the applicable investor will be entitled to certain “piggyback” registration rights allowing them to include their shares in such registration, subject to customary limitations. As a result, whenever Lionsgate proposes to file a registration statement under the Securities Act, other than with respect to a registration statement on Forms
S-4
or
S-8
or certain other exceptions, the applicable investor will be entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.
The registration rights described above of Liberty will terminate on the first anniversary of the date that Liberty (together with certain of its affiliates) both (i) beneficially owns less than 5,713,774 common shares (which amount, for the avoidance of doubt, represents approximately 2% of Lionsgate’s common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the Lionsgate Board of Directors. The registration rights described above of the applicable affiliates of MHR Fund Management will terminate on the first anniversary of the date that they both (i) beneficially own less than 28,568,868 common shares (which amount, for the avoidance of doubt, represents approximately 10% of Lionsgate’s common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the Lionsgate Board of Directors.
The foregoing descriptions of the MHR Letter Agreement, the Investor Rights Agreement, the Voting Agreement and the Registration Rights Agreements is not meant to be complete and is qualified by reference to the full text of each of the MHR Letter Agreement, the Investor Rights Agreement, the Voting Agreement and the Registration Rights Agreements, respectively, which are filed as exhibits hereto and incorporated by reference herein.
Transactions with Equity Method Investees
Equity Method Investees.
 In the ordinary course of business, the Company is involved in related party transactions with equity method investees. These related party transactions primarily relate to the licensing and distribution of the Company’s films and television programs and the lease of a studio facility owned by a former equity-method investee, for which the impact on the Company’s consolidated balance sheets and consolidated statements of operations is as follows (see Note 1 and Note 5):
 
    
March 31,
  
    
2025
     
2024
  
    
(Amounts
in millions)
  
Consolidated Balance Sheets
      
Accounts receivable
    $ 11.7    $ 11.1  
Investment in films and television programs
      1.1      2.2  
  
 
 
     
 
 
  
Total due from related parties
    $ 12.8    $ 13.3  
  
 
 
     
 
 
  
Accounts payable
(1)
    $ 17.6    $ 16.8  
Participations and residuals, current
      11.1      5.5  
Participations and residuals, noncurrent
      1.8      1.3  
Deferred revenue, current
      0.1      0.1  
  
 
 
     
 
 
  
Total due to related parties
    $ 30.6    $ 23.7  
  
 
 
     
 
 
  
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Consolidated Statements of Operations
         
Revenues
    $ 4.0    $ 4.2    $ 6.1
Direct operating expense
    $ 4.6    $ 5.0    $ 8.3
Distribution and marketing expense
    $ 3.0    $ 0.8    $ 0.4
Interest and other income
    $ —     $ —     $ 1.7
 
(1)
Amounts primarily represent production related advances due to certain of its equity method investees.
21. Subsequent Events
Starz Separation
On May 6, 2025, through a series of transactions contemplated by the Arrangement Agreement, the Starz Separation was completed. As a result of the Arrangement Agreement, the
pre-transaction
shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and is referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz business that was previously held by Old Lionsgate. See Note 1 for further information.
In connection with the completion of the Starz Separation and related transactions,
pre-transaction
shareholders of Old Lionsgate holding Class A voting shares (“Old Lionsgate Class A Shares”) received one and twelve
one-hundredths
(
1.12) Lionsgate new common shares (“Lionsgate Common Shares”) and one and twelve
one-hundredths
(
1.12) Starz Entertainment Corp. common shares (“Starz Common Shares”) and
pre-transaction
shareholders of Old Lionsgate holding Class B
non-voting
shares (“Old Lionsgate Class B Shares”) received one Lionsgate Common Share and one Starz Common Share.
Pre-transaction
Legacy Lionsgate Studios shareholders, other than Old Lionsgate, received, in exchange for each Legacy Lionsgate Studios common share, without par value (“Legacy Lionsgate Studios Common Share”), they held, a number of Lionsgate Common Shares equal to the product of the Lionsgate Studios Consideration Shares divided by the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation and held by Legacy Lionsgate Studios shareholders other than Old Lionsgate (such shares, the “LG Studios Flip Shares” and such ratio, the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equals the aggregate number of Legacy Lionsgate Studios Common Shares obtained when the LG Studios Flip Percentage is multiplied by the quotient of (a) the aggregate number of Lionsgate Common Shares issued to Lionsgate shareholders divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equals the quotient, expressed as a percentage, of (1) the LG Studios Flip Shares divided by (2) the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation.
Such transactions by Legacy Lionsgate Studios shareholders are collectively referred to as the “LG Studios Flip.”
Each of Lionsgate and Starz Entertainment Corp. have a single class of “one share, one vote” common shares.
Following completion of the Starz Separation, Lionsgate Common Share, began trading under the symbol “LION” on the New York Stock Exchange (“NYSE”) and Starz Common Shares began trading under the symbol “STRZ” on the Nasdaq Global Select Market (“NASDAQ”). Old Lionsgate Class A Shares and Old Lionsgate Class B Shares were withdrawn from listing on NYSE and Legacy Lionsgate Studios Common Shares were withdrawn from listing on NASDAQ.
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Financing
. On May 6, 2025, all outstanding obligations in respect of principal, interest and fees under the Old Lionsgate Credit Agreement, were repaid in full and all commitments thereunder were terminated.
Lionsgate Credit Agreement.
 On May 6, 2025, Lionsgate entered into a new credit agreement (the “Lionsgate Credit Agreement”) with Lions Gate Television Inc. (“LGTV”), as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent.
The Lionsgate Credit Agreement provides for an $800.0 million senior secured revolving credit facility, which facility may be increased to a total amount not in excess of $1,200.0 million, subject to the terms and conditions set forth therein. Availability of funds under the Lionsgate Credit Agreement is subject to a borrowing base. The Lionsgate Credit Agreement and commitments thereunder will mature on the date that is five years after the closing date of the facility.
Borrowings under the Lionsgate Credit Agreement will bear interest at a rate per annum equal to, at LGTV’s option, either Term SOFR (subject to a 0.00% floor) or a base rate, in each case plus a margin of 2.50% for SOFR loans and 1.50% for base rate loans. LGTV will pay a commitment fee equal to 0.375% per annum in respect of unutilized commitments thereunder.
Borrowings under the Lionsgate Credit Agreement may be used for working capital needs and other general corporate purposes, including the financing of permitted acquisitions and investments and to fund the development, production and acquisition costs of motion pictures and episodic series and other transactions not prohibited by the terms thereof.
LGTV’s obligations under the Lionsgate Credit Agreement are guaranteed by Lionsgate and substantially all of its wholly owned restricted subsidiaries and secured by substantially all assets LGTV and the guarantors, in each case subject to certain customary exceptions.
The Lionsgate Credit Agreement contains certain customary affirmative and negative covenants that limit the ability of Lionsgate and its restricted subsidiaries, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, asset sales and acquisitions, pay dividends and make other restricted payments and enter into transactions with affiliates. The Lionsgate Credit Agreement also contains events of default customary for financings of this type, including relating to a change of control. In addition, the Lionsgate Credit Agreement requires Lionsgate to maintain a Liquidity Ratio (as defined in the Lionsgate Credit Agreement) of no less than 1.10 to 1.00 as of the last day of each fiscal quarter.
6.000% Notes.
 On May 6, 2025, in connection with the completion of the Starz Separation, LGTV assumed the Exchange Notes by way of supplemental indenture (the “Supplemental Indenture”). Pursuant to the terms of the Supplemental Indenture, LGTV agreed to assume and perform as primary obligor all obligations of the initial issuer under the Exchange Notes and the initial issuer was released and discharged from all obligations thereunder.
Following completion of the Starz Separation, the Exchange Notes bear interest at 6.000% per annum payable semi-annually and mature April 15, 2030. The Exchange Notes are redeemable at LGTV’s option in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date, see Note 7.
Incentive Plans.
 On May 6, 2025, Lionsgate assumed the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan, and the plan was amended and restated as the Lionsgate Studios Corp. 2025 Performance Incentive Plan (the “Lionsgate 2025 Plan”), and became effective, with respect to 58,000,000
 
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LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Lionsgate Common Shares. On May 6, 2025, Lionsgate became the sponsor of the Lionsgate 2025 Plan. All awards outstanding immediately prior to the completion of the Starz Separation under the equity plans of Old Lionsgate and held by employees or directors who became Lionsgate employees or directors after the Starz Separation, or by former employees (regardless of the division in which such former employee served), were converted into awards of Lionsgate under the Lionsgate 2025 Plan, except that awards of individuals who will be serving as
non-employee
directors of both Lionsgate and Starz were only partially converted into awards under the Lionsgate 2025 Plan.
Other Starz Separation Agreements.
 On May 6, 2025, Lionsgate entered into several agreements with Legacy Lionsgate Studios and Starz Entertainment Corp. in connection with the completion of the Starz Separation, including the Separation Agreement; Transition Services Agreement; Employee Matters Agreement; Amendment to Tax Matters Agreement, pursuant to which Lionsgate was made a party to the Tax Matters Agreement; and Amendment to Sponsor Option Agreement, pursuant to which Lionsgate was made a party to the Sponsor Option Agreement.
In addition, Lionsgate entered into several agreements with each of Liberty Global Ventures Limited, Liberty Global Ltd., 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, MHR Institutional Partners IV LP and MHR Fund Management LLC and affiliated funds thereto, including the Lionsgate Voting Agreement; Lionsgate Registration Rights Agreements; and Lionsgate Investor Rights Agreement.
Other Events
Interest Rate Swaps.
 In April 2025, the Company entered into the following
pay-fixed
interest rate swaps. The Company expects to designate these interest rate swaps as cash flow hedges (all related to the Company’s SOFR-based debt, see Note 7 and Note 8):
 
Effective Date
   
Notional Amount
     
Fixed Rate Paid
    
Maturity Date
  
    
(in millions)
               
April 14, 2025
    $ 100.0      3.449 %      April 14, 2027  
April 14, 2025
    $ 48.8      3.646 %      April 14, 2027  
  
 
 
       
Total
    $ 148.8     
  
 
 
       
Sale of Equity Method Investment.
 On April 17, 2025, the Company sold its equity method ownership interest in Spyglass for $31.9 million and received proceeds of $28.9 million, with the remaining amount to be paid to the Company on the first anniversary of the closing, May 17, 2025. See Note 5.
Production Tax Credit Facility.
 In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million. See Note 8.
Backlog Facility.
 In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility. See Note 8.
 
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Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Lionsgate Studios Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Lionsgate Studios Corp. (the Company) as of March 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), equity (deficit) and cash flows for each of the three years in the period ended March 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at March 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended March 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of March 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated May 30, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
 
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Table of Contents
  
Pre-release
Film Impairments
Description of the Matter
    As disclosed in Note 1 to the consolidated financial statements, Investment in Films and Television Programs is stated at the lower of unamortized cost or estimated fair value. As disclosed in Note 4 to the consolidated financial statements, total impairment charges on investment in films and television programs related to theatrical films were $19.7 million for the year ended March 31, 2025 and the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million at March 31, 2025.
   Auditing the Company’s impairment evaluation for theatrical films prior to release is challenging and subjective as the key assumptions in the analysis include estimates of future anticipated revenues and box office performance, which may differ from future actual results. These estimates are based in part on the historical performance of similar films, test audience results when available, information regarding competing film releases, and critic reviews.
How We Addressed the Matter in Our Audit
    We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s theatrical impairment review process. For example, we tested controls over management’s review of unreleased theatrical films for indicators of impairment and management’s determination of the significant assumptions mentioned above.
   To test the assessment of unreleased theatrical films for impairment, our audit procedures included, among others, evaluating unreleased theatrical films for indicators of impairment and testing the completeness and accuracy of the underlying data as well as the significant assumptions mentioned above. For example, we assessed management’s assumptions by comparing them to historical performance of comparable films and to current operating information, we evaluated test audience results when available, and we considered the historical accuracy of management’s estimates. We also performed sensitivity analyses to evaluate the potential changes in the expected profitability of unreleased films resulting from reasonable changes in the assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2001.
Los Angeles, California
May 30, 2025
 
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LIONSGATE STUDIOS CORP.
CONSOLIDATED BALANCE SHEETS
 
    
March 31,
2025
    
March 31,
2024
  
    
(Amounts in millions)
  
ASSETS
     
Cash and cash equivalents
    $ 205.7   $ 277.0
Accounts receivable, net
      576.0     688.6
Due from Starz Business (Note 21)
      215.0     33.4
Other current assets
      359.2     373.1
  
 
 
    
 
 
  
Total current assets
      1,355.9     1,372.1
Investment in films and television programs, net
      1,992.6     1,929.0
Property and equipment, net
      34.1     37.3
Investments
      77.8     74.8
Intangible assets, net
      20.8     25.7
Goodwill
      808.5     811.2
Other assets
      825.5     852.9
  
 
 
    
 
 
  
Total assets
    $ 5,115.2   $ 5,103.0
  
 
 
    
 
 
  
LIABILITIES
     
Accounts payable
    $ 248.2   $ 246.7
Content related payables
      32.8     41.4
Other accrued liabilities
      216.4     282.4
Participations and residuals
      642.4     647.8
Film related obligations
      1,617.8     1,393.1
Debt-short term portion
      215.6     860.3
Deferred revenue
      235.5     170.6
  
 
 
    
 
 
  
Total current liabilities
      3,208.7     3,642.3
Debt
      1,457.4     923.0
Participations and residuals
      409.3     435.1
Film related obligations
      365.3     544.9
Other liabilities
      417.0     452.5
Deferred revenue
      169.1     118.4
Deferred tax liabilities
      11.3     13.7
  
 
 
    
 
 
  
Total liabilities
      6,038.1     6,129.9
Commitments and contingencies (Note 18)
     
Redeemable noncontrolling interests
      93.7     123.3
EQUITY (DEFICIT)
     
Common shares, no par value, unlimited authorized, 288.7 shares issued (March 31, 2024-253.4 shares issued)
      311.9     —   
Accumulated deficit
      (1,418.2 )      (1,249.1 ) 
Accumulated other comprehensive income
      60.9     96.7
  
 
 
    
 
 
  
Total Lionsgate Studios Corp. shareholders’ equity (deficit)
      (1,045.4 )      (1,152.4 ) 
Noncontrolling interests
      28.8     2.2
  
 
 
    
 
 
  
Total equity (deficit)
      (1,016.6 )      (1,150.2 ) 
  
 
 
    
 
 
  
Total liabilities, redeemable noncontrolling interests and equity (deficit)
    $ 5,115.2   $ 5,103.0
  
 
 
    
 
 
  
See accompanying notes.
 
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LIONSGATE STUDIOS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
    
Year Ended March 31,
  
    
2025
    
2024
    
2023
  
    
(Amounts in millions, except per share amounts)
  
Revenues:
   
 
     
 
  
 
     
 
  
 
     
 
Revenue
    $ 2,575.8   $ 2,440.5   $ 2,308.3
Revenue - Related Party (Note 21)
      619.7     545.9     775.5
  
 
 
    
 
 
    
 
 
  
Total revenues
    $ 3,195.5   $ 2,986.4   $ 3,083.8
Expenses:
       
Direct operating
      2,210.0     1,886.7     2,207.9
Distribution and marketing
      395.9     462.3     304.2
General and administration
      344.6     349.2     387.0
Depreciation and amortization
      17.8     15.6     17.9
Restructuring and other
      102.6     132.9     27.2
  
 
 
    
 
 
    
 
 
  
Total expenses
      3,070.9     2,846.7     2,944.2
  
 
 
    
 
 
    
 
 
  
Operating income
      124.6     139.7     139.6
Interest expense
      (242.5 )      (222.5 )      (162.6 ) 
Interest and other income
      14.8     19.2     6.4
Other losses, net
      (11.8 )      (20.0 )      (21.2 ) 
Loss on extinguishment of debt
      (1.8 )      (1.3 )      (1.3 ) 
Gain on investments, net
      —        3.5     44.0
Equity interests income
      4.3     8.7     0.5
  
 
 
    
 
 
    
 
 
  
Income (loss) before income taxes
      (112.4 )      (72.7 )      5.4
Income tax provision
      (14.5 )      (34.2 )      (14.3 ) 
  
 
 
    
 
 
    
 
 
  
Net loss
      (126.9 )      (106.9 )      (8.9 ) 
Less: Net loss (income) attributable to noncontrolling interests
      (1.6 )      13.4     8.6
  
 
 
    
 
 
    
 
 
  
Net loss attributable to Lionsgate Studios Corp. shareholders
    $ (128.5 )    $ (93.5 )    $ (0.3 ) 
  
 
 
    
 
 
    
 
 
  
Per share information attributable to Lionsgate Studios Corp. shareholders:
       
Basic net loss per common share
    $ (0.43 )    $ (0.42 )    $ (0.00 ) 
  
 
 
    
 
 
    
 
 
  
Diluted net loss per common share
    $ (0.43 )    $ (0.42 )    $ (0.00 ) 
  
 
 
    
 
 
    
 
 
  
Weighted average number of common shares outstanding:
       
Basic
      284.6     253.4     253.4
Diluted
      284.6     253.4     253.4
See accompanying notes.
 
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LIONSGATE STUDIOS CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 
    
Year Ended March 31,
  
    
2025
    
2024
    
2023
  
    
(Amounts in millions)
  
Net loss
    $ (126.9 )    $ (106.9 )    $ (8.9 ) 
Foreign currency translation adjustments, net of tax
      (6.9 )      (1.0 )      (2.2 ) 
Net unrealized gain (loss) on cash flow hedges, net of tax
      (28.9 )      (3.8 )      93.5
  
 
 
    
 
 
    
 
 
  
Comprehensive income (loss)
      (162.7 )      (111.7 )      82.4
Less: Comprehensive income (loss) attributable to noncontrolling interests
      (1.6 )      13.4       8.6
  
 
 
    
 
 
    
 
 
  
Comprehensive income (loss) attributable to Lionsgate Studios Corp. shareholders
    $ (164.3 )    $ (98.3 )    $ 91.0
  
 
 
    
 
 
    
 
 
  
See accompanying notes.
 
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Table of Contents
LIONSGATE STUDIOS CORP.
CONSOLIDATED STATEMENTS OF EQUITY (DEFICIT)
 
   
Year Ended
  
   
Common Shares
    
Accumulated
Deficit
    
Parent Net
Investment
    
Accumulated
Other
Comprehensive
Income
    
Total
Lionsgate
Studios
Corp. Equity
(Deficit)
    
Non-controlling

Interests
(a)
    
Total
Equity
(Deficit)
  
   
Number
    
Amount
  
   
(Amounts in millions)
  
Balance at March 31, 2022
     —      $ —    $ —    $ (271.5 )    $ 10.2   $ (261.3 )      1.8     $ (259.5 ) 
Retroactive application of recapitalization
     253.4     —        (271.5 )      271.5     —        —        —        —   
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2022, after effect of recapitalization (Note 1 and Note 2)
     253.4     —        (271.5 )      —        10.2     (261.3 )      1.8     (259.5 ) 
Net (loss) income
     —        —        (0.3 )      —        —        (0.3 )      0.6     0.3
Net transfers to Parent
     —        —        (550.4 )      —        —        (550.4 )      —        (550.4 ) 
Distributions to noncontrolling interests
     —        —        —        —        —        —        (0.9 )      (0.9 ) 
Redeemable noncontrolling interests adjustments
     —        —        (59.7 )      —        —        (59.7 )      —        (59.7 ) 
Other comprehensive income
     —        —        —        —        91.3     91.3     —        91.3
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2023
     253.4     —        (881.9 )      —        101.5     (780.4 )      1.5     (778.9 ) 
Net (loss) income
     —        —        (93.5 )      —        —        (93.5 )      1.5     (92.0 ) 
Net transfers to Parent
     —        —        (239.5 )      —        —        (239.5 )      —        (239.5 ) 
Distributions to noncontrolling interests
     —        —        —        —        —        —        (0.8 )      (0.8 ) 
Redeemable noncontrolling interests adjustments
     —        —        (34.2 )      —        —        (34.2 )      —        (34.2 ) 
Other comprehensive income
     —        —        —        —        (4.8 )      (4.8 )      —        (4.8 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2024
     253.4     —        (1,249.1 )      —        96.7     (1,152.4 )      2.2     (1,150.2 ) 
Net (loss) income
     —        —        (128.5 )      —        —        (128.5 )      3.3     (125.2 ) 
Net transfers to Parent
     —        —        (55.5 )      —        —        (55.5 )      —        (55.5 ) 
Noncontrolling interests (see Note 12)
     —        —        —        —        —        —        33.6     33.6
Distributions to noncontrolling interests
     —        —        —        —        —        —        (10.3 )      (10.3 ) 
Redeemable noncontrolling interests adjustments
     —        —        14.9     —        —        14.9     —        14.9
Other comprehensive loss
     —        —        —        —        (35.8 )      (35.8 )      —        (35.8 ) 
Share-based compensation, Old Lionsgate contribution post Studio Separation, net of required tax withholding
     —        33.7     —        —        —        33.7     —        33.7
Issuance of Legacy LG Studios Common Shares upon Business Combination and PIPE Investments, net of issuance costs
     35.3     278.2     —        —          278.2     —        278.2
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Balance at March 31, 2025
     288.7   $ 311.9   $ (1,418.2 )    $ —    $ 60.9   $ (1,045.4 )    $ 28.8   $ (1,016.6 ) 
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(a)
Excludes redeemable noncontrolling interests, which are reflected in temporary equity (see Note 12).
See accompanying notes.
 
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Table of Contents
LIONSGATE STUDIOS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
    
Year Ended March 31,
  
    
2025
    
2024
    
2023
  
    
(Amounts in millions)
  
Operating Activities:
       
Net loss
    $ (126.9 )    $ (106.9 )    $ (8.9 ) 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
       
Depreciation and amortization
      17.8     15.6     17.9
Amortization of films and television programs
      1,642.1     1,347.8     1,649.3
Non-cash
charge from the modification of an equity award (see Note 12)
      —        49.2     —   
Content and other impairments
      26.1     12.8     5.9
Amortization of debt financing costs and other
non-cash
interest
      23.7     25.1     21.8
Non-cash
share-based compensation
      57.9     62.5     73.4
Other
non-cash
items
      38.7     46.0     59.9
Loss on extinguishment of debt
      1.8     1.3     1.3
Equity interests income
      (4.3 )      (8.7 )      (0.5 ) 
Gain on investments, net
      —        (3.5 )      (44.0 ) 
Deferred income taxes
      (2.4 )      (4.4 )      1.6
Changes in operating assets and liabilities:
       
Proceeds from the termination of interest rate swaps
      —        —        188.7
Accounts receivable, net
      185.3     84.9     (136.7 ) 
Investment in films and television programs, net
      (1,667.3 )      (1,120.5 )      (1,568.4 ) 
Other assets
      (78.0 )      16.5     (44.9 ) 
Accounts payable and accrued liabilities
      (102.5 )      (48.8 )      57.4
Participations and residuals
      (34.5 )      26.8     138.3
Content related payables
      (13.5 )      (24.5 )      (10.7 ) 
Deferred revenue
      111.0     3.2     (24.5 ) 
Due from Starz Business
      (181.8 )      114.5     (30.8 ) 
  
 
 
    
 
 
    
 
 
  
Net Cash Flows Provided By (Used In) Operating Activities
      (106.8 )      488.9     346.1
  
 
 
    
 
 
    
 
 
  
Investing Activities:
       
Net proceeds from purchase price adjustments for eOne acquisition (see Note 3)
      12.0     —        —   
Purchase of eOne, net of cash acquired (see Note 3)
      —        (331.1 )      —   
Proceeds from the sale of other investments
      1.6     5.2     46.3
Investment in equity method investees and other
      (2.0 )      (13.3 )      (17.5 ) 
Distributions from equity method investees and other
      —        0.8     1.9
Acquisition of assets (film library and related assets)
      (35.0 )      —        —   
Increase in loans receivable
      —        (3.7 )      —   
Repayment of loans receivable
      1.5     —        —   
Purchases of accounts receivables held for collateral
      —        (85.5 )      (183.7 ) 
Receipts of accounts receivables held for collateral
      —        105.7     190.8
Capital expenditures
      (13.5 )      (9.9 )      (6.5 ) 
  
 
 
    
 
 
    
 
 
  
Net Cash Flows Provided By (Used In) Investing Activities
      (35.4 )      (331.8 )      31.3
  
 
 
    
 
 
    
 
 
  
Financing Activities:
       
Debt - borrowings, net of debt issuance costs
      4,387.7     3,145.0     1,523.0
Debt - repurchases and repayments
      (4,474.5 )      (2,611.4 )      (1,745.8 ) 
Film related obligations - borrowings
      1,985.8     1,820.8     1,584.7
Film related obligations - repayments
      (1,959.5 )      (1,942.9 )      (956.5 ) 
Settlement of financing component of interest rate swaps
      —        —        (134.5 ) 
Purchase of noncontrolling interest
      (7.4 )      (194.6 )      (36.5 ) 
Distributions to noncontrolling interest
      (10.3 )      (1.7 )      (7.6 ) 
Parent net investment
      (100.3 )      (290.1 )      (621.3 ) 
Tax withholding required on equity awards
      (18.7 )      —        —   
Proceeds from Business Combination, net (See Note 2)
      281.7     —        —   
  
 
 
    
 
 
    
 
 
  
Net Cash Flows Provided By (Used In) Financing Activities
      84.5     (74.9 )      (394.5 ) 
  
 
 
    
 
 
    
 
 
  
Net Change In Cash, Cash Equivalents and Restricted Cash
      (57.7 )      82.2     (17.1 ) 
Foreign Exchange Effects on Cash, Cash Equivalents and Restricted Cash
      (3.1 )      0.8     (1.8 ) 
Cash, Cash Equivalents and Restricted Cash - Beginning Of Period
      334.4     251.4     270.3
  
 
 
    
 
 
    
 
 
  
Cash, Cash Equivalents and Restricted Cash - End Of Period
    $ 273.6   $ 334.4   $ 251.4
  
 
 
    
 
 
    
 
 
  
See accompanying notes.
 
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Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Description of Business, Basis of Presentation and Significant Accounting Policies
Nature of Operations
Prior to the Starz Separation, as further discussed below, Lionsgate Studios Corp. (the “Company,” “Legacy Lionsgate Studios,” “we,” “us,” or “our”) was a subsidiary of Lions Gate Entertainment Corp. (“Old Lionsgate” or “Parent”) which encompasses the motion picture and television studio operations (collectively referred to as the “Studio Business”) of Old Lionsgate.
The Studio Business consists of the Motion Picture and Television Production reportable segments, together with substantially all of Old Lionsgate’s corporate general and administrative costs. Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired. Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and
non-fiction
programming. Television Production includes the domestic and international licensing of Starz original productions to the Media Networks segment of Old Lionsgate and its subsidiaries (the “Starz Business”), and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment, a talent management company.
Studio Separation and Business Combination
On May 13, 2024, Old Lionsgate consummated the transactions contemplated by that certain business combination agreement (the “Business Combination Agreement”), with Screaming Eagle Acquisition Corp., a Cayman Islands exempted company (“SEAC”), SEAC II Corp., a Cayman Islands exempted company and a wholly-owned subsidiary of SEAC (“New SEAC”), LG Sirius Holdings ULC, a British Columbia unlimited liability company and a wholly-owned subsidiary of Old Lionsgate (“Studio HoldCo”), LG Orion Holdings ULC, a British Columbia unlimited liability company and wholly-owned subsidiary of Old Lionsgate (“StudioCo”), and other affiliates of SEAC. Pursuant to the terms and conditions of the Business Combination Agreement, the Studio Business was combined with SEAC through a series of transactions, including an amalgamation of StudioCo and New SEAC under a Canadian plan of arrangement (the “Business Combination”). In connection with the closing of the Business Combination, New SEAC changed its name to “Lionsgate Studios Corp.” (referred to as “Legacy Lionsgate Studios”) and continued the existing business operations of the Studio Business of Old Lionsgate. The Company became a separate publicly traded company and its common shares, without par value (“Legacy LG Studios Common Shares”), commenced trading on Nasdaq under the symbol “LION” on May 14, 2024.
In connection with and prior to the Business Combination, Old Lionsgate and StudioCo entered into a separation agreement pursuant to which the assets and liabilities of the Studio Business were transferred to StudioCo such that StudioCo held, directly or indirectly, all of the assets and liabilities of the Studio Business (the “Studio Separation”).
The Business Combination was accounted for as a reverse recapitalization in accordance with United States (“U.S.”) generally accepted accounting principles (“GAAP”). Under this method of accounting, SEAC is treated as the acquired company and the Studio Business is treated as the acquirer for financial reporting purposes. Accordingly, for accounting purposes, the financial statements of Legacy Lionsgate Studios will represent a continuation of the financial statements of the Studio Business, with the Business Combination treated as the equivalent of the Studio Business issuing Legacy LG Studios Common Shares for the historical net assets of SEAC, substantially consisting of cash held in the trust account, accompanied by a recapitalization of the Studio
 
F-9
1
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Business equity. The historical net assets were stated at fair value, which approximated historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination are those of the Studio Business.
To conform to the retroactive application of the reverse recapitalization, in all periods prior to the Business Combination, parent net investment transactions have been recast to accumulated deficit in the consolidated balance sheets and the consolidated statements of equity (deficit).
The shares and net income (loss) per common share, in all periods prior to the Business Combination, are based on the 253.4 million shares issued to Old Lionsgate at the closing of the Business Combination. See
 Net Income (Loss) Per Share
 below for further information.
The Studio Business has been determined to be the accounting acquirer in the Business Combination because Old Lionsgate held a controlling financial interest.
As a result of the Business Combination and additional private investments in public equities (“PIPE”) financing discussed in Note 2, former SEAC public shareholders and founders and new common equity financing investors owned approximately 12.2% of Legacy LG Studios Common Shares. In addition to establishing the Studio Business as a standalone publicly-traded entity, the transaction resulted in approximately $330.0 million of gross proceeds to Old Lionsgate received as of March 31, 2025, including $254.3 million in PIPE financing. See Note 2 for additional information related to the Business Combination. Shortly after the closing of the Business Combination, approximately $299.0 million was used by the Company to pay down the Intercompany Note, see Note 8.
Starz Separation
On May 6, 2025, Old Lionsgate, through a series of transactions contemplated by a certain arrangement agreement, dated as of January 29, 2025, as amended by an amending agreement, dated as of March 12, 2025 (collectively, the “Arrangement Agreement”) completed the separation of the businesses of Legacy Lionsgate Studios, from the STARZ-branded premium subscription platform business (the “Starz Separation”). As a result of the Arrangement Agreement, the
pre-transaction
shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and herein after referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate (see Note 22).
Notwithstanding the legal form of the Starz Separation, for accounting and financial reporting purposes, in accordance with U.S. GAAP, due to the relative significance of the Studio Business as compared to the Starz Business and the continued involvement of Old Lionsgate’s senior management with Lionsgate following the completion of the Starz Separation, Lionsgate (which holds the Lionsgate Studio Business) is considered the accounting spinnor or divesting entity and Starz (which holds the Starz Business) is considered the accounting spinnee or divested entity. As a result, Old Lionsgate will be the accounting predecessor to Lionsgate and the pro rata distribution of the Starz Business will be recorded through equity with no gain or loss recorded. The Starz Business will be reflected as discontinued operations in the financial statements of Lionsgate following the completion of the Starz Separation, beginning with the first quarter ending June 30, 2025. For periods following the Starz Separation, Lionsgate will reflect the historical financial position and results of operations of Old Lionsgate and as such, Old Lionsgate’s consolidated financial statements as of March 31, 2025 and 2024 and for each of the three years in the period ended March 31, 2025 are included as exhibit 99.1 to this Annual Report.
 
F-9
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Basis of Presentation
Upon the effective date of the Studio Separation, the Company’s financial statements are presented on a consolidated basis, as Old Lionsgate completed the contribution of the Studio Business on such date.
For periods prior to the Studio Separation, the Company operated as a segment of Old Lionsgate and not as a separate entity. The Company’s financial statements prior to the Studio Separation were prepared on a
carve-out
basis and were derived from Old Lionsgate’s consolidated financial statements and accounting records and reflect the Studio Business’s combined historical financial position, results of operations and cash flows as they were historically managed in accordance with U.S. GAAP. Prior to the Studio Separation, a management approach was applied to determine the
carve-out
basis of presentation. In using the management approach, considerations over how the business operated were utilized to identify historical operations that should be presented within the
carve-out
financial statements.
For periods subsequent to the Studio Separation, the accompanying consolidated financial statements include the accounts of Legacy Lionsgate Studios and all of its majority-owned and controlled subsidiaries. The financial statements of the Company for all periods presented herein are referred to as “consolidated financial statements”, but include the historical results of the Company prior to the Studio Separation that are presented on a
carve-out
basis.
All revenues and costs as well as assets and liabilities directly associated with the business activity of the Studio Business were included in the accompanying consolidated financial statements. Revenues and costs associated with the Studio Business were specifically identifiable in the accounting records maintained by Old Lionsgate and primarily represent the revenue and costs used for the determination of segment profit of the Motion Picture and Television Production segments of Old Lionsgate. In addition, prior to the Studio Separation, the Studio Business costs included an allocation of corporate general and administrative expense (inclusive of share-based compensation) which was allocated to the Studio Business as further discussed below. Other costs excluded from the Motion Picture and Television Production segment profit but relating to the Studio Business were generally specifically identifiable as costs of the Studio Business in the accounting records of Old Lionsgate and were included in the accompanying consolidated financial statements in periods prior to the Studio Separation.
In connection with the Business Combination, on May 9, 2024, Old Lionsgate and StudioCo entered into a shared services and overhead sharing agreement (the “Shared Services Agreement”) which took effect upon the closing of the Business Combination. The Shared Services Agreement facilitates the allocation to the Company of all corporate general and administrative expenses of Old Lionsgate, except for an amount of $10.0 million to be allocated annually to the Starz Business of Old Lionsgate. The $10.0 million allocation of Old Lionsgate’s corporate general and administrative expenses to the Starz Business pursuant to the Shared Services Agreement is designed to reflect the portion of corporate expenses expended and reflective of the level of effort and costs incurred related to management oversight and services provided for the Starz Business post Studio Separation with consideration of the anticipated separation of the Starz Business.
The corporate general and administrative expenses that are allocated to the Company pursuant to the Shared Services Agreement include salaries and wages for certain executives and other corporate officers related to executive oversight, investor relations costs, costs for the maintenance of corporate facilities, and other common administrative support functions, including corporate accounting, finance and financial reporting, audit and tax costs, corporate and other legal support functions, and certain information technology and human resources. In addition, the Separation Agreement and the Shared Services Agreement provide that officers, employees and directors of the Company will continue to receive awards of equity and equity-based compensation pursuant to
 
F-9
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
the existing plans of Old Lionsgate. Such awards will be treated as a capital contribution by Old Lionsgate to the Company, with the associated share based compensation expense for such awards allocated to the Company, see Note 14.
For periods prior to the Studio Separation, the combined financial statements of the Studio Business included allocations of corporate general and administrative expenses (inclusive of share-based compensation) from Old Lionsgate related to the corporate and shared service functions historically provided by Old Lionsgate. These expenses were allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis of consolidated Old Lionsgate revenue, payroll expense or other measures considered to be a reasonable reflection of the historical utilization levels of these services.
Management believes the assumptions underlying these consolidated financial statements, including the assumptions regarding the allocation of general and administrative expenses from Old Lionsgate to the Studio Business prior to the Studio Separation, are reasonable. See Note 21 for further detail of the allocations included in the consolidated financial statements.
In connection with the Business Combination, the Company entered into certain intercompany note arrangements, which mirrored the terms and amounts outstanding under Old Lionsgate’s credit facilities as previously reflected in the historical financial statements of the Studio Business prior to the Studio Separation, see Note 8.
Generally Accepted Accounting Principles
These consolidated financial statements have been prepared in accordance with U.S. GAAP.
Principles of Consolidation
For periods subsequent to the Studio Separation, the accompanying consolidated financial statements of the Company include the accounts of Legacy Lionsgate Studios and its majority-owned and controlled subsidiaries. The Company reviews its relationships with other entities to identify whether it is the primary beneficiary of a variable interest entity (“VIE”). If the determination is made that the Company is the primary beneficiary, then the entity is consolidated.
For periods prior to the Studio Separation, the accompanying consolidated financial statements of the Company were derived from the consolidated financial statements and accounting records of Old Lionsgate and reflect certain allocations from Old Lionsgate as further discussed above.
All significant intercompany balances and transactions within the Company were eliminated in these consolidated financial statements.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. The most significant estimates made by management in the preparation of the financial statements relate to ultimate revenue and costs used for the amortization of investment in films and television programs; estimates related to the revenue recognition of sales or usage-based royalties; fair value of equity-based compensation; the allocations of costs to the Company for certain corporate and shared service
 
F-9
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
functions in preparing the consolidated financial statements for periods prior to the Studio Separation on a
carve-out
basis; fair value of assets and liabilities for allocation of the purchase price of companies and assets acquired; income taxes including the assessment of valuation allowances for deferred tax assets; accruals for contingent liabilities; and impairment assessments for investment in films and television programs and for goodwill. Actual results could differ
from
such estimates.
Reclassifications
Certain amounts presented in prior years have been reclassified to conform to the current year’s presentation.
Significant Accounting Policies
Revenue Recognition
The Company’s Motion Picture and Television Production segments generate revenue principally from the licensing of content in domestic theatrical exhibition, home entertainment (e.g., digital media and packaged media), television, and international market places.
Revenue is recognized upon transfer of control of promised services or goods to customers in an amount that reflects the consideration the Company expects to receive in exchange for those services or goods. Revenues do not include taxes collected from customers on behalf of taxing authorities such as sales tax and value-added tax.
Revenue also includes licensing of motion pictures and television programming (including Starz original productions) to the Starz Business. See Note 21 for further details.
Licensing Arrangements.
 The Company’s content licensing arrangements include fixed fee and minimum guarantee arrangements, and sales or usage based royalties.
Fixed Fee or Minimum Guarantees
: The Company’s fixed fee or minimum guarantee licensing arrangements may, in some cases, include multiple titles, multiple license periods (windows) with a substantive period in between the windows, rights to exploitation in different media, or rights to exploitation in multiple territories, which may be considered distinct performance obligations. When these performance obligations are considered distinct, the fixed fee or minimum guarantee in the arrangement is allocated to the title, window, media right or territory as applicable, based on estimates of relative standalone selling prices. The amounts related to each performance obligation (i.e., title, window, media or territory) are recognized when the content has been delivered, and the window for the exploitation right in that territory has begun, which is the point in time at which the customer is able to begin to use and benefit from the content.
Sales or Usage Based Royalties
: Sales or usage based royalties represent amounts due to the Company based on the “sale” or “usage” of the Company’s content by the customer, and revenues are recognized at the later of when the subsequent sale or usage occurs, or the performance obligation to which some or all the sales or usage-based royalty has been allocated and satisfied (or partially satisfied). Generally, when the Company licenses completed content with standalone functionality (such as a movie, or television show), its performance obligation will be satisfied prior to the sale or usage. When the Company licenses intellectual property that does not have stand-alone functionality (e.g., brands, themes, logos, etc.), its performance obligation is generally satisfied in the same period as the sale or usage. The actual amounts due to the Company under these arrangements are generally not reported to the Company until after the close of the reporting period. The
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Company records revenue under these arrangements for the amounts due and not yet reported to the Company based on estimates of the sales or usage of these customers and pursuant to the terms of the contracts. Such estimates are based on information from the Company’s customers, historical experience with similar titles in that market or territory, the performance of the title in other markets, and/or data available in the industry.
Revenues by Market or Product Line
. The following describes the revenues generated by market or product line. Theatrical revenues are included in the Motion Picture segment; home entertainment, television, international and other revenues are applicable to both the Motion Picture and Television Production segments.
 
  •  
Theatrical.
 Theatrical revenues are derived from the domestic theatrical release of motion pictures licensed to theatrical exhibitors on a
picture-by-picture
basis (distributed by the Company directly in the United States and through a
sub-distributor
in Canada). Revenue from the theatrical release of feature films are treated as sales or usage-based royalties, are recognized as revenue starting at the exhibition date and are based on the Company’s participation in box office receipts of the theatrical exhibitor. Theatrical revenues also include revenues from licenses to
direct-to-platform
customers where the initial license of a motion picture is to a
direct-to-platform
customer.
 
  •  
Home Entertainment.
 Home entertainment consists of Digital Media and Packaged Media.
 
  •  
Digital Media.
 Digital media includes digital transaction revenue sharing arrangements
(pay-per-view
and
video-on-demand
platforms, electronic sell through (“EST”), and digital rental) and licenses of content to digital platforms for a fixed fee.
Digital Transaction Revenue Sharing Arrangements:
 Primarily represents revenue sharing arrangements with certain digital media platforms which generally provide that, in exchange for a nominal or no upfront sales price, the Company shares in the rental or sales revenues generated by the platform on a
title-by-title
basis. These digital media platforms generate revenue from rental and EST arrangements, such as
download-to-own,
download-to-rent,
and
video-on-demand.
These revenue sharing arrangements are recognized as sales or usage-based royalties based on the performance of these platforms and pursuant to the terms of the contract, as discussed above.
Licenses of Content to Digital Platforms:
 Primarily represents the licensing of content to
subscription-video-on-demand
(“SVOD”) or other digital platforms for a fixed fee. As discussed above, revenues are recognized when the content has been delivered and the window for the exploitation right in that territory has begun.
 
  •  
Packaged Media.
 Packaged media revenues represent the sale of motion pictures and television shows (produced or acquired) on physical discs (DVD’s,
Blu-ray,
4K Ultra HD, referred to as “Packaged Media”) in the retail market. Revenues are recognized, net of an allowance for estimated returns and other allowances, on the later of receipt by the customer or “street date” (when it is available for sale by the customer).
 
  •  
Television.
 Television revenues are derived from the licensing to domestic markets (linear pay, basic cable, free television markets, syndication) of motion pictures (including theatrical productions and acquired films) and scripted and unscripted television series, television movies, mini-series, and
non-fiction
programming. Television revenues also include revenue from licenses to SVOD platforms in which the initial license of a television series is to an SVOD platform or the traditional pay window for a motion picture is licensed to an SVOD platform. Television revenues include fixed fee arrangements as well as arrangements in which the Company earns advertising revenue from the exploitation of certain content on television networks. Revenues associated with a title, right, or window from television licensing arrangements are recognized when the feature film or television program is delivered (on an episodic basis for television product) and the window for the exploitation right has begun.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  •  
International.
 International revenues are derived from (1) licensing of the Company’s productions, acquired films, catalog product and libraries of acquired titles to international distributors, on a
territory-by-territory
basis; (2) the direct distribution of the Company’s productions, acquired films, and the Company’s catalog product and libraries of acquired titles in the United Kingdom; and (3) licensing to international markets of scripted and unscripted series, television movies, mini-series and
non-fiction
programming. License fees and minimum guarantee amounts associated with title, window, media or territory, are recognized when access to the feature film or television program has been granted or delivery has occurred, as required under the contract, and the right to exploit the feature film or television program in that window, media or territory has commenced. Revenues are also generated from sales or usage based royalties received from international distributors based on their distribution performance pursuant to the terms of the contracts after the recoupment of certain costs in some cases, and the initial minimum guarantee, if any, and are recognized when the sale by the Company’s customer generating a royalty due to the Company has occurred.
 
  •  
Other.
 Other revenues are derived from the licensing of the Company’s film and television and related content (games, music, location-based entertainment royalties, etc.) to other ancillary markets and from commissions and executive producer fees earned related to talent management.
Revenues from the licensing of film and television content and the sales and licensing of music are recognized when the content has been delivered and the license period has begun, as discussed above. Revenues from the licensing of symbolic intellectual property (i.e., licenses of motion pictures or television characters, brands, storylines, themes or logos) is recognized over the corresponding license term. Commissions are recognized as such services are provided.
Deferred Revenue.
 Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation.
Deferred revenue also relates to customer payments that are made in advance of when the Company fulfills its performance obligation and recognizes revenue. This primarily occurs under television production contracts, in which payments may be received as the production progresses, international motion picture contracts, where a portion of the payments are received prior to the completion of the movie and prior to license rights start dates, and pay television contracts with multiple windows with a portion of the revenues deferred until the subsequent exploitation windows commence. These arrangements do not contain significant financing components because the reason for the payment structure is not for the provision of financing to the Company, but rather to mitigate the Company’s risk of customer
non-performance
and incentivize the customer to exploit the Company’s content.
See Note 13 for further information.
Accounts Receivable.
 Payment terms vary by location and type of customer and the nature of the licensing arrangement. However, other than certain multi-year license arrangements; payments are generally due within 60 days after revenue is recognized. For certain multi-year licensing arrangements primarily in the television, digital media, and international markets, payments may be due over a longer period. When the Company expects the period between fulfillment of its performance obligation and the receipt of payment to be greater than a year, a significant financing component is present. In these cases, such payments are discounted to present value based on a discount rate reflective of a separate financing transaction between the customer and the Company, at contract inception. The significant financing component is recorded as a reduction to revenue and accounts receivable initially, with such accounts receivable discount amortized to interest income over the period to receipt of payment. The Company does not assess contracts with deferred payments for significant financing
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
components if, at contract inception, the Company expects the period between fulfillment of the performance obligation and subsequent payment to be one
year
or less.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash deposits at financial institutions and investments in money market mutual funds.
Restricted Cash
At March 31, 2025, the Company had restricted cash of $67.9 million primarily representing amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations (March 31, 2024- $57.4 million). Restricted cash is included within “other current assets” and “other
non-current
assets” on the consolidated balance sheets (see Note 20).
Investment in Films and Television Programs
General.
 Investment in films and television programs includes the unamortized costs of films and television programs, which are monetized individually (i.e., through domestic theatrical, home entertainment, television, international or other ancillary-market distribution).
Recording Cost.
 Costs of acquiring and producing films and television programs and of acquired libraries are capitalized when incurred. For films and television programs produced by the Company, capitalized costs include all direct production and financing costs, capitalized interest and production overhead. For the years ended March 31, 2025, 2024 and 2023, total capitalized interest was $37.9 million, $21.0 million and $28.1 million, respectively. For acquired films and television programs, capitalized costs consist of minimum guarantee payments to acquire the distribution rights.
Amortization.
 Costs of acquiring and producing films and television programs and of acquired libraries are amortized using the individual-film-forecast method, whereby these costs are amortized and participations and residuals costs are accrued in the proportion that current year’s revenue bears to management’s estimate of ultimate revenue at the beginning of the current year expected to be recognized from the exploitation, exhibition or sale of the films or television programs.
Ultimate Revenue.
 Ultimate revenue includes estimates over a period not to exceed
ten
years following the date of initial release of the motion picture. For an episodic television series, the period over which ultimate revenues are estimated cannot exceed
ten years
following the date of delivery of the first episode, or, if still in production, five years from the date of delivery of the most recent episode, if later. For titles included in acquired libraries, ultimate revenue includes estimates over a period not to exceed twenty years following the date of acquisition.
Development.
 Films and television programs in development include costs of acquiring film rights to books, stage plays or original screenplays and costs to adapt such projects. Such costs are capitalized and, upon commencement of production, are transferred to production costs. Projects in development are written off at the earlier of the date they are determined not to be recoverable or when abandoned, or three years from the date of the initial investment unless the fair value of the project exceeds its carrying cost.
Impairment Assessment.
 An individual film or television program is evaluated for impairment when an event or change in circumstances indicates that the fair value of an individual film is less than its unamortized cost.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The fair value is determined based on a discounted cash flow analysis of the cash flows directly attributable to the title. To the extent the unamortized costs exceed the fair value, an impairment charge is recorded for the excess.
The discounted cash flow analysis includes cash flows estimates of ultimate revenue and costs as well as a discount rate (a Level 3 fair value measurement, see Note 11). The discount rate utilized in the discounted cash flow analysis is based on the weighted average cost of capital of the Company plus a risk premium representing the risk associated with producing a particular film or television program. Estimates of future revenue involve measurement uncertainty and it is therefore possible that reductions in the carrying value of investment in films and television programs may be required as a consequence of changes in management’s future revenue estimates.
Property and Equipment, net
Property and equipment is carried at cost less accumulated depreciation. Depreciation is provided for on a straight line basis over the following useful lives:
 
Computer equipment and software
    3 - 5 years
Furniture and equipment
    3 - 5 years
Leasehold improvements
    Lease term or the useful life, whichever is shorter
Land
    Not depreciated
The Company periodically reviews and evaluates the recoverability of property and equipment. Where applicable, estimates of net future cash flows, on an undiscounted basis, are calculated based on future revenue estimates. If appropriate and where deemed necessary, a reduction in the carrying amount is recorded based on the difference between the carrying amount and the fair value based on discounted cash flows.
Leases
The Company determines if an arrangement is a lease at its inception. The expected term of the lease used for computing the lease liability and
right-of-use
(“ROU”) asset and determining the classification of the lease as operating or financing may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company also elected to not separate lease components from
non-lease
components across all lease categories. Instead, each separate lease component and
non-lease
component are accounted for as a single lease component.
Operating Leases.
 Operating lease ROU assets, representing the Company’s right to use the underlying asset for the lease term, are included in the “Other
assets—non-current”
line item in the Company’s consolidated balance sheets. Operating lease liabilities, representing the present value of the Company’s obligation to make payments over the lease term, are included in the “Other accrued liabilities” and “Other
liabilities—non-current”
line items in the Company’s consolidated balance sheets. The Company has entered into various short-term operating leases which have an initial term of 12 months or less. These short-term leases are not recorded on the Company’s consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term.
The present value of the lease payments is calculated using a rate implicit in the lease, when readily determinable. However, as most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate to determine the present value of the lease payments for the majority of its leases.
Variable lease payments that are based on an index or rate are included in the measurement of ROU assets and lease liabilities at lease inception. All other variable lease payments are expensed as incurred and are not included in the measurement of ROU assets and lease liabilities.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Company
did
not have any finance leases during the years ended March 31, 2025, 2024 or 2023.
Investments
Investments include investments accounted for under the equity method of accounting, and equity investments with and without readily determinable fair value.
Equity Method Investments:
 The Company uses the equity method of accounting for investments in companies in which it has a minority equity interest and the ability to exert significant influence over operating decisions of the companies. Significant influence is generally presumed to exist when the Company owns between 20% and 50% of the voting interests in the investee, holds substantial management rights or holds an interest of less than 20% in an investee that is a limited liability partnership or limited liability corporation that is treated as a flow-through entity.
Under the equity method of accounting, the Company’s share of the investee’s earnings (losses) are included in the “equity interests income” line item in the consolidated statements of operations. The Company records its share of the net income or loss of most equity method investments on a one quarter lag and, accordingly, during the years ended March 31, 2025, 2024 and 2023, the Company recorded its share of the income or loss generated by these entities for the years ended December 31, 2024, 2023 and 2022, respectively.
Dividends and other distributions from equity method investees are recorded as a reduction of the Company’s investment. Distributions received up to the Company’s interest in the investee’s retained earnings are considered returns on investments and are classified within cash flows from operating activities in the consolidated statements of cash flows. Distributions from equity method investments in excess of the Company’s interest in the investee’s retained earnings are considered returns of investments and are classified within cash flows provided by investing activities in the consolidated statements of cash flows.
Other Equity Investments:
 Investments in nonconsolidated affiliates in which the Company owns less than 20% of the voting common stock, or does not exercise significant influence over operating and financial policies, are recorded at fair value using quoted market prices if the investment has a readily determinable fair value. If an equity investment’s fair value is not readily determinable, the Company will recognize it at cost less any impairment, adjusted for observable price changes in orderly transactions in the investees’ securities that are identical or similar to the Company’s investments in the investee. The unrealized gains and losses and the adjustments related to the observable price changes are recognized in net income (loss).
Impairments of Investments:
 The Company regularly reviews its investments for impairment, including when the carrying value of an investment exceeds its market value. If the Company determines that an investment has sustained an other-than-temporary decline in its value, the investment is written down to its fair value by a charge to earnings. Factors that are considered by the Company in determining whether an other-than-temporary decline in value has occurred include (i) the market value of the security in relation to its cost basis, (ii) the financial condition of the investee, and (iii) the Company’s intent and ability to retain the investment for a sufficient period of time to allow for recovery in the market value of the investment.
For investments accounted for using the equity method of accounting or equity investments without a readily determinable fair value, the Company evaluates information available (e.g., budgets, business plans, financial statements, etc.) in addition to quoted market prices, if any, in determining whether an other-than-temporary decline in value exists. Factors indicative of an other-than-temporary decline include recurring operating losses, credit defaults and subsequent rounds of financing at an amount below the cost basis of the Company’s investment.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Finite-Lived Intangible Assets
Identifiable intangible assets with finite lives are amortized to depreciation and amortization expense over their estimated useful lives, ranging from 5 to 15 years.
Amortizable intangible assets are tested for impairment whenever events or changes in circumstances (triggering events) indicate that the carrying amount of the asset may not be recoverable. If a triggering event has occurred, an impairment analysis is required. The impairment test first requires a comparison of undiscounted future cash flows expected to be generated over the remaining useful life of an asset to the carrying value of the asset. The impairment test is performed at the lowest level of cash flows associated with the asset. If the carrying value of the asset exceeds the undiscounted future cash flows, the asset would not be deemed to be recoverable. Impairment would then be measured as the excess of the asset’s carrying value over its fair value, which would generally be estimated based on a discounted cash flow (“DCF”) model.
The Company monitors its finite-lived intangible assets and changes in the underlying circumstances each reporting period for indicators of possible impairments or a change in the useful life or method of amortization of its finite-lived intangible assets. No such triggering events were identified during the years ended March 31, 2025 and 2024.
Goodwill
At March 31, 2025, the carrying value of goodwill was $808.5 million. Goodwill is allocated to the Company’s reporting units, which are its operating segments or one level below its operating segments (component level). Reporting units are determined by the discrete financial information available for the component and whether that information is regularly reviewed by segment management. Components are aggregated into a single reporting unit if they share similar economic characteristics. The Company’s reporting units for purposes of goodwill impairment testing during the years ended March 31, 2025, 2024 and 2023 were Motion Picture, and the Television and Talent Management businesses, both of which are part of the Television Production segment.
Goodwill is not amortized, but is reviewed for impairment each fiscal year or between the annual tests if an event occurs or circumstances change that indicates it is
more-likely-than-not
that the fair value of a reporting unit is less than its carrying value. The Company performs its annual impairment test as of January 1 in each fiscal year. A goodwill impairment loss would be recognized for the amount that the carrying amount of a reporting unit exceeds its fair value. An entity may perform a qualitative assessment of the likelihood of the existence of a goodwill impairment. The qualitative assessment is an evaluation, based on all identified events and circumstances which impact the fair value of the reporting unit, of whether or not it is more likely than not that the fair value is less than the carrying value of the reporting unit. If the Company believes that as a result of its qualitative assessment it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, a quantitative impairment test is not required but may be performed at the option of the Company.
A quantitative assessment requires determining the fair value of the Company’s reporting units. The determination of the fair value of each reporting unit utilizes DCF analyses and market-based valuation methodologies, which represent Level 3 fair value measurements. Fair value determinations require considerable judgment and requires assumptions and estimates of many factors, including revenue and market growth, operating margins and cash flows, market multiples and discount rates, and are sensitive to changes in these underlying assumptions and factors.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Goodwill Impairment Assessments:
Fiscal 2025.
 For the Company’s annual goodwill impairment test for fiscal 2025, given the length of time since our last quantitative assessment and considering the separation of the Studio Business from the Starz Business, the Company performed quantitative goodwill impairment assessments for all our reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment), based on the most recent data and expected growth trends, using a combination of DCF analyses and market-based valuation methodologies to estimate the fair value of the Company’s reporting units. Based on our quantitative impairment assessment, the Company determined that the fair value of our reporting units significantly exceeded the carrying values for all of our reporting units. See Note 7 for further information.
Fiscal 2024
. For the Company’s annual goodwill impairment test for fiscal 2024, the Company performed qualitative goodwill impairment assessments for all reporting units (Motion Picture, and our Television and Talent Management businesses, both of which are part of our Television Production segment). Our qualitative assessment considered the recent performance of these reporting units, and updated forecasts of performance and cash flows, as well as the current micro and macroeconomic environments in relation to the current and expected performance of these reporting units, and industry considerations, and determined that since the date of the most recent quantitative assessment performed over these reporting units, there were no events or circumstances that rise to a level that would
more-likely-than-not
reduce the fair value of those reporting units below their carrying values; therefore, a quantitative goodwill impairment analysis was not required for these reporting units.
Management will continue to monitor all of its reporting units for changes in the business environment that could impact the recoverability of goodwill in future periods. The recoverability of goodwill is dependent upon the continued growth of revenue and cash flows from the Company’s business activities. Examples of events or circumstances that could result in changes to the underlying key assumptions and judgments used in the Company’s goodwill impairment tests, and ultimately impact the estimated fair value of the Company’s reporting units may include the global economy; consumer consumption levels of the Company’s content; adverse macroeconomic conditions related to higher inflation and interest rates and currency rate fluctuations, and the impact on the global economy from wars, terrorism and multiple international conflicts, and future bank failures; volatility in the equity and debt markets which could result in higher weighted-average cost of capital; capital market transactions; the duration and potential impact of strikes of unions, on our ability to produce, acquire and distribute our content; the commercial success of the Company’s television programming and motion pictures; the Company’s continual contractual relationships with its customers; and changes in consumer behavior. While historical performance and current expectations have resulted in fair values of the Company’s reporting units in excess of carrying values, if the Company’s assumptions are not realized, it is possible that an impairment charge may need to be recorded in the future.
Prints, Advertising and Marketing Expenses
The costs of prints, advertising and marketing expenses are expensed as incurred.
Advertising expenses for the year ended March 31, 2025 were $296.3 million (2024 — $347.8 million, 2023 — $203.4 million) which were recorded as distribution and marketing expenses in the accompanying consolidated statements of operations.
Income Taxes
Income taxes are accounted for using an asset and liability approach for financial accounting and reporting for income taxes and recognition and measurement of deferred tax assets are based upon the likelihood of
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
realization of tax benefits in future years. Under this method, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Valuation allowances are established when management determines that it is more likely than not that some portion or all of the net deferred tax asset, on a
jurisdiction-by-jurisdiction
basis, will not be realized. The financial effect of changes in tax laws or rates is accounted for in the period of enactment.
From time to time, the Company engages in transactions in which the tax consequences may be subject to uncertainty and judgment is required in assessing and estimating the tax consequences of these transactions. In determining the Company’s tax provision for financial reporting purposes, the Company establishes a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being sustained upon examination, based on their technical merits. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense.
In connection with the Business Combination, on May 13, 2024, the Company and Old Lionsgate entered into a tax matters agreement (the “Tax Matters Agreement”) that governs the parties’ respective rights, responsibilities and obligations with respect to tax liabilities and benefits, tax attributes, certain indemnification rights with respect to tax matters, the preparation and filing of tax returns, the control of audits and other tax proceedings and other matters regarding taxes.
For periods prior to the Business Combination (including the period from April 1, 2024, through May 13, 2024), income taxes were calculated on a separate tax return basis. The separate tax return method applies the accounting guidance for income taxes to the standalone financial statements as if the Company was a separate taxpayer and standalone enterprise. The Company’s U.S. operations, and certain of its
non-U.S.
operations historically were included in the income tax returns of Old Lionsgate or its subsidiaries that may not be part of the Company. Management believes the assumptions supporting the Company’s allocation and presentation of income taxes on a separate tax return basis for the periods prior to the Business Combination to be reasonable.
For periods following the Business Combination (including the period from May 14, 2024, through March 31, 2025), income taxes were calculated by applying an estimated effective income tax rate to the Company’s ordinary income (loss), adjusted for the income tax effects of items that related discretely to the period, if any. Following the Business Combination, certain tax attributes (including U.S. federal net operating losses) were statutorily allocated from Old Lionsgate to the legal entities comprising the Studio Business, and were available for use.
Government Assistance
The Company has access to government programs that are designed to promote film and television production and distribution in certain foreign countries. The Company also has access to similar programs in certain states within the U.S. that are designed to promote film and television production in those states.
Tax credits earned with respect to expenditures on qualifying film and television productions are recorded as a reduction to investment in films and television programs when the qualifying expenditures have been incurred provided that there is reasonable assurance that the credits will be realized (see Note 4 and Note 20).
Foreign Currency Translation
Monetary assets and liabilities denominated in currencies other than the functional currency are translated at exchange rates in effect at the balance sheet date. Resulting unrealized and realized gains and losses are included in the consolidated statements of operations.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Foreign company assets and liabilities in foreign currencies are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Foreign company revenue and expense items are translated at the average rate of exchange for the fiscal year. Gains or losses arising on the translation of the accounts of
foreign
companies are included in accumulated other comprehensive income or loss, a separate component of equity.
Derivative Instruments and Hedging Activities
Derivative financial instruments are used by the Company in the management of its foreign currency and interest rate exposures. The Company’s policy is not to use derivative financial instruments for trading or speculative purposes.
The Company uses derivative financial instruments to hedge its exposures to foreign currency exchange rate and interest rate risks. All derivative financial instruments are recorded at fair value in the consolidated balance sheets (see Note 11). The effective changes in fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income or loss and included in unrealized gains (losses) on cash flow hedges until the underlying hedged item is recognized in earnings. The effective changes in the fair values of derivatives designated as cash flow hedges are reclassified from accumulated other comprehensive income or loss to net income or net loss when the underlying hedged item is recognized in earnings. If the derivative is not designated as a hedge, changes in the fair value of the derivative are recognized in earnings. See Note 19 for further discussion of the Company’s derivative financial instruments.
Parent Net Investment
Parent net investment represents Old Lionsgate’s historical investment in the Company, the accumulated net earnings (losses) after taxes and the net effect of settled transactions with and allocations from Old Lionsgate. All transactions reflected in parent net investment by Old Lionsgate have been considered as financing activities for purposes of the consolidated statements of cash flows. To conform to the retroactive application of the reverse recapitalization as described above, transactions historically presented as parent net investment have been recast to accumulated deficit in the consolidated balance sheets and the consolidated statements of equity (deficit).
Share-Based Compensation
Certain Company employees participate in the share-based compensation plans sponsored by Old Lionsgate. Old Lionsgate share-based compensation awards granted to employees of the Company consist of stock options, restricted share units and share appreciation rights. As such, following the Studio Separation the awards to Company employees are reflected in common shares within the consolidated statements of equity (deficit) at the time they are expensed. Prior to the Studio Separation, the awards to Company employees were reflected in accumulated deficit (as recast from parent net investment in connection with the reverse recapitalization, see
 Studio Separation and Business Combination
 above) within the consolidated statements of equity (deficit) at the time they were expensed. For periods prior to the Studio Separation, the consolidated statements of operations also include an allocation of Old Lionsgate corporate and shared employee share-based compensation expenses.
The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award. The fair value is recognized in earnings over the period during which an employee is required to provide service. See Note 14 for further discussion of the Company’s share-based compensation.
 
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LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Transfers of Financial Assets
The Company enters into arrangements to sell certain financial assets (i.e., monetize its trade accounts receivables). For a transfer of financial assets to be considered a sale, the asset must be legally isolated from the Company and the purchaser must have control of the asset. Determining whether all the requirements have been met includes an evaluation of legal considerations, the extent of the Company’s continuing involvement with the assets transferred and any other relevant considerations. When the true sales criteria are met, the Company derecognizes the carrying value of the financial asset transferred and recognizes a net gain or loss on the sale. The proceeds from these arrangements with third party purchasers are reflected as cash provided by operating activities in the consolidated statements of cash flows. If the sales criteria are not met, the transfer is considered a secured borrowing and the financial asset remains on the consolidated balance sheets with proceeds from the sale recognized as debt and recorded as cash flows from financing activities in the consolidated statements of cash flows. See Note 20 for discussion of the Company’s accounts receivable monetization.
Net Loss Per Share
Basic net loss per share is calculated based on the weighted average common shares outstanding for the period. Basic and diluted net loss per share for the years ended March 31, 2025, 2024 and 2023 is presented below:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions, except per
share amounts)
  
Basic and Diluted Net Loss Per Common Share:
         
Numerator:
         
Net loss attributable to Lionsgate Studios Corp. shareholders
    $ (128.5 )     $ (93.5 )     $ (0.3 ) 
Recovery (accretion) of redeemable noncontrolling interest
      5.0      (11.9 )       —   
  
 
 
     
 
 
     
 
 
  
Net loss attributable to Lionsgate Studios Corp. shareholders after accretion of redeemable noncontrolling interest
    $ (123.5 )     $ (105.4 )     $ (0.3 ) 
  
 
 
     
 
 
     
 
 
  
Denominator:
         
Weighted average common shares outstanding
      284.6      253.4      253.4
  
 
 
     
 
 
     
 
 
  
Basic and diluted net loss per common share
    $ (0.43 )     $ (0.42 )     $ 0.00
  
 
 
     
 
 
     
 
 
  
For periods prior to the Studio Separation, basic and diluted net loss per share per share was calculated based on the 253.4 million shares issued to Old Lionsgate at the closing of the Business Combination.
Additionally, for the years ended March 31, 2025, 2024 and 2023, the outstanding common shares issuable presented below were excluded from diluted net loss per common share because they are contingently issuable upon certain vesting criteria that have not been met as of the reporting period.
 
    
Year Ended
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
SEAC Sponsor Options
      2.2      —         —   
  
 
 
     
 
 
     
 
 
  
 
F-10
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Recent Accounting Pronouncements
Accounting Guidance Adopted in Fiscal 2025
Segment Reporting:
 In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2023-07,
 Improvements to Reportable Segment Disclosures
. The amendments in this update expanded disclosures about a public entity’s reportable segments and requires more enhanced information about a reportable segment’s expenses, interim segment profit or loss, and how a public entity’s chief operating decision maker (“CODM”) uses reported segment profit or loss information in assessing segment performance and allocating resources. This guidance was effective for the Company beginning with these financial statements issued for the fiscal year ended March 31, 2025, and the Company has applied this guidance to all periods presented (see Note 17).
Accounting Guidance Not Yet Adopted
Income Taxes:
 In December 2023, the FASB issued ASU
2023-09,
 Income Taxes (Topic 740): Improvements to Income Tax Disclosures,
 requiring public business entities, on an annual basis, to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. Additionally, the guidance requires all entities to disaggregate disclosures by jurisdiction on the amount of income taxes paid (net of refunds received), income or loss from continuing operations before income tax expense (or benefit) and income tax expense (or benefit) from continuing operations. This guidance is effective for fiscal years beginning after December 15, 2024, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2026. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
Income Statement:
 In November 2024, the FASB issued ASU
2024-03,
 Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic
220-40):
Disaggregation of Income Statement Expenses (Subtopic
220-40),
 requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. This ASU is effective for fiscal years beginning after December 15, 2026, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2028 and interim reporting periods beginning in fiscal 2029, with early adoption permitted. The disclosures required under the ASU can be applied either prospectively to financial statements issued for reporting periods after the effective date or retrospectively to any or all periods presented in the financial statements. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
Business Combinations:
 In May 2025, the FASB issued ASU
2025-03,
 Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.
 This standard clarifies the guidance in determining the acquirer in an acquisition transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business. The amendments require that an entity consider the same factors that are currently required for determining which entity is the accounting acquirer in other acquisition transactions. This guidance is effective for fiscal years beginning after December 15, 2026, and therefore will be effective beginning with the Company’s financial statements issued for the fiscal year ending March 31, 2028 and interim reporting periods beginning in fiscal 2029, with early adoption permitted. The amendments are required to be applied prospectively to any acquisition transaction that occurs after the initial application date. The Company is currently evaluating the impact of adopting this guidance on its consolidated financial statements and disclosures.
 
F-10
6
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
2. Business Combination
As discussed in Note 1, on May 13, 2024 (the “Closing Date”) the Company consummated the transactions contemplated by the Business Combination (the “Closing”).
The following table presents the number of Legacy LG Studios Common Shares issued in connection with the Closing:
 
 
  
Number of

Legacy LG

Studios

Common

Shares Issued
 
Shares issued to SEAC public shareholders
(1)
      7,027,873
Shares issued to SEAC Sponsor and its permitted transferees
(2)
      2,010,000
Shares issued to PIPE Investors
(3)
      25,759,430
Additional shares issued
(4)
      448,127
  
 
 
  
Total shares issued in Business Combination and related transactions
      35,245,430
Shares issued to Old Lionsgate
(5)
      253,435,794
  
 
 
  
Total Legacy Lionsgate Studios Common Shares following the Closing of the Business Combination
      288,681,224
  
 
 
  
 
(1)
Reflects 7,027,873 Legacy LG Studios Common Shares issued to holders of Class A ordinary shares of SEAC (the “SEAC Class A Ordinary Shares”) which were subject to possible redemption. This reflects the 75,000,000 SEAC Class A Ordinary Shares outstanding as of March 31, 2024, net of 67,972,127 SEAC Class A Ordinary Shares which were redeemed prior to the Closing for $730.1 million in aggregate at a weighted average redemption price of $10.745 per share.
(2)
Reflects 2,010,000 Legacy LG Studios Common Shares issued to Eagle Equity Partners V, LLC (the “SEAC Sponsor”) and its permitted transferees in connection with their SEAC Class A Ordinary Shares held after the conversion of their Class B ordinary shares of SEAC (the “SEAC Class B Ordinary Shares”) and repurchase of 16,740,000 SEAC Class B Ordinary Shares pursuant to the Sponsor Securities Repurchase, as described below, prior to the Business Combination. The number of Legacy LG Studios Common Shares issued excludes options issued in the Sponsor Securities Repurchase described below, for the purchase of 2,200,000 Legacy LG Studios Common Shares subject to certain vesting restrictions pursuant to the Sponsor Option Agreement described below.
(3)
Reflects 14,141,559 Legacy LG Studios Common Shares issued at a purchase price of $9.63 per share and 11,617,871 Legacy LG Studios Common Shares issued at a purchase price of $10.165 per share, to certain institutional and accredited investors (the “PIPE Investors”) pursuant to subscription agreements as described below. Amounts exclude 1,953,976 PIPE Shares for which Reduction Rights as described below were exercised.
(4)
Reflects 254,200 Legacy LG Studios Common Shares issued pursuant to share purchase and/or
non-redemption
agreements (the
“Non-Redemption
Agreements”) SEAC and New SEAC entered into with certain investors prior to the Business Combination and 193,927 Legacy LG Studios Common Shares issued to certain PIPE Investors for which Reduction Rights, as described below, were exercised.
(5)
Reflects 253,435,794 Legacy LG Studios Common Shares issued to Old Lionsgate through a series of transactions, including an amalgamation of StudioCo and New SEAC, as consideration for the cancellation and exchange of each then issued and outstanding common share, without par value, of StudioCo. Under the recapitalization accounting, these shares are reflected as issued and outstanding as of the beginning of the earliest period presented in the consolidated statements of equity (deficit).
 
F-1
07
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table presents and reconciles elements of the Business Combination and related transactions to the consolidated statement of cash flows and the consolidated statement of equity (deficit) for the year ended March 31, 2025 (amounts in millions):
 
Gross cash proceeds from SEAC trust account, net of redemptions
(1)
    $ 75.7
Gross cash proceeds from PIPE Investment, net of Reduction Rights exercised
(2)
      254.3
  
 
 
  
Total gross cash proceeds
      330.0
Less: SEAC warrant exchange payment
(3)
      (12.5 ) 
Less: SEAC transaction costs
      (20.1 ) 
Less: Legacy Lionsgate Studios transaction costs
      (19.2 ) 
  
 
 
  
Net proceeds from the Business Combination and related equity issuances per the consolidated statement of equity (deficit)
      278.2
Add: Transaction costs accrued and not paid, net of transaction costs previously paid
      3.5
  
 
 
  
Net cash proceeds from the Business Combination and related equity issuances per the consolidated statement of cash flows
    $ 281.7
  
 
 
  
 
(1)
Reflects the remaining $75.7 million in SEAC’s trust account, established at the consummation of SEAC’s initial public offering, after redemptions. As described above, 7,027,873 Legacy LG Studios Common Shares were issued to holders of SEAC Class A Ordinary Shares which were subject to possible redemption and not redeemed prior to the Closing.
(2)
Reflects the gross proceeds from the issuance of 25,759,430 Legacy LG Studios Common Shares to PIPE Investors, net of Reduction Rights exercised.
(3)
Prior to the Closing, each of the then issued and outstanding whole warrants of SEAC, sold as part of SEAC’s initial public offering (the “SEAC Public Warrants”) was automatically exchanged for $0.50 in cash pursuant to the terms of an amendment to the agreement governing the SEAC Public Warrants. As of the Closing, no SEAC Public Warrants were outstanding.
PIPE Investment
Concurrently with the execution of the Business Combination Agreement, SEAC, New SEAC and Old Lionsgate entered into subscription agreements with PIPE Investors (the “Initial Subscription Agreements”) pursuant to which PIPE Investors agreed to purchase from the Company an aggregate of 18,172,378 Legacy LG Studios Common Shares (the “Initial PIPE Shares”), at a purchase price of $9.63 per share, immediately following the Closing.
Pursuant to the Initial Subscription Agreements, certain PIPE Investors elected to offset their commitment under their Initial Subscription Agreement (the “Reduction Right”) with respect to 1,953,976 PIPE Shares, which reduced the Initial PIPE Shares to 16,218,402 shares. PIPE Investors that exercised Reduction Rights were entitled to purchase from SEAC a fractional share of newly issued SEAC Class A Ordinary Shares at a nominal purchase price for every SEAC Class A Ordinary Share for which it exercised its Reduction Right, and resulted in 193,927 newly issued SEAC Class A Ordinary Shares being issued, which ultimately resulted in 193,927 Legacy LG Studios Common Shares as reflected in the table above.
Prior to the close of the Business Combination, SEAC, New SEAC and Old Lionsgate entered into additional subscription agreements with additional PIPE Investors pursuant to which such PIPE Investors agreed
 
F-1
08
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
to purchase from the Company an aggregate of 11,617,871 Legacy LG Studios Common Shares at a purchase price of $10.165 per share, immediately following the Closing.
The aggregate gross proceeds from the PIPE Investment received at the Closing was $254.3 million, which amount excludes an aggregate of approximately $20.0 million that remains due from a PIPE Investor that subscribed for 2,076,843 Legacy LG Studios Common Shares pursuant to the Initial Subscription Agreements.
Sponsor Option; Lions Gate Parent Issuance and Sponsor Issuance
In connection with the Business Combination, SEAC repurchased 16,740,000 of the SEAC Class B Ordinary Shares, representing the SEAC Class B Ordinary Shares in excess of 1,800,000 held by the SEAC Sponsor (the “Sponsor Securities Repurchase”), in exchange for an aggregate of $1.00 and 2,200,000 options of SEAC (the “SEAC Sponsor Options”) each of which entitled SEAC Sponsor to purchase one SEAC Class A Ordinary Share at $0.0001 per share, (the “Sponsor Option Agreement”). In connection with the Business Combination, the SEAC Sponsor Options ultimately became options to purchase Legacy LG Studios Common Shares pursuant to the terms of the Sponsor Option Agreement, see Note 14. After the repurchase of the SEAC Class B Ordinary Shares, there were 2,010,000 SEAC Class B Ordinary Shares outstanding (consisting of the 1,800,000 and 210,000 of SEAC Class B Ordinary Shares held by the SEAC Sponsor and the independent directors and advisors, respectively) which automatically converted into SEAC Class A Ordinary Shares and were exchanged for 2,010,000 Legacy LG Studios Common Shares as reflected in the table above. In connection with the Starz Separation, on May 6, 2025, Legacy Lionsgate Studios entered into an amendment to the Sponsor Option Agreement, pursuant to which Lionsgate was made a party to the Sponsor Option Agreement and SEAC Sponsor Options became options to purchase Lionsgate common shares, see Note 22.
Non-Redemption
Agreements
In connection with the Business Combination, SEAC and New SEAC entered into
non-redemption
agreements with certain investors (the
“Non-Redemption
Investors”), pursuant to which
Non-Redemption
Investors who met the terms and conditions set forth in the
non-redemption
agreement were entitled to purchase from SEAC a fractional share of newly issued SEAC Class A Ordinary Shares at a nominal purchase price for every Purchase Commitment Share, as defined in the
non-redemption
agreement, purchased. As a result, 254,200 newly issued SEAC Class A Ordinary Shares were issued to the
Non-Redemption
Investors, which ultimately resulted in 254,200 Legacy LG Studios Common Shares as reflected in the table above.
Intercompany Note Repayment
Following the close of the Business Combination, the Company transferred the aggregate transaction proceeds less the SEAC warrant exchange payment and SEAC transaction expenses, in cash to Old Lionsgate in partial repayment of the Intercompany Note, see Note 8.
3. Acquisitions
Acquired Library
On June 5, 2024, the Company invested approximately $35.0 million for a 51% members’ interest in a newly formed limited liability company, CP LG Library Holdings, LLC (“CP LG”), with the Company designated as the managing member of CP LG. CP LG used the funds received from the Company, along with funds invested by the 49% member, to acquire a library of 46 films for approximately $68.6 million. Also on June 5, 2024, the Company entered into a distribution agreement with CP LG to distribute the titles in the
 
F-1
09
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
acquired library. The purchase included the film library (of which $48.3 million of the purchase price was allocated to investment in film and television programs for the film library), accounts receivable and certain liabilities associated with the film library, most notably participations and residuals liabilities.
The Company determined that CP LG is a VIE for which it is the primary beneficiary and is consolidated under the applicable accounting guidance as the Company has the power to direct the significant activities and the right to receive benefits and obligation to absorb losses of CP LG. The Company concluded that the acquired library and related assets and liabilities was not a business and therefore, accounted for the acquisition as an initial consolidation of a VIE that is not a business under the applicable accounting guidance. There was no gain or loss recognized upon initial consolidation of the VIE as the sum of the fair value of the consideration paid and noncontrolling interest equaled the fair value of the net assets on the acquisition date. See Note 12 for the noncontrolling interest recorded related to CP LG.
As of March 31, 2025, the consolidated balance sheet included assets and liabilities of CP LG totaling $63.3 million (which is primarily comprised of investment in film and television programs) and $7.7 million, respectively. The assets and liabilities of CP LG primarily consist of accounts receivable, investment in film and television programs, and participations and residuals.
eOne Acquisition
On December 27, 2023, Old Lionsgate and its subsidiaries, Lions Gate Entertainment Inc., a Delaware corporation (“LGEI”), and Lions Gate International Motion Pictures S.à.r.l., a Luxembourg société à responsabilité limitée (“LGIMP” and, with the Company and LGEI, collectively the “Buyers”), completed the acquisition of all of the issued and outstanding equity interests of the companies constituting the Entertainment One television and film (“eOne”) business from Hasbro, Inc., a Rhode Island corporation (“Hasbro”), pursuant to that certain Equity Purchase Agreement (the “Purchase Agreement”) dated August 3, 2023. The aggregate cash purchase price was approximately $373.1 million. The acquisition of eOne, a film and television production and distribution company, builds the Company’s film and television library, strengthens the Company’s scripted and unscripted television business, and continues to expand the Company’s presence in Canada and the U.K.
The acquisition was accounted for under the acquisition method of accounting, with the financial results of eOne included in the Company’s consolidated results from December 27, 2023. Revenues and loss before income taxes from eOne for the period from December 27, 2023 through March 31, 2024 amounted to approximately $113.8 million and $4.9 million, respectively. The Company incurred approximately $1.0 million and $9.4 million of acquisition-related costs that were expensed in restructuring and other during the fiscal years ended March 31, 2025 and 2024, respectively.
 
F-11
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Allocation of Purchase Consideration.
 The Company has made an allocation of the purchase price of eOne to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as follows:
 
    
(Amounts in millions)
  
Cash and cash equivalents
    $ 54.1
Accounts receivable
      293.2
Investment in films and television programs
      370.2
Property and equipment
      14.0
Intangible assets
      4.0
Other assets
(1)
      172.4
Accounts payable and accrued liabilities
      (69.3 ) 
Content related payables
      (38.8 ) 
Participations and residuals
(1)
      (202.9 ) 
Film related obligations
(1)
      (105.8 ) 
Other liabilities and deferred revenue
(1)
      (130.9 ) 
  
 
 
  
Fair value of net assets acquired
      360.2  
Goodwill
      12.9  
  
 
 
  
Purchase price consideration
    $ 373.1
  
 
 
  
 
(1)
Includes current and
non-current
amounts.
The goodwill amount reflected in the table above arises from the opportunity for strengthening the Company’s global distribution infrastructure and enhanced positioning for motion picture and television projects and selling opportunities. The goodwill will not be amortized for financial reporting purposes, and will not be deductible for federal tax purposes. The fair value measurements were primarily based on significant inputs that are not observable in the market, such as discounted cash flow (DCF) analyses, and thus represent Level 3 fair value measurements.
Investment in films and television programs includes the fair value of completed films and television programs which have been produced by eOne or for which eOne has acquired distribution rights, as well as the fair value of films and television programs in production,
pre-production
and development. For investment in films and television programs, the fair value was estimated based on forecasted cash flows discounted to present value at a rate commensurate with the risk of the assets. Titles that were released less than three years prior to the acquisition date (December 27, 2023) were valued individually and will be amortized using the individual film forecast method, based on the ratio of current period revenues to management’s estimated remaining total gross revenues to be earned (“ultimate revenue”). Titles released more than three years prior to the acquisition date were valued as part of a library and will be amortized on a straight-line basis over the estimated useful life of 5 years to 10 years.
The intangible assets acquired include trade names with a weighted average estimated useful life of 5 years. The fair value of the trade names was estimated based on the present value of the hypothetical cost savings that could be realized by the owner of the trade names as a result of not having to pay a stream of royalty payments to another party. These cost savings were calculated based on a DCF analysis of the hypothetical royalty payment that a licensee would be required to pay in exchange for use of the trade names, reduced by the tax effect realized by the licensee on the royalty payments.
Other fair value adjustments were made to property and equipment and
right-of-use
lease assets to reflect the fair value of certain assets upon acquisition.
 
F-11
1
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Deferred taxes, net of any required valuation allowance, were adjusted to record the deferred tax impact of acquisition accounting adjustments primarily related to amounts allocated to film and television programs, other intangible assets, and certain property and equipment,
right-of-use
lease assets, and other liabilities.
The fair value of eOne’s cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, participations and residuals, film related obligations and other liabilities were estimated to approximate their book values.
Pro Forma Statement of Operations Information.
 The following unaudited pro forma condensed consolidated statement of operations information presented below illustrates the results of operations of the Company as if the acquisition of eOne as described above occurred on April 1, 2023. The unaudited pro forma condensed consolidated financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the acquisition had occurred on April 1, 2023, nor is it indicative of future results. The statement of operations information below includes (i) the statement of operations of eOne for the nine months ended December 27, 2023 combined with the Company’s statement of operations for the fiscal year ended March 31, 2024 (which includes the operations of eOne since the December 27, 2023 acquisition date).
 
    
Year Ended
March 31,
2024
  
    
(Amounts
in millions)
  
Revenues
    $ 3,380.0
Net loss attributable to Lionsgate Studios Corp. shareholders
      (376.5 ) 
The unaudited pro forma condensed consolidated financial information includes, where applicable, adjustments for (i) reductions in amortization expense from the fair value adjustments to investment in films and television programs, (ii) reduction in amortization expense related to acquired intangible assets, (iii) reduction in depreciation expense from the fair value of property and equipment, (iv) transaction costs and other
one-time
non-recurring
costs, (v) increase in interest expense resulting from financing the acquisition with borrowings under the Company’s revolving credit facility, (vi) elimination of intercompany activity between eOne and the Company, and (vii) associated
tax-related
impacts of adjustments. These pro forma adjustments are based on available information as of the date hereof and upon assumptions that the Company believes are reasonable to reflect the impact of the acquisition of eOne on the Company’s historical financial information on a supplemental pro forma basis. The unaudited pro forma condensed consolidated statement of operations information does not include adjustments related to integration activities, operating efficiencies or cost savings. In addition, the unaudited pro forma condensed consolidated financial information for the year ended March 31, 2024 includes an impairment of goodwill and trade name of $296.2 million which was reflected in the statement of operations of eOne for the nine months ended December 27, 2023.
The results of operations of eOne were reflected beginning December 27, 2023, in the Motion Picture and Television Production reportable segments of the Company.
 
F-11
2
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
4. Investment in Films and Television Programs
The predominant monetization strategy for all of the Company’s investments in films and television programs is on an individual film basis. Total investment in films and television programs is as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Investment in Films and Television Programs:
      
Released, net of accumulated amortization
    $ 987.3    $ 992.2
Completed and not released
      135.1      225.4
In progress
      783.0      644.4
In development
      87.2      67.0
  
 
 
     
 
 
  
Investment in films and television programs, net
    $ 1,992.6    $ 1,929.0
  
 
 
     
 
 
  
 
(1)
At March 31, 2025, the unamortized balance related to completed and not released and in progress theatrical films was $680.9 million.
(2)
Production tax credits reduced total investment in films and television programs by $243.6 million and $112.2 million during the years ended March 31, 2025 and 2024, respectively, which resulted in a reduction of direct operating expense related to the amortization of investment in films and television programs cost of approximately $112.0 million and $70.6 million for the years ended March 31, 2025 and 2024, respectively.
At March 31, 2025, acquired film and television libraries have remaining unamortized costs of $235.7 million, which are monetized individually and are being amortized on a straight-line basis or the individual-film-forecast method over a weighted average remaining period of approximately 13.3 years (March 31, 2024 - unamortized costs of $223.1 million).
Amortization of investment in film and television programs was $1,642.1 million, $1,347.8 million and $1,649.3 million for the years ended March 31, 2025, 2024 and 2023, respectively, and was included in direct operating expense in the consolidated statements of operations.
The table below summarizes estimated future amortization expense for the Company’s investment in film and television programs as of March 31, 2025:
 
    
Year Ending March 31,
  
    
2026
     
2027
     
2028
  
    
(Amounts in millions)
  
Estimated future amortization expense:
         
Released investment in films and television programs
    $ 333.5    $ 182.1    $ 146.9
Completed and not released investment in films and television programs
    $ 90.4      n/a        n/a  
 
F-11
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Impairments.
 Investment in films and television programs includes write-downs to fair value, which are included in direct operating expense on the consolidated statements of operations, and represented the following amounts by segment for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Impairments by segment:
         
Included in direct operating expense
(1
)
:
         
Motion Picture
    $ 19.7    $ 34.6    $ 6.2
Television Production
      6.7      8.4      4.6
Impairments not included in segment operating results
(2)
:
         
Included in restructuring and other
      7.2      12.8      —   
  
 
 
     
 
 
     
 
 
  
   $ 33.6    $ 55.8    $ 10.8
  
 
 
     
 
 
     
 
 
  
 
(1)
Impairments included in direct operating expense are included in the amortization expense amounts disclosed above.
(2)
Amounts in fiscal 2025 primarily represent content impairments related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. Amounts in fiscal 2024 represent development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. See Note 16.
5. Property and Equipment
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Leasehold improvements
    $ 33.9    $ 34.4
Property and equipment
      17.5      18.1
Computer equipment and software
      96.6      84.2
  
 
 
     
 
 
  
     148.0      136.7
Less accumulated depreciation and amortization
      (115.1 )       (100.6 ) 
  
 
 
     
 
 
  
     32.9      36.1
Land
      1.2      1.2
  
 
 
     
 
 
  
   $ 34.1    $ 37.3
  
 
 
     
 
 
  
During the fiscal year ended March 31, 2025, depreciation expense amounted to $12.9 million (2024 - $10.3 million; 2023 - $12.2 million).
6. Investments
The Company’s investments consisted of the following:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Investments in equity method investees
    $ 68.1    $ 68.4
Other investments
(1)
      9.7      6.4
  
 
 
     
 
 
  
   $ 77.8    $ 74.8
  
 
 
     
 
 
  
 
F-11
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
(1)
Other investments represents equity investments without readily determinable fair values.
Equity Method Investments:
The Company has investments in various equity method investees with ownership percentages ranging from approximately 6% to 49%. These investments include:
Spyglass.
 Spyglass is a global premium content company, focused on developing, producing, financing and acquiring motion pictures and television programming across all platforms for worldwide audiences. On April 17, 2025, the Company sold its equity method ownership interest in Spyglass. See Note 22 for further information.
STARZPLAY Arabia.
 STARZPLAY Arabia (Playco Holdings Limited) offers a STARZ-branded online subscription
video-on-demand
service in the Middle East and North Africa. On October 17, 2022, the Company sold a portion of its ownership interest in STARZPLAY Arabia and received net proceeds of $43.4 million, and the Company recorded a gain of $43.4 million on the sale which is included in gain on investments in the Company’s consolidated statements of operations. Subsequent to the transaction, the Company continues to hold a minority ownership interest in STARZPLAY Arabia.
Roadside Attractions
. Roadside Attractions is an independent theatrical distribution company.
Pantelion Films.
 Pantelion Films is a joint venture with Videocine, an affiliate of Televisa, which produces, acquires and distributes a slate of English and Spanish language feature films that target Hispanic moviegoers in the U.S.
42.
 42 is a fully integrated management and production company, producing film, television and content, representing actors, writers, directors, comedians, presenters, producers, casting directors and media book rights; with offices in London and Los Angeles.
Other.
 In addition to the equity method investments discussed above, the Company holds ownership interests in other immaterial equity method investees.
7. Goodwill and Intangible Assets
Goodwill
Changes in the carrying value of goodwill by reporting segment were as follows:
 
    
Motion
Picture
     
Television
Production
     
Total
  
    
(Amounts in millions)
  
Balance as of March 31, 2023
    $ 393.7    $ 401.9    $ 795.6
Acquisition of eOne (see Note 3)
      1.0      4.8      5.8
Measurement period adjustments
(1)
      3.9      5.9      9.8
  
 
 
     
 
 
     
 
 
  
Balance as of March 31, 2024
    $ 398.6    $ 412.6    $ 811.2
Measurement period adjustments
(2)
      (1.7 )       (1.0 )       (2.7 ) 
  
 
 
     
 
 
     
 
 
  
Balance as of March 31, 2025
    $ 396.9    $ 411.6    $ 808.5
  
 
 
     
 
 
     
 
 
  
 
F-11
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
(1)
Fiscal 2024:
 Measurement period adjustments in fiscal 2024 for the acquisition of eOne reflect an increase to goodwill of $9.8 million resulting from a net decrease in estimated fair value of the net assets acquired. The decrease in the estimated fair value of the net assets acquired consisted of net decreases to accounts receivable and other assets of $11.4 million and $12.4 million, respectively, partially offset by a net increase to investment in films and television programs of $4.0 million, and net decreases to content related payables of $1.9 million, accrued liabilities of $3.8 million, participations and residuals of $1.9 million, and deferred revenue of $2.4 million.
(2)
Fiscal 2025:
 Measurement period adjustments in fiscal 2025 for the acquisition of eOne reflect a decrease to goodwill of $2.7 million resulting from an adjustment to the purchase price related to a settlement of certain working capital items of $12.0 million partially offset by a net decrease in the estimated fair value of the net assets acquired. The decrease in the estimated fair value of the net assets acquired consisted of a net decrease to accounts receivable of $5.6 million, a net decrease in investment in films and television programs of $1.6 million, net increases to content related payables of $3.4 million, participations and residuals of $1.0 million, and accrued and other liabilities of $1.9 million, partially offset by a net increase to other assets of $4.2 million.
Intangible Assets
Finite-Lived Intangible Assets.
 Finite-lived intangible assets consisted of the following:
 
    
March 31, 2025
     
March 31, 2024
  
    
Gross
Carrying
Amount
     
Accumulated
Amortization
     
Net
Carrying
Amount
     
Gross
Carrying
Amount
     
Accumulated
Amortization
     
Net
Carrying
Amount
  
    
(Amounts in millions)
  
Finite-lived intangible assets subject to amortization:
                  
Customer relationships
    $ 31.0    $ 14.1    $ 16.9    $ 31.0    $ 12.1    $ 18.9
Trademarks and trade names
      7.6      4.0      3.6      7.6      3.0      4.6
Other
      23.9      23.6      0.3      23.9      21.7      2.2
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
   $ 62.5    $ 41.7    $ 20.8    $ 62.5    $ 36.8    $ 25.7
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
Amortization expense associated with the Company’s intangible assets for the fiscal years ended March 31, 2025, 2024, and 2023 was approximately $4.9 million, $5.3 million, and $5.7 million, respectively. Amortization expense remaining relating to intangible assets for each of the years ending March 31, 2026 through 2030 is estimated to be approximately $3.3 million, $3.0 million, $3.0 million, $2.7 million, and $2.1 million, respectively.
 
F-1
16
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
8. Debt
Total debt of the Company, excluding film related obligations, was as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Intercompany Revolver
(1)
    $ 81.6    $ — 
Intercompany Note:
      
LGTV Revolver
(2)
      —         575.0
LGTV Term Loan A
(2)
      314.4      399.3
LGTV Term Loan B
(2)
      —         819.2
eOne IP Credit Facility
      323.0      —   
LG IP Credit Facility
      978.8      —   
  
 
 
     
 
 
  
Total corporate debt
      1,697.8      1,793.5
Unamortized debt issuance costs
      (24.8 )       (10.2 ) 
  
 
 
     
 
 
  
Total debt, net
      1,673.0      1,783.3
Less current portion
      (215.6 )       (860.3 ) 
  
 
 
     
 
 
  
Non-current
portion of debt
    $ 1,457.4    $ 923.0
  
 
 
     
 
 
  
 
(1)
In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Intercompany Revolver were repaid in full. See
 Starz Separation
 below and Note 22 for further information.
(2)
As of March 31, 2024, amounts reflect the balances outstanding under Old Lionsgate’s Credit Agreement (including the revolving credit facility, term loan A and term loan B, together referred to as the “Old Lionsgate Senior Credit Facilities”) prior to the Company’s entry into the Intercompany Note with LGCH described below. In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Intercompany Note were repaid in full. See
 Starz Separation
 below and Note 22 for further information.
The following table sets forth future annual contractual principal payment commitments of debt as of March 31, 2025:
 
   
Maturity Date
  
Year Ending March 31,
  
Debt Type
  
2026
    
2027
    
2028
    
2029
    
2030
    
Thereafter
    
Total
  
       
(Amounts in millions)
  
Intercompany Revolver
(1)
   —    $ 81.6   $ —    $ —    $ —    $ —    $ —    $ 81.6
Intercompany Note
(1)
:
                
LGTV Revolver
   April 2026     —        —        —        —        —        —        —   
LGTV Term Loan A
   April 2026     —        314.4     —        —        —        —        314.4
eOne IP Credit Facility
   July 2029     34.0     34.0     34.0     34.0     187.0     —        323.0
LG IP Credit Facility
   September 2029     100.0     100.0     100.0     100.0     578.8     —        978.8
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
    $ 215.6   $ 448.4   $ 134.0   $ 134.0   $ 765.8   $ —    $ 1,697.8
   
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Less aggregate unamortized debt issuance costs
 
     (24.8 ) 
               
 
 
  
                $ 1,673.0
               
 
 
  
 
(1)
In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Intercompany Revolver and Intercompany Note were repaid in full. See
 Starz Separation
 below and Note 22 for further information.
 
F-11
7
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Intercompany Note and Intercompany Revolver
Intercompany Revolver
. In connection with the Studio Separation and Business Combination, on May 13, 2024, LGAC International LLC, a Delaware limited liability company and wholly owned consolidated subsidiary of the Company (“LGAC International”) and Lions Gate Capital Holdings 1, Inc., a Delaware corporation and subsidiary of Old Lionsgate (“LGCH1”), which is not a consolidated subsidiary of Legacy Lionsgate Studios, entered into a revolving credit agreement (the “Intercompany Revolver”), pursuant to which LGAC International and LGCH1 agreed to make revolving loans to each other from time to time, provided that the net amount owing by one party to the other at any particular time may not exceed $150.0 million. Amounts advanced by one party were used to repay existing indebtedness owing to the other party thereunder, if any, such that at no time were amounts owed in both directions. The net amount owed under the Intercompany Revolver, at any time, bore interest on the outstanding principal amount at a rate equal to adjusted term SOFR plus 1.75%. In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Intercompany Revolver were repaid in full. See
 Starz Separation
 below and Note 22 for further information.
Intercompany Note.
 In connection with the Studio Separation and Business Combination, on May 8, 2024, Lions Gate Capital Holdings LLC, a Delaware limited liability company and subsidiary of Old Lionsgate (“LGCH”), which is not a consolidated subsidiary of Legacy Lionsgate Studios, as lender, entered into an intercompany note and assumption agreement (the “Intercompany Note”) with Lions Gate Television Inc., a Delaware corporation and wholly owned consolidated subsidiary of the Company (“LGTV”), as borrower and assuming party.
Pursuant to the Intercompany Note, LGTV was able to borrow up to $1.1 billion from LGCH on a revolving basis (the “LGTV Revolver”). LGTV also assumed balances of $399.3 million in term A loans (“LGTV Term Loan A”) and $819.2 million in term B loans (“LGTV Term Loan B” and together with the LGTV Revolver and the LGTV Term Loan A, the “LGTV Loans”). Assumed balances of the LGTV Term Loan A and LGTV Term Loan B reflected the outstanding balances of Old Lionsgate’s term loan A and term loan B under the credit and guarantee agreement dated December 8, 2016, as amended (the “Old Lionsgate Credit Agreement”). The terms of the Intercompany Note provide that the outstanding obligations and debt service requirements (principal and interest payments) of the Company remain substantially similar to the amounts and terms reflected in historical periods prior to the Studio Separation. In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Intercompany Note were repaid in full. See
 Starz Separation
 below and Note 22 for further information.
LGTV Revolver Availability of Funds
 & Commitment Fee.
 The Company’s borrowing capacity under the LGTV Revolver was $1.1 billion, and as of March 31, 2025 there was $1.1 billion available thereunder. LGTV was required to pay a quarterly commitment fee on the revolving credit facility of 0.250% to 0.375% per annum, depending on Old Lionsgate’s achievement of certain leverage ratios, as defined in the Old Lionsgate Credit Agreement.
Maturity Date:
 
  •  
LGTV Revolver
 & LGTV Term Loan A:
 April 6, 2026. See
 Starz Separation
 below.
 
  •  
LGTV Term Loan B:
 In November 2024, the Company paid in full the LGTV Term Loan B which was due March 24, 2025. See the “Other Debt Transactions” section below.
Interest:
 
  •  
LGTV Revolver
 & LGTV Term Loan A:
 The LGTV Revolver and LGTV Term Loan A bore interest at a rate per annum equal to SOFR plus 0.10% plus 1.75% margin (or an alternative base rate plus
 
F-1
18
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
0.75%), with a SOFR floor of zero. The margin was subject to potential increases of up to 50 basis points (two increases of 25 basis points each) upon certain increases to net first lien leverage ratios, as defined in the Old Lionsgate Credit Agreement (effective interest rate of 6.17% as of March 31, 2025, before the impact of interest rate swaps, see Note 19 for interest rate swaps).
 
  •  
LGTV Term Loan B:
 The LGTV Term Loan B bore interest at a rate per annum equal to SOFR plus 0.10% plus 2.25% margin, with a SOFR floor of zero (or an alternative base rate plus 1.25% margin).
Required Principal Payments:
 
  •  
LGTV Term Loan A:
 Principal payments were required in an amount equal to LGTV’s pro rata share (as determined by LGCH in its reasonable discretion) of the principal payments due and payable under the Old Lionsgate Credit Agreement. The Old Lionsgate Credit Agreement required quarterly principal payments, at quarterly rates of 1.75% and increasing to 2.50% beginning September 30, 2024 through March 31, 2026, with the balance payable at maturity.
The LGTV Term Loan A also required mandatory prepayments in the event LGCH is required to make a mandatory repayment pursuant to the terms of the Old Lionsgate Credit Agreement. The Old Lionsgate Credit Agreement required repayment in connection with certain asset sales, subject to certain significant exceptions.
Optional Prepayment:
 
  •  
LGTV Revolver
 & LGTV Term Loan A:
 The Company may voluntarily prepay the LGTV Loans at any time without premium or penalty.
Guarantee and Security Matters.
 The Company and certain of its subsidiaries were guarantors under the Old Lionsgate Senior Credit Facilities. The Old Lionsgate Senior Credit Facilities were secured by a security interest in substantially all of the assets of Old Lionsgate and the Guarantors (as defined in the Old Lionsgate Credit Agreement), subject to certain exceptions. The Intercompany Note and the Intercompany Revolver are not secured obligations of the obligors thereunder. In the event the Company and its subsidiaries that are Guarantors cease to be Guarantors under the Old Lionsgate Senior Credit Facilities, LGCH had the right to cause the Company and such subsidiaries to take actions to become guarantors under the Intercompany Note and provide security over property or assets previously pledged under the Old Lionsgate Senior Credit Facilities.
Covenants.
 The Intercompany Note contained representations and warranties, events of default and affirmative and negative covenants that are customary for similar financings. In addition, the Intercompany Note required the Company observe and perform each of the covenants set forth in the Old Lionsgate Credit Agreement which include, among other things and subject to certain significant exceptions, restrictions on the ability to declare or pay dividends, create liens, incur additional indebtedness, make investments, dispose of assets and merge or consolidate with any other person. In addition, a net first lien leverage maintenance covenant and an interest coverage ratio maintenance covenant apply to the Old Lionsgate Credit Agreement and were tested quarterly by Old Lionsgate. These covenants and ratios are applicable to and computed for the applicable entities pursuant to the Old Lionsgate Credit Agreement, which includes Old Lionsgate subsidiaries which are not part of the Company. As of March 31, 2025, the Company and Old Lionsgate were in compliance with all applicable covenants.
Sale Transaction or Change of Control.
 LGTV was required to prepay the LGTV Loans immediately prior to or simultaneously with the closing of any Sale Transaction or Change of Control, as defined in the Intercompany Note.
 
F-1
19
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Starz Separation.
 In connection with the Starz Separation, all outstanding obligations in respect of principal, interest and fees under the Old Lionsgate Credit Agreement, were repaid in full and all commitments thereunder were terminated. See Note 22.
On May 6, 2025, all outstanding obligations in respect of principal, interest and fees were repaid in full and all commitments were terminated under each of (i) Intercompany Revolver and (ii) the Intercompany Note.
eOne IP Credit Facility.
 In July 2024, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “eOne IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles acquired as part of the eOne acquisition. The maximum principal amount of the eOne IP Credit Facility is $340.0 million, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. The eOne IP Credit Facility is subject to quarterly required principal payments of $8.5 million, beginning November 14, 2024, with the balance payable at maturity. Advances under the eOne IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum (effective interest rate of 6.57% as of March 31, 2025, before the impact of interest rate swaps, see Note 19 for interest rate swaps). The eOne IP Credit Facility matures on July 3, 2029.
LG IP Credit Facility.
 In September 2024, certain subsidiaries of the Company entered into a $455.0 million senior secured amortizing term credit facility (the “LG IP Credit Facility”) based on and secured by the Company’s intellectual property rights primarily associated with certain titles. In November 2024 and December 2024, the Company closed amendments which increased the maximum principal amount of the LG IP Credit Facility to $850.0 million, and in March 2025, the Company closed an amendment which increased the maximum principal amount of the LG IP Credit Facility to $1.0 billion, subject to the amount of collateral available, which is based on the valuation of unsold rights from the libraries. As of March 31, 2025, the LG IP Credit Facility is subject to quarterly required principal payments of $25.0 million, with the balance payable at maturity. Advances under the LG IP Credit Facility bear interest at a rate equal to Term SOFR plus 2.25% per annum (effective interest rate of 6.57% as of March 31, 2025, before the impact of interest rate swaps, see Note 19 for interest rate swaps). The LG IP Credit Facility matures on September 30, 2029.
Capacity to Pay Dividends
At March 31, 2025, the capacity to pay dividends significantly exceeded the amount of the Company’s accumulated deficit or net loss, and therefore the Company’s net loss of $126.9 million and accumulated deficit of $1,418.2 million were deemed free of restrictions from paying dividends at March 31, 2025.
Lionsgate Exchange Notes and Existing Notes:
On May 8, 2024, LGCH1, an indirect, wholly-owned subsidiary of Old Lionsgate, which is not a consolidated subsidiary of Legacy Lionsgate Studios, issued $389.9 million aggregate principal amount of 5.5% senior notes due 2029 (the “Exchange Notes”) in exchange for an equivalent amount of Old Lionsgate’s existing 5.5% senior notes due 2029 (the “Existing Notes”). The Exchange Notes initially bear interest at 5.5% annually and mature April 15, 2029, with the interest rate increasing to 6.0% and the maturity date extending to April 15, 2030 effective upon Lionsgate’s completion of the separation of the Starz Business from the Studio Business.
The Exchange Notes and Existing Notes and related interest expense are not reflected in the Company’s consolidated financial statements. The Company and certain of its subsidiaries are guarantors under the Exchange Notes and the Existing Notes. Upon completion of the Starz Separation, the Exchange Notes became obligations of Lionsgate, see Note 22.
 
F-12
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The outstanding principal balance of the Exchange Notes and Existing Notes totaled $715.0 million at March 31, 2025 and March 31, 2024.
As of March 31, 2025, Old Lionsgate was in compliance with all applicable covenants with respect to the Exchange Notes and the Existing Notes.
Other Debt Transactions
Fiscal 2025:
LGTV Term Loan A and LGTV Term Loan B Prepayment
. In May 2024, the Company used the proceeds from the equity issuance associated with the Business Combination (Note 2) to prepay $84.9 million principal amount of the LGTV Term Loan A and $214.1 million of the LGTV Term Loan B, together with accrued and unpaid interest thereon.
In September 2024, the Company used the proceeds from the LG IP Credit Facility to prepay $355.1 million principal amount of the LGTV Term Loan B, together with accrued and unpaid interest thereon.
In November 2024, the Company used the proceeds from the increase in the LG IP Credit Facility to pay in full the remaining $250.0 million principal amount of the LGTV Term Loan B, together with accrued and unpaid interest thereon.
Fiscal 2023:
LGTV Term Loan A Prepayment.
 In April 2022, the Company voluntarily prepaid the entire outstanding principal amount of the LGTV Term Loan A due March 22, 2023 of $193.6 million, together with accrued and unpaid interest.
Loss on Extinguishment of Debt
During the fiscal years ended March 31, 2025, 2024, and 2023, the Company recorded a loss on extinguishment of debt related to the transactions described above as summarized in the table below.
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Loss on Extinguishment of Debt:
         
Term Loan A and Term Loan B repayment
(1)
    $ (1.8 )     $ —     $ (1.3 ) 
Production loan prepayment
(2)
      —         (1.3 )       —   
  
 
 
     
 
 
     
 
 
  
   $ (1.8 )     $ (1.3 )     $ (1.3 ) 
  
 
 
     
 
 
     
 
 
  
 
(1)
See
 LGTV Term Loan A and LGTV Term Loan B Prepayment
 above.
(2)
Represents issuance costs written off in connection with the early prepayment of certain production loans (see Note 9).
 
F-12
1
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
9. Film Related Obligations
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Film related obligations:
      
Production Loans
    $ 1,395.4    $ 1,292.2
Production Tax Credit Facility
      280.0      260.0
Backlog Facility and Other
      238.9      287.3
Film Library Facility
      75.9      109.9
  
 
 
     
 
 
  
Total film related obligations
      1,990.2      1,949.4
Unamortized issuance costs
      (7.1 )       (11.4 ) 
  
 
 
     
 
 
  
Total film related obligations, net
      1,983.1      1,938.0
Less current portion
      (1,617.8 )       (1,393.1 ) 
  
 
 
     
 
 
  
Total
non-current
film related obligations
    $ 365.3    $ 544.9
  
 
 
     
 
 
  
The following table sets forth future annual repayment of film related obligations as of March 31, 2025:
 
 
  
Year Ending March 31,
 
 
  
2026
 
  
2027
 
  
2028
 
  
2029
 
  
2030
 
  
Thereafter
 
  
Total
 
 
  
(Amounts in millions)
 
Production Loans
    $ 1,395.4    $ —     $ —    $ —     $ —     $ —     $ 1,395.4
Production Tax Credit Facility
      —         —         280.0      —         —         —         280.0
Backlog Facility and Other
      185.1      —         53.8      —         —         —         238.9
Film Library Facility
(1)
      37.3      38.6      —         —         —         —         75.9
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
   $ 1,617.8    $ 38.6    $ 333.8    $ —     $ —     $ —     $ 1,990.2
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
 
 
     
Less unamortized issuance costs
                        (7.1 ) 
                    
 
 
  
                     $ 1,983.1
                    
 
 
  
 
(1)
Repayment dates are based on the projected future cash flows generated from the exploitation of the rights, subject to a minimum guaranteed payment amount, as applicable (see further information below).
Production Loans
.
 Production loans represent individual and multi-title loans for the production of film and television programs that the Company produces. The majority of the Company’s production loans have contractual repayment dates either at or near the expected completion or release dates, with the exception of certain loans containing repayment dates on a longer term basis, and incur primarily SOFR-based interest at a weighted average rate of 5.66% (before the impact of interest rate swaps, see Note 19 for interest rate swaps). Production loans amounting to $1,254.8 million are secured by collateral which consists of the underlying rights related to the intellectual property (i.e. film or television show), and $140.6 million are unsecured.
Production Tax Credit Facility.
 In January 2021, as amended in February 2025, the Company entered into a
non-recourse
senior secured revolving credit facility (the “Production Tax Credit Facility”) based on and secured by collateral consisting solely of certain of the Company’s tax credit receivables.
As of March 31, 2025, the maximum principal amount of the Production Tax Credit Facility was $280.0 million, subject to the amount of collateral available, which is based on specified percentages of amounts payable to the Company by governmental authorities pursuant to the tax incentive laws of certain eligible
 
F-12
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
jurisdictions that arise from the production or exploitation of motion pictures and television programming in such jurisdiction. Cash collections from the underlying collateral (tax credit receivables) are used to repay the Production Tax Credit Facility. As of March 31, 2025, tax credit receivables amounting to $357.8 million represented collateral related to the Production Tax Credit Facility. Advances under the Production Tax Credit Facility bear interest at a rate equal to SOFR plus 0.10% plus 1.50% per annum or the base rate plus 0.50% per annum (effective interest rate of 5.92% at March 31, 2025). The Production Tax Credit Facility matures on January 27, 2028. As of March 31, 2025, there were no amounts available under the Production Tax Credit Facility. In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million, see Note 22.
Film Library Facility.
 In July 2021, as amended in September 2022, certain subsidiaries of the Company entered into a senior secured amortizing term credit facility (the “Film Library Facility”) based on and secured by the collateral consisting solely of certain of the Company’s rights in certain acquired library titles. The maximum principal amount of the Film Library Facility is $161.9 million, subject to the amount of collateral available, which is based on the valuation of cash flows from the libraries. The cash flows generated from the exploitation of the rights will be applied to repay the Film Library Facility subject to cumulative minimum guaranteed payment amounts as set forth below:
 
Cumulative Period From September 29,
2022 Through:
   
Cumulative Minimum Guaranteed
Payment Amounts
     
Payment Due Date
  
    
(in millions)
         
September 30, 2025
    $ 91.1        November 14, 2025  
September 30, 2026
    $ 121.4        November 14, 2026  
July 30, 2027
    $ 161.9        July 30, 2027  
Advances under the Film Library Facility bear interest at a rate equal to, at the Company’s option, SOFR plus 0.11% to 0.26% depending on the SOFR term (i.e., one or three months) plus 2.25% per annum (with a SOFR floor of 0.25%) or the base rate plus 1.25% per annum (effective interest rate of 6.74% at March 31, 2025). The Film Library Facility matures on July 30, 2027.
Backlog Facility and Other:
Backlog Facility.
 In March 2022, as amended in August 2022, certain subsidiaries of the Company entered into a committed secured revolving credit facility (the “Backlog Facility”) based on and secured by collateral consisting solely of certain of the Company’s fixed fee or minimum guarantee contracts where cash will be received in the future. As of March 31, 2025, the maximum principal amount of the Backlog Facility was $175.0 million, subject to the amount of eligible collateral contributed to the facility. Advances under the Backlog Facility bear interest at a rate equal to Term SOFR plus 0.10% to 0.25% depending on the SOFR term (i.e., one, three or six months), plus an applicable margin amounting to 1.15% per annum. The applicable margin is subject to a potential increase to either 1.25% or 1.50% based on the weighted average credit quality rating of the collateral contributed to the facility (effective interest rate of 5.57% at March 31, 2025). In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility (see Note 22). The Backlog Facility revolving period ends on May 16, 2025, at which point cash collections from the underlying collateral is used to repay the facility. The facility maturity date is up to two years, 90 days after the revolving period ends, currently August 28, 2027. As of March 31, 2025, there was $135.7 million outstanding under the Backlog Facility, and there were no amounts available under the Backlog Facility (March 31, 2024—$175.0 million outstanding).
 
F-12
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Other.
 The Company has other loans, which are secured by accounts receivable and contracted receivables which are not yet recognized as revenue under certain licensing agreements. Outstanding loan balances under these “other” loans must be repaid with any cash collections from the underlying collateral if and when received by the Company, and may be voluntarily repaid at any time without prepayment penalty fees. As of March 31, 2025, there was $103.2 million outstanding (March 31, 2024—$112.3 million outstanding,) under the “other” loans, incurring SOFR-based interest at a weighted average rate of 5.88%, with contractual repayment dates in July 2025 and October 2025. As of March 31, 2025, accounts receivable amounting to $36.2 million and contracted receivables not yet reflected as accounts receivable on the balance sheet at March 31, 2025 amounting to $86.1 million represented collateral related to the “other” loans.
Old Lionsgate Film Related Obligations
The Company is a guarantor under certain film related obligations of the Starz Business of Old Lionsgate with an outstanding principal balance of $90.9 million and nil at March 31, 2025 and 2024, respectively, with contractual maturity dates in April 2025.
10.
Leases
The Company has operating leases primarily for office space, studio facilities, and other equipment. The Company’s leases have remaining lease terms of up to approximately 12.25 years.
The components of lease cost were as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Operating lease cost
(1)
    $ 66.5    $ 48.7    $ 35.3
Short-term lease cost
(2)
      161.2      96.2      145.0
Variable lease cost
(3)
      4.3      3.0      2.8
  
 
 
     
 
 
     
 
 
  
Total lease cost
    $ 232.0    $ 147.9    $ 183.1
  
 
 
     
 
 
     
 
 
  
 
(1)
Operating lease cost amounts primarily represent the amortization of
right-of-use
assets and are included in the “other
non-cash
items” line of the consolidated statements of cash flows. Amounts include costs capitalized during the period for leased assets used in the production of film and television programs.
(2)
Short-term lease cost primarily consists of leases of facilities and equipment associated with film and television productions and are capitalized when incurred.
(3)
Variable lease cost primarily consists of insurance, taxes, maintenance and other operating costs.
Supplemental balance sheet information related to leases was as follows:
 
Category
  
Balance Sheet Location
  
March 31,
2025
    
March 31,
2024
  
Operating Leases
      
(Amounts in millions)
  
Right-of-use
assets
  
Other assets - non-current
   $ 294.1     344.3
   
 
 
    
 
 
  
Lease liabilities (current)
  
Other accrued liabilities
   $ 44.0     44.4
Lease liabilities (non-current)
  
Other liabilities - non-current
     290.7     329.7
   
 
 
    
 
 
  
    $ 334.7   $ 374.1
   
 
 
    
 
 
  
 
F-12
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
    
March 31,
2025
    
March 31,
2024
  
Weighted average remaining lease term (in years):
     
Operating leases
      9.0       9.4  
Weighted average discount rate:
     
Operating leases
      5.54 %      5.37 % 
The expected future payments relating to the Company’s lease liabilities at March 31, 2025 are as follows:
 
    
Operating
Leases
  
    
(Amounts in millions)
  
Year ending March 31,
   
2026
    $ 56.2
2027
      51.0
2028
      49.0
2029
      46.5
2030
      39.3
Thereafter
      186.0
  
 
 
  
Total lease payments
      428.0
Less imputed interest
      (93.3 ) 
  
 
 
  
Total
    $ 334.7
  
 
 
  
As of
March 
31, 2025, the Company has entered into certain leases that have not yet commenced primarily related to studio facilities, for which construction related to those leases has not yet been completed. The leases are for terms up to 12.25 years, commencing upon completion of construction (currently expected to be ranging from calendar years 2025 to 2026). The leases include an option to extend the initial term for an additional 10 years to 12 years. The total minimum lease payments under these leases in aggregate are approximately $245.0 million.
11. Fair Value Measurements
Fair Value
Accounting guidance and standards about fair value define fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair Value
Hierarchy
Fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The accounting guidance and standards establish three levels of inputs that may be used to measure fair value:
 
  •  
Level 1 — Quoted prices in active markets for identical assets or liabilities.
 
  •  
Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived
 
F-12
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.
 
  •  
Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.
The following table sets forth the assets and liabilities required to be carried at fair value on a recurring basis as of March 31, 2025 and 2024:
 
    
March 31, 2025
    
March 31, 2024
  
    
Level 1
     
Level 2
    
Total
    
Level 1
     
Level 2
    
Total
  
    
(Amounts in millions)
  
Assets:
               
Forward exchange contracts (see Note 19)
    $ —     $ 1.8   $ 1.8   $ —     $ —    $ — 
Interest rate swaps (see Note 19)
      —         —        —        —         35.6     35.6
Liabilities:
               
Forward exchange contracts (see Note 19)
      —         —        —        —         (2.8 )      (2.8 ) 
Interest rate swaps
 (see Note 19)
      —         (3.1 )      (3.1 )      —         —        —   
The
following
table sets forth the carrying values and fair values of the Company’s outstanding debt and film related obligations at March 31, 2025 and 2024:
 
    
March 31, 2025
     
March 31, 2024
  
    
(Amounts in millions)
  
    
Carrying
Value
     
Fair Value
(1)
     
Carrying Value
     
Fair Value
(1)
  
           
(Level 2)
            
(Level 2)
  
Intercompany Revolver
    $ 81.6    $ 81.6    $ —     $ — 
LGTV Revolver
      —         —         569.9      575.0
LGTV Term Loan A
      313.4      312.9      396.6      397.3
LGTV Term Loan B
      —         —         816.9      818.1
eOne IP Credit Facility
      317.6      323.0      —         —   
LG IP Credit Facility
      962.9      978.8      —         —   
Production Loans
      1,394.1      1,395.4      1,286.2      1,292.2
Production Tax Credit Facility
      276.2      280.0      258.7      260.0
Backlog Facility and Other
      238.4      238.9      285.4      287.3
Film Library Facility
      74.4      75.9      107.6      109.9
 
(1)
The Company measures the fair value of its outstanding debt and interest rate swaps using discounted cash flow techniques that use observable market inputs, such as SOFR-based yield curves, swap rates, and credit ratings (Level 2 measurements).
The Company’s financial instruments also include cash and cash equivalents, accounts receivable, accounts payable, content related payables, other accrued liabilities, and other liabilities. The carrying values of these financial instruments approximated the fair values at March 31, 2025 and 2024.
12.
Noncontrolling
Interests
Redeemable Noncontrolling Interests
Redeemable noncontrolling interests (included in temporary equity on the consolidated balance sheets) primarily relate to 3 Arts Entertainment and Pilgrim Media Group (prior to the acquisition of additional interest in July 2024), as further described below.
 
F-1
26
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Redeemable noncontrolling interests are measured at the greater of (i) the redemption amount that would be paid if settlement occurred at the balance sheet date less the amount attributed to unamortized noncontrolling interest discount if applicable, or (ii) the historical value resulting from the original acquisition date value plus or minus any earnings or loss attribution, plus the amount of amortized noncontrolling interest discount, less the amount of cash distributions that are not accounted for as compensation, if any. The amount of the redemption value in excess of the historical values of the noncontrolling interest, if any, is recognized as an increase to redeemable noncontrolling interest and a charge to retained earnings or accumulated deficit.
The table below presents the reconciliation of changes in redeemable noncontrolling interests:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Beginning balance
    $ 123.3    $ 343.6    $ 321.2
Net loss attributable to redeemable noncontrolling interests
      (1.7 )       (14.9 )       (9.2 ) 
Noncontrolling interests discount accretion
      —         —         13.2
Adjustments to redemption value
      (5.0 )       83.4      78.4
Other
(1)
      —         (93.2 )       1.7
Cash contributions (distributions)
      0.5      (1.0 )       (6.6 ) 
Purchase of noncontrolling interest
      (23.4 )       (194.6 )       (55.1 ) 
  
 
 
     
 
 
     
 
 
  
Ending balance
    $ 93.7    $ 123.3    $ 343.6
  
 
 
     
 
 
     
 
 
  
 
(1)
In fiscal 2024, amounts represent the reclassification of a portion of the 3 Arts Entertainment redeemable noncontrolling interest from mezzanine equity to a liability, as further described below.
3 Arts Entertainment:
Accounting Prior to Acquisition of Additional Interest in January 2024.
 As of March 31, 2023, the Company had a redeemable noncontrolling interest representing 49% of 3 Arts Entertainment. The noncontrolling interest was subject to put and call options at fair value that were exercisable during the year ended March 31, 2024. The put and call options were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company, the noncontrolling interest holder’s interest prior to the modification discussed below was included in redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets.
The noncontrolling interest holders are employees of 3 Arts Entertainment. Pursuant to the various 3 Arts Entertainment acquisition and related agreements, a portion of the noncontrolling interest holders’ participation in the put and call proceeds was based on the noncontrolling interest holders’ performance during the period. Further, if the employment of a noncontrolling interest holder is terminated, under certain circumstances, their participation in distributions cease and the put and call value was discounted from the fair value of their equity ownership percentage. Accordingly, earned distributions were accounted for as compensation and were being expensed within general and administrative expense as incurred. Additionally, the amount of the put and call proceeds subject to the discount was accounted for as compensation, and amortized within general and administrative expense and reflected as an addition to redeemable noncontrolling interest over the vesting period which ended in November 2022.
A portion of the purchase price of the controlling interest in 3 Arts Entertainment, up to $38.3 million, was recoupable for a five-year period commencing on the acquisition date of May 29, 2018, contingent upon the
 
F-1
27
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
continued employment of certain employees, or the achievement of certain EBITDA targets, as defined in the 3 Arts Entertainment acquisition and related agreements. Accordingly, $38.3 million was initially recorded as a deferred compensation arrangement within other current and
non-current
assets and was amortized in general and administrative expenses over the five-year period ended May 29, 2023.
Acquisition of Additional Interest.
 On January 2, 2024, the Company closed on the acquisition of an additional 25% of 3 Arts Entertainment representing approximately half of the noncontrolling interest for $194.1 million. In addition, the Company purchased certain profit interests held by certain managers and entered into certain option rights agreements, which replaced the put and call rights under the previous arrangement by providing noncontrolling interest holders the right to sell to the Company and the Company the right to purchase their remaining (24%) interest beginning in January 2027.
The purchase of the additional 25% interest in 3 Arts Entertainment for $194.1 million was recorded as a reduction of noncontrolling interest which had previously been adjusted to its redemption value, which equaled fair value. At the completion of the purchase, a portion of the noncontrolling interest continued to be considered compensatory, as it was subject to forfeiture provisions upon termination of employment under certain circumstances, and the remaining portion represented the noncontrolling interest holders’ fully vested equity interest. Under the new arrangement, the holders’ right to sell their interest to the Company, and the Company’s right to purchase the noncontrolling interest, are based on a formula-based amount (i.e., a fixed EBITDA multiple), subject to a minimum purchase price, rather than being based on fair value. Since the redemption features described above were based on a formula using a fixed multiple, the compensatory portion of the noncontrolling interest is now considered a liability award, and as a result, during the fourth quarter of fiscal 2024, approximately $93.2 million was reclassified from mezzanine equity to a liability, and is reflected in “other
liabilities—non-current”
in the consolidated balance sheet at March 31, 2024. In addition, because the new arrangement represented a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million in the year ended March 31, 2024, representing the excess of the fair value of the modified award over amounts previously expensed. This incremental expense was reflected in “restructuring and other” in the consolidated statements of operations, and as a reduction of accumulated deficit in shareholders’ equity, reflected in the “redeemable noncontrolling interests adjustments” line item in the consolidated statements of equity (deficit).
The redeemable noncontrolling interest balance related to 3 Arts Entertainment reflects the fully vested equity portion of the noncontrolling interest, which remains classified as redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets due to the purchase and sale rights beginning in 2027 which were determined to be embedded in the noncontrolling interest, and are outside the control of the Company. The redeemable noncontrolling interest is being adjusted to its redemption value through accumulated deficit through the sale or purchase right date in January 2027. Subsequent to the January 2024 transactions noted above, changes in the carrying value of the redeemable noncontrolling interest are reflected in the calculation of basic and diluted net income or loss per common share attributable to Legacy Lionsgate Studios Corp. shareholders, if dilutive, or to the extent the adjustments represent recoveries of amounts previously reflected in the computation of basic and diluted net income or loss per common share attributable to Legacy Lionsgate Studios Corp. shareholders (see Note 1).
The liability component of the noncontrolling interest is reflected at its estimated redemption value, with any changes in estimated redemption value recognized as a charge or benefit in general and administrative expense in the consolidated statements of operations over the vesting period (i.e., the period from January 2, 2024 to the sale or purchase right date in January 2027). Earned distributions continue to be accounted for as compensation since such amounts are allocated to the holders based on performance, and are being expensed within general and administrative expense as incurred.
 
F-12
8
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Pilgrim Media Group:
Accounting Prior to Acquisition of Additional Interest in July 2024.
As of March 31, 2022, the Company had a redeemable noncontrolling interest representing 37.5% of Pilgrim Media Group. The noncontrolling interest was subject to put and call options, such that the noncontrolling interest holder had a right to put and the Company had a right to call a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group, at fair value, exercisable for thirty (30) days beginning November 12, 2022. On November 14, 2022 the noncontrolling interest holder exercised the right to put a portion of the noncontrolling interest, equal to 25% of Pilgrim Media Group. In February 2023, the Company paid $36.5 million as settlement of the exercised put option, and recorded a reduction to redeemable noncontrolling interest of $55.1 million representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the settlement of the put recorded as a reduction to accumulated deficit of $18.6 million. The noncontrolling interest holder had a right to put and the Company had a right to call the remaining amount of noncontrolling interest at fair value, subject to a cap, exercisable for thirty (30) days beginning November 12, 2024, as amended. Prior to the Company’s acquisition of the remaining interest discussed below, the noncontrolling interest was presented as a redeemable noncontrolling interest outside of shareholders’ equity on the Company’s consolidated balance sheets, due to put and call options which were determined to be embedded in the noncontrolling interest, and because the put rights were outside the control of the Company.
Acquisition of Additional Interest
. In July 2024, the Company acquired the noncontrolling interest holder’s remaining 12.5% of Pilgrim Media Group for approximately $13.5 million, and recorded a reduction to redeemable noncontrolling interest of $23.4 million, representing the carrying value of the noncontrolling interest purchased, with the difference between the carrying value of the noncontrolling interest purchased and the cash paid for the remaining interest recorded as a reduction to accumulated deficit of $9.9 million.
Other:
The Company has other immaterial redeemable noncontrolling interests.
Non-Redeemable
Noncontrolling Interests
Other:
In connection with the Company’s investment in CP LG and acquisition of the acquired library and related assets and liabilities discussed in Note 3, on June 5, 2024, the Company recorded a noncontrolling interest representing approximately 49% of CP LG amounting to $33.6 million ($27.3 million at March 31, 2025). See Note 3 for further information.
In addition, the Company has other immaterial noncontrolling interests that are not redeemable.
 
F-1
29
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
13. Revenue
Revenue by Segment, Market or Product Line
The table below presents revenues by segment, market or product line for the fiscal years ended March 31, 2025, 2024, and 2023. The Motion Picture and Television Production segments include the revenues of eOne from the acquisition date of December 27, 2023 (see Note 3).
 
    
Year Ended

March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Revenue by Type:
         
Motion Picture
         
Theatrical
    $ 154.1    $ 226.5    $ 120.7
Home Entertainment
         
Digital Media
      598.2      652.3      527.5
Packaged Media
      60.0      84.0      70.5
  
 
 
     
 
 
     
 
 
  
Total Home Entertainment
      658.2      736.3      598.0
Television
      347.3      274.4      217.8
International
      401.5      391.0      365.0
Other
      28.6      28.1      22.2
  
 
 
     
 
 
     
 
 
  
Total Motion Picture revenues
(1)
      1,589.7      1,656.3      1,323.7
Television Production
         
Television
      1,069.4      788.5      1,144.3
International
      248.2      228.8      277.7
Home Entertainment
         
Digital Media
      184.0      240.6      241.7
Packaged Media
      4.1      2.0      3.3
  
 
 
     
 
 
     
 
 
  
Total Home Entertainment
      188.1      242.6      245.0
Other
      100.1      70.2      93.1
  
 
 
     
 
 
     
 
 
  
Total Television Production revenues
(2)
      1,605.8      1,330.1      1,760.1
  
 
 
     
 
 
     
 
 
  
Total revenues
    $ 3,195.5    $ 2,986.4    $ 3,083.8
  
 
 
     
 
 
     
 
 
  
 
(1)
Total Motion Picture revenues for the fiscal years ended March 31, 2025, 2024, and 2023 includes $203.3 million, $128.2 million, and $44.2 million, respectively, of revenues from licensing Motion Picture segment product to the Starz Business.
(2)
Total Television Production revenues for the fiscal years ended March 31, 2025, 2024, and 2023 includes $416.4 million, $417.7 million, and $731.3 million, respectively, of revenues from licensing Television Production segment product to the Starz Business.
 
F-13
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Remaining Performance Obligations
Remaining performance obligations represent deferred revenue on the balance sheet plus fixed fee or minimum guarantee contracts where the revenue will be recognized and the cash received in the future (i.e., backlog). Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at March 31, 2025 are as follows:
 
    
Year Ending March 31,
                
    
2026
     
2027
     
2028
     
Thereafter
     
Total
  
    
(Amounts in millions)
  
Remaining Performance Obligations
    $ 935.0    $ 376.3    $ 128.7    $ 50.7    $ 1,490.7
  
 
 
     
 
 
     
 
 
     
 
 
     
 
 
  
The above table does not include estimates of variable consideration for transactions involving sales or usage-based royalties in exchange for licenses of intellectual property. The revenues included in the above table include all fixed fee contracts regardless of duration.
Revenues of $269.7 million, including variable and fixed fee arrangements, were recognized during the fiscal year ended March 31, 2025, from performance obligations satisfied prior to March 31, 2024. These revenues were primarily associated with the distribution of television and theatrical product in electronic sell-through and
video-on-demand
formats, and to a lesser extent, the distribution of theatrical product in the domestic and international markets related to films initially released in prior periods.
Accounts Receivable, Contract Assets and Deferred Revenue
The timing of revenue recognition, billings and cash collections affects the recognition of accounts receivable, contract assets and deferred revenue. See the consolidated balance sheets or Note 20 for accounts receivable, contract assets and deferred revenue balances at March 31, 2025 and 2024.
Accounts Receivable.
 Accounts receivable are presented net of estimated credit losses. The Company estimates credit losses for accounts receivable based on historical experience for the respective risk categories and current and future expected economic conditions. To assess collectability, the Company analyzes market trends, economic conditions, the aging of receivables and customer specific risks, and records an allowance for estimated credit losses expected over the lifetime of the receivables in direct operating expense.
The Company performs ongoing credit evaluations and monitors its credit exposure through active review of customers’ financial condition, aging of receivable balances, historical collection trends, and expectations about relevant future events that may significantly affect collectability. The Company generally does not require collateral for its trade accounts receivable.
Changes in the allowance for accounts receivable consisted of the following:
 
    
March 31,
2024
     
Recoveries
    
Other
(1)
     
Uncollectible accounts
written-off
    
March 31,
2025
  
    
(Amounts in millions)
  
Provision for credit losses
    $ 6.4    $ (2.1 )    $ 2.5    $ (1.2 )    $ 5.6
 
(1)
Represents a measurement period adjustment to the fair value of accounts receivable acquired in the acquisition of eOne (see Note 3).
 
F-13
1
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Contract Assets.
 Contract assets relate to the Company’s conditional right to consideration for completed performance under the contract (e.g., unbilled receivables). Amounts relate primarily to contractual payment holdbacks in cases in which the Company is required to deliver additional episodes or seasons of television content in order to receive payment, complete certain administrative activities, such as guild filings, or allow the Company’s customers’ audit rights to expire. See Note 20 for contract assets at March 31, 2025 and 2024.
Deferred Revenue.
 Deferred revenue relates primarily to customer cash advances or deposits received prior to when the Company satisfies the corresponding performance obligation. Deferred revenue as of March 31, 2025 increased as compared to March 31, 2024 due to the receipt of customers’ payments for certain motion pictures and television programs prior to the Company satisfying the corresponding performance obligation (i.e., completion and delivery of the motion pictures and television programs, and the start of the customers’ exploitation rights). The change in deferred revenue was also impacted by the industry strikes which has affected the timing of content deliveries. Revenues of $151.8 million were recognized during the fiscal year ended March 31, 2025, related to the balance of deferred revenue at March 31, 2024.
14. Capital Stock
(a) Common Shares
The Company has an unlimited number of authorized shares following the closing of the Business Combination and at March 31, 2025. As of March 31, 2025, common shares reserved for future issuance include SEAC Sponsor Options described below.
As of March 31, 2024 and prior to the Business Combination, the Company was wholly-owned by Old Lionsgate.
See Note 22 for a discussion of the Starz Separation transaction and the LG Studios Flip.
(b) SEAC Sponsor Options
In connection with the Business Combination, 2,200,000 SEAC Sponsor Options to receive Legacy LG Studios Common Shares pursuant to the Sponsor Option Agreement, as described in Note 2, were issued and have an exercise price of $0.0001 per share. The SEAC Sponsor Options will become exercisable (i) on or after the date on which the trading price of Legacy LG Studios Common Shares (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) equals or exceeds $16.05 per share or (ii) if a Change of Control (as defined in the Sponsor Option Agreement) occurs, subject to certain conditions. The SEAC Sponsor Options are not considered compensatory nor were they granted in exchange for a good or service. The SEAC Sponsor Options meet the requirements for equity classification because they are considered to be indexed to Legacy LG Studios Common Shares and are classified in shareholders’ equity. The Company has recorded the SEAC Sponsor Options to equity at closing of the Business Combination in connection with the reverse recapitalization accounting described at Note 2.
In connection with the Starz Separation, Legacy Lionsgate Studios entered into an amendment to Sponsor Option Agreement, pursuant to which Lionsgate was made a party to the Sponsor Option Agreement and SEAC Sponsor Options became options to purchase Lionsgate common shares, see Note 22.
(c) Lionsgate Share-based Compensation
General
. As described in Note 1, the Separation Agreement and the Shared Services Agreement provide that officers, employees and directors of the Company receive awards of equity and equity-based compensation
 
F-13
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
pursuant to the existing equity incentive plan of Old Lionsgate, the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan (the “2023 Lionsgate Plan”). Such awards are treated as a capital contribution by Old Lionsgate to the Company, and the share-based compensation expenses for such awards will be allocated to the Company.
Prior to the Studio Separation, the consolidated financial statements included an allocation of share-based compensation expense attributable to corporate and shared service functions.
The following disclosures of unit data are based on grants related directly to Company employees and Old Lionsgate corporate and shared employees, and exclude unit data related to employees of the Starz Business.
Stock options are generally granted at exercise prices equal to or exceeding the market price of shares of existing Old Lionsgate common stock at the date of grant. Substantially all stock options vest ratably over 
one
 to five years from the grant date based on continuous service and expire 
seven
 to ten years from the date of grant. Restricted stock and restricted share units generally vest ratably over 
one
 to three years based on continuous service. Old Lionsgate satisfies stock option exercises and vesting of restricted stock and restricted share units with newly issued shares.
The measurement of all share-based awards uses a fair value method and the recognition of the related share-based compensation expense in the consolidated financial statements is recorded over the requisite service period. Further, Old Lionsgate estimates forfeitures for share-based awards that are not expected to vest. As share-based compensation expense allocated to the Company and recognized in the Company’s consolidated financial statements is based on awards ultimately expected to vest, it has been reduced for estimated forfeitures.
Share-Based Compensation Expense.
 The Company recognized the following share-based compensation expense during the fiscal years ended March 31, 2025, 2024, and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Compensation Expense:
         
Stock options
    $ 0.8    $ 1.7    $ 2.3
Restricted share units and other share-based compensation
      27.7      37.7      39.3
Share appreciation rights
      0.6      0.4      0.9
  
 
 
     
 
 
     
 
 
  
Total Legacy Lionsgate Studios employee share-based compensation expense
      29.1      39.8      42.5
Corporate allocation of share-based compensation
      23.9      15.0      26.7
  
 
 
     
 
 
     
 
 
  
     53.0      54.8      69.2
Impact of accelerated vesting on equity awards
(1)
      4.9      7.7      4.2
  
 
 
     
 
 
     
 
 
  
Total share-based compensation expense
      57.9      62.5      73.4
Tax impact
(2)
      (14.0 )       (15.1 )       (17.8 ) 
  
 
 
     
 
 
     
 
 
  
Reduction in net income
    $ 43.9    $ 47.4    $ 55.6
  
 
 
     
 
 
     
 
 
  
 
(1)
Represents the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements prior to the Studio Separation.
(2)
Represents the income tax benefit recognized in the statements of operations for share-based compensation arrangements prior to the effects of changes in the valuation allowance.
 
F-13
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Share-based compensation expense, by expense category, consisted of the following:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Share-Based Compensation Expense:
         
General and administration
    $ 53.0    $ 54.8    $ 69.2
Restructuring and other
      4.9      7.7      4.2
  
 
 
     
 
 
     
 
 
  
   $ 57.9    $ 62.5    $ 73.4
  
 
 
     
 
 
     
 
 
  
Stock Options
The following table sets forth the stock option, and share appreciation rights (“SARs”) at Old Lionsgate for grants related directly to the Company employees and Old Lionsgate corporate and shared service employees during the fiscal year ended March 31, 2025:
 
   
Stock Options and SARs
  
   
Old Lions Gate Class A Voting Shares
    
Old Lions Gate Class B
Non-Voting
Shares
  
   
Number of
Shares
    
Weighted-
Average
Exercise
Price
    
Weighted-
Average
Remaining
Contractual
Term
(years)
    
Aggregate
Intrinsic
Value
(2)
    
Number of
Shares
    
Weighted-
Average
Exercise
Price
    
Weighted-
Average
Remaining
Contractual
Term
(years)
    
Aggregate
Intrinsic
Value
(2)
  
   
(Amounts in millions, except for weighted-average exercise price and years)
  
Outstanding at March 31, 2024
     2.4   $ 22.96         17.1     $ 13.92    
Granted
     —      $ —          — 
(1)
 		   $ 7.12    
Exercised
     —      $ —          (0.1 )    $ 5.50    
Forfeited or expired
     (0.1 )    $ 20.26         (2.2 )    $ 14.64    
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Outstanding at March 31, 2025
     2.3   $ 23.10     1.51     $ 0.1     14.8     $ 13.86     4.22     $ 0.6
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Vested or expected to vest at March 31, 2025
     2.3   $ 23.10     1.51     $ 0.1     14.8     $ 13.87     4.21     $ 0.6
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Exercisable at March 31, 2025
     2.3   $ 23.10     1.51     $ 0.1     14.5     $ 13.98     4.14     $ 0.6
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(1)
Represents less than 0.1 million shares.
(2)
The intrinsic value is calculated for each in the money stock option and SAR as the difference between the closing price of Old Lionsgate’s common stock on March 31, 2025 and the exercise price.
The fair value of each option award is estimated on the date of grant using a closed-form option valuation model (Black-Scholes). The following table presents the weighted average grant-date fair value of options granted in the fiscal years ended March 31, 2025, 2024, and 2023, and the weighted average applicable
 
F-13
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
assumptions used in the Black-Scholes option-pricing model for stock options and share-appreciation rights granted during the years then ended:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
Weighted average fair value of grants
      $3.87        $4.63        $4.56  
Weighted average assumptions:
         
Risk-free interest rate
(1)
      4.2%       
4.3% - 4.5%
       
2.8% - 3.7%
  
Expected option lives (in years)
(2)
      7 years       
3.3 - 7 years
       
3.5 - 7 years
  
Expected volatility for options
(3)
      47%       
46% - 47%
        44%  
Expected dividend yield
(4)
      0%        0%        0%  
 
(1)
The risk-free rate assumed in valuing the options is based on the U.S. Treasury Yield curve in effect applied against the expected term of the option at the time of the grant.
(2)
The expected term of options granted represents the period of time that options granted are expected to be outstanding.
(3)
Expected volatilities are based on implied volatilities from traded options on the Company’s shares, historical volatility of the Company’s shares and other factors.
(4)
The expected dividend yield is estimated by dividing the expected annual dividend by the market price of the Company’s shares at the date of grant.
The total intrinsic value of options exercised during the fiscal year ended March 31, 2025 was $0.2 million (2024 — $0.2 million, 2023 — $1.1 million).
During the fiscal year ended March 31, 2025, less than 0.1 million shares (2024 and 2023— less than 0.1 million shares) were cancelled to fund withholding tax obligations upon exercise of options.
Restricted Share Units
The following table sets forth the restricted share unit and restricted stock activity on grants related directly to Company employees and Old Lionsgate corporate and shared service employees during the fiscal year ended March 31, 2025:
 
    
Restricted Share Units and Restricted Stock
  
    
Old Lions Gate Class A Voting Shares
     
Old Lions Gate Class B Non-Voting Shares
  
    
Number of Shares
     
Weighted-Average

Grant-Date Fair
Value
     
Number of Shares
     
Weighted-Average

Grant-Date Fair
Value
  
    
(Amounts in millions, except for weighted-average grant date fair value)
  
Outstanding at March 31, 2024
      0.1    $ 9.27      9.8    $ 8.93
Granted
      0.1    $ 8.20      8.2    $ 7.98
Vested
      (0.1 )     $ 9.20      (5.9 )     $ 8.83
Forfeited
      —         —         (1.0 )     $ 8.32
  
 
 
     
 
 
     
 
 
     
 
 
  
Outstanding at March 31, 2025
      0.1    $ 8.39      11.1    $ 8.17
  
 
 
     
 
 
     
 
 
     
 
 
  
The fair values of restricted share units and restricted stock are determined based on the market value of the shares on the date of grant. The total fair value of restricted share units and restricted stock on the date of vesting during fiscal year ended March 31, 2025 was $37.9 million (2024—$39.6 million, 2023—$29.1 million).
 
F-13
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table summarizes the total remaining unrecognized compensation cost as of March 31, 2025 related to
non-vested
stock options and restricted stock and restricted share units and the weighted average remaining years over which the cost will be recognized:
 
    
Total
Unrecognized
Compensation
Cost
     
Weighted
Average
Remaining
Years
  
    
(Amounts in
millions)
         
Stock Options
    $ 0.9      0.7  
Restricted Share Units and Restricted Stock
      45.1      1.5  
  
 
 
     
Total
(1)
    $ 46.0   
  
 
 
     
 
(1)
Represents remaining unrecognized compensation cost related to the Company’s employees and an allocation of compensation costs for Old Lionsgate corporate and shared service employees.
Under Old Lionsgate’s stock option and long term incentive plans, Old Lionsgate withholds shares to satisfy minimum statutory federal, state and local tax withholding obligations arising from the vesting of restricted share units and restricted stock. During the fiscal year ended March 31, 2025, 3.3 million shares (2024 — 3.0 million shares, 2023—1.5 million) were withheld upon the vesting of restricted share units and restricted stock.
Prior to the Starz Separation, Old Lionsgate, and hence, the Company, became entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the stock options and restricted share units when vesting or exercise occurs, the restrictions are released and the shares are issued. Restricted share units are forfeited if the employees are terminated prior to vesting.
The Company recognized excess tax deficiencies of $2.4 million associated with its equity awards in its tax provision for the fiscal year ended March 31, 2025 (2024 — deficiencies of $7.4 million, 2023 — benefits of $8.7 million).
Other Share-Based Compensation
Pursuant to the terms of certain employment agreements, during the fiscal year ended March 31, 2025, Old Lionsgate granted the equivalent of $2.3 million (2024 - $2.3 million, 2023 - $2.3 million) in shares to certain Company employees through the term of their employment contracts, which were recorded as compensation expense in the applicable period. Pursuant to this arrangement, for the year ended March 31, 2025, Old Lionsgate issued 0.3 million shares (2024 - 0.2 million shares, 2023 - 0.3 million shares), net of shares withheld to satisfy minimum tax withholding obligations.
15. Income Taxes
The components of pretax income (loss), net of intercompany eliminations, are as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
United States
    $ (139.3 )     $ (143.8 )     $ (33.5 ) 
International
      26.9      71.1      38.9
  
 
 
     
 
 
     
 
 
  
   $ (112.4 )     $ (72.7 )     $ 5.4
  
 
 
     
 
 
     
 
 
  
 
F-1
36
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Company’s current and deferred income tax provision (benefits) are as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Current provision (benefit):
   
Federal
    $ 3.1    $ 20.4    $ 3.2
States
      2.7      5.6      (0.5 ) 
International
      11.1      12.6      10.0
  
 
 
     
 
 
     
 
 
  
Total current provision
    $ 16.9    $ 38.6    $ 12.7
  
 
 
     
 
 
     
 
 
  
Deferred provision (benefit):
         
Federal
    $ 1.6    $ (3.4 )     $ 0.4
States
      (4.0 )       0.3      (0.1 ) 
International
      —         (1.3 )       1.3
  
 
 
     
 
 
     
 
 
  
Total deferred provision (benefit)
      (2.4 )       (4.4 )       1.6
  
 
 
     
 
 
     
 
 
  
Total provision for income taxes
    $ 14.5    $ 34.2    $ 14.3
  
 
 
     
 
 
     
 
 
  
Although the Company is incorporated under Canadian law, the majority of its global operations are currently subject to tax in the U.S. As a result, the Company believes it is more appropriate to use the U.S. federal statutory income tax rate of 21% in its reconciliation of the statutory rate to its reported income tax provision (benefit). The Company’s income tax provision differs from the U.S. federal statutory rate multiplied by pretax income (loss) due to the mix of the Company’s pretax income (loss) generated across the various jurisdictions in which it operates, changes in the valuation allowance against deferred tax assets, and certain minimum taxes and foreign withholding taxes.
The differences between income taxes expected at U.S. federal statutory income tax rates and the income tax provision are as set forth below:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Income taxes computed at Federal statutory rate
    $ (23.9 )     $ (15.3 )     $ 1.1
Foreign operations subject to different income tax rates
      6.9      6.8      5.0
State income tax
      (1.5 )       5.9      (0.6 ) 
Remeasurements of originating deferred tax assets and liabilities
      (283.4 )       4.7      (4.7 ) 
Permanent differences
      2.1      0.1      2.1
Nondeductible share based compensation
      4.5      1.2      1.8
Nondeductible officers compensation
      4.2      7.7      9.8
Non-controlling
interest in partnerships
      2.8      18.6      1.8
Foreign derived intangible income
      —         (2.4 )       (1.4 ) 
Other
      0.1      2.7      1.7
Changes in valuation allowance
      302.7      4.2      (2.3 ) 
  
 
 
     
 
 
     
 
 
  
Total provision for income taxes
    $ 14.5    $ 34.2    $ 14.3
  
 
 
     
 
 
     
 
 
  
 
F-1
37
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The income tax effects of temporary differences between the book value and tax basis of assets and liabilities are as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Deferred tax assets:
      
Net operating losses
    $ 395.3    $ 241.9
Foreign tax credits
      36.6      —   
Intangible assets
      —         9.5
Accrued compensation
      34.8      42.9
Operating leases- liabilities
      76.3      83.5
Other assets
      45.8      50.7
Reserves
      19.1      21.1
Interest
      180.3      68.0
  
 
 
     
 
 
  
Total deferred tax assets
      788.2      517.6
Valuation allowance
      (686.6 )       (341.6 ) 
  
 
 
     
 
 
  
Deferred tax assets, net of valuation allowance
      101.6      176.0
Deferred tax liabilities:
      
Intangible assets
      (2.0 )       —   
Investment in film and television programs
      (13.2 )       (56.9 ) 
Unrealized gains on derivative contracts
      (25.4 )       (32.9 ) 
Operating leases - assets
      (68.2 )       (78.2 ) 
Other
      (4.1 )       (21.7 ) 
  
 
 
     
 
 
  
Total deferred tax liabilities
      (112.9 )       (189.7 ) 
  
 
 
     
 
 
  
Net deferred tax liabilities
    $ (11.3 )     $ (13.7 ) 
  
 
 
     
 
 
  
The Company has recorded valuation allowances for certain deferred tax assets, which are primarily related to U.S. federal, state, foreign net operating loss carryforwards (“NOLs”), U.S. foreign tax credit carryforwards and carryforwards of U.S. federal and state interest expenses limited in their deduction under the Internal Revenue Code and similar state statutes. In its assessment, the Company has concluded there to be sufficient uncertainty regarding the future realization of these deferred tax assets.
The table below presents the changes in the deferred tax valuation allowances:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Beginning balance
    $ 341.6    $ 152.2    $ 362.8
Changes in valuation allowance
      302.7      4.2      (2.3 ) 
Other 
(1)
      42.3      185.2      (208.3 ) 
  
 
 
     
 
 
     
 
 
  
Ending balance
    $ 686.6    $ 341.6    $ 152.2
  
 
 
     
 
 
     
 
 
  
 
(1)
Valuation allowance adjustments recorded in other comprehensive income are primarily associated with hedging activity. Amounts for the year ended March 31, 2025 and March 31, 2024 also include opening balances of $23.0 million and $187.0 million, respectively, due to the acquisition of eOne on December 27, 2023.
 
F-1
38
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Following the Business Combination, certain tax attributes were statutorily allocated from Old Lionsgate to the legal entities comprising the Studio Business. As of March 31, 2025, the Company has U.S. federal NOLs of approximately $1,067.4 million available to reduce future U.S. federal income taxes, certain of which expire beginning in 2037 through 2038. As of March 31, 2025, the Company had state NOLs of approximately $817.7 million available to reduce future state income taxes which expire in varying amounts beginning in 2026. As of March 31, 2025, the Company had Canadian NOLs of approximately $324.1 million which will expire beginning in 2030. As of March 31, 2025, the Company had Spanish NOLs of $95.6 million which will expire beginning in 2036. As of March 31, 2025 the Company had U.K. NOLs of approximately $64.9 million with no expiration. As of March 31, 2025, the Company had other foreign jurisdiction NOLs of $13.6 million which will expire beginning in 2028. In addition, as of March 31, 2025, the Company had U.S federal credit carryforwards related to foreign taxes paid of approximately $36.6 million to offset future U.S. federal income taxes that will expire beginning in 2026.
The unrecognized tax benefits that are not expected to result in payment or receipt of cash within one year are classified as “other liabilities” in the consolidated balance sheets. As of March 31, 2025 and 2024, the total amount of gross unrecognized tax benefits, exclusive of interest and penalties, was $0.4 million and $0.4 million, respectively, which, if recognized, would favorably impact the Company’s effective tax rate. The aggregate changes in the Company’s gross amount of unrecognized tax benefits, exclusive of interest and penalties, are summarized as follows:
 
    
Amounts
in millions
  
Gross unrecognized tax benefits at March 31, 2022
    $ 1.0
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      —  
Decreases related to prior year tax positions
      —   
Settlements
      —   
Lapse in statute of limitations
      (0.7 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2023
      0.3
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      5.3
Decreases related to prior year tax positions
      —   
Settlements
      —   
Lapse in statute of limitations
      (0.3 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2024
      5.3
Increases related to current year tax position
      —   
Increases related to prior year tax positions
      5.6
Decreases related to prior year tax positions
      (2.0 ) 
Settlements
      —   
Lapse in statute of limitations
      (0.8 ) 
  
 
 
  
Gross unrecognized tax benefits at March 31, 2025
    $ 8.1
  
 
 
  
The Company records interest and penalties on unrecognized tax benefits as part of its income tax provision. For the years ended March 31, 2025, 2024 and 2023, the Company recognized insignificant amounts of interest and penalties related to uncertain tax positions. The Company estimates the liability for unrecognized tax benefits may decrease by approximately $0.8 million in the next twelve months.
 
F-13
9
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Company is subject to taxation in the U.S. and various state, local, and foreign jurisdictions. To the extent allowed by law, the taxing authorities may have the right to examine prior periods where NOLs were generated and carried forward and make adjustments up to the amount of the NOLs. While the Company is in various stages of inquiry and examination with certain taxing authorities and believes that its tax positions will more likely than not be sustained, it is nonetheless possible that future obligations related to these matters could arise. The Company believes that adequate amounts have been reserved for any adjustments that may ultimately result from an examination.
16. Restructuring and Other
Restructuring and other includes restructuring and severance costs and certain transaction and other costs, when applicable. During the fiscal years ended March 31, 2025, 2024, and 2023 the Company also incurred certain other unusual charges or benefits, which are included in direct operating expense in the consolidated statements of operations and are described below. The following table sets forth restructuring and other and these other unusual charges or benefits and the statement of operations line items they are included in for the fiscal years ended March 31, 2025, 2024, and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
        
Restructuring and other:
         
Content and other impairments
(1)
    $ 26.1    $ 12.8    $ 5.9
Severance
(2)
      37.0      35.2      15.0
Transaction and other costs
(3)
      39.5      84.9      6.3
  
 
 
     
 
 
     
 
 
  
Total Restructuring and Other
      102.6      132.9      27.2
Other unusual charges not included in restructuring and other or the Company’s operating segments:
         
Content charges included in direct operating expense
(4)
      —         1.5      8.1
COVID-19
related benefit included in direct operating expense
(5)
      (2.1 )       (0.9 )       (8.9 ) 
Unallocated rent cost included in direct operating expense
(6)
      18.6      —         —   
  
 
 
     
 
 
     
 
 
  
Total restructuring and other and other unusual charges not included in restructuring and other
    $ 119.1    $ 133.5    $ 26.4
  
 
 
     
 
 
     
 
 
  
 
(1)
Amounts in the fiscal year ended March 31, 2025 include content impairments of $7.7 million related to the Motion Picture and Television Production segments associated with exiting local production in certain international territories. Amounts in the fiscal year ended March 31, 2025 also include impairments of certain operating lease
right-of-use
and leasehold improvement assets related to the Television Production segment associated with facility leases that will no longer be utilized by the Company primarily related to the integration of eOne. Amounts in the fiscal year ended March 31, 2024 include $12.8 million of development costs written off in connection with changes in strategy in the Television Production segment as a result of the acquisition of eOne. Amounts in the fiscal year ended March 31, 2023 include an impairment of an operating lease
right-of-use
asset related to the Studio Business and corporate facilities amounting to $5.8 million associated with a portion of a facility lease that will no longer be utilized by the Company. The lease impairments reflect a decline in market conditions since the inception of the leases impacting potential sublease opportunities, and represents the difference between the estimated fair values, which were determined based on the expected discounted future cash flows of the lease assets, and the carrying value.
 
F-14
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
(2)
Severance costs were primarily related to restructuring, acquisition integration activities and other cost-saving initiatives. During the fiscal year ended March 31, 2025, in connection with the Company’s current restructuring plan, approximately 8% of its eligible U.S. employees elected to take advantage of voluntary severance and early retirement packages. A total of approximately $26.0 million in severance expense was incurred under the voluntary severance program and was recognized in restructuring and other in the fiscal year ended March 31, 2025. In the fiscal year ended March 31, 2024, amounts were due to restructuring activities including integration of the acquisition of eOne, and our Motion Picture and Television Production segments.
(3)
Transaction and other costs in the fiscal years ended March 31, 2025, 2024, and 2023 reflect transaction, integration and legal costs associated with certain strategic transactions, and restructuring activities and also include costs associated with legal and other matters. In fiscal 2025 and fiscal 2024, amounts include costs associated with the separation of the Starz Business from the Studio Business, and acquisition and integration costs related to the acquisition of eOne. In fiscal 2024, amounts also include $
49.2
 million associated with the acquisition of additional interest in 3 Arts Entertainment. Due to the new arrangement representing a modification of terms of the compensation element under the previous arrangement which resulted in the reclassification of the equity award to a liability award, the Company recognized incremental compensation expense of $49.2 million, representing the excess of the fair value of the modified award over amounts previously expensed (see Note 12 for further information). In addition, transaction and other costs in fiscal 2024 includes approximately $16.6 million of a loss associated with a theft at a production of a 51% owned consolidated entity. In the quarter ended March 31, 2025, the Company recognized a benefit of $3.1 million for insurance recoveries related to the loss. The Company also expects to recover a portion of the loss from the noncontrolling interest holders of this entity.
(4)
Amounts represent certain unusual content charges. In the fiscal year ended March 31, 2023, the amounts represent development costs written off as a result of changes in strategy across the Company’s theatrical slate in connection with certain management changes and changes in the theatrical marketplace in the Motion Picture segment. These charges are excluded from segment results and included in amortization of investment in film and television programs in direct operating expense on the consolidated statement of operations.
(5)
Amounts include incremental costs incurred, if any, due to circumstances associated with the
COVID-19
global pandemic, net of recoveries. In the fiscal years ended March 31, 2025, 2024 and 2023, recoveries exceeded the incremental costs expensed in the year, resulting in a net benefit included in direct operating expense. Insurance recoveries in the fiscal years 2025, 2024 and 2023 were $2.1 million, $1.0 million and $8.4 million, respectively. The fiscal 2023 benefit also included bad debt recoveries.
(6)
Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.
Changes in the restructuring and other severance liability were as follows for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Severance liability
         
Beginning balance
    $ 19.3    $ 3.7    $ 0.8
Accruals
(2)
      32.1      27.5      10.8
Severance payments
      (27.9 )       (11.9 )       (7.9 ) 
  
 
 
     
 
 
     
 
 
  
Ending balance
(1)
    $ 23.5    $ 19.3    $ 3.7
  
 
 
     
 
 
     
 
 
  
 
(1)
As of March 31, 2025, the remaining severance liability of approximately $23.5 million is expected to be paid in the next 12 months.
(2)
Excludes $4.9 million, $7.7 million, and $4.2 million in the fiscal years ended March 31, 2025, 2024, and 2023 respectively, of accelerated vesting on equity awards.
 
F-14
1
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
17. Segment Information
The Company’s reportable segments have been determined based on the distinct nature of their operations, the Company’s internal management structure, and the financial information that is evaluated regularly by the Company’s CODM in deciding how to allocate resources to an individual segment and in assessing performance. Our Chief Executive Officer (“CEO”) is the CODM.
The Company has two reportable business segments: (1) Motion Picture and (2) Television Production.
Motion Picture.
 Motion Picture consists of the development and production of feature films, acquisition of North American and worldwide distribution rights, North American theatrical, home entertainment and television distribution of feature films produced and acquired, and worldwide licensing of distribution rights to feature films produced and acquired.
Television Production.
 Television Production consists of the development, production and worldwide distribution of television productions including television series, television movies and mini-series, and
non-fiction
programming. Television Production includes the licensing of Starz original series productions to the Starz Business, and the ancillary market distribution of Starz original productions and licensed product. Additionally, the Television Production segment includes the results of operations of 3 Arts Entertainment.
Segment information is presented in the table below. The Motion Picture and Television Production segments include the results of operations of eOne from the acquisition date of December 27, 2023 (see Note 3).
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Segment revenues
         
Motion Picture
    $ 1,589.7    $ 1,656.3    $ 1,323.7
Television Production
      1,605.8      1,330.1      1,760.1
  
 
 
     
 
 
     
 
 
  
Total revenue
      3,195.5      2,986.4      3,083.8
Segment direct operating expenses
         
Motion Picture
      824.2      796.0      666.5
Television Production
      1,369.3      1,090.1      1,541.5
  
 
 
     
 
 
     
 
 
  
Total segment direct operating expense
      2,193.5      1,886.1      2,208.0
Segment distribution and marketing
         
Motion Picture
      357.8      427.0      270.9
Television Production
      38.1      35.3      33.3
  
 
 
     
 
 
     
 
 
  
Total segment distribution and marketing
      395.9      462.3      304.2
Gross contribution
         
Motion Picture
      407.7      433.3      386.3
Television Production
      198.4      204.7      185.3
  
 
 
     
 
 
     
 
 
  
Total gross contribution
      606.1      638.0      571.6
Segment general and administration
         
Motion Picture
      100.1      113.9      109.8
Television Production
      61.9      57.9      51.9
  
 
 
     
 
 
     
 
 
  
Total segment general and administration
      162.0      171.8      161.7
Segment profit
         
Motion Picture
      307.6      319.4      276.5
Television Production
      136.5      146.8      133.4
  
 
 
     
 
 
     
 
 
  
Total segment profit
    $ 444.1    $ 466.2    $ 409.9
  
 
 
     
 
 
     
 
 
  
 
F-14
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The Company’s primary measure of segment performance is segment profit. Segment profit is defined as gross contribution (segment revenues, less segment direct operating and segment distribution and marketing expense) less segment general and administration expenses. Segment profit excludes, when applicable, corporate general and administrative expense, restructuring and other costs, share-based compensation, certain programming and content charges as a result of changes in management and/or programming and content strategy, certain benefits related to the
COVID-19
global pandemic, unallocated rent cost and purchase accounting and related adjustments. The Company believes the presentation of segment profit is relevant and useful for investors because it allows investors to view segment performance in a manner similar to the primary method used by the Company’s management, including the CODM, and enables them to understand the fundamental performance of the Company’s businesses. The CODM uses segment profit to evaluate the operating performance of the Company’s segments, to inform decisions for planning and forecasting, and for the allocation of resources.
The reconciliation of total segment profit to the Company’s income (loss) before income taxes is as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Company’s total segment profit
    $ 444.1    $ 466.2    $ 409.9
Corporate general and administrative expenses
(1)
      (120.9 )       (110.6 )       (100.9 ) 
Adjusted depreciation and amortization
(2)
      (13.6 )       (10.5 )       (12.2 ) 
Restructuring and other
      (102.6 )       (132.9 )       (27.2 ) 
COVID-19
related benefit included in direct operating expense
(3)
      2.1      0.9      8.9
Content charges
(4)
      —         (1.5 )       (8.1 ) 
Unallocated rent cost included in direct operating expense
(5)
      (18.6 )       —         —   
Adjusted share-based compensation expense
(6)
      (53.0 )       (54.8 )       (69.2 ) 
Purchase accounting and related adjustments
(7)
      (12.9 )       (17.1 )       (61.6 ) 
  
 
 
     
 
 
     
 
 
  
Operating income
      124.6      139.7      139.6
Interest expense
      (242.5 )       (222.5 )       (162.6 ) 
Interest and other income
      14.8      19.2      6.4
Other gains (losses), net
      (11.8 )       (20.0 )       (21.2 ) 
Loss on extinguishment of debt
      (1.8 )       (1.3 )       (1.3 ) 
Gain on investments, net
      —        3.5      44.0
Equity interests income
      4.3      8.7      0.5
  
 
 
     
 
 
     
 
 
  
Income (loss) before income taxes
    $ (112.4 )     $ (72.7 )     $ 5.4
  
 
 
     
 
 
     
 
 
  
 
(1)
Corporate general and administrative expenses reflect the allocations of certain general and administrative expenses from Old Lionsgate related to certain corporate and shared service functions historically provided by Old Lionsgate, including, but not limited to, executive oversight, accounting, tax, legal, human resources, occupancy, and other shared services (see Note 1 and Note 21). Amount excludes allocation of share-based compensation expense discussed below. The costs included in corporate general and administrative expenses represent certain corporate executive expense (such as salaries and wages for the office of the Chief Executive Officer, Chief Financial Officer, General Counsel and other corporate officers), investor relations costs, costs of maintaining corporate facilities, and other unallocated common administrative support functions, including corporate accounting, finance and financial reporting, internal and external audit and tax costs, corporate and other legal support functions, and certain information technology and human resources expense.
 
F-14
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
(2)
Adjusted depreciation and amortization represents depreciation and amortization as presented on the consolidated statements of operations less the depreciation and amortization related to the
non-cash
fair value adjustments to property and equipment and intangible assets acquired in acquisitions which are included in the purchase accounting and related adjustments line item above, as shown in the table below:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Depreciation and amortization
    $ 17.8    $ 15.6    $ 17.9
Less: Amount included in purchase accounting and related adjustments
      (4.2 )       (5.1 )       (5.7 ) 
  
 
 
     
 
 
     
 
 
  
Adjusted depreciation and amortization
    $ 13.6    $ 10.5    $ 12.2
  
 
 
     
 
 
     
 
 
  
 
(3)
Amounts represent the incremental costs, if any, included in direct operating expense resulting from circumstances associated with the
COVID-19
global pandemic, net of recoveries (see Note 16). These benefits are excluded from segment operating results.
(4)
Content charges represent certain charges included in direct operating expense in the consolidated statements of operations, and excluded from segment operating results.
(5)
Amounts represent rent cost for production facilities that were unutilized as a result of the industry strikes, and therefore such amounts are not allocated to the segments.
(6)
The following table reconciles total share-based compensation expense to adjusted share-based compensation expense:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Total share-based compensation expense
    $ 57.9    $ 62.5    $ 73.4
Less:
         
Amount included in restructuring and other
(i)
      (4.9 )       (7.7 )       (4.2 ) 
  
 
 
     
 
 
     
 
 
  
Adjusted share-based compensation
    $ 53.0    $ 54.8    $ 69.2
  
 
 
     
 
 
     
 
 
  
 
  (i)
Represents share-based compensation expense included in restructuring and other expenses reflecting the impact of the acceleration of vesting schedules for equity awards pursuant to certain severance arrangements.
 
(7)
The following sets forth the amounts included in each line item in the financial statements:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Purchase accounting and related adjustments:
         
Direct operating
    $ —     $ —     $ 0.7
General and administrative expense
(i)
      8.7      12.0      55.2
Depreciation and amortization
      4.2      5.1      5.7
  
 
 
     
 
 
     
 
 
  
   $ 12.9    $ 17.1    $ 61.6
  
 
 
     
 
 
     
 
 
  
 
  (i)
In the fiscal years ended March 31, 2025, 2024 and 2023, these adjustments include the expense associated with the noncontrolling equity interests in the distributable earnings related to 3 Arts Entertainment.
 
F-14
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  Amounts in fiscal 2024 and 2023 also include the amortization of the recoupable portion of the purchase price (through May 2023) related to 3 Arts Entertainment. Amounts in fiscal 2023 also include the
non-cash
charges for the accretion of the noncontrolling interest discount related to 3 Arts Entertainment (through November 2022). These amounts are accounted for as compensation and are included in general and administrative expense, as presented in the table below. The noncontrolling equity interest in the distributable earnings of 3 Arts Entertainment are reflected as an expense rather than noncontrolling interest in the consolidated statement of operations due to the relationship to continued employment.
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Amortization of recoupable portion of the purchase price
    $ —     $ 1.3    $ 7.7
Noncontrolling interest discount amortization
      —         —         13.2
Noncontrolling equity interest in distributable earnings
      8.7      10.7      34.3
  
 
 
     
 
 
     
 
 
  
   $ 8.7    $ 12.0    $ 55.2
  
 
 
     
 
 
     
 
 
  
See Note 13 for revenues by media or product line as broken down by segment for the fiscal years ended March 31, 2025, 2024, and 2023.
The following table reconciles segment general and administration expense to the Company’s total consolidated general and administration expense:
 
 
  
Year Ended March 31,
 
 
  
2025
 
  
2024
 
  
2023
 
 
  
(Amounts in millions)
 
General and administration
         
Segment general and administrative expenses
    $ 162.0    $ 171.8    $ 161.7
Corporate general and administrative expenses
      120.9      110.6      100.9
Share-based compensation expense included in general and administrative expense
      53.0      54.8      69.2
Purchase accounting and related adjustments
      8.7      12.0      55.2
  
 
 
     
 
 
     
 
 
  
   $ 344.6    $ 349.2    $ 387.0
  
 
 
     
 
 
     
 
 
  
The reconciliation of total segment assets to the Company’s total consolidated assets is as follows:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Assets
      
Motion Picture
    $ 1,867.4    $ 1,851.4
Television Production
      2,279.3      2,347.8
Other unallocated assets
(1)
      968.5      903.8
  
 
 
     
 
 
  
   $ 5,115.2    $ 5,103.0
  
 
 
     
 
 
  
 
(1)
Other unallocated assets primarily consist of cash, other assets and investments.
 
F-14
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth acquisition of investment in films and television programs and program rights, as broken
down
by segment for the fiscal years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Acquisition of investment in films and television programs and program rights
         
Motion Picture
    $ 642.3    $ 418.1    $ 484.5
Television Production
      1,025.0      702.4      1,083.9
  
 
 
     
 
 
     
 
 
  
   $ 1,667.3    $ 1,120.5    $ 1,568.4
  
 
 
     
 
 
     
 
 
  
The following table sets forth capital expenditures, as broken down by segment for the years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Capital expenditures
         
Motion Picture
    $ —     $ —     $ — 
Television Production
      0.3      0.3      0.3
Corporate
(1)
      13.2      9.6      6.2
  
 
 
     
 
 
     
 
 
  
   $ 13.5    $ 9.9    $ 6.5
  
 
 
     
 
 
     
 
 
  
 
(1)
Represents unallocated capital expenditures primarily related to the Company’s corporate headquarters.
Revenue by geographic location, based on the location of the customers, with no other foreign country individually comprising greater than 10% of total revenue, is as follows:
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Revenue
         
Canada
    $ 75.8    $ 70.4    $ 64.0
United States
      2,332.8      2,262.3      2,348.8
Other foreign
      786.9      653.7      671.0
  
 
 
     
 
 
     
 
 
  
   $ 3,195.5    $ 2,986.4    $ 3,083.8
  
 
 
     
 
 
     
 
 
  
Long-lived assets by geographic location are as follows:
 
    
March 31, 2025
     
March 31, 2024
  
    
(Amounts in millions)
  
Long-lived assets
(1)
      
United States
    $ 2,039.9    $ 2,047.6
Other foreign
      280.9      263.0
  
 
 
     
 
 
  
   $ 2,320.8    $ 2,310.6
  
 
 
     
 
 
  
 
(1)
Long-lived assets represents total assets less the following: current assets, investments, long-term receivables, interest rate swaps, intangible assets, goodwill and deferred tax assets.
 
F-1
46
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
For the fiscal years ended March 31, 2025, 2024 and 2023, the Company had revenue from the Starz Business of $619.7 million, $545.9 million and $775.5 million, respectively, which represented greater than 10% of consolidated revenues (see Note 21). For the fiscal year ended March 31, 2025, the Company had revenue from one individual external customer which represented greater than 10% of consolidated revenues, amounting to $513.4 million, related to the Company’s Motion Picture and Television Production segments (2024—revenue from one individual external customer which represented greater than 10% of consolidated revenues, amounting to $411.1 million, related to the Company’s Motion Picture and Television Production segments; 2023—revenue from one individual external customer which represented greater than 10% of consolidated revenues, amounting to $337.1 million, related to the Company’s Motion Picture and Television Production segments).
As of March 31, 2025, the Company had accounts receivable due from two customers which individually represented greater than
10
% of consolidated accounts receivable. Accounts receivable due from these two customers amounted to 12.8% and 10.5% of total consolidated accounts receivable (current and
non-current)
at March 31, 2025, respectively, or gross accounts receivable of approximately $83.1 million and $68.1 million, respectively. As of March 31, 2024, the Company had accounts receivable due from two customers which individually represented greater than 10% of consolidated accounts receivable. Accounts receivable due from these two customers amounted to 12.5% and 10.7% of total consolidated accounts receivable (current and
non-current)
at March 31, 2024, respectively, or gross accounts receivable of approximately $100.9 million and $86.8 million, respectively. In addition, the Company had amounts due from the Starz Business of $215.0 million and $33.4 million at March 31, 2025 and 2024, respectively, which are separately presented in the “Due from Starz Business” line item of the consolidated balance sheets (see Note 21).
18. Commitments and Contingencies
Commitments
The following table sets forth our future annual repayment of contractual commitments as of March 31, 2025:
 
   
Year Ending March 31,
  
   
2026
    
2027
    
2028
    
2029
    
2030
    
Thereafter
    
Total
  
   
(Amounts in millions)
  
Contractual commitments by expected repayment date
(off-balance
sheet arrangements)
              
Film related obligations commitments
(1)
   $ 187.3   $ 47.3   $ 5.8   $ —    $ —    $ —    $ 240.4
Interest payments
(2)
     131.9     100.0     66.7     55.8     21.7     —        376.1
Other contractual obligations
     92.8     67.5     42.5     33.6     25.0     154.9     416.3
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
Total future commitments under contractual obligations
(3)
   $ 412.0   $ 214.8   $ 115.0   $ 89.4   $ 46.7   $ 154.9   $ 1,032.8
 
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
    
 
 
  
 
(1)
Film related obligations commitments are not reflected on the consolidated balance sheets as they did not then meet the criteria for recognition and include the following items:
  (i)
Distribution and marketing commitments represent contractual commitments for future expenditures associated with distribution and marketing of films which we will distribute. The payment dates of these amounts are primarily based on the anticipated release date of the film.
  (ii)
Minimum guarantee commitments represent contractual commitments related to the purchase of film rights for pictures to be delivered in the future.
  (iii)
Production loan commitments represent amounts committed for future film production and development to be funded through production financing and recorded as a production loan liability
 
F-1
47
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
  when incurred. Future payments under these commitments are based on anticipated delivery or release dates of the related film or contractual due dates of the commitment. The amounts include estimated future interest payments associated with the commitment.
(2)
Includes cash interest payments on the Company’s corporate debt and film related obligations, based on the applicable SOFR interest rates at March 31, 2025, net of payments and receipts from the Company’s interest rate swaps, and excluding the interest payments on the revolving credit facility as future amounts are not fixed or determinable due to fluctuating balances and interest rates.
(3)
Not included in the amounts above are $90.7 million included in other
liabilities-non
current representing the compensatory portion of the 3 Arts Entertainment noncontrolling interest and $93.7 million of redeemable noncontrolling interest, as future amounts and timing are subject to a number of uncertainties such that we are unable to make sufficiently reliable estimations of future payments (see Note 12).
Multiemployer Benefit Plans.
 The Company contributes to various multiemployer pension plans under the terms of collective bargaining agreements that cover its union-represented employees. The Company makes periodic contributions to these plans in accordance with the terms of applicable collective bargaining agreements and laws but does not sponsor or administer these plans. The risks of participating in these multiemployer pension plans are different from single-employer pension plans such that (i) contributions made by the Company to the multiemployer pension plans may be used to provide benefits to employees of other participating employers; (ii) if the Company chooses to stop participating in certain of these multiemployer pension plans, it may be required to pay those plans an amount based on the underfunded status of the plan, which is referred to as a withdrawal liability; and (iii) actions taken by a participating employer that lead to a deterioration of the financial health of a multiemployer pension plan may result in the unfunded obligations of the multiemployer pension plan to be borne by its remaining participating employers.
The Company does not participate in any multiemployer benefit plans that are considered to be individually significant to the Company, and as of March 31, 2025, all except one of the largest plans in which the Company participates were funded at a level of 80% or greater. The other plan, the Motion Picture Industry Pension Plan, was funded at 72.10% for the 2024 plan year, but was not considered to be in endangered, critical, or critical and declining status in the 2024 plan year. Total contributions made by the Company to multiemployer pension and other benefit plans for the years ended March 31, 2025, 2024 and 2023 were $104.4 million, $58.0 million, and $87.0 million, respectively.
Contingencies
From time to time, the Company is involved in certain claims and legal proceedings arising in the normal course of business.
The Company establishes an accrued liability for claims and legal proceedings when the Company determines that a loss is both probable and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted from time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation to matters for which an accrual has been established may be higher or lower than the amounts accrued for such matters.
As of March 31, 2025, the Company is not a party to any material pending claims or legal proceeding and is not aware of any other claims that it currently expects will, individually or in the aggregate, have a material adverse effect on the Company’s financial position, results of operations or cash flows.
 
F-1
48
Table of Contents
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
19. Financial Instruments
(a) Credit Risk
Concentration of credit risk with the Company’s customers is limited due to the Company’s customer base and the diversity of its sales throughout the world. The Company performs ongoing credit evaluations and maintains a provision for potential credit losses. The Company generally does not require collateral for its trade accounts receivable.
(b) Derivative Instruments and Hedging Activities
Forward Foreign Exchange Contracts
The Company enters into forward foreign exchange contracts to hedge its foreign currency exposures on future production expenses and tax credit receivables denominated in various foreign currencies (i.e., cash flow hedges). The Company also enters into forward foreign exchange contracts that economically hedge certain of its foreign currency risks, even though hedge accounting does not apply or the Company elects not to apply hedge accounting. The Company monitors its positions with, and the credit quality of, the financial institutions that are party to its financial transactions. Changes in the fair value of the foreign exchange contracts that are designated as hedges are reflected in accumulated other comprehensive income (loss), and changes in the fair value of foreign exchange contracts that are not designated as hedges and do not qualify for hedge accounting are recorded in direct operating expense. Gains and losses realized upon settlement of the foreign exchange contracts that are designated as hedges are amortized to direct operating expense on the same basis as the production expenses being hedged.
As of March 31, 2025, the Company had the following outstanding forward foreign exchange contracts (all outstanding contracts have maturities of less than 
24
 months from March 31, 2025):
 
March 31, 2025
  
Foreign Currency
   
Foreign Currency
Amount
          
US Dollar Amount
     
Weighted Average
Exchange Rate
Per $1 USD
  
    
(Amounts in millions)
          
(Amounts in millions)
         
Euro
      40.7     EUR      in exchange for    $ 43.6      0.92     EUR  
Canadian Dollar
      15.5     CAD      in exchange for    $ 10.6      1.40     CAD  
Mexican Peso
      69.5     MXN      in exchange for    $ 3.4      20.63     MXN  
Hungarian Forint
      6,000.0     HUF      in exchange for    $ 16.0      374.00     HUF  
New Zealand Dollar
      6.4     NZD      in exchange for    $ 3.9      1.66     NZD  
Interest Rate Swaps
The Company is exposed to the impact of interest rate changes, primarily through its borrowing activities. The Company’s objective is to mitigate the impact of interest rate changes on earnings and cash flows. The Company primarily uses
pay-fixed
interest rate swaps to facilitate its interest rate risk management activities, which the Company generally designates as cash flow hedges of interest payments on floating-rate borrowings.
Pay-fixed
swaps effectively convert floating-rate borrowings to fixed-rate borrowings. The unrealized gains or losses from these designated cash flow hedges are deferred in accumulated other comprehensive income (loss) and recognized in interest expense as the interest payments occur. Changes in the fair value of interest rate swaps that are not designated as hedges are recorded in interest expense (see further explanation below).
 
F-1
49
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Cash settlements related to interest rate contracts are generally classified as operating activities on the consolidated statements of cash flows. However, due to a financing component (debt host) on a portion of our previously outstanding interest rate swaps, the cash flows related to these contracts are classified as financing activities through the date of termination.
In connection with the Studio Separation, Business Combination and Intercompany Note described in Note 8, the Company assumed the rights, obligations, costs and benefits associated with and provided under the terms of Old Lionsgate’s
floating-to-fixed
swap contracts.
Designated Cash Flow Hedges.
 As of March 31, 2024, the Company had the following
pay-fixed
interest rate swaps, which were designated as cash flow hedges outstanding (all related to the Company’s SOFR-based debt, see Note 8 and Note 9) and were terminated in December 2024, as further described below.
 
Effective Date
   
Notional Amount
     
Fixed Rate Paid
    
Maturity Date
  
    
(in millions)
               
May 23, 2018
    $ 300.0      2.915 %      March 24, 2025  
May 23, 2018
    $ 700.0      2.915 %      March 24, 2025
(1)
 
June 25, 2018
    $ 200.0      2.723 %      March 23, 2025
(1)
 
July 31, 2018
    $ 300.0      2.885 %      March 23, 2025
(1)
 
December 24, 2018
    $ 50.0      2.744 %      March 23, 2025
(1)
 
December 24, 2018
    $ 100.0      2.808 %      March 23, 2025
(1)
 
December 24, 2018
    $ 50.0      2.728 %      March 23, 2025
(1)
 
  
 
 
       
Total
    $ 1,700.0     
  
 
 
       
 
(1)
Represents the
re-designated
swaps as described in the Fiscal 2023 Transactions section below that were previously not designated cash flow hedges at March 31, 2022.
In December 2024, the Company terminated all of its
pay-fixed
interest rate swaps which were outstanding at March 31, 2024, as shown in the table above. As a result of the termination, the Company received approximately $9.4 million, which was recorded as a reduction of the interest rate swap asset values, and represents the amount of unrealized gains recorded in accumulated other comprehensive income related to the terminated interest rate swaps which will be amortized as a reduction of interest expense through the remaining term of the terminated swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded to interest expense at that time. The receipt of approximately $9.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities.
During the fiscal year ended March 31, 2025, the Company entered into the following
pay-fixed
interest rate swaps, which have been designated as cash flow hedges outstanding (all related to the Company’s SOFR-based debt, see Note 8 and Note 9).
 
F-15
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Designated Cash Flow Hedges at March
 31, 2025:
 
Effective Date
   
Notional Amount
     
Fixed Rate Paid
    
Maturity Date
  
    
(in millions)
               
August 15, 2024
    $
65.0
      4.045 %      September 15, 2026  
August 15, 2024
    $
77.5
      3.803 %      August 15, 2026  
August 15, 2024
    $
77.5
      3.810 %      September 15, 2026  
December 15, 2024
    $
125.0
      3.970 %      December 15, 2026  
January 31, 2025
    $
100.0
      4.060 %      January 31, 2027  
February 14, 2025
    $
282.8
      4.097 %      February 14, 2027  
  
 
 
       
Total
    $
727.8
     
  
 
 
       
Fiscal 2023 Transactions:
 In May 2022, the Company terminated certain of its previous interest rate swap contracts (the “Terminated Swaps”). As a result of the terminations, the Company received approximately $56.4 million. Simultaneously with the termination of the Terminated Swaps, the Company
re-designated
all other swaps previously not designated as cash flow hedges of variable rate debt.
The receipt of approximately $56.4 million as a result of the termination was recorded as a reduction of the asset values of the derivatives amounting to $188.7 million and a reduction of the financing component (debt host) of the Terminated Swaps amounting to $131.3 million. At the time of the termination of the Terminated Swaps, there was approximately $180.4 million of unrealized gains recorded in accumulated other comprehensive income (loss) related to these Terminated Swaps. This amount will be amortized as a reduction of interest expense through the remaining term of the swaps unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the gain will be recorded as a reduction to interest expense at that time. In addition, the liability amount of $6.8 million for the
re-designated
swaps at the
re-designation
date will be amortized as a reduction of interest expense throughout the remaining term of the
re-designated
swaps, unless it becomes probable that the cash flows originally hedged will not occur, in which case the proportionate amount of the loss will be recorded to interest expense at that time.
The receipt of approximately $56.4 million was classified in the consolidated statement of cash flows as cash provided by operating activities of $188.7 million reflecting the amount received for the derivative portion of the termination of swaps, and a use of cash in financing activities of $134.5 million reflecting the pay down of the financing component of the Terminated Swaps (inclusive of payments made between April 1, 2022 and the termination date amounting to $3.2 million).
 
F-15
1
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Financial Statement Effect of Derivatives
Consolidated statements of operations and comprehensive income (loss):
 The following table presents the
pre-tax
effect of the Company’s derivatives on the accompanying consolidated statements of operations and comprehensive income (loss) for the fiscal years ended March 31, 2025, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
         
Forward exchange contracts
         
Gain (loss) recognized in accumulated other comprehensive income (loss)
    $ 3.4    $ (5.8 )     $ 1.7
Loss reclassified from accumulated other comprehensive income (loss) into direct operating expense
      (1.2 )       (0.3 )       (0.3 ) 
Interest rate swaps
         
Gain (loss) recognized in accumulated other comprehensive income (loss)
    $ (0.6 )     $ 36.3    $ 81.1
Gain reclassified from accumulated other comprehensive income (loss) into interest expense
      28.6      41.8      1.4
Derivatives not designated as cash flow hedges:
         
Interest rate swaps
         
Gain (loss) reclassified from accumulated other comprehensive income (loss) into interest expense
    $ 4.3    $ (7.2 )     $ (11.8 ) 
Total direct operating expense on consolidated statements of operations
    $ 2,210.0    $ 1,886.7    $ 2,207.9
Total interest expense on consolidated statements of operations
    $ 242.5    $ 222.5    $ 162.6
Consolidated balance sheets:
 The Company classifies its forward foreign exchange contracts and interest rate swap agreements within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments (see Note 11). Pursuant to the Company’s accounting policy to offset the fair value amounts recognized for derivative instruments, the Company presents the asset or liability position of the swaps that are with the same counterparty under a master netting arrangement net as either an asset or liability in its consolidated balance sheets. As of March 31, 2025 and March 31, 2024, there were no swaps outstanding that were subject to a master netting arrangement.
As of March 31, 2025 and 2024, the Company had the following amounts recorded in the accompanying consolidated balance sheets related to the Company’s use of derivatives:
 
    
March 31, 2025
  
    
Other Current
Assets
     
Other Liabilities
(non-current)
  
    
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
      
Forward exchange contracts
    $ 1.8    $ — 
Interest rate swaps
      —         3.1
  
 
 
     
 
 
  
Fair value of derivatives
    $ 1.8    $ 3.1
  
 
 
     
 
 
  
 
F-15
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
   
March 31, 2024
  
   
Other Current
Assets
    
Other Accrued
Liabilities
  
   
(Amounts in millions)
  
Derivatives designated as cash flow hedges:
    
Forward exchange contracts
   $ —    $ 2.8
Interest rate swaps
     35.6     —   
 
 
 
    
 
 
  
Fair value of derivatives
   $ 35.6   $ 2.8
 
 
 
    
 
 
  
As of March 31, 2025, based on the current release schedule, the Company estimates approximately $1.1 million of gains associated with forward foreign exchange contract cash flow hedges in accumulated other comprehensive income (loss) will be reclassified into earnings during the
one-year
period ending March 31, 2026.
As of March 31, 2025, the Company estimates approximately $26.4 million of gains recorded in accumulated other comprehensive income (loss) associated with interest rate swap agreement cash flow hedges will be reclassified into interest expense during the
one-year
period ending March 31, 2026.
20. Additional Financial Information
The following tables present supplemental information related to the consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of investments that are readily convertible into cash. Cash equivalents are carried at cost, which approximates fair value. The Company classifies its cash equivalents within Level 1 of the fair value hierarchy because the Company uses quoted market prices to measure the fair value of these investments (see Note 11). The Company monitors concentrations of credit risk with respect to cash and cash equivalents by placing such balances with higher quality financial institutions or investing such amounts in liquid, short-term, highly-rated instruments or investment funds holding similar instruments. As of March 31, 2025, the Company’s cash and cash equivalents were held in bank depository accounts.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows at March 31, 2025 and 2024. At March 31, 2025 and 2024, restricted cash represents primarily amounts related to required cash reserves for interest payments associated with certain corporate debt and film related obligations.
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Cash and cash equivalents
    $ 205.7    $ 277.0
Restricted cash included in other current assets
      67.9      43.7
Restricted cash included in other
non-current
assets
      —         13.7
  
 
 
     
 
 
  
Total cash, cash equivalents and restricted cash
    $ 273.6    $ 334.4
  
 
 
     
 
 
  
 
F-15
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Accounts Receivable Monetization
Under the Company’s accounts receivable monetization programs, the Company has entered into (1) individual agreements to monetize certain of its trade accounts receivable directly with third-party purchasers and (2) a revolving agreement to monetize designated pools of trade accounts receivable with various financial institutions, as further described below. Under these programs, the Company transfers receivables to purchasers in exchange for cash proceeds, and the Company continues to service the receivables for the purchasers. The Company accounts for the transfers of these receivables as a sale, removes (derecognizes) the carrying amount of the receivables from its balance sheets and classifies the proceeds received as cash flows from operating activities in the consolidated statements of cash flows. The Company records a loss on the sale of these receivables reflecting the net proceeds received (net of any obligations incurred), less the carrying amount of the receivables transferred. The loss is reflected in the “other gains (losses), net” line item on the consolidated statements of operations. The Company receives fees for servicing the accounts receivable for the purchasers, which represent the fair value of the services and were immaterial for the fiscal years ended March 31, 2025, 2024, and 2023.
Individual Monetization Agreements.
 The Company enters into individual agreements to monetize trade accounts receivable. The third-party purchasers have no recourse to other assets of the Company in the event of
non-payment
by the customers. The following table sets forth a summary of the receivables transferred under individual agreements or purchases during the fiscal years ended March 31, 2025, 2024, and 2023:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Carrying value of receivables transferred and derecognized
    $ 478.3    $ 512.3      400.5
Net cash proceeds received
      464.9      491.9      383.0
Loss recorded related to transfers of receivables
      13.4      20.4      17.5
At March 31, 2025, the outstanding amount of receivables derecognized from the Company’s consolidated balance sheets, but which the Company continues to service, related to the Company’s individual agreements to monetize trade accounts receivable was $429.9 million (March 31, 2024 - $449.2 million).
Pooled Monetization Agreement.
 In December 2019, the Company entered into a revolving agreement, as amended in July 2023, to transfer up to $100.0 million of certain receivables to various financial institutions on a recurring basis in exchange for cash equal to the gross receivables transferred, which matured on October 1, 2023. As customers paid their balances, the Company would transfer additional receivables into the program. The transferred receivables were fully guaranteed by a bankruptcy-remote wholly-owned subsidiary of the Company. The third-party purchasers had no recourse to other assets of the Company in the event of
non-payment
by the customers.
 
F-15
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The following table sets forth a summary of the receivables transferred under the pooled monetization agreement during the years ended March 31, 2024 and 2023:
 
    
Year Ended
  
    
March 31,
  
    
 2024 
     
 2023 
  
    
(Amounts in millions)
  
Gross cash proceeds received for receivables transferred and derecognized
    $ 22.2    $ 167.0
Less amounts from collections reinvested under revolving agreement
      (9.1 )       (94.3 ) 
  
 
 
     
 
 
  
Proceeds from new transfers
      13.1      72.7
Collections not reinvested and remitted or to be remitted
      (13.4 )       (66.6 ) 
  
 
 
     
 
 
  
Net cash proceeds received (paid or to be paid)
(1)
    $ (0.3 )     $ 6.1
Carrying value of receivables transferred and derecognized
(2)
    $ 22.1    $ 164.8
Obligations recorded
    $ 2.1    $ 5.9
Loss recorded related to transfers of receivables
    $ 2.0    $ 3.7
 
(1)
During the fiscal year ended March 31, 2024, the Company voluntarily repurchased $46.0 million of receivables previously transferred. In addition, during the year ended March 31, 2023, the Company repurchased $27.4 million of receivables previously transferred, as separately agreed upon with the third-party purchasers, in order to monetize such receivables under the individual monetization program discussed above without being subject to the collateral requirements under the pooled monetization program.
(2)
Receivables net of unamortized discounts on long-term,
non-interest
bearing receivables.
At March 31, 2025 and March 31, 2024, there were no outstanding receivables derecognized from the Company’s consolidated balance sheet, for which the Company continues to service, related to the pooled monetization agreement.
Other Assets
The composition of the Company’s other assets is as follows as of March 31, 2025 and 2024:
 
    
March 31,
2025
     
March 31,
2024
  
    
(Amounts in millions)
  
Other current assets
      
Prepaid expenses and other
(1)
    $ 43.1    $ 34.8
Restricted cash
      67.9      43.7
Contract assets
      61.4      59.9
Interest rate swap assets
      —         35.6
Tax credits receivable
      186.8      199.1
  
 
 
     
 
 
  
   $ 359.2    $ 373.1
  
 
 
     
 
 
  
Other
non-current
assets
      
Prepaid expenses and other
    $ 18.6    $ 18.3
Restricted cash
      —         13.7
Accounts receivable
(2)
      65.7      111.7
Contract assets
(2)
      11.3      3.2
Tax credits receivable
      435.8      361.7
Operating lease
right-of-use
assets
      294.1      344.3
  
 
 
     
 
 
  
   $ 825.5    $ 852.9
  
 
 
     
 
 
  
 
F-15
5
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
 
(1)
Includes home entertainment product inventory which consists of Packaged Media and is stated at the lower of cost or market value
(first-in,
first-out
method). Costs of Packaged Media sales, including shipping and handling costs, are included in distribution and marketing expenses.
(2)
Unamortized discounts on long-term,
non-interest
bearing receivables were $7.0 million and $6.2 million at March 31, 2025 and 2024, respectively, and unamortized discounts on contract assets were $1.1 million and $0.3 million at March 31, 2025 and 2024, respectively.
Content Related Payables
Content related payables include minimum guarantees and accrued licensed program rights obligations, which represent amounts payable for film or television rights that the Company has acquired or licensed.
Other Accrued Liabilities
Other accrued liabilities include employee related liabilities (such as accrued bonuses and salaries and wages) of $59.2 million and $116.2 million at March 31, 2025 and March 31, 2024, respectively.
Accumulated Other Comprehensive Income
The following table summarizes the changes in the components of accumulated other comprehensive income, net of tax. During the fiscal years ended March 31, 2025, 2024, and 2023, there was no income tax expense or benefit reflected in other comprehensive income due to the income tax impact being offset by changes in the Company’s deferred tax valuation allowance.
 
    
Foreign currency
translation adjustments
    
Net unrealized gain
(loss) on cash flow
hedges
    
Total
  
    
(Amounts in millions)
  
March 31, 2022
    $ (38.9 )    $ 49.1   $ 10.2
Other comprehensive income (loss)
      (2.2 )      82.8     80.6
Reclassifications to net loss
(1)
      —        10.7     10.7
  
 
 
    
 
 
    
 
 
  
March 31, 2023
      (41.1 )      142.6     101.5
Other comprehensive income (loss)
      (1.0 )      30.5     29.5
Reclassifications to net loss
(1)
      —        (34.3 )      (34.3 ) 
  
 
 
    
 
 
    
 
 
  
March 31, 2024
      (42.1 )      138.8     96.7
Other comprehensive income (loss)
      (6.9 )      2.8     (4.1 ) 
Reclassifications to net loss
(1)
      —        (31.7 )      (31.7 ) 
  
 
 
    
 
 
    
 
 
  
March 31, 2025
    $ (49.0 )    $ 109.9   $ 60.9
  
 
 
    
 
 
    
 
 
  
 
(1)
Represents a loss of $1.2 million included in direct operating expense and a gain of $32.9 million included in interest expense on the consolidated statement of operations in the fiscal year ended March 31, 2025 (2024 - loss of $0.3 million included in direct operating expense and a gain of $34.6 million included in interest expense; 2023- loss of $0.3 million included in direct operating expense and loss of $10.4 million included in interest expense) (see Note 19).
Supplemental Cash Flow Information
Interest paid during the fiscal year ended March 31, 2025 amounted to $214.0 million (2024 - $196.9 million; 2023 - $137.7 million).
 
F-1
5
6
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Income taxes paid during the fiscal year ended March 31, 2025 amounted to net tax paid of $19.5 million (2024 - net tax paid of $22.8 million; 2023 - net tax paid of $14.3 million).
Significant
non-cash
transactions during the fiscal years ended March 31, 2025, 2024, and 2023 include certain interest rate swap agreements, which are discussed in Note 19, “Financial Instruments”.
Except for
non-cash
financing activity described in Note 21, there were no significant
non-cash
financing or investing activities for the fiscal years ended March 31, 2025, 2024, and 2023. Supplemental cash flow information related to leases was as follows:
 
    
Year Ended
  
    
March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Cash paid for amounts included in the measurement of lease liabilities:
         
Operating cash flows for operating leases
    $ 68.4    $ 45.1    $ 40.3
Right-of-use
assets obtained in exchange for new lease obligations:
         
Operating leases
    $ 7.4    $ 172.1    $ 11.3
Increase in
right-of-use
assets and lease liability due to a reassessment event:
         
Operating leases - increase in
right-of-use
assets
    $ 2.8    $ 103.6    $ 17.4
Operating leases - increase in lease liability
    $ 2.8    $ 103.6    $ 17.4
21. Related Party Transactions
In connection with the Studio Separation and in the normal course of business, the Company entered into transactions with Old Lionsgate and the Starz Business which include the following, which unless otherwise indicated prior to the Studio Separation were settled through parent net investment at the time of the transaction:
Old Lionsgate corporate general and administrative expenses:
 As described in Note 1, in connection with the Business Combination, the Company and Old Lionsgate entered into the Shared Services Agreement which took effect upon the Closing. The Shared Services Agreement facilitates the allocation to the Company of all corporate general and administrative expenses of Old Lionsgate, except for an amount of $10.0 million to be allocated annually to Old Lionsgate. During the fiscal year ended March 31, 2025, $120.9 million of Old Lionsgate corporate general and administrative expenses, excluding amounts related to share-based compensation discussed below, were allocated to the Company. Of the total amount allocated to the Company during fiscal year ended March 31, 2025, $106.7 million was allocated to the Company after the Studio Separation pursuant to the Shared Services Agreement. Prior to the Studio Separation, during the fiscal year ended March 31, 2025, $14.2 million of corporate expenses were allocated to the Company (2024 -$110.6 million, 2023- $100.9 million).
Share-based compensation:
 The Studio Separation Agreement and the Shared Services Agreement provide that officers, employees and directors of Legacy LG Studios will continue to receive awards of equity and equity-based compensation pursuant to the existing equity incentive plans of Old Lionsgate. Such awards are treated as a capital contribution by Old Lionsgate to Legacy LG Studios, and the share-based compensation expense for such awards is allocated to Legacy LG Studios.
 
F-1
57
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Prior to the Studio Separation, Old Lionsgate provided share-based compensation related to the Studio Business employees and as part of its corporate expense allocations a proportionate amount of the share-based compensation related to those corporate functions is allocated to the Studio Business.
Licensing of content to the Starz Business:
 The Company licenses motion pictures and television programming (including Starz original productions) to the Starz Business. The license fees generally are due upon delivery or due at a point in time following the first showing or when the content is made available. Prior to the Studio Separation, license fee amounts due were primarily settled with the Starz Business through parent net investment. License fees receivable (net of amounts owed to the Starz Business) are reflected in Due from Starz Business on the consolidated balance sheets. The consideration to which the Company is entitled under the license agreements with the Starz Business is included in revenue from contracts with customers and presented separately in the consolidated statements of operations (see Note 13). In the fiscal years ended March 31, 2025, 2024 and 2023, the Company recognized revenue of $619.7 million, $545.9 million and $775.5 million, respectively, related to these licensing arrangements with the Starz Business, which is separately presented in the “Revenue - Related Party” line on the consolidated statements of operations. As of March 31, 2025, deferred revenue on the consolidated balance sheet includes $19.1 million related to these licensing arrangements with the Starz Business.
Operating expense reimbursement:
 As previously described in Note 1, the Company pays certain expenses on behalf of the Starz Business such as certain rent expense, employee benefits, insurance and other administrative operating costs. The Starz Business also pays certain expenses on behalf of the Company such as legal expenses, software development costs and severance. See
 “Transactions with Old Lionsgate”
 below for further discussion of the settlement of these transactions. These expenditures are reflected in the financial statements of the Studio Business and the Starz Business as applicable.
Monetization of certain accounts receivables:
 The Company had an agreement with Starz for Starz to transfer certain accounts receivables to the Company to participate in the Company’s pooled monetization arrangement, which matured on October 1, 2023. The Company purchased the transferred receivables at fair value and recorded them at the purchased amount on its balance sheet and classified the purchase price paid in parent net investment (see Note 20). The accounts receivables purchased from the Starz Business were historically pledged as collateral under this agreement. Any discount on the purchase of the receivable from the Starz Business was accreted to interest income over the period to collection of the accounts receivable. The accounts receivable purchased from the Starz Business and subsequent collections were reflected as investing activities in the consolidated statements of cash flows.
Transactions with Old Lionsgate
Prior to the Studio Separation, Old Lionsgate utilized a centralized approach to cash management. Cash generated by the Studio Business was managed by Old Lionsgate’s centralized treasury function and cash was routinely transferred to the Company or to the Starz Business to fund operating activities when needed. Payables to and receivables from Old Lionsgate, primarily related to the Starz Business, were often settled through movement to the intercompany accounts between Old Lionsgate, the Starz Business and the Studio Business. Other than certain specific balances related to unsettled payables or receivables, the intercompany balances between the Studio Business and Old Lionsgate were accounted for as parent net investment.
Because of this centralized approach to cash management, financial transactions for cash movement and the settlement of payables and receivables when due with Old Lionsgate were generally accounted for through the parent net investment account. Settlements of amounts payable and receivable when due through the parent net investment account were reflected as cash payments or receipts for the applicable operating transaction within
 
F-1
58
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
operating activities, with the net change in parent net investment included within financing activities in the consolidated statements of cash flows.
The net transfers to and from Old Lionsgate through the period prior to the Studio Separation discussed above were as follows:
 
    
Year Ended
  
    
March 31,
  
    
  2025  
     
  2024  
     
  2023  
  
Cash pooling and general financing activities
    $ 91.6    $ (199.3 )       36.1
Licensing of content
(1)
      11.7      540.0      733.3
Corporate reimbursements
      (5.3 )       7.0      13.3
Corporate expense allocations (excluding allocation of share-based compensation)
      2.3      27.9      22.3
Funding of purchases of accounts receivables held for collateral
      —         (85.5 )       (183.7 ) 
  
 
 
     
 
 
     
 
 
  
Net transfers to (from) Parent per consolidated statements of cash flows
    $ 100.3    $ 290.1    $ 621.3
  
 
 
     
 
 
     
 
 
  
Share-based compensation (including allocation of share-based compensation)
      (6.0 )       (62.5 )       (73.4 ) 
Other
non-cash
transfer
(2)
      (38.8 )       11.9      2.5
  
 
 
     
 
 
     
 
 
  
Net transfers to (from) Parent per consolidated statements of equity (deficit)
    $ 55.5    $ 239.5    $ 550.4
  
 
 
     
 
 
     
 
 
  
 
(1)
Reflects the settlement of amounts due from the Starz Business related to the Company’s licensing arrangements with the Starz Business.
(2)
Includes a
non-cash
transfer of debt through Parent net investment of $35.0 million in connection with the Studio Separation in the fiscal year ended March 31, 2025.
Other Related Party Transactions
Ignite, LLC
. In April 2004, a wholly-owned subsidiary of the Company entered into agreements (as amended) with Ignite, LLC (“Ignite”) for distribution rights to certain films. Michael Burns, the Vice Chair and a director of the Company, owns a 65.45% interest in Ignite, and Hardwick Simmons, a director of the Company, owns a 24.24% interest in Ignite. During the year ended March 31, 2025, $0.2 million was paid to Ignite under these agreements (2024 - $0.3 million; 2023 -$0.4 million).
Sponsor Option Agreement.
 On May 13, 2024, Old Lionsgate consummated the transactions contemplated by the Business Combination Agreement. Harry E. Sloan, a member of the Company’s Board of Directors, was the Chairman of SEAC and owned, directly or indirectly, a material interest in Eagle Equity Partners V, LLC, a Delaware limited liability company, the SEAC sponsor. Mr. Sloan recused himself from the decisions to approve the business combination.
In connection with the Business Combination, SEAC received an aggregate of $1.00 and 2,200,000 SEAC Sponsor Options each of which entitled SEAC Sponsor to purchase one SEAC Class A Ordinary Share at $0.0001 per share. The SEAC Sponsor Options became options to purchase Old Lionsgate’s common shares pursuant to the terms of the Sponsor Option Agreement. Lionsgate assumed in writing all of the obligations
 
F-1
59
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
under and in accordance with the Sponsor Option Agreement pursuant to an amendment thereto under which the SEAC Sponsor Options became exercisable for 2,177,191 common shares of Lionsgate.
Letter Agreement.
 On July 9, 2009, Old Lionsgate entered into a letter agreement (as amended from time to time, the “MHR Letter Agreement”) with Dr. Mark H. Rachesky, the Chairman of the Company’s Board of Directors. The MHR Letter Agreement provided, subject to certain terms and conditions, including that Dr. Rachesky and certain of his affiliates hold at least 8,192,246 common shares of Old Lionsgate, subject to equitable adjustment (which amount represented approximately 7% of Old Lionsgate’s common shares outstanding as of May 22, 2009), that in the event Old Lionsgate enters into an agreement with any other person, or invites or receives a proposal, in either case which relates to the matters addressed by the MHR Letter Agreement, and that has terms or conditions that are more favorable to such other person or more restrictive to Old Lionsgate than the terms or conditions set forth in the MHR Letter Agreement or the Registration Rights Agreement with MHR Fund Management (as described below), then Old Lionsgate will offer Dr. Rachesky and certain of his affiliates the opportunity to enter into an agreement on the same terms and conditions or, as the case may be, make a competing proposal which shall be considered by Old Lionsgate in good faith before deciding whether to execute any such other agreement. Lionsgate assumed all of the obligations under and in accordance with the Letter Agreement.
Investor Rights Agreement.
 On May 6, 2025, Lionsgate entered into an investor rights agreement with MHR Fund Management LLC and affiliated funds (“MHR Fund Management”), Liberty Global Ventures Limited and Liberty Global Ltd. (collectively, “Liberty”) (as amended from time to time, the “Investor Rights Agreement”). The Investor Rights Agreement provides that, among other things, (i) for so long as funds affiliated with MHR Fund Management beneficially own at least 10,000,000 of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include three (3) designees of MHR Fund Management (at least one of whom will be an independent director and will be subject to approval by the Lionsgate Board of Directors) on its slate of director nominees for election at each future annual general and special meeting of Lionsgate’s shareholders, (ii) for so long as funds affiliated with MHR Fund Management beneficially own at least 7,500,000, but less than 10,000,000, of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include two designees of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of Lionsgate’s shareholders, and (iii) for so long as funds affiliated with MHR Fund Management beneficially own at least 5,000,000, but less than 7,500,000, of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include one designee of MHR Fund Management on its slate of director nominees for election at each future annual general meeting of Lionsgate’s shareholders. Dr. Rachesky, Emily Fine and John D. Harkey, Jr. were appointed as the designees of MHR Fund Management to the Lionsgate Board of Directors pursuant to the Investor Rights Agreement.
In addition, the Investor Rights Agreement provides that for so long as Liberty (together with certain of its affiliates) beneficially own at least 5,000,000 of Lionsgate’s then outstanding common shares in the aggregate, Lionsgate will include one designee of Liberty on its slate of director nominees for election to the Lionsgate Board of Directors at each future annual general meeting of Lionsgate’s shareholders. Michael T. Fries was appointed as the designee of Liberty to the Lionsgate Board of Directors under the Investor Rights Agreement.
In addition, under the Investor Rights Agreement, Lionsgate has also agreed to provide MHR Fund Management and Liberty Management with certain
pre-emptive
rights on shares that Lionsgate may issue in the future for cash consideration.
Under the Investor Rights Agreement, Liberty (together with certain of its affiliates) has agreed that if it sells or transfers any of its common shares to a shareholder or group of shareholders that beneficially own 5% or more of Lionsgate’s then outstanding common shares, or that would result in a person or group of persons
 
F-16
0
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
beneficially owning 5% or more of Lionsgate’s then outstanding common shares, any such transferee would have to agree to the restrictions and obligations set forth in the Investor Rights Agreement, including transfer restrictions, subject to certain exceptions set forth in the Investor Rights Agreement.
Voting Agreement.
 On May 6, 2025, Lionsgate entered into a voting agreement with Liberty and MHR Fund Management (as amended from time to time, the “Voting Agreement”). Under the Voting Agreement, Liberty has agreed to vote, in any vote of Lionsgate’s shareholders on a merger, amalgamation, plan of arrangement, consolidation, business combination, third party tender offer, asset sale or other similar transaction involving Lionsgate or any of its subsidiaries (and any proposal relating to the issuance of capital, increase in the authorized capital or amendment to any constitutional documents in connection with any of the foregoing), all of the common shares beneficially owned by them (together with certain of their affiliates) in excess of 18.5% of Lionsgate’s outstanding voting power in the aggregate in the same proportion as the votes cast by other shareholders.
In addition, each of Liberty and MHR Fund Management (together with certain of their affiliates) has agreed that as long as any of them have the right to nominate at least one representative to the Lionsgate Board of Directors, each of them will vote all of Lionsgate’s common shares owned by them (together with certain of their affiliates) in favor of each of the other’s respective nominees to the Lionsgate Board of Directors, subject to certain exceptions set forth in the Voting Agreement.
Under the Voting Agreement, Liberty (together with certain of its affiliates) has also agreed that if it sells or transfers any of its common shares to a shareholder or group of shareholders that beneficially own 5% or more of Lionsgate’s common shares, or that would result in a person or group of persons beneficially owning 5% or more of Lionsgate’s common shares, any such transferee would have to agree to the Voting Agreement, subject to certain exceptions set forth in the Lionsgate Voting Agreement.
Registration Rights Agreements.
 On May 6, 2025, Lionsgate entered into a registration rights agreement with each of MHR Fund Management and Liberty (together with certain of their affiliates). The two registration rights agreements described in the foregoing are referred to herein as the “Registration Rights Agreements.”
Each Registration Rights Agreement provides that the applicable investor is entitled to two demand registration rights to request that Lionsgate register all or a portion of their common shares. In addition, in the event that Lionsgate proposes to register any of Lionsgate’s equity securities or securities convertible into or exchangeable for Lionsgate’s equity securities, either for its own account or for the account of other security holders, the applicable investor will be entitled to certain “piggyback” registration rights allowing them to include their shares in such registration, subject to customary limitations. As a result, whenever Lionsgate proposes to file a registration statement under the Securities Act, other than with respect to a registration statement on Forms
S-4
or
S-8
or certain other exceptions, the applicable investor will be entitled to notice of the registration and have the right, subject to certain limitations, to include their shares in the registration.
The registration rights described above of Liberty will terminate on the first anniversary of the date that Liberty (together with certain of its affiliates) both (i) beneficially owns less than 5,713,774 common shares (which amount, for the avoidance of doubt, represents approximately 2% of Lionsgate’s common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the Lionsgate Board of Directors. The registration rights described above of the applicable affiliates of MHR Fund Management will terminate on the first anniversary of the date that they both (i) beneficially own less than 28,568,868 common shares (which amount, for the avoidance of doubt, represents approximately 10% of Lionsgate’s common shares outstanding as of May 7, 2025), and (ii) ceases to have a designated representative on the Lionsgate Board of Directors.
 
F-16
1
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
The foregoing descriptions of the MHR Letter Agreement, the Investor Rights Agreement, the Voting Agreement and the Registration Rights Agreements is not meant to be complete and is qualified by reference to the full text of each of the MHR Letter Agreement, the Investor Rights Agreement, the Voting Agreement and the Registration Rights Agreements, respectively, which are filed as exhibits hereto and incorporated by reference herein.
Transactions with Equity Method Investees
Equity Method Investees.
 In the ordinary course of business, the Company is involved in related party transactions with equity method investees. These related party transactions primarily relate to the licensing and distribution of the Company’s films and television programs and the lease of a studio facility owned by a former equity-method investee, for which the impact on the Company’s consolidated balance sheets and consolidated statements of operations is as follows (see Note 1 and Note 6):
 
    
March 31,
  
    
 2025 
     
 2024 
  
    
(Amounts in millions)
  
Consolidated Balance Sheets
      
Accounts receivable
    $ 8.7    $ 8.1
Investment in films and television programs
      1.1        2.2  
  
 
 
     
 
 
  
Total due from related parties
    $ 9.8    $ 10.3
  
 
 
     
 
 
  
Accounts payable
(1)
    $ 17.6    $ 16.8
Participations and residuals, current
      11.1        5.5  
Participations and residuals, noncurrent
      1.8        1.3  
Deferred revenue, current
      0.1        0.1  
  
 
 
     
 
 
  
Total due to related parties
    $ 30.6    $ 23.7
  
 
 
     
 
 
  
 
    
Year Ended March 31,
  
    
2025
     
2024
     
2023
  
    
(Amounts in millions)
  
Consolidated Statements of Operations
         
Revenues
    $ 3.3    $ 3.0    $ 4.8  
Direct operating expense
    $ 4.6    $ 5.0    $ 8.3  
Distribution and marketing expense
    $ 3.0    $ 0.8    $ 0.4  
 
(1)
Amounts primarily represent production related advances due to certain of its equity method investees.
22. Subsequent Events
Starz Separation
On May 6, 2025, Old Lionsgate, through a series of transactions contemplated by the Arrangement Agreement, completed the separation of the businesses of Legacy Lionsgate Studios, from the STARZ-branded premium subscription platform business (the “Starz Separation”). Pursuant to the Arrangement Agreement, the
pre-transaction
shareholders of Old Lionsgate own shares in two separately traded public companies: (1) New Lionsgate, which was renamed “Lionsgate Studios Corp.” (and is referred to as “Lionsgate”) and holds, directly and through subsidiaries, the Studio Business previously held by Old Lionsgate, and is owned by Old Lionsgate shareholders and Legacy Lionsgate Studios shareholders, and (2) Old Lionsgate, which was renamed “Starz
 
F-16
2
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Entertainment Corp.” and holds, directly and through subsidiaries, the Starz Business that was previously held by Old Lionsgate. See Note 1 for further information.
In connection with the completion of the Starz Separation and related transactions,
pre-transaction
shareholders of Old Lionsgate holding Class A voting shares (“Old Lionsgate Class A Shares”) received one and twelve
one-hundredths
(1.12) Lionsgate new common shares (“Lionsgate Common Shares”) and one and twelve
one-hundredths
(1.12) Starz Entertainment Corp. common shares (“Starz Common Shares”) and
pre-transaction
shareholders of Old Lionsgate holding Class B
non-voting
shares (“Old Lionsgate Class B Shares”) received one Lionsgate Common Share and one Starz. Common Share.
Pre-transaction
Legacy Lionsgate Studios shareholders, other than Old Lionsgate, received, in exchange for each Legacy Lionsgate Studios common share, without par value (“Legacy Lionsgate Studios Common Share”), they held, a number of Lionsgate Common Shares equal to the product of the Lionsgate Studios Consideration Shares divided by the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation and held by Legacy Lionsgate Studios shareholders other than Old Lionsgate (such shares, the “LG Studios Flip Shares” and such ratio, the “LG Studios Reorganization Ratio”). The LG Studios Consideration Shares equals the aggregate number of Legacy Lionsgate Studios Common Shares obtained when the LG Studios Flip Percentage is multiplied by the quotient of (a) the aggregate number of Lionsgate Common Shares issued to Lionsgate shareholders divided by (b) 1 minus the LG Studios Flip Percentage. The LG Studios Flip Percentage equals the quotient, expressed as a percentage, of (1) the LG Studios Flip Shares divided by (2) the total number of Legacy Lionsgate Studios Common Shares issued and outstanding immediately prior to the Starz Separation. Such transactions by Legacy Lionsgate Studios shareholders are collectively referred to as the “LG Studios Flip.”
Each of Lionsgate and Starz Entertainment Corp. have a single class of “one share, one vote” common shares.
Following completion of the Starz Separation, Lionsgate Common Shares began trading under the symbol “LION” on the New York Stock Exchange (“NYSE”) and Starz Common Shares began trading under the symbol “STRZ” on the Nasdaq Global Select Market (“NASDAQ”). Old Lionsgate Class A Shares and Old Lionsgate Class B Shares were withdrawn from listing on NYSE and Legacy Lionsgate Studios Common Shares were withdrawn from listing on NASDAQ.
Financing
. On May 6, 2025, all outstanding obligations in respect of principal, interest and fees under the Old Lionsgate Credit Agreement, were repaid in full and all commitments thereunder were terminated. On May 6, 2025, all outstanding obligations in respect of principal, interest and fees were repaid in full and all commitments were terminated under each of (i) Intercompany Revolver and (ii) the Intercompany Note.
Lionsgate Credit Agreement.
 On May 6, 2025, Lionsgate entered into a new credit agreement (the “Lionsgate Credit Agreement”) with Lions Gate Television Inc. (“LGTV”), as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent.
The Lionsgate Credit Agreement provides for an $800.0 million senior secured revolving credit facility, which facility may be increased to a total amount not in excess of $1,200.0 million, subject to the terms and conditions set forth therein. Availability of funds under the Lionsgate Credit Agreement is subject to a borrowing base. The Lionsgate Credit Agreement and commitments thereunder will mature on the date that is five years after the closing date of the facility.
Borrowings under the Lionsgate Credit Agreement will bear interest at a rate per annum equal to, at LGTV’s option, either Term SOFR (subject to a 0.00% floor) or a base rate, in each case plus a margin of 2.50% for SOFR loans and 1.50% for base rate loans. LGTV will pay a commitment fee equal to 0.375% per annum in respect of unutilized commitments thereunder.
 
F-16
3
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Borrowings under the Lionsgate Credit Agreement may be used for working capital needs and other general corporate purposes, including the financing of permitted acquisitions and investments and to fund the development, production and acquisition costs of motion pictures and episodic series and other transactions not prohibited by the terms thereof.
LGTV’s obligations under the Lionsgate Credit Agreement are guaranteed by Lionsgate and substantially all of its wholly owned restricted subsidiaries and secured by substantially all assets LGTV and the guarantors, in each case subject to certain customary exceptions.
The Lionsgate Credit Agreement contains certain customary affirmative and negative covenants that limit the ability of Lionsgate and its restricted subsidiaries, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, asset sales and acquisitions, pay dividends and make other restricted payments and enter into transactions with affiliates. The Lionsgate Credit Agreement also contains events of default customary for financings of this type, including relating to a change of control. In addition, the Lionsgate Credit Agreement requires Lionsgate to maintain a Liquidity Ratio (as defined in the Lionsgate Credit Agreement) of no less than 1.10 to 1.00 as of the last day of each fiscal quarter.
6.000% Notes.
 On May 6, 2025, in connection with the completion of the Starz Separation, LGTV assumed the Exchange Notes by way of supplemental indenture (the “Supplemental Indenture”). Pursuant to the terms of the Supplemental Indenture, LGTV agreed to assume and perform as primary obligor all obligations of the initial issuer under the Exchange Notes and the initial issuer was released and discharged from all obligations thereunder.
Following completion of the Starz Separation, the Exchange Notes bear interest at 6.000% per annum payable semi-annually and mature April 15, 2030. The Exchange Notes are redeemable at LGTV’s option in whole at any time, or in part from time to time, at certain specified redemption prices, plus accrued and unpaid interest, if any, to, but not including, the redemption date, see Note 8.
Incentive Plans.
 On May 6, 2025, Lionsgate assumed the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan, and the plan was amended and restated as the Lionsgate Studios Corp. 2025 Performance Incentive Plan (the “Lionsgate 2025 Plan”), and became effective, with respect to 58,000,000 Lionsgate Common Shares. On May 6, 2025, Lionsgate became the sponsor of the Lionsgate 2025 Plan. All awards outstanding immediately prior to the completion of the Starz Separation under the equity plans of Old Lionsgate and held by employees or directors who became Lionsgate employees or directors after the Starz Separation, or by former employees (regardless of the division in which such former employee served), were converted into awards of Lionsgate under the Lionsgate 2025 Plan, except that awards of individuals who will be serving as
non-employee
directors of both Lionsgate and Starz were only partially converted into awards under the Lionsgate 2025 Plan.
Other Starz Separation Agreements.
 On May 6, 2025, Lionsgate entered into several agreements with Legacy Lionsgate Studios and Starz Entertainment Corp. in connection with the completion of the Starz Separation, including the Separation Agreement; Transition Services Agreement; Employee Matters Agreement; Amendment to Tax Matters Agreement, pursuant to which Lionsgate was made a party to the Tax Matters Agreement; and Amendment to Sponsor Option Agreement, pursuant to which Lionsgate was made a party to the Sponsor Option Agreement.
In addition, Lionsgate entered into several agreements with each of Liberty Global Ventures Limited, Liberty Global Ltd., MHR Capital Partners Master Account LP, MHR Capital Partners (100) LP, MHR
 
F-16
4
LIONSGATE STUDIOS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 
Institutional Partners II LP, MHR Institutional Partners IIA LP, MHR Institutional Partners III LP, MHR Institutional Partners IV LP and MHR Fund Management LLC and affiliated funds thereto, including the Lionsgate Voting Agreement; Lionsgate Registration Rights Agreements; and Lionsgate Investor Rights Agreement.
Rights Agreement
On May 6, 2025, the Board of Directors of Lionsgate declared a dividend of one common share purchase right (a “Right”) for each outstanding Lionsgate Common Share, and adopted a shareholder rights plan, as set forth in the Shareholder Rights Agreement dated as of May 7, 2025 (the “Rights Agreement”), by and between Lionsgate and Computershare Investor Services, Inc., as rights agent. The dividend is payable on May 20, 2025 to Lionsgate stockholders of record as of the close of business on May 19, 2025.
Other Events
Interest Rate Swaps.
 In April 2025, the Company entered into the following
pay-fixed
interest rate swaps. The Company expects to designate these interest rate swaps as cash flow hedges (all related to the Company’s SOFR-based debt, see Note 8 and Note 9):
 
Effective Date
   
Notional Amount
     
Fixed Rate Paid
    
Maturity Date
    
(in millions)
             
April 14, 2025
    $ 100.0      3.449 %    April 14, 2027
April 14, 2025
    $ 48.8      3.646 %    April 14, 2027
  
 
 
       
Total
    $ 148.8     
  
 
 
       
Sale of Equity Method Investment.
 On April 17, 2025, the Company sold its equity method ownership interest in Spyglass for $31.9 million and received proceeds of $28.9 million, with the remaining amount to be paid to the Company on the first anniversary of the closing, May 17, 2025. See Note 6.
Production Tax Credit Facility.
 In May 2025, the Company entered into an amendment to the Production Tax Credit Facility which increased the maximum principal amount to $380.0 million. See Note 9.
Backlog Facility.
 In May 2025, the Company entered into an amendment to the Backlog Facility, such that the maximum principal amount of the Backlog Facility was decreased to $150.0 million, and the Backlog Facility revolving period ends on May 30, 2025, at which point cash collections from the underlying collateral is used to repay the facility. See Note 9.
 
F-16
5

Table of Contents

Item 21. Exhibits and Financial Statement Schedules

 

  (a)

The exhibits listed below in the “Exhibit Index” are filed as part of, or are incorporated by reference in, this registration statement.

 

  (b)

Exhibit Index

EXHIBIT INDEX

 

Exhibit No.   

Description of Document

  2.1    Arrangement Agreement, dated as of January 29, 2025, by and among Lions Gate Entertainment Corp., Lionsgate Studios Holding Corp., Lionsgate Studios Corp., and LG Sirius Holdings ULC.**
  2.2    Amendment No.1 to Arrangement Agreement, dated as of March 12, 2025, by and among Lions Gate Entertainment Corp., Lionsgate Studios Corp., Lionsgate Studios Holding Corp. and LG Sirius Holdings ULC.**
  2.3    Plan of Arrangement by and among Lions Gate Entertainment Corp., Lionsgate Studios Holding Corp., Lionsgate Studios Corp., and LG Sirius Holdings ULC.
  2.4    Separation Agreement, dated as of May 6, 2025, by and among Lions Gate Entertainment Corp., Lionsgate Studios Holding Corp., Lionsgate Studios Corp., and LG Sirius Holdings ULC.
  3.1    Interim Articles of Lionsgate Studios Holding Corp.**
  3.2    Closing Articles of Lionsgate Studios Holding Corp.
  4.1    Indenture, dated as of May 8, 2024, among Lions Gate Capital Holdings 1, Inc., the guarantors party thereto, and U.S. Bank Trust Company, National Association, as Trustee.
 4.1.1    Supplemental Indenture No. 1, dated as of May 13, 2024.
 4.1.2    Supplemental Indenture No. 2, dated as of September 25, 2024.
 4.1.3    Supplemental Indenture No. 3, dated as of December 31, 2024.
 4.1.4    Supplemental Indenture No. 4, dated as of May 8, 2024.
 4.1.5    Supplemental Indenture No. 5, dated as of February 3, 2025.
 4.1.6    Supplemental Indenture No. 6, dated as of April 23, 2025.
 4.1.7    Supplemental Indenture No. 7, dated as of May 6, 2025.
  5.1    Opinion of Dentons Canada LLP regarding legality of securities being registered.
 10.1    Tax Matters Agreement, dated as of May 9, 2024, by and between Lions Gate Entertainment Corp. and Lionsgate Studios Holding Corp.**
 10.2    Amendment to Tax Matters Agreement, dated as of May 6, 2025, by and between Lions Gate Entertainment Corp. and Lionsgate Studios Holding Corp.
 10.3    Transition Services Agreement, dated as of May 6, 2025, by and between Starz Entertainment, LLC and Lions Gate Entertainment, Inc.
 10.4    Employee Matters Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp., Lionsgate Studios Corp., LG Sirius Holdings ULC and Lions Gate Entertainment Corp.
 10.5    Lionsgate Studios Corp. 2025 Performance Incentive Plan.

 

II-1

Table of Contents
Exhibit No.   

Description of Document

 10.6    Employment Agreement between Jon Feltheimer and Lions Gate Entertainment Corp., dated as of August 21, 2020.**
 10.7    Employment Agreement between Michael Burns and Lionsgate Studios Corp., dated as of May 6, 2025.
 10.8    Employment Agreement between James W. Barge and Lions Gate Entertainment Corp., dated as of March 21, 2024.**
 10.9    Employment Agreement between Brian Goldsmith and Lions Gate Entertainment Corp., dated as of October 1, 2022.**
 10.10    Employment Agreement between Bruce Tobey and Lions Gate Entertainment Corp., dated as of March 27, 2023.**
 10.11    Amendment to Employment Agreement, dated as of April 9, 2025, between Lions Gate Entertainment Corp. and Bruce Tobey.
 10.12    Employment Agreement between Jeffrey A. Hirsch and Lions Gate Entertainment Corp., dated as of September 30, 2019.**
 10.13    Amendment No. 1 to Employment Agreement between Jeffrey A. Hirsch and Lions Gate Entertainment Corp., dated as of September 28, 2023.**
 10.14    Investor Rights Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp., MHR Fund Management, LLC, Liberty Global Ventures Limited, Liberty Global LTD. and Mammoth Funds (as defined therein).
 10.15    Voting Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp., Liberty Global Ventures Limited, MHR Fund Management, LLC, Liberty Global LTD., and Mammoth Funds (as defined therein).
 10.16    Registration Rights Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp. and the MHR Group (as defined therein).*
 10.17    Registration Rights Agreement, dated as of May 6, 2025, by and between Lionsgate Studios Holding Corp. and Liberty Global Ventures Limited.*
 10.18    Sponsor Option Agreement by and among Screaming Eagle Acquisition Corp, Eagle Equity Partners V, LLC and SEAC II Corp.**
 10.19    Amendment to Sponsor Option Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp. and Eagle Equity Partners V, LLC.
 10.20    Credit and Guarantee Agreement, dated as of May 6, 2025, among Lions Gate Television Inc., as borrower, the guarantors party thereto, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as administrative agent.
 21.1    List of Subsidiaries of Lionsgate Studios Corp.
 23.1    Consent of Ernst & Young LLP, independent registered public accounting firm for Lions Gate Entertainment Corp.
 23.2    Consent of Ernst & Young LLP, independent registered public accounting firm for Lionsgate Studios Corp.
 23.3    Consent of Dentons Canada LLP (included as part of Exhibit 5.1 hereto).

 

II-2

Table of Contents
Exhibit No.   

Description of Document

 24.1    Powers of Attorney (included on the signature pages hereto).
107    Filing Fee Table.**
101.INS    Inline XBRL Instance Document.
101.SCH    Inline XBRL Taxonomy Extension Schema Document.
101.CAL    Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF    Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB    Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE    Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104    Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

 

 
*

Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The Company hereby agrees to furnish a copy of any omitted schedule or similar attachment to the Securities and Exchange Commission upon request.

**

Previously filed.

 

II-3

Table of Contents

Item 22. Undertakings.

Each undersigned Registrant hereby undertakes:

 

  (a)

to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

 

  (1)

to include any prospectus required by section 10(a)(3) of the Securities Act of 1933, as amended (the “Securities Act of 1933”);

 

  (2)

to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in the volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

 

  (3)

to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

 

  (b)

that, for the purpose of determining any liability under the Securities Act of 1933, each such post- effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;

 

  (c)

to remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering;

 

  (e)

that for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned Registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

  (1)

any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

 

  (2)

any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

 

  (3)

the portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

 

  (4)

any other communication that is an offer in the offering made by the undersigned registrant to the purchaser;

(f) Insofar as indemnification by each Registrant for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of such Registrant pursuant to the indemnification provisions described herein, or otherwise, such Registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the

 

II-4

Table of Contents

payment by such Registrant of expenses incurred or paid by a director, officer or controlling person of such Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

 

II-5

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Act, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Los Angeles, State of California, on July 24, 2025.

 

LIONSGATE STUDIOS CORP.
By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Chief Financial Officer

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints each of Jon Feltheimer, Bruce Tobey and Adrian Kuzycz, acting singly, his or her true and lawful agent, proxy and attorney-in-fact, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to (i) act on, sign and file with the SEC and the Canadian Securities Administrators any and all amendments (including post-effective amendments) to this Registration Statement together with all schedules and exhibits thereto, (ii) act on, sign and file such certificates, instruments, agreements and other documents as may be necessary or appropriate in connection therewith, (iii) act on and file any supplement to any prospectus included in this Registration Statement or any such amendment and (iv) take any and all actions which may be necessary or appropriate in connection therewith, granting unto such agents, proxies and attorneys-in-fact, and each of them, full power and authority to do and perform each and every act and thing necessary or appropriate to be done, as fully for all intents and purposes as he might or could do in person, hereby approving, ratifying and confirming all that such agents, proxies and attorneys-in-fact or any of their substitutes may lawfully do or cause to be done by virtue thereof.

IN WITNESS WHEREOF and pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the date indicated above.

 

Signature

   

Title

  

Date

/s/ James W. Barge

James W. Barge

   

Chief Financial Officer

(Principal Financial and Principal Accounting Officer)

   July 24, 2025

/s/ Gordon Crawford

Gordon Crawford

   

Director

   July 24, 2025

/s/ Jon Feltheimer

Jon Feltheimer

   

Chief Executive Officer

(Principal Executive Officer) and Director

   July 24, 2025

/s/ Emily Fine

Emily Fine

   

Director

   July 24, 2025

/s/ Michael T. Fries

Michael T. Fries

   

Director

   July 24, 2025

/s/ John D. Harkey, Jr.

John D. Harkey, Jr.

   

Director

  

July 24, 2025

 

II-6

Table of Contents

Signature

   

Title

  

Date

/s/ Susan McCaw

Susan McCaw

   

Director

   July 24, 2025

/s/ Yvette Ostolaza

Yvette Ostolaza

   

Director

   July 24, 2025

/s/ Mark H. Rachesky, M.D.

Mark H. Rachesky, M.D.

   

Director

   July 24, 2025

/s/ Richard Rosenblatt

Richard Rosenblatt

   

Director

   July 24, 2025

/s/ Harry E. Sloan

Harry E. Sloan

   

Director

   July 24, 2025

 

II-7

Exhibit 2.3

PLAN OF ARRANGEMENT

UNDER PART 9 DIVISION 5

OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)

ARTICLE 1

DEFINITIONS AND INTERPRETATION

 

1.1

Definitions

 

1.1.1

In this Plan of Arrangement, any capitalized term used herein and not defined in this Section 1.1.1 will have the meaning ascribed thereto in the Arrangement Agreement. Unless the context otherwise requires, the following words and phrases used in this Plan of Arrangement will have the meanings hereinafter set out:

“Affected Person” has the meaning ascribed thereto in Section 7.1.1.

“Arrangement” means an arrangement under Part 9, Division 5 of the BCBCA, on the terms and subject to the conditions set out in this Plan of Arrangement, subject to any amendments or variations to this Plan of Arrangement made in accordance with the terms of the Arrangement Agreement and the provisions of this Plan of Arrangement or made at the direction of the Court in the Final Order with the consent of LGEC and LG Studios, such consent, in each case, not to be unreasonably withheld, conditioned or delayed.

“Arrangement Agreement” means the arrangement agreement dated as of January 29, 2025, between LGEC, LG Studios, Sirius, and New Lionsgate, together with the Schedules attached thereto, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms thereof.

“Arrangement Effective Date” means, unless otherwise agreed to in writing by the Parties, the first Business Day after the date of the Final Order.

“Arrangement Effective Time” means the time on the Arrangement Effective Date designated by LGEC and LG Studios in a joint notice delivered to New Lionsgate pursuant to the Arrangement Agreement, or, if no such notice is given, 2:30 p.m. Pacific time on the Arrangement Effective Date.

“BCBCA” means the Business Corporations Act (British Columbia) and the regulations made thereunder, as now in effect and as they may be promulgated or amended from time to time.

“Broker” has the meaning ascribed thereto in Section 7.1.2(a).

“Business Day” means any day of the year, other than a Saturday, Sunday, a holiday as defined in the Interpretation Act (British Columbia), or any day on which major banks are closed for business in Vancouver, British Columbia, Los Angeles, California, or New York, New York.

“Class A Exchange Ratio” means, subject to any adjustment in the manner and in the circumstances contemplated in the Arrangement Agreement, one and twelve one-hundredths (1.12).

 

1

“Court” means the Supreme Court of British Columbia.

“Final Order” means the final order of the Court made pursuant to section 291 of the BCBCA, in a form acceptable to each of LGEC and LG Studios, each acting reasonably, approving the Arrangement, as such order may be amended by the Court with the consent of LGEC and LG Studios, such consent, in each case, not to be unreasonably withheld, conditioned or delayed, at any time prior to the Arrangement Effective Date, or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended, on appeal, provided that any such amendment is acceptable to each of LGEC and LG Studios, each acting reasonably.

“Governmental Entity” means (i) any international, multinational, national, federal, provincial, state, regional, municipal, local or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, commissioner, board, bureau, ministry, agency or instrumentality, domestic or foreign, including the U.S. Internal Revenue Service and the Canada Revenue Agency, (ii) any subdivision or authority of any of the above, (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing or (iv) any stock exchange.

“Initial Exchange Effective Time” means the time that step 3.1.1(c) of this Plan of Arrangement occurs, expressed in Pacific time.

“Initial Lion Shares” means the total number of Lion Common Shares issued to New Lionsgate Shareholders pursuant to Section 3.1.1(i) of this Plan of Arrangement.

“Initial Starz Shares” means the number of Starz Common Shares equal to (i) the number of LGEC Class A Shares outstanding as of immediately prior to the Arrangement Effective Time multiplied by one and twelve one-hundredths (1.12), plus (ii) the number of LGEC Class B Shares outstanding immediately prior to the Arrangement Effective Time.

“Law” means, with respect to any Person, any and all applicable laws (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, notice, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have the force of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended.

“LG Studios” means Lionsgate Studios Corp., a company existing under the laws of the Province of British Columbia.

“LG Studios Arrangement Resolution” means the special resolution of LG Studios Shareholders approving the Arrangement to be considered at the LG Studios Meeting, in substantially the form attached as Schedule C to the Arrangement Agreement.

“LG Studios Circular” means the notice of the LG Studios Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to LG Studios Shareholders in connection with the LG Studios Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Arrangement Agreement.

 

2

“LG Studios Consideration Shares” means the aggregate number of Lion Common Shares equal to the product obtained when the LG Studios Flip Percentage is multiplied by the quotient of (a) the Initial Lion Shares divided by (b) 1 (one) minus the LG Studios Flip Percentage.

“LG Studios Dissent Rights” has the meaning ascribed thereto in Section 4.2.1.

“LG Studios Dissenting Shares” has the meaning ascribed thereto in Section 4.2.2.

“LG Studios Flip Percentage” means the number of LG Studios Flip Shares divided by the total number of LG Studios Shares issued immediately prior to the Arrangement Effective Time, multiplied by one hundred (100) and expressed as a percentage to four decimal places.

“LG Studios Flip Shares” means the LG Studios Shares issued and outstanding immediately prior to the Arrangement Effective Time other than the Sirius Owned Shares.

“LG Studios Interim Order” means the interim order of the Court made pursuant to section 291 of the BCBCA, in a form acceptable to each of LG Studios and LGEC, each acting reasonably, providing for, among other things, the calling and holding of the LG Studios Meeting, as the same may be amended by the Court with the consent of LG Studios and LGEC, each such consent not to be unreasonably withheld, conditioned or delayed.

“LG Studios Meeting” means the special meeting of LG Studios Shareholders, including any adjournment or postponement of such special meeting in accordance with the terms of the Arrangement Agreement, to be called and held in accordance with the LG Studios Interim Order to consider the LG Studios Arrangement Resolution and for any other purpose as may be set out in the LG Studios Circular.

“LG Studios Per Share Consideration” means, for each one (1) LG Studios Flip Share, the number (which may be less than or greater than one (1)) of a Lion Common Share equal to the quotient of the LG Studios Consideration Shares divided by the LG Studios Flip Shares, expressed to four decimal places.

“LG Studios Shareholders” means the registered holders of LG Studios Shares.

“LG Studios Shares” means the common shares in the capital of LG Studios.

“LG Studios Sponsor Options” means the 2,200,000 options to purchase one LG Studios common share held by Eagle Equity Partners V, LLC pursuant to the terms of a Sponsor Option Agreement dated May 10, 2024, as amended prior to the Arrangement Effective Time by the Amendment to the Sponsor Option Agreement (collectively, the “Sponsor Option Agreement”).

“LGEC” means Lions Gate Entertainment Corp., a company existing under the laws of the Province of British Columbia, renamed “Starz Entertainment Corp.” at the time of Section 3.1.1(e) of this Plan of Arrangement.

“LGEC Arrangement Resolution” means the resolution of the LGEC Shareholders to be considered at the LGEC Meeting approving the Arrangement, in substantially the form attached as Schedule B to the Arrangement Agreement.

 

3

“LGEC Circular” means the notice of the LGEC Meeting and accompanying management information circular, including all schedules, appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to LGEC Shareholders in connection with the LGEC Meeting, as amended, supplemented or otherwise modified from time to time in accordance with the terms of the Arrangement Agreement.

“LGEC Class A Shares” means the Class A Voting Shares in the capital of LGEC.

“LGEC Class B Shares” means the Class B Non-Voting Shares in the capital of LGEC.

“LGEC Dissent Rights” means the rights of dissent of the LGEC Shareholders in respect of the LGEC Arrangement Resolution as described in Section 4.1.1.

“LGEC Dissenting Shareholder” means a registered LGEC Shareholder who has validly exercised a LGEC Dissent Right and who is ultimately entitled to be paid the fair value of LGEC Shares held by such registered LGEC Shareholder, but such LGEC Shareholder will only be a LGEC Dissenting Shareholder in respect of LGEC Shares in respect of which LGEC Dissent Rights are validly exercised by such holder in strict compliance with the terms of the LGEC Dissent Rights.

“LGEC Dissenting Shares” has the meaning ascribed thereto in Section 4.1.2.

“LGEC Equity Incentive Plans” means the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan, the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan, the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan, and the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan.

“LGEC Interim Order” means the interim order of the Court made pursuant to section 291 of the BCBCA, in a form acceptable to each of LGEC and LG Studios, each acting reasonably, providing for, among other things, the calling and holding of the LGEC Meeting, as the same may be amended by the Court with the consent of LGEC and LG Studios, each such consent not to be unreasonably withheld, conditioned or delayed.

“LGEC Meeting” means the special meeting of LGEC Shareholders, including any adjournment or postponement of such special meeting in accordance with the terms of the Arrangement Agreement, to be called and held in accordance with the LGEC Interim Order to consider the LGEC Arrangement Resolution and for any other purpose as may be set out in the LGEC Circular.

“LGEC Shareholders” means the registered holders of LGEC Shares.

“LGEC Shares” means the LGEC Class A Shares and the LGEC Class B Shares.

“Lien” means any mortgage, charge, pledge, hypothecation, security interest, prior claim, encroachments, option, right of first refusal or right of first offer, occupancy right, possessory right, covenant, assignment, lien (statutory, inchoate or otherwise), defect of title, restriction, adverse right or claim, or other third party interest or encumbrance of any kind, in each case, whether contingent or absolute.

“Lion Common Shares” means the Common Shares in the capital of New Lionsgate.

 

4

“New Lionsgate” means Lionsgate Studios Holding Corp., a company existing under the laws of the Province of British Columbia.

“New Lionsgate Class A Consideration” means, for each LGEC Class A Share, one (1) New Lionsgate Class A Share and one (1) New Lionsgate Class C Share.

“New Lionsgate Class A Shares” means the Class A Voting Shares in the capital of New Lionsgate.

“New Lionsgate Class B Consideration” means, for each LGEC Class B Share, one (1) New Lionsgate Class B Share and one (1) New Lionsgate Class C Share.

“New Lionsgate Class B Shares” means the Class B Non-Voting Shares in the capital of New Lionsgate.

“New Lionsgate Class C Shares” means the Class C Preferred Shares in the capital of New Lionsgate.

“New Lionsgate Consideration” means the New Lionsgate Class A Consideration and the New Lionsgate Class B Consideration.

“New Lionsgate Equity Incentive Plan” means, from the date of the conclusion of the Arrangement, the Lionsgate Studios Corp. 2025 Performance Incentive Plan.

“New Lionsgate Shareholders” means the registered holders of New Lionsgate Shares.

“New Lionsgate Shares” means the New Lionsgate Class A Shares, the New Lionsgate Class B Shares, and the New Lionsgate Class C Shares.

“Parties” means LGEC, LG Studios, Sirius, and New Lionsgate, and “Party” means any of them, as the context requires.

“Payment Agent” means such Person, if any, as LGEC may select to be appointed to act as payment agent for cash entitlements due to fractions or consolidations in relation to the Arrangement.

“Per Share Class A Separation Consideration” means, for each one (1) New Lionsgate Class A Share and one (1) New Lionsgate Class C Share, together, issued to a holder of LGEC Class A Shares in Section 3.1.1(c) of this Plan of Arrangement, the number of Lion Common Shares equal to one (1) multiplied by the Class A Exchange Ratio, and the number of Starz Common Shares equal to one (1) multiplied by the Class A Exchange Ratio.

“Per Share Class B Separation Consideration” means, for each one (1) New Lionsgate Class B Share and one (1) New Lionsgate Class C Share, together, issued to a holder of LGEC Class B Shares in Section 3.1.1(c) of this Plan of Arrangement, one (1) Lion Common Share and one (1) Starz Common Share.

“Person” includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator, legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.

 

5

“Plan of Arrangement” means this plan of arrangement, subject to any amendments or variations hereto made in accordance with Section 5.1 of the Arrangement Agreement or Section 6.1 hereto, or made at the direction of the Court in the Final Order with the consent of LGEC and LG Studios, such consent, in each case, not to be unreasonably withheld, conditioned or delayed.

“Registrar” means the person appointed as the Registrar of Companies pursuant to section 400 of the BCBCA.

“Separation Consideration” means the Initial Lion Shares and the Starz Common Shares issued to New Lionsgate Shareholders pursuant to Section 3.1.1(i) of this Plan of Arrangement.

“Separation Effective Time” means the time that step 3.1.1(i) of this Plan of Arrangement occurs, expressed in Pacific time.

“Sirius” means LG Sirius Holdings ULC, an unlimited liability company existing under the laws of the Province of British Columbia.

“Sirius Owned Share Value” means the fair market value of the Sirius Owned Shares as at the Arrangement Effective Time.

“Sirius Owned Shares” means all of the LG Studios Shares owned by Sirius at the Arrangement Effective Time.

“Starz Common Shares” means the class of common shares in the capital of LGEC created at the time of Section 3.1.1(e) of this Plan of Arrangement.

“Starz Equity Incentive Plan” means, from the date of the conclusion of the Arrangement, the Starz Entertainment Corp. 2025 Performance Incentive Plan.

“Tax Act” means the Income Tax Act (Canada) and the regulations promulgated thereunder, each as amended.

“U.S. Tax Code” means the United States Internal Revenue Code of 1986, as amended.

“U.S. Holder” means a beneficial owner of LGEC Shares, Lion Common Shares or Starz Common Shares who is a “United States person” within the meaning of Section 7701(a)(30) U.S. Tax Code, other than a “domestic partnership” (within the meaning of Section 7701(a)(30)(B) of the U.S. Tax Code).

“Withholding Obligation” has the meaning ascribed thereto in Section 7.1.1.

 

1.2

Interpretation Not Affected by Headings

The headings contained in this Plan of Arrangement are for convenience of reference only and will not affect in any way the meaning or interpretation of this Plan of Arrangement. The terms “this Plan of Arrangement”, “hereof”, “herein”, “hereto”, “hereunder” and similar expressions refer to this Plan of Arrangement and not to any particular Article, Section or Subsection hereof and include any agreement or instrument supplementary or ancillary hereto.

 

6

1.3

Date for any Action

If the date on which any action is required to be taken hereunder is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day.

 

1.4

Number and Gender

In this Plan of Arrangement, unless the context otherwise requires, words importing the singular include the plural and vice versa, and words importing gender include all genders and neuter.

 

1.5

References to Persons and Statutes

A reference to a Person includes any successor to that Person. Any reference to a statute or to a rule of a self-regulatory organization, including any stock exchange, refers to such statute or rule, and all rules and regulations, administrative policy statements, instruments, blanket orders, notices, directions and rulings issued or adopted under it, as it or they may have been or may from time to time be amended or re-enacted, unless stated otherwise.

 

1.6

Currency

Unless otherwise stated in this Plan of Arrangement, all references herein to “dollars” or “$” are references to Canadian dollars and all references herein to “U.S. dollars” or “US$” are references to United States dollars.

 

1.7

Time

All times expressed herein are local time (Vancouver, British Columbia) unless otherwise stipulated.

 

1.8

Governing Law

This Plan of Arrangement will be governed by and construed in accordance with laws of the Province of British Columbia and other federal laws of Canada applicable therein.

ARTICLE 2

ARRANGEMENT AGREEMENT; EFFECTIVENESS

 

2.1

Effectiveness

 

2.1.1

This Plan of Arrangement is made pursuant to and subject to the provisions of the Arrangement Agreement, except in respect of the order and sequence of the steps comprising the Arrangement, which will occur in the order and sequence set forth in Section 3.1.1. This Plan of Arrangement constitutes an arrangement as referred to in Part 9, Division 5 of the BCBCA for LG Studios and for LGEC.

 

2.1.2

This Plan of Arrangement will become effective as at the Arrangement Effective Time and will be binding (without any further authorization, act or formality on the part of the Court, the Registrar or any other Person) from and after the Arrangement Effective Time on: LGEC, LG Studios, Sirius, New Lionsgate, the LGEC Shareholders, the LG Studios Shareholders, and any Payment Agent.

 

7

2.1.3

The transfers, assignments, alterations, exchanges, issuances, cancellations, dissolutions and other steps or transactions provided for in Section 3.1.1 of this Plan of Arrangement will occur, and will be deemed to occur, at the time specified by this Plan of Arrangement and in the order and sequence specified in Section 3.1.1, notwithstanding that certain of the procedures related thereto may not be completed until after the Arrangement Effective Date.

ARTICLE 3

THE ARRANGEMENT

 

3.1

Arrangement

 

3.1.1

Commencing at the Arrangement Effective Time, unless otherwise specifically provided in this Section 3.1.1, each of the following transactions and events in subsections (a) through (n) of this Section 3.1.1 will occur and will be deemed to occur sequentially as set out below without any further authorization, act or formality, in each case effective as at one minute intervals following the transaction or event described in the immediately preceding subsection:

 

  (a)

each LGEC Share outstanding immediately prior to the Arrangement Effective Time held by a LGEC Shareholder in respect of which LGEC Dissent Rights have been validly exercised will be, and will be deemed to be, transferred free and clear of all Liens by the holder thereof to New Lionsgate without any further act or formality, and:

 

  (i)

such LGEC Shareholder will cease to be the holder of such LGEC Dissenting Shares and will cease to have any rights as a holder of such LGEC Dissenting Shares other than the right to be paid fair value for such LGEC Dissenting Shares as set out in Section 4.1.2;

 

  (ii)

such LGEC Shareholder’s name will be removed as the registered holder of such LGEC Dissenting Shares from the central securities register of LGEC Dissenting Shares maintained by or on behalf of LGEC; and

 

  (iii)

New Lionsgate will be deemed to be the legal and beneficial owner of such LGEC Dissenting Shares so transferred and will be recorded as the registered holder thereof on the central securities registers for the LGEC Dissenting Shares;

 

  (b)

the notice of articles of New Lionsgate will be amended to remove all of the existing directors and to name the following individuals as directors of New Lionsgate:

 

  (i)

Michael Burns;

 

  (ii)

Mignon L. Clyburn;

 

  (iii)

Gordon Crawford;

 

  (iv)

Jon Feltheimer;

 

  (v)

Emily Fine;

 

8

  (vi)

Michael T. Fries;

 

  (vii)

John D. Harkey, Jr.;

 

  (viii)

Susan McCaw;

 

  (ix)

Yvette Ostolaza;

 

  (x)

Mark H. Rachesky;

 

  (xi)

Hardwick Simmons; and

 

  (xii)

Harry E. Sloan.

 

  (c)

all of the New Lionsgate Class A Shares held by LGEC will be repurchased for their initial subscription price and cancelled and LGEC will be removed from the New Lionsgate Class A Share central securities register and each outstanding LGEC Class A Share will be transferred by the holder thereof to New Lionsgate without any further authorization, act, or formality by such holders, in exchange for the New Lionsgate Class A Consideration, and each outstanding LGEC Class B Share will be transferred by the holder thereof to New Lionsgate without any further authorization, act, or formality by such holders, in exchange for the New Lionsgate Class B Consideration, and in connection therewith,

 

  (i)

each holder of an LGEC Share will cease to be the holder thereof and to have any rights as a LGEC Shareholder other than the right to receive the New Lionsgate Consideration;

 

  (ii)

the name of the holder of such LGEC Share will be removed from LGEC’s central securities register in respect of such LGEC Share;

 

  (iii)

New Lionsgate will be deemed to be the legal and beneficial owner of such LGEC Shares so transferred, free and clear of all Liens, and will be recorded as the registered holder thereof on the central securities registers for the LGEC Shares;

 

  (iv)

each former holder of an exchanged LGEC Share will be entered in New Lionsgate’s central securities register for the New Lionsgate Shares as the owner of the New Lionsgate Shares constituting the New Lionsgate Consideration received by such shareholder; and

 

  (v)

there will be added to the capital account maintained by New Lionsgate in respect of the New Lionsgate Class A Shares, for each New Lionsgate Class A Share issued to a LGEC Shareholder in partial consideration of an exchange of a LGEC Class A Share by such LGEC Shareholder pursuant to Section 3.1.1(c), an amount equal to the fair market value of such LGEC Class A Share as of immediately prior to such transfer less $0.01. There shall be added to the capital account maintained by New Lionsgate in respect of the New Lionsgate Class B Shares, for each New Lionsgate Class B Share issued to a LGEC Shareholder in partial consideration of an exchange of a LGEC Class B Share by such LGEC Shareholder pursuant to Section 3.1.1(c), an amount equal to the fair market value of such LGEC Class B Share

 

9

  as of immediately prior to such transfer less $0.01. There shall be added to the capital account maintained by New Lionsgate in respect of the New Lionsgate Class C Shares, for each New Lionsgate Class C Share issued to a LGEC Shareholder in partial consideration of an exchange of a LGEC Class A Share or LGEC Class B Share by a LGEC Shareholder pursuant to Section 3.1.1(c), an amount equal to $0.01;

 

  (d)

Sirius will be voluntarily dissolved in accordance with Section 314 of the BCBCA and in connection therewith, effective immediately prior to the voluntary dissolution,

 

  (i)

Sirius will reduce the capital of its class of common shares to $1.00 without any repayment of capital to LGEC; and

 

  (ii)

Sirius will transfer and assign all of its property to LGEC, and LGEC will assume all of the liabilities and obligations of Sirius. As a consequence of such assignment and assumption from the time of this Section 3.1.1(d) of the Plan of Arrangement, LGEC will own all of the Sirius Owned Shares;

 

  (e)

LGEC’s name will be changed to “Starz Entertainment Corp.” and the authorized capital of LGEC will be altered to create the Starz Common Shares and, in connection therewith, LGEC’s notice of articles will be amended to reflect the change of name and the alterations to LGEC’s capital, and the articles in the form attached as Schedule D to the Arrangement Agreement will be the articles of Starz Entertainment Corp. (formerly LGEC);

 

  (f)

all of the outstanding LGEC Shares will be transferred by New Lionsgate to Starz Entertainment Corp. (formerly LGEC) without any further authorization, act, or formality by Starz Entertainment Corp. (formerly LGEC) or New Lionsgate, in exchange for the Initial Starz Shares and the Sirius Owned Shares, and in connection therewith,

 

  (i)

all of the LGEC Shares held by New Lionsgate will be cancelled and New Lionsgate will be removed from the LGEC Share central securities registers with respect to the LGEC Shares;

 

  (ii)

Starz Entertainment Corp. (formerly LGEC) will issue the Initial Starz Shares to New Lionsgate, and New Lionsgate will be deemed to be the legal and beneficial owner of such Starz Common Shares so issued, free and clear of all Liens, and will be recorded as the registered holder thereof on the central securities registers for the Starz Common Shares;

 

  (iii)

New Lionsgate will be entered in LG Studio’s central securities register for the Sirius Owned Shares as the owner of the Sirius Owned Shares; and

 

  (iv)

there will be added to the capital account maintained by Starz Entertainment Corp. (formerly LGEC) in respect of the Starz Common Shares an amount equal to the aggregate fair market value of the LGEC Shares as at the Arrangement Effective Time less the Sirius Owned Share Value.

 

10

  (g)

the authorized capital of Starz Entertainment Corp. (formerly LGEC) will be altered to eliminate the LGEC Class A Shares and the LGEC Class B Shares, and in connection therewith Starz Entertainment Corp.’s (formerly LGEC) notice of articles will be amended to reflect the alterations to Starz Entertainment Corp.’s (formerly LGEC) capital, and the articles in the form attached as Schedule E to the Arrangement Agreement will be the articles of Starz Entertainment Corp. (formerly LGEC);

 

  (h)

the authorized capital of New Lionsgate will be altered to create the Lion Common Shares and in connection therewith the notice of articles of New Lionsgate will be amended to reflect the alterations to New Lionsgate’s capital;

 

  (i)

the New Lionsgate Class A Shares, New Lionsgate Class B Shares, and New Lionsgate Class C Shares will be transferred by the holders thereof to New Lionsgate without any further authorization, act, or formality by such holders, in exchange for the Separation Consideration, and, in connection therewith,

 

  (i)

each holder of New Lionsgate Class A Shares will exchange all of such holder’s New Lionsgate Class A Shares, together with all of such holder’s New Lionsgate Class C Shares, for the Per Share Class A Separation Consideration for each one New Lionsgate Class A Share and New Lionsgate Class C Share, with the Per Share Class A Separation Consideration being allocated as between each New Lionsgate Class A Share and each New Lionsgate Class C Share exchanged by such holder based on the relative fair market value of each such New Lionsgate Class A Share and each such New Lionsgate Class C Share;

 

  (ii)

each holder of New Lionsgate Class B Shares will exchange all of such holder’s New Lionsgate Class B Shares, together with all of such holder’s New Lionsgate Class C Shares, for the Per Share Class B Separation Consideration for each one New Lionsgate Class B Share and New Lionsgate Class C Share, with the Per Share Class B Separation Consideration being allocated as between each New Lionsgate Class B Share and each New Lionsgate Class C Share exchanged by such holder based on the relative fair market value of each such New Lionsgate Class B Share and each such New Lionsgate Class C Share;

 

  (iii)

each holder of a New Lionsgate Share will cease to be the holder thereof and to have any rights as a New Lionsgate Shareholder other than the right to receive the Separation Consideration;

 

  (iv)

the name of the holder of each New Lionsgate Share will be removed from New Lionsgate’s central securities register in respect of each New Lionsgate Share;

 

  (v)

each former holder of an exchanged New Lionsgate Share will be entered in New Lionsgate’s central securities register for the Lion Common Shares as the owner of the Lion Common Shares issued as part of the Separation Consideration;

 

11

  (vi)

any fractional Lion Common Share issued as Separation Consideration to a registered New Lionsgate shareholder under this Section 3.1.1(i) will be delivered to the Paying Agent on behalf of such registered New Lionsgate shareholder, and will be converted to cash to be delivered to the registered shareholder of the Lion Common Shares in accordance with Section 3.5 of this Plan of Arrangement;

 

  (vii)

there will be added to the capital account maintained by New Lionsgate in respect of the Lion Common Shares an amount equal to the aggregate fair market value of the LGEC Shares as at the Arrangement Effective Time less the fair market value of the Starz Common Shares as at the time of this step;

 

  (viii)

each former holder of an exchanged New Lionsgate Share will be entered in Starz Entertainment Corp.’s (formerly LGEC) central securities register for the Starz Common Shares as the owner of the Starz Common Shares issued as part of the Separation Consideration;

 

  (ix)

Starz Common Shares issued as Separation Consideration to a registered New Lionsgate shareholder under this Section 3.1.1(i) may be issued as fractional shares;

 

  (j)

the authorized capital of New Lionsgate will be altered to eliminate the New Lionsgate Class A Shares, the New Lionsgate Class B Shares, and the New Lionsgate Class C Shares, and in connection therewith New Lionsgate’s notice of articles will be amended to reflect the alterations to New Lionsgate’s capital, and the articles in the form attached as Schedule F to the Arrangement Agreement will be the articles of New Lionsgate;

 

  (k)

the Starz Common Shares will be consolidated on a 15:1 basis, so each fifteen (15) whole Starz Common Shares held by a registered shareholder are consolidated to one (1) whole Starz Common Share, and in connection therewith,

 

  (i)

fractional interests of registered shareholders resulting from the 15:1 consolidation of Starz Common Shares will be rounded up to the nearest whole share; and

 

  (ii)

the central securities register for the Starz Common Shares will be updated to reflect the consolidation;

 

  (l)

each LG Studios Share outstanding immediately prior to the Arrangement Effective Time held by a LG Studios Shareholder in respect of which LG Studios Dissent Rights have been validly exercised will be, and will be deemed to be, transferred without any further act or formality to New Lionsgate free and clear of all Liens, and:

 

  (i)

such LG Studios Shareholder will cease to be the holder of such LG Studios Dissenting Shares and will cease to have any rights as a holder of such LG Studios Dissenting Shares other than the right to be paid fair value for such LG Studios Dissenting Shares as set out in Section 4.2.2;

 

  (ii)

such LG Studios Shareholder’s name will be removed as the registered holder of such LG Studios Dissenting Shares from the central securities register of LG Studios Shares maintained by or on behalf of LG Studios; and

 

12

  (iii)

New Lionsgate will be deemed to be the legal and beneficial owner of such LG Studios Dissenting Shares so transferred and will be recorded as the registered holder thereof on the central securities registers for the LG Studios Dissenting Shares;

 

  (m)

each outstanding LG Studios Flip Share not owned by New Lionsgate will be transferred by the holder thereof to New Lionsgate without any further authorization, act, or formality by the holder or by New Lionsgate, in exchange for the LG Studios Per Share Consideration, and in connection therewith:

 

  (i)

each holder of such LG Studios Flip Share will cease to be the holder thereof and to have any rights as a LG Studios Shareholder other than the right to receive the LG Studios Per Share Consideration;

 

  (ii)

the name of the holder of such LG Studios Flip Share will be removed from LG Studio’s central securities register in respect of such LG Studios Flip Share;

 

  (iii)

New Lionsgate will be deemed to be the legal and beneficial owner of such LG Studios Flip Shares so transferred, free and clear of all Liens, and will be recorded as the registered holder thereof on the central securities register for the LG Studios Shares;

 

  (iv)

each such former holder of such exchanged LG Studios Flip Share will be entered in New Lionsgate’s central securities register for the Lion Common Shares as the owner of the Lion Common Shares constituting such LG Studios Per Share Consideration;

 

  (v)

any fractional Lion Common Share issued as LG Studios Per Share Consideration to a registered LG Studios Flip Share shareholder under this Section 3.1.1(m) will be delivered to the Paying Agent on behalf of such registered LG Studios Flip Share shareholder, and will be converted to cash to be delivered to the registered shareholder of the Lion Common Shares in accordance with Section 3.5 of this Plan of Arrangement;

 

  (vi)

there will be added to the capital account maintained by New Lionsgate in respect of the Lion Common Shares issued pursuant to this Section 3.1.1(m), an aggregate amount equal to the lesser of (A) the fair market value and (B) the paid-up capital (within the meaning of the Tax Act), in either case of the LG Studios Flip Shares transferred to New Lionsgate pursuant to this Section 3.1.1(m), as of immediately prior to such transfer;

 

  (n)

the notice of articles of each of LG Studios, New Lionsgate, and Starz Entertainment Corp. (formerly LGEC) will be amended to reflect the following:

 

  (i)

LG Studios’ name will be changed to “Lionsgate Studios Holding Corp.” and the director of LG Studios will be:

 

  1)

Bruce Tobey

 

13

  (ii)

New Lionsgate’s name will be changed to “Lionsgate Studios Corp.”, the articles in the form attached as Schedule G to the Arrangement Agreement will be the articles of New Lionsgate, and the directors of New Lionsgate will be:

 

  1)

Gordon Crawford;

 

  2)

Jon Feltheimer;

 

  3)

Emily Fine;

 

  4)

Michael T. Fries;

 

  5)

John D. Harkey, Jr.;

 

  6)

Susan McCaw;

 

  7)

Yvette Ostolaza;

 

  8)

Mark H. Rachesky;

 

  9)

Richard Rosenblatt; and

 

  10)

Harry E. Sloan.

 

  (iii)

the directors of Starz Entertainment Corp. (formerly LGEC) will be:

 

  1)

Michael Burns;

 

  2)

Mignon L. Clyburn;

 

  3)

Emily Fine;

 

  4)

Lisa Gersh;

 

  5)

Marc Graboff;

 

  6)

Jeffrey A. Hirsch;

 

  7)

Bruce Mann;

 

  8)

Mark H. Rachesky;

 

  9)

Joshua W. Sapan;

 

  10)

Hardwick Simmons; and

 

  11)

Harry E. Sloan.

 

14

3.2

U.S. Tax Treatment

For U.S. federal income tax purposes, it is intended that: (i) certain transactions contemplated by Sections 3.1.1(a) through 3.1.1(j), effecting the separation of New Lionsgate from LGEC (collectively, the “Separation”), be properly treated as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the U.S. Tax Code, pursuant to which LGEC will be treated as distributing 100% of the outstanding stock of New Lionsgate to the LGEC Shareholders (ii) LGEC will recognize no gain or loss as a result of the Separation, (iii) no gain or loss will be recognized by (and no amount will be includable in the income of) U.S. Holders of LGEC Shares upon the receipt of Lion Common Shares and Stars Common Shares as a result of the Separation, except with respect to any cash received in lieu of any fractional Lion Common Share or Starz Common Share, (iv) the aggregate basis in the Lion Common Shares and Starz Common Shares received in the Separation (including any fractional share interest in Lion Common Shares or Starz Common Shares for which cash is received) in the hand of each U.S. Holder of Lion Common Shares and Starz Common Shares immediately after the Separation will equal the aggregate basis of the LGEC Shares held by such U.S. Holder immediately before the Separation, allocated in accordance with U.S. Treasury Regulation Section 1.358-2(a)(2) between the Lion Common Shares and the Starz Common Shares (including any fractional share interest in Lion Common Shares or Starz Common Shares for which cash is received) in proportion to the relative fair market value of each on the date on which the Separation Effective Time occurs, and, (v) the holding period of the Lion Common Shares and Starz Common Shares received by each U.S. Holder of LGEC Shares in the Separation (including any fractional share interest in Lion Common Shares or Starz Common Shares for which cash is received) will include the holding period at the time of the Separation of the LGEC Shares with respect to which the Lion Common Shares and Starz Common Shares are received in the Separation, provided that such shares are held as a capital asset. From and after the date of the Arrangement Agreement and until the completion of the Arrangement, each party thereto has agreed to use its reasonable best efforts to cause the transactions contemplated by the Arrangement Agreement to be properly treated as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the U.S. Tax Code, and not knowingly take any action, cause any action to be taken, fail to take any action or cause any action to fail to be taken, which action or failure to act would reasonably be expected to prevent the transactions contemplated by the Arrangement Agreement from being properly treated as such.

 

3.3

Deemed Fully Paid and Non-Assessable Shares

All LGEC Shares, Lion Common Shares, Starz Common Shares, LG Studios Shares, and New Lionsgate Shares issued under the Arrangement will be deemed to be validly issued and outstanding as fully paid and non-assessable shares for all purposes of the BCBCA.

 

3.4

Transfers Free and Clear

Any transfer of securities pursuant to this Plan of Arrangement will be free and clear of all Liens.

 

3.5

Fractional Shares

 

3.5.1

Fractional Lion Common Shares issued to Persons pursuant to Section 3.1.1(i) (“New Lionsgate Fractions”) and Section 3.1.1(m) (“Flip Fractions”, and the New Lionsgate Fractions and the Flip Fractions each a “Paid Fraction Group”) will be aggregated by Paid Fraction Group and rounded up to the nearest whole share and delivered to the Paying Agent on behalf of the holders of shares in each Paid Fraction Group to be sold in accordance with Section 3.5.3 and Section 5.3 of this Plan of Arrangement. Holders of shares in a Paid Fraction Group will receive, from the Paying Agent, cash (without interest) in an amount (rounded down to the nearest cent) representing such holder’s proportional interest in the net proceeds from the sale by the Payment Agent, on behalf of all holders of that Paid Fraction Group, of the aggregate fractional Lion Common Shares that would otherwise have been delivered to holders in the Paid Fraction Group as part of consideration pursuant to this Plan of Arrangement (each such cash amount, a “Fractional Share Cash Amount”).

 

15

3.5.2

No fractional shares will be issued to Persons pursuant to Section 3.1.1(k) (“Starz Fractions”) and any entitlement of a holder to a Starz Fraction will be, in accordance with this Plan of Arrangement, rounded up to the nearest whole Starz Common Share.

 

3.5.3

As soon as practicable after the Arrangement Effective Date, the Payment Agent will, on behalf of all Persons that would have otherwise been entitled to receive a fraction of a share in a Paid Fraction Group, effect the sale of all such shares that would otherwise have been issuable as part of the consideration at the then-prevailing price on the NYSE. After the proceeds of such sale have been received, the Payment Agent will determine the applicable Fractional Share Cash Amount payable to each applicable holder in a Paid Fraction Group and will make such amounts available to such holders in accordance with Section 5.3. The Parties acknowledge that payment of such cash consideration in lieu of issuing fractional shares is not separately bargained-for consideration, but merely represents a mechanical rounding off for the purpose of avoiding the expense and inconvenience that would otherwise be caused by the issuance of fractional shares.

 

3.5.4

No Persons that would have otherwise been entitled to receive a fraction of a share in a Paid Fraction Group will be entitled to dividends, voting rights, or any other rights in respect of any fractional share that would otherwise have been issued as part of the consideration.

 

3.6

LGEC Equity Incentive Awards

 

3.6.1

At or prior to the Separation Effective Time,

 

  (a)

LGEC will adopt the Starz Equity Incentive Plan, and such adopted plan will accommodate existing grants and awards on substantially equivalent terms and conditions as the holder enjoyed immediately prior to the Separation Effective Time under the LGEC Equity Incentive Plans, and

 

  (b)

New Lionsgate will adopt the New Lionsgate Equity Incentive Plan, and such adopted plan will accommodate existing grants and awards on substantially equivalent terms and conditions as the holder enjoyed immediately prior to the Separation Effective Time under the LGEC Equity Incentive Plans, provided that any exchange of rights or awards by any holder who is a resident of Canada for the purposes of the Tax Act shall be adjusted as necessary in order to comply with the requirements of paragraph 7(1.4)(c) of the Tax Act and such exchange shall occur following step 3.1.1(h) and prior to step 3.1.1(i).

 

3.6.2

At the moment of step 3.1.1(m) of this Plan of Arrangement, the LG Studios Sponsor Options will become exercisable for Lion Common Shares in accordance with the terms of the LG Studios Sponsor Options and the Sponsor Option Agreement and pursuant to resolutions regarding the treatment of the LG Studios Sponsor Options adopted by the board of LG Studios and the board of LGEC prior to the Arrangement Effective Time.

 

16

ARTICLE 4

RIGHTS OF DISSENT

 

4.1

LGEC Dissent Rights

 

4.1.1

Registered holders of LGEC Shares may exercise rights of dissent (the “LGEC Dissent Rights”) in connection with the Arrangement pursuant to the LGEC Interim Order and in the manner set forth in Division 2 of Part 8 of the BCBCA, as modified by the LGEC Interim Order, the Final Order and this Section 4.1, provided that the written notice setting forth the objection of such registered LGEC Shareholder to the Arrangement contemplated by Section 242 of the BCBCA must be received by LGEC not later than 4:00 p.m. (Vancouver time) on the Business Day that is two (2) Business Days before the LGEC Meeting.

 

4.1.2

LGEC Shareholders who duly and validly exercise LGEC Dissent Rights with respect to their LGEC Shares (“LGEC Dissenting Shares”) and who:

 

  (a)

are ultimately determined to be entitled to be paid fair value for their LGEC Dissenting Shares will be entitled to be paid the fair value by New Lionsgate for the LGEC Dissenting Shares and will be deemed to have irrevocably transferred such LGEC Dissenting Shares to New Lionsgate (free and clear of all Liens) pursuant to Section 3.1.1(a); or

 

  (b)

for any reason are ultimately not entitled to be paid fair value for their LGEC Dissenting Shares will be deemed to have participated in the Arrangement on the same basis as a non-dissenting LGEC Shareholder and will receive Lion Common Shares and Starz Common Shares on the same basis as every other non-dissenting LGEC Shareholder,

but in no case will LGEC or New Lionsgate be required to recognize such Persons as holding LGEC Shares after the effective time of the transactions described in Section 3.1.1(a) and the names of such LGEC Dissenting Shareholders will be removed from the central securities register of holders of LGEC Shares as of such time.

 

4.1.3

In addition to any other restrictions set forth in Division 2 of Part 8 of the BCBCA, none of the LGEC Shareholders who vote, or who have instructed a proxyholder to vote, in favour of the LGEC Arrangement Resolution, will be entitled to exercise LGEC Dissent Rights.

 

4.2

LG Studios Dissent Rights

 

4.2.1

Registered holders of LG Studios Shares may exercise rights of dissent (the “LG Studios Dissent Rights”) in connection with the Arrangement pursuant to the LG Studios Interim Order and in the manner set forth in Division 2 of Part 8 of the BCBCA, as modified by the LG Studios Interim Order, the Final Order, and this Section 4.2, provided that the written notice setting forth the objection of such registered LG Studios Shareholder to the Arrangement contemplated by Section 242 of the BCBCA must be received by LG Studios not later than 4:00 p.m. (Vancouver time) on the Business Day that is two (2) Business Days before the LG Studios Meeting.

 

4.2.2

LG Studios Shareholders who duly and validly exercise LG Studios Dissent Rights with respect to their LG Studios Shares (“LG Studios Dissenting Shares”) and who:

 

  (a)

are ultimately determined to be entitled to be paid fair value for their LG Studios Dissenting Shares will be entitled to be paid the fair value by New Lionsgate for the LG Studios Dissenting Shares and will be deemed to have irrevocably transferred such LG Studios Dissenting Shares to New Lionsgate (free and clear of all Liens) pursuant to Section 3.1.1(l); or

 

17

  (b)

for any reason are ultimately not entitled to be paid fair value for their LG Studios Dissenting Shares will be deemed to have participated in the Arrangement on the same basis as a non-dissenting LG Studios Shareholder and will receive Lion Common Shares on the same basis as every other non-dissenting LG Studios Shareholder,

but in no case will New Lionsgate or LG Studios be required to recognize such Persons as holding LG Studios Shares after the effective time of the transactions described in Section 3.1.1(l) and the names of such LG Studios Shareholders will be deleted from the central securities register of holders of LG Studios Shares as of such time.

 

4.2.3

In addition to any other restrictions set forth in Division 2 of Part 8 of the BCBCA, none of the LG Studios Shareholders who vote, or who have instructed a proxyholder to vote, in favour of the LG Studios Arrangement Resolution will be entitled to exercise LG Studios Dissent Rights.

ARTICLE 5

DELIVERY OF CONSIDERATION

 

5.1

Share Exchange Procedures

 

5.1.1

All of the share certificates issued by LGEC to LGEC Shareholders prior to the Arrangement Effective Time will cease to represent any interest in LGEC Shares and will be cancelled by LGEC as of the Initial Exchange Effective Time.

 

5.1.2

All of the shares issued by each of New Lionsgate, LG Studios, and LGEC pursuant to the Arrangement will be issued as uncertificated shares as defined in Section 107 of the BCBCA.

 

5.1.3

Other than for the Lion Common Shares issued in Sections 3.1.1(g) and 3.1.1(m), New Lionsgate will not send a written notice containing the information required by Section 107(6) the BCBCA with respect to issuances of shares by New Lionsgate in the Arrangement.

 

5.1.4

Other than for the Starz Common Shares resulting from the consolidation in Section 3.1.1(k), LGEC will not send a written notice containing the information required by Section 107(6) of the BCBCA with respect to issuances of shares by LGEC in the Arrangement.

 

5.2

Calculations

All calculations and determinations made by LGEC, New Lionsgate, LG Studios, or any Payment Agent, as applicable, for the purposes of this Plan of Arrangement will be conclusive, final and binding.

 

5.3

Payment Agent Procedures

 

5.3.1

As promptly as practicable following the Arrangement Effective Date, the Payment Agent will calculate the number of fractional New Lionsgate Shares otherwise issuable to LGEC Shareholders and LG Studios Shareholders pursuant to the Arrangement. The Payment Agent will aggregate and deliver such fractional New Lionsgate Shares to a broker satisfactory to LGEC. The Payment Agent will instruct such broker to sell the fractional New Lionsgate Shares thereafter at a price the broker determines in its absolute discretion. The Payment Agent shall have no responsibility for the sale of such fractional New Lionsgate Shares or for the price that may be obtained in respect of such sale.

 

18

5.3.2

No charge will be imposed on the LGEC Shareholders or the LG Studios Shareholders for the fractional New Lionsgate Shares sold pursuant to Section 5.3.1, except for brokerage commissions, any taxes and other fees or charges incurred or imposed by the broker in respect of such sale, which amounts shall be deducted from the proceeds of the sale of the fractional New Lionsgate Shares.

 

5.3.3

The proceeds received by the broker from the sale of the fractional New Lionsgate Shares, net of all applicable taxes, brokerage commissions and fees or charges, shall be delivered to the Payment Agent for payment to the applicable LGEC Shareholders or LG Studios Shareholders. Such net proceeds will be divided pro rata among the applicable LGEC Shareholders or LG Studios Shareholders, and the Payment Agent shall make such pro rata payments by cheque, as promptly as practicable to the applicable LGEC Shareholders or LG Studios Shareholders at their addresses of record in the register of LGEC or LG Studios, without any interest thereon and less applicable withholdings.

ARTICLE 6

AMENDMENT

 

6.1

Amendments to Plan of Arrangement

 

6.1.1

LGEC, New Lionsgate, and LG Studios may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Arrangement Effective Time, provided that each such amendment, modification and/or supplement must (i) be set out in writing, (ii) be approved by LGEC, LG Studios (only to the extent such amendment, modification and/or supplement adversely affects LG Studios or the LG Studios Shareholders), and New Lionsgate in writing, each acting reasonably, (iii) be filed with the Court if required by Law, and, if made following the LGEC Meeting or the LG Studios Meeting, be approved by the Court, and (iv) be communicated to LGEC Shareholders and/or LG Studios Shareholders if and as required by the Court.

 

6.1.2

Any amendment, modification or supplement to this Plan of Arrangement that is directed by the Court following the LGEC Meeting or the LG Studios Meeting will be effective only if (i) it is consented to in writing by each of LGEC, LG Studios (only to the extent such amendment, modification and/or supplement adversely affects LG Studios or the LG Studios Shareholders), and New Lionsgate (in each case, acting reasonably), and (ii) if required by the Court, it is consented to by some or all of the LGEC Shareholders or LG Studios Shareholders, as applicable, voting or consenting, as the case may be, in the manner directed by the Court.

 

6.1.3

Any amendment, modification or supplement to this Plan of Arrangement may be made following the Arrangement Effective Date unilaterally by New Lionsgate, provided that it concerns a matter which, in the reasonable opinion of New Lionsgate, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the economic interest of any former LGEC Shareholder or LG Studios Shareholder.

 

19

ARTICLE 7

WITHHOLDING TAX

 

7.1

Withholding Tax

 

7.1.1

LGEC, New Lionsgate, LG Studios, and any Payment Agent, as the case may be, will be entitled to deduct or withhold from any amounts contemplated to be payable to any Person under this Plan of Arrangement (an “Affected Person”) such amounts as are reasonably determined to be required, entitled or permitted to be deducted or withheld with respect to such payment (a “Withholding Obligation”) under the Tax Act, the U.S. Tax Code or any other provision of federal, provincial, territorial, state, local or foreign tax Law, in each case, as amended, and will remit or cause to be remitted the amount so deducted or withheld to the appropriate Governmental Entity. To the extent that amounts are so deducted or withheld, such deducted or withheld amounts will be treated for all purposes as having been paid to the recipient of the payment in respect of which such deduction or withholding was made, provided that such deducted or withheld amounts are actually remitted in accordance with applicable Law to the appropriate Governmental Entity.

 

7.1.2

Each of LGEC, New Lionsgate, LG Studios, and any Payment Agent will also have the right to:

 

  (a)

deduct, withhold and sell, or direct LGEC, New Lionsgate, LG Studios, or any Payment Agent to deduct, withhold and sell through a broker (the “Broker”), and on behalf of any Affected Person; or

 

  (b)

require the Affected Person to irrevocably direct the sale through a Broker and irrevocably direct the Broker pay the proceeds of such sale to LGEC, New Lionsgate, LG Studios, or any Payment Agent as appropriate (and, in the absence of such irrevocable direction, the Affected Person will be deemed to have provided such irrevocable direction),

such number of LGEC Shares or New Lionsgate Shares delivered or deliverable to such Affected Person pursuant to this Plan of Arrangement as is necessary to produce sale proceeds (after deducting commissions payable to the Broker and other costs and expenses) sufficient to fund any Withholding Obligations. Any such sale of LGEC Shares or New Lionsgate Shares will be effected on a public market and as soon as practicable following the Arrangement Effective Date. None of LGEC, New Lionsgate, LG Studios, any Payment Agent or the Broker will be liable for any loss arising out of any sale of such LGEC Shares or New Lionsgate Shares, including any loss relating to the manner or timing of such sales, the prices at which the LGEC Shares or New Lionsgate Shares are sold or otherwise.

ARTICLE 8

PARAMOUNTCY

 

8.1

Paramountcy

 

8.1.1

From and after the Arrangement Effective Time:

 

  (a)

this Plan of Arrangement will take precedence and priority over any and all rights related to LGEC Shares, New Lionsgate Shares, and LG Studios Shares outstanding immediately prior to the Arrangement Effective Time;

 

  (b)

the rights and obligations of LGEC Shareholders, New Lionsgate Shareholders, LG Studios Shareholders, Sirius, LGEC, New Lionsgate, LG Studios, any Payment Agent and any transfer agent in respect of the LGEC Shares, the New Lionsgate Shares and the LG Studios Shares, will be solely as provided for in this Plan of Arrangement; and

 

20

  (c)

all actions, causes of actions, claims or proceedings (actual or contingent, and whether or not previously asserted) based on or in any way relating to LGEC Shares, New Lionsgate Shares, LG Studios Shares, will be deemed to have been settled, compromised, released and determined without liability except as set forth herein.

ARTICLE 9

FURTHER ASSURANCES

 

9.1

Further Assurances

Notwithstanding that the transactions and events set out in this Plan of Arrangement will occur and be deemed to have occurred in the order set out herein without any further authorization, act or formality, each of the Parties will make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by any of them in order to implement this Plan of Arrangement and to further document or evidence any of the transactions or events set out herein.

****

 

 

21

Exhibit 2.4

SEPARATION AGREEMENT

BY AND BETWEEN

LIONSGATE STUDIOS HOLDING CORP.,

LIONSGATE STUDIOS CORP.,

LG SIRIUS HOLDINGS ULC,

AND

LIONS GATE ENTERTAINMENT CORP.

 

 

Dated as of May 6, 2025

TABLE OF CONTENTS

 

         Page  
ARTICLE I DEFINITIONS      2  
ARTICLE II THE TRANSACTIONS      12  

2.1

  

Transfer of Assets and Assumption of Liabilities

      12  

2.2

  

Starz Assets; New Lionsgate Assets

      14  

2.3

  

Starz Liabilities; New Lionsgate Liabilities

      18  

2.4

  

Arrangement Effective Time

      20  

2.5

  

Changes to the Transactions; Cooperation

      20  

2.6

  

Actions Prior to the Transactions

      21  

2.7

  

Conditions to the Transactions

      22  

2.8

  

Approvals and Notifications

      23  

2.9

  

Assignment and Novation of Liabilities

      26  

2.10

  

Release of Guarantees

      27  

2.11

  

Termination of Agreements

      28  

2.12

  

Treatment of Shared Contracts

      29  

2.13

  

Bank Accounts; Cash Balances

      30  

2.14

  

Ancillary Agreements

      30  

2.15

  

Transition Committee

      30  

2.16

  

Disclaimer of Representations and Warranties

      31  

2.17

  

Financing Arrangements

      31  
ARTICLE III MUTUAL RELEASES; INDEMNIFICATION      32  

3.1

  

Release of Pre-Transactions Claims

      32  

3.2

  

Indemnification by Starz

      35  

3.3

  

Indemnification by New Lionsgate

      36  

3.4

  

Indemnification Obligations Net of Insurance Proceeds and Other Amounts

      36  

3.5

  

Procedures for Indemnification of Third-Party Claims

      37  

3.6

  

Cost Sharing

      39  

3.7

  

Additional Matters

      39  

3.8

  

Right of Contribution

      40  

3.9

  

Covenant Not to Sue

      40  

3.10

  

Remedies Cumulative

      41  

3.11

  

Survival of Indemnities

      41  
ARTICLE IV CERTAIN OTHER MATTERS      41  

4.1

  

Starz Financial Information Certifications

      41  

4.2

  

Reserved

      41  

4.3

  

Insurance Matters

      41  

4.4

  

Late Payments

      44  

4.5

  

Inducement

      44  

4.6

  

Post-Arrangement Effective Time Conduct

      44  
ARTICLE V EXCHANGE OF INFORMATION; CONFIDENTIALITY      44  

5.1

  

Agreement for Exchange of Information

      44  

5.2

  

Ownership of Information

      45  

5.3

  

Compensation for Providing Information

      45  

5.4

  

Record Retention

      45  

5.5

  

Limitations of Liability

      45  

5.6

  

Other Agreements Providing for Exchange of Information

      46  

 

i

         Page  

5.7

  

Production of Witnesses; Records; Cooperation

      46  

5.8

  

Privileged Matters

      47  

5.9

  

Confidentiality

      48  

5.10

  

Protective Arrangements

      49  
ARTICLE VI DISPUTE RESOLUTION      50  

6.1

  

Good Faith Officer Negotiation

      50  

6.2

  

Good-Faith Negotiation; Mediation

      50  

6.3

  

Arbitration

      51  

6.4

  

Litigation and Unilateral Commencement of Arbitration

      51  

6.5

  

Conduct During Dispute Resolution Process

      52  

ARTICLE VII FURTHER ASSURANCES AND ADDITIONAL COVENANTS

      52  

7.1

  

Further Assurances

     52  

ARTICLE VIII TERMINATION

     53  

8.1

  

Termination

      53  

8.2

  

Effect of Termination

      53  
ARTICLE IX MISCELLANEOUS      53  

9.1

  

Counterparts; Entire Agreement; Corporate Power

      53  

9.2

  

Governing Law

      54  

9.3

  

Assignability

      54  

9.4

  

Third-Party Beneficiaries

      54  

9.5

  

Notices

      54  

9.6

  

Severability

      55  

9.7

  

Force Majeure

      55  

9.8

  

No Set-Off

      55  

9.9

  

Expenses

      55  

9.10

  

Headings

      56  

9.11

  

Survival of Covenants

      56  

9.12

  

Waivers of Default

      56  

9.13

  

Specific Performance

      56  

9.14

  

Amendments

      56  

9.15

  

Interpretation

      56  

9.16

  

Limitations of Liability

      57  

9.17

  

Performance

      57  

9.18

  

Mutual Drafting

      57  

9.19

  

Conflict Among Ancillary Agreements

      57  

EXHIBITS

 

Exhibit A    Closing Articles of Starz
Exhibit B    Closing Articles of New Lionsgate

 

ii

SEPARATION AGREEMENT

This SEPARATION AGREEMENT, dated as of May 6, 2025 (this “Agreement”), is by and between Lionsgate Studios Holding Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“New Lionsgate”), Lionsgate Studios Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“LG Studios”), LG Sirius Holdings ULC, an unlimited liability company organized under the laws of the Province of British Columbia, Canada (“LG Sirius”), and Lions Gate Entertainment Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“Lionsgate” prior to the Separation Effective Time and “Starz” from and after the Separation Effective Time). In this Agreement, the legal entity currently named Lions Gate Entertainment Corp. may be referred to as “Lionsgate” prior to the Separation Effective Time and as “Starz” from and after the Separation Effective Time, with covenants, obligations, representations, and warranties of the applicable entity, and other terms of this Agreement applicable to the applicable entity, having the same force and effect regardless of the entity’s legal name at any point in time, or the name used in any part of this Agreement. Capitalized terms used herein and not otherwise defined shall have the respective meanings assigned to them in Article I.

R E C I T A L S

WHEREAS, on May 13, 2024, Lionsgate consummated a business combination (the “Business Combination”) resulting in LG Studios becoming a publicly-traded company and majority-owned subsidiary of Lionsgate and, in connection therewith, Lionsgate, LG Studios and LG Sirius entered into that certain Separation Agreement, dated as of May 8, 2024;

WHEREAS, the board of directors of Lionsgate (the “Lionsgate Board”) has determined that it is advisable and in the best interests of Lionsgate and its stakeholders, including its shareholders and creditors, to create two publicly traded companies to separately operate the Starz Business and the LG Studios Business, respectively;

WHEREAS, in furtherance of the foregoing, the Lionsgate Board has determined that it is appropriate and desirable for Lionsgate and its applicable Subsidiaries to (i) transfer the Starz Assets to Starz and its applicable Subsidiaries, and for Starz and its applicable Subsidiaries to assume the Starz Liabilities, and (ii) transfer the New Lionsgate Assets to New Lionsgate and its applicable Subsidiaries, and for New Lionsgate and its applicable Subsidiaries to assume New Lionsgate Liabilities, in each case, as more fully described in this Agreement and the Ancillary Agreements;

WHEREAS, the Lionsgate Board has further determined that it is appropriate and desirable, on the terms and conditions contemplated hereby, to have LGEC Shareholders exchange all of their LGEC Shares for New Lionsgate New Common Shares and Starz Common Shares, and LG Studios Shareholders exchange all of their LG Studios Shares for New Lionsgate New Common Shares, in each case, by way of a plan of arrangement under applicable corporate law (the “Arrangement”) to be implemented in accordance with the terms and subject to the conditions set out in the plan of arrangement to be appended to the Arrangement Agreement (as it may be amended from time to time, the “Plan of Arrangement”);

WHEREAS, pursuant to the Plan of Arrangement, Lionsgate’s current equity interest in New Lionsgate will be cancelled in accordance with the terms and subject to the conditions set out in the Plan of Arrangement (such cancellation, together with the transfer of Starz Assets and assumption of Starz Liabilities, the transfer of New Lionsgate Assets and assumption of New Lionsgate Liabilities, and the exchanges of common shares by LGEC Shareholders and LG Studios Shareholders, each as described above and pursuant to the Transaction Steps Plan, the “Transactions”);

WHEREAS, it is intended that, for U.S. federal income tax purposes, (a) certain transactions contemplated by Section 3.1.1(a) through Section 3.1.1(j) of the Plan of Arrangement effecting the separation of

 

1

New Lionsgate from Lionsgate be treated as a “reorganization” within the meaning of Sections 368(a)(1)(D) and 355 of the Code, pursuant to which Lionsgate is treated as distributing 100% of the outstanding stock of New Lionsgate to the LGEC Shareholders, and (b) this Agreement, the Arrangement Agreement and the Plan of Arrangement are intended to be, and are hereby adopted as, a “plan of reorganization” within the meaning of Treasury Regulations Section 1.368-2(g) (collectively, the “Intended U.S. Tax Treatment”);

WHEREAS, Lionsgate and New Lionsgate have prepared and filed with the SEC the Form S-4, which includes the joint Proxy Statement/Prospectus of Lionsgate and New Lionsgate, and which sets forth disclosures concerning Lionsgate, New Lionsgate, Starz, LG Studios and the Transactions; and

WHEREAS, each of New Lionsgate and Lionsgate has determined that it is appropriate and desirable to set forth the principal corporate transactions required to effect the Transactions and certain other agreements that will govern certain matters relating to the Transactions and the relationship of New Lionsgate, Starz and the members of their respective Groups following the consummation of the Transactions.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

For the purpose of this Agreement, the following terms shall have the following meanings:

“Accounts Payable” shall mean any and all trade and non-trade accounts payable of any Party or member of its Group.

“Accounts Receivable” shall mean any and all trade and non-trade accounts receivable of any Party or member of its Group.

“Action” shall mean any demand, action, claim, dispute, suit, countersuit, arbitration, inquiry, subpoena, proceeding or investigation of any nature (whether criminal, civil, legislative, administrative, regulatory, prosecutorial or otherwise) by or before any federal, state, territorial, provincial, local, foreign or international Governmental Authority or any arbitration or mediation tribunal.

“Affiliate” shall mean, when used with respect to a specified Person, a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified Person as of the date on which, or at any time during the period for which, the determination of affiliation is being made. For the purpose of this definition, “control” (including, with correlative meanings, “controlled by” and “under common control with”), when used with respect to any specified Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or other interests, by contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment, undertaking or otherwise. It is expressly agreed that, prior to, at and after the Separation Effective Time, solely for purposes of this Agreement and the Ancillary Agreements, (a) no member of the Starz Group, on the one hand, shall be deemed to be an Affiliate of any member of the New Lionsgate Group or the LG Studios Group, on the other hand, and (b) no member of the New Lionsgate Group or the LG Studios Group, on the one hand, shall be deemed to be an Affiliate of any member of the Starz Group, on the other hand.

“Agent” shall mean the trust company or bank to be duly appointed by New Lionsgate to act as the exchange agent in connection with the Transactions and the transfer agent and registrar for the New Lionsgate New Common Shares and Starz Common Shares.

 

2

“Ancillary Agreements” shall mean all agreements (other than this Agreement) entered into by the Parties or the members of their respective Groups (but as to which no Third Party is a party) in connection with the Transactions or the other transactions contemplated by this Agreement, including the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement, the Arrangement Agreement, the Plan of Arrangement, and the Transfer Documents.

“Approvals or Notifications” shall mean any consents, waivers, approvals, permits or authorizations to be obtained from, notices, registrations or reports to be submitted to, or other filings to be made with, any third Person, including any Governmental Authority.

“Arrangement Agreement” shall mean the Arrangement Agreement, to be made between Lionsgate, New Lionsgate, LG Studios and LG Sirius in connection with the Arrangement, as it may be amended from time to time.

“Arrangement Effective Date” shall have the meaning set forth in the Arrangement Agreement.

“Arrangement Effective Time” shall have the meaning set forth in the Arrangement Agreement.

“Assets” shall mean, with respect to any Person, the assets, properties, claims and rights (including goodwill) of such Person, wherever located (including in the possession of vendors or other third Persons or elsewhere), of every kind, character and description, whether real, personal or mixed, tangible, intangible or contingent, in each case whether or not recorded or reflected or required to be recorded or reflected on the books and records or financial statements of such Person, including rights and benefits pursuant to any contract, license, permit, indenture, note, bond, mortgage, agreement, concession, franchise, instrument, undertaking, commitment, understanding or other arrangement.

“Audio/Visual Works” shall mean any and all visual or audio works of artistic, creative or educational authorship, including any motion picture, television production, game, or cultural, educational, informational or sports program, together with any artwork, books, audiobooks, comicbooks, articles, stories, soundtracks, musical works or similar content based upon, derived from or related to such visual or audio works, and any adaptations or derivative works of any of the foregoing, and any recordings or embodiments of any of the foregoing, in each case, whether in print, digital or any other format or medium, in each case, including all associated documentation.

“Business Day” shall mean a day other than a Saturday, a Sunday or a day on which banking institutions located in Vancouver, British Columbia, Los Angeles, California, or New York, New York are authorized or obligated by Law or executive order to close.

“Canadian Securities Authorities” shall mean the Canadian securities authorities in each of the provinces or territories of Canada, and any of their successors.

“Change of Control” shall mean, with respect to a Party: (a) a transaction whereby any Person or group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended) would acquire, directly or indirectly, voting securities representing more than fifty percent (50%) of the total voting power of such Party; (b) a merger, consolidation, recapitalization or reorganization of such Party, unless securities representing more than fifty percent (50%) of the total voting power of the legal successor to such Party as a result of such merger, consolidation, recapitalization or reorganization are immediately thereafter beneficially owned, directly or indirectly, by the Persons who beneficially owned such Party’s outstanding voting securities immediately prior to such transaction; or (c) the sale of all or substantially all of the consolidated assets of such Party’s Group. For the avoidance of doubt, no transaction contemplated by this Agreement or the Ancillary Agreements shall be considered a Change of Control.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

3

“Domains and Social Media” shall mean any (a) Internet domain names and Internet Protocol addresses, and (b) social media profiles, accounts, addresses and handles, and services related thereto, including those made available through Facebook, X (formerly Twitter), Instagram, SnapChat, TikTok and other similar platforms, in each case, including the content thereon.

“Employee Matters Agreement” shall mean the Employee Matters Agreement, dated as of the date hereof, by and between New Lionsgate and Lionsgate or the members of their respective Groups, as it may be amended from time to time.

“Exchange Act” shall mean the U.S. Securities Exchange Act of 1934, as amended, together with the rules and regulations promulgated thereunder.

“Final Order” shall have the meaning set forth in the Arrangement Agreement.

“Force Majeure” shall mean, with respect to a Party, an event beyond the reasonable control of such Party (or any Person acting on its behalf), which event (a) does not arise or result from the fault or negligence of such Party (or any Person acting on its behalf) and (b) by its nature would not reasonably have been foreseen by such Party (or such Person), or, if it would reasonably have been foreseen, was unavoidable, and includes acts of God, acts of civil or military authority, acts of terrorism, cyberattacks, embargoes, epidemics, pandemics or diseases (including COVID-19) or other health crises or public health events, or any worsening of any of the foregoing, quarantine or government health alert that prohibits or restricts travel or prevents any individual from reporting to a work location, war, riots, insurrections, fires, explosions, earthquakes, floods, unusually severe weather conditions, labor problems or unavailability of parts, or, in the case of computer systems, any significant and prolonged failure in electrical or air conditioning equipment.

“Form S-4” shall mean the registration statement and joint proxy statement on Form S-4 filed by Lionsgate and New Lionsgate with the SEC to effect the registration of Starz Common Shares and New Lionsgate New Common Shares pursuant to the Securities Act in connection with the Arrangement, as such registration statement may be amended or supplemented from time to time prior to the Arrangement Effective Time.

“GAAP” shall mean United States generally accepted accounting principles, consistently applied.

“Governmental Approvals” shall mean any Approvals or Notifications to be made to, or obtained from, any Governmental Authority.

“Governmental Authority” shall mean any nation or government, any state, municipality or other political subdivision thereof, and any entity, body, agency, commission, department, board, bureau, court, tribunal or other instrumentality, whether federal, state, local, domestic, foreign, multinational, supranational, territorial, or provincial, exercising executive, legislative, judicial, regulatory, administrative or other similar functions of, or pertaining to, a government and any executive official thereof.

“Group” shall mean the LG Studios Group, the Lionsgate Group, the New Lionsgate Group, or the Starz Group, as the context requires.

“Information Technology” shall mean all Software, computer systems (including computers, screens, servers, middleware, workstations, routers, hubs, switches, networks, data communication lines and hardware), network and telecommunications systems hardware, and other information technology equipment, and all associated documentation, but in each case, excluding any Audio/Visual Works.

“Insurance Proceeds” shall mean those monies (a) received by an insured from an insurance carrier or (b) paid by an insurance carrier on behalf of the insured, in any such case, net of any applicable premium adjustments (including reserves and retrospectively rated premium adjustments) and net of any costs or expenses incurred in the collection thereof.

 

4

“Intellectual Property Rights” shall mean any and all intellectual property rights or similar proprietary rights arising anywhere in the world, including in or with respect to any of the following: (a) patents, statutory invention registrations, certificates of invention, registered designs, utility models and similar or equivalent rights in inventions and designs, and all rights therein provided by international treaties and conventions, and including any applications for any of the foregoing; (b) trademarks, service marks, slogans, trade dress, trade names, logos, and other designations of origin, and including any applications for any of the foregoing, and including all goodwill associated therewith and symbolized thereby (collectively, “Trademarks”); (c) domain names, uniform resource locators, Internet Protocol addresses, social media handles, and other names, identifiers, and locators associated with Internet addresses, sites, and services, and including any applications for any of the foregoing; (d) trade secrets, industrial secret rights, know-how, inventions, and any confidential or proprietary business or technical information; and (e) published and unpublished works of authorship, whether copyrightable or not, including Software, website and mobile content, data, databases and other compilations of information, copyrights in or to any of the foregoing, mask works, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof.

“Interim Orders” shall mean the LGEC Interim Order and the Studios Interim Order.

“Joint Information/Proxy Statement” shall mean the joint information statement and proxy statement to be mailed to LGEC Shareholders and LG Studios shareholders in connection with the LGEC Meeting, the Studios Meeting and the Transactions, as such document may be amended or supplemented from time to time prior to the Arrangement Effective Time, a form of which is included in the Form S-4.

“Law” shall mean any domestic, foreign, multinational, national, supranational, federal, state, territorial, provincial, local or similar law (including common law), statute, code, order, ordinance, rule, regulation, treaty (including any Tax treaty), license, permit, authorization, approval, consent, decree, injunction, binding judicial or administrative interpretation or other requirement, in each case, enacted, promulgated, issued or entered by a Governmental Authority.

“LGEC Arrangement Approval” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Interim Order” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Meeting” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Shares” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Shareholders” shall have the meaning set forth in the Arrangement Agreement.

“LG Studios Board” shall mean the board of directors of LG Studios.

“LG Studios Business” shall mean all businesses, operations and activities (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) conducted at any time prior to the Arrangement Effective Time by any Party or any member of its Group, other than the Starz Business.

“LG Studios Group” shall mean LG Studios and each Person that is a Subsidiary of LG Studios (for clarity, other than Starz and any other member of the Starz Group).

“LG Studios Shares” shall have the meaning set forth in the Arrangement Agreement.

“LG Studios Shareholders” shall have the meaning set forth in the Arrangement Agreement.

“Liabilities” shall mean any and all debts, guarantees, assurances, commitments, liabilities, responsibilities, Losses, remediation, deficiencies, damages, fines, penalties, settlements, sanctions, costs,

 

5

expenses, attorneys’ fees, interest and obligations of any nature or kind, whether accrued or fixed, absolute or contingent, matured or unmatured, accrued or not accrued, asserted or unasserted, liquidated or unliquidated, foreseen or unforeseen, known or unknown, reserved or unreserved, or determined or determinable, including those arising under any Law, claim (including any Third-Party Claim), demand, Action or order, writ, judgment, injunction, decree, stipulation, determination or award entered by or with any Governmental Authority or arbitration tribunal, and those arising under any contract, agreement, obligation, indenture, instrument, lease, promise, arrangement, release, warranty, commitment or undertaking, or any fines, damages or equitable relief that is imposed, in each case, including all costs and expenses relating thereto.

“Lionsgate Group” shall mean Lionsgate and each Person that is a Subsidiary of Lionsgate.

“Lionsgate Intellectual Property Rights” shall mean (a) the Registered IP set forth on Schedule 1.1, and (b) all other Intellectual Property Rights, other than Starz Intellectual Property Rights, owned by any Party or any member of its Group as of immediately prior to the Arrangement Effective Time to the extent they are used, held, or developed primarily for use in the LG Studios Business, in each case, including the goodwill associated with or symbolized by any Trademarks included in any of the foregoing Intellectual Property Rights.

“Lionsgate Resolutions” shall mean the special resolutions of the shareholders of Lionsgate as are necessary to approve the Arrangement as set out in the Arrangement Agreement.

“Losses” shall mean actual losses (including any diminution in value), costs, damages, penalties and expenses (including legal and accounting fees and expenses and costs of investigation and litigation), whether or not involving a Third-Party Claim.

“Meeting Materials” shall have the meaning set forth in the Arrangement Agreement.

“NASDAQ” shall mean the NASDAQ Global Select Market.

“New Lionsgate Articles” shall mean the articles of New Lionsgate, substantially in the form of Exhibit B hereto.

“New Lionsgate Designees” shall mean any and all entities (including corporations, general or limited partnerships, trusts, joint ventures, unincorporated organizations, limited liability entities or other entities) designated by Lionsgate that will be members of the New Lionsgate Group as of immediately prior to the Separation Effective Time.

“New Lionsgate Debt Assumption” means the assumption by New Lionsgate or one of its Subsidiaries of approximately $390 million of 5.500% exchange notes due 2029 issued by Lions Gate Capital Holdings 1, Inc. in exchange for the New Lionsgate Debt Assumption Consideration.

“New Lionsgate Entities” shall mean the entities set forth on Schedule 1.2.

“New Lionsgate Debt Assumption Consideration” means the amount equal to $389.9 million in cash which is comprised of the Starz Intercompany Credit Facility Receivable at the Separation Effective Time and any cash on hand necessary to equal $389.9 million if the outstanding balance of the Starz Intercompany Credit Facility Receivable at the Separation Effective Time is less than $389.9 million.

“New Lionsgate Group” shall mean New Lionsgate and each Person that is, or pursuant to the Transactions becomes, a Subsidiary of New Lionsgate (other than Starz and any other member of the Starz Group), including the New Lionsgate Entities.

“New Lionsgate New Common Shares” shall mean the common shares, without par value, of New Lionsgate.

“NYSE” shall mean the New York Stock Exchange.

 

6

“Parties” shall mean the parties to this Agreement and “Party” shall mean any one of the Parties to this Agreement.

“Permits” shall mean permits, approvals, authorizations, consents, licenses or certificates issued by any Governmental Authority.

“Person” shall mean an individual, a general or limited partnership, a corporation, a trust, a joint venture, an unincorporated organization, a limited liability entity, any other entity and any Governmental Authority.

“Policies” shall mean insurance policies and insurance contracts of any kind, including global property, excess and umbrella liability, domestic and foreign commercial general liability, local foreign placements, directors and officers liability, fiduciary liability, cyber, media and technology errors and omissions liability, employment practices liability, domestic and foreign automobile, cargo stock throughput, customer cargo, global cargo terrorism, workers’ compensation and employers’ liability, employee dishonesty/crime/fidelity, special contingency (K&R), bonds and self-insurance, together with the rights, benefits, privileges and obligations thereunder.

“Prime Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the United States or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the U.S. Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by New Lionsgate and Starz cooperating together in good faith) or any similar release by the U.S. Federal Reserve Board (as determined by New Lionsgate and Starz cooperating together in good faith).

“Privileged Information” shall mean any information, in written, oral, electronic or any other tangible or intangible forms, including any communications by or to attorneys (including attorney-client privileged communications), memoranda and other materials prepared by attorneys or under their direction (including attorney work product), as to which a Party or any member of its Group would be entitled to assert or have asserted a privilege or other protection, including the attorney-client and attorney work product privileges.

“Real Property” shall mean land together with all easements, rights and interests arising out of the ownership thereof or appurtenant thereto and all buildings, structures, improvements and fixtures located thereon.

“Real Property Leases” shall mean all leases to Real Property and, to the extent covered by such leases, any and all buildings, structures, improvements and fixtures located thereon.

“Registered IP” shall mean all United States, international or foreign: (a) patents and patent applications; (b) registered Trademarks and applications to register Trademarks; and (c) registered copyrights and applications for copyright registration.

“Representatives” shall mean, with respect to any Person, any of such Person’s directors, officers, employees, agents, consultants, advisors, accountants, attorneys or other representatives.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Security Interest” shall mean any mortgage, security interest, pledge, lien, charge, claim, option, right to acquire, voting or other restriction, right-of-way, covenant, condition, easement, encroachment, restriction on transfer or other encumbrance of any nature whatsoever.

“Separation Effective Time” shall have the meaning set forth in the Arrangement Agreement.

 

7

“Software” shall mean any software, computer program, application, application programming interface, middleware or firmware, including software implementations of algorithms, models and methodologies, whether in source code, object code, human readable form or other form, and all documentation (including user manuals and other training documentation) relating to any of the foregoing.

“Starz Accounts Payable” shall mean any and all trade and non-trade accounts payable of any Party or member of its Group outstanding as of immediately prior to the Arrangement Effective Time, in each case, to the extent related to the Starz Business or arising out of any Starz Contract.

“Starz Accounts Receivable” shall mean any and all trade and non-trade accounts receivable of any Party or member of its Group outstanding as of immediately prior to the Arrangement Effective Time, in each case, to the extent related to the Starz Business or arising out of any Starz Contract.

“Starz Articles” shall mean the Articles of Starz, substantially in the form of Exhibit A hereto.

“Starz Audio/Visual Works” shall mean all Audio/Visual Works set forth on Schedule 1.3.

“Starz Balance Sheet” shall mean the pro forma combined balance sheet of the Starz Business, including any notes and subledgers thereto, as presented in the Form S-4 at the time it is declared effective under the Securities Act.

“Starz Books and Records” shall mean all books and records to the extent used in or necessary for, as of immediately prior to the Arrangement Effective Time, the operation of the Starz Business, including financial, employee, and general business operating documents, instruments, papers, books, books of account, records and files and data related thereto (including regulatory dossiers, correspondence and related documentation).

“Starz Business” shall mean the Media Networks business and operations (whether or not such businesses, operations or activities are or have been terminated, divested or discontinued) of Lionsgate and its relevant Subsidiaries, as such business and operations are described in the “Media Networks” segment of Lionsgate in its Annual Report on Form 10-K for the fiscal year ended March 31, 2024 (as modified by its Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30, 2024 and September 30, 2024 and excluding, for the avoidance of doubt, any New Lionsgate Assets and New Lionsgate Liabilities) and conducted at any time prior to the Arrangement Effective Time by any Party or any current or former member of its Group. For the avoidance of doubt, the Starz Business shall include only the business and operations described in the immediately prior sentence, and shall not include any other businesses or operations of Lionsgate or any of its Subsidiaries.

“Starz Common Shares” shall mean the common shares, without par value, of Starz, created pursuant to Section 3.1.1(e) of the Plan of Arrangement.

“Starz Contracts” shall mean the following contracts and agreements to which any Party or any member of its Group is a party or by which it or any member of its Group or any of their respective Assets is bound, whether or not in writing; provided, that Starz Contracts shall not include any contract or agreement that shall be retained by New Lionsgate or any member of the New Lionsgate Group from and after the Separation Effective Time pursuant to any provision of this Agreement or any Ancillary Agreement:

(a) any customer, reseller, distributor or development contract or agreement entered into prior to the Arrangement Effective Time to the extent related to the Starz Business;

(b) any supply or vendor contract or agreement entered into prior to the Arrangement Effective Time to the extent related to the Starz Business;

(c) any contract or agreement entered into prior to the Arrangement Effective Time which grants a Third Party rights or licenses to Intellectual Property Rights that are Starz Intellectual Property Rights;

 

8

(d) any license agreement entered into prior to the Arrangement Effective Time pursuant to which a Third Party grants any Party or any member of its Group rights or licenses to Intellectual Property Rights to the extent related to the Starz Business;

(e) any joint venture or partnership contract or agreement entered into prior to the Arrangement Effective Time to the extent that it relates to the Starz Business;

(f) any guarantee, indemnity, representation, covenant, warranty or other liability of any Party or any member of its Group in each case entered into prior to the Arrangement Effective Time in respect of any other Starz Contract, any Starz Liability or the Starz Business;

(g) any proprietary information and inventions agreement or similar agreement assigning or licensing Intellectual Property Rights with any current or former New Lionsgate Group employee, Starz Group employee, consultant of the New Lionsgate Group or consultant of the Starz Group, in each case entered into prior to the Arrangement Effective Time to the extent that it is related to the Starz Business;

(h) any contract or agreement that is expressly contemplated pursuant to this Agreement or any of the Ancillary Agreements to be assigned to, or to be a contract or agreement in the name of, Starz or any member of the Starz Group;

(i) any credit agreement, indenture, note or other financing agreement or instrument entered into by Starz and/or any member of the Starz Group in connection with the Transactions, including any Starz Financing Arrangements;

(j) any interest rate, currency, commodity or other swap, collar, cap or other hedging or similar agreements or arrangements entered into prior to the Arrangement Effective Time to the extent that it is related to the Starz Business;

(k) Starz Leases;

(l) any other contract or agreement entered into prior to the Arrangement Effective Time to the extent that it is related to the Starz Business or Starz Assets; and

(m) any contracts, agreements or settlements set forth on Schedule 1.4, including the right to recover any amounts under such contracts, agreements or settlements.

“Starz Designees” shall mean any and all entities (including corporations, general or limited partnerships, trusts, joint ventures, unincorporated organizations, limited liability entities or other entities) designated by Lionsgate that will be members of the Starz Group as of immediately prior to the Arrangement Effective Time.

“Starz Domains and Social Media” shall mean (a) the Domains and Social Media set forth on Schedule 1.5(a) and Schedule 1.5(b) , and (b) all other Domains and Social Media owned or controlled by, or registered in the name of, any Party or any member of its Group as of immediately prior to the Arrangement Effective Time to the extent used or held for use in the Starz Business.

“Starz Entities” shall mean the entities set forth on Schedule 1.6.

“Starz Group” shall mean (a) prior to the Separation Effective Time, Starz and each Person that will be a Subsidiary of Starz immediately after the Separation Effective Time, including the Starz Entities and their respective Subsidiaries, even if, prior to the Separation Effective Time, such Person is not a Subsidiary of Starz, and (b) on and after the Separation Effective Time, Starz and each Person that is a Subsidiary of Starz.

 

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“Starz Information Technology” shall mean all Information Technology owned by any Party or any member of its Group as of immediately prior to the Separation Effective Time to the extent used, or held or developed for use, in the Starz Business.

“Starz Intellectual Property Rights” shall mean (a) the Registered IP set forth on Schedule 1.7(a), Schedule 1.7(b), and Schedule 1.7(c), and (b) all other Intellectual Property Rights (other than Registered IP) owned by any Party or any of the members of its Group as of immediately prior to the Separation Effective Time to the extent used, held or developed for use, in the Starz Business, in each case, including the goodwill associated with or symbolized by any Trademarks included in any of the foregoing Intellectual Property Rights.

“Starz Intercompany Credit Facility Receivable” means the receivable held by Lionsgate or one of its Subsidiaries reflecting the outstanding balance of debt issued under the Revolving Credit Agreement, dated May 13, 2024, entered into between Lions Gate Capital Holding 1, Inc. and LGAC International LLC.

“Starz Leases” shall have the meaning set forth in the definition of Starz Real Property.

“Starz Permits” shall mean all Permits owned or licensed by any Party or any member of its Group to the extent used or held for use in the Starz Business as of immediately prior to the Separation Effective Time.

“Starz Real Property” shall mean (a) the Real Property Leases to which any Party or member of its Group is party as of immediately prior to the Separation Effective Time set forth on Schedule 1.8 (“Starz Leases”) and (b) all recorded Real Property notices, easements, and obligations with respect to the Real Property leases described in clause (a) of this definition.

“Studios Arrangement Approval” shall have the meaning set forth in the Arrangement Agreement.

“Studios Interim Order” shall have the meaning set forth in the Arrangement Agreement.

“Studios Meeting” shall have the meaning set forth in the Arrangement Agreement.

“Subsidiary” shall mean, with respect to any Person, any corporation, limited liability company, joint venture, partnership or other entity of which such Person (a) beneficially owns, either directly or indirectly, more than fifty percent (50%) of (i) the total combined voting power of all classes of voting securities, (ii) the total combined equity interests or (iii) the capital or profit interests, in the case of a partnership, or (b) otherwise has the power to vote, either directly or indirectly, sufficient securities to elect a majority of the board of directors or similar governing body.

“Tangible Information” shall mean information that is contained in written, electronic or other tangible forms.

“Tangible Personal Property” shall mean machinery, equipment, hardware, furniture, fixtures, tools, motor vehicles and other transportation equipment, special and general tangible tools, prototypes, models and other tangible personal property, it being understood that Tangible Personal Property shall not include any (a) any Information Technology or (b) Audio/Visual Works.

“Tax” shall have the meaning set forth in the Tax Matters Agreement.

“Tax Act” shall mean the Income Tax Act (Canada), as amended.

“Tax Matters Agreement” shall mean the Tax Matters Agreement, dated as of May 8, 2024, by and between Lionsgate and Lionsgate Studios Corp. (formerly known as LG Orion Holdings ULC), as it may be amended from time to time.

 

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“Tax Return” shall have the meaning set forth in the Tax Matters Agreement.

“Third Party” shall mean any Person other than the Parties or any members of their respective Groups.

“Transition Services Agreement” shall mean the Transition Services Agreement, dated as of the date hereof, by and between New Lionsgate and Starz or any members of their respective Groups, as it may be amended from time to time.

“U.S. Tax Opinion” shall mean an opinion of the tax advisor of Lions Gate Entertainment Inc., a subsidiary of New Lionsgate, to be dated at or prior to the Arrangement Effective Date, addressed to Lions Gate Entertainment Inc., and otherwise in a form acceptable to New Lionsgate or Lions Gate Entertainment Inc., regarding the Intended U.S. Tax Treatment.

 

Terms

   

Sections

Agreement

   

Preamble

Arbitration Request

   

6.3

Arrangement

   

Recitals

CEO Negotiation Request

   

6.2

Delayed New Lionsgate Asset

   

2.8(h)

Delayed New Lionsgate Liability

   

2.8(h)

Delayed Starz Asset

   

2.8(c)

Delayed Starz Liability

   

2.8(c)

Dispute

   

6.1

Indemnifying Party

   

3.4(a)

Indemnitee

   

3.4(a)

Indemnity Payment

   

3.4(a)

Insurance Termination Time

   

4.3(b)

Intended U.S. Tax Treatment

   

Recitals

JAMS Rules

   

6.3(a)

Linked

   

2.13(a)

Officer Negotiation Request

   

6.1

New Lionsgate

   

Preamble

New Lionsgate Accounts

   

2.13(a)

New Lionsgate Assets

   

2.2(b)

New Lionsgate Board

   

Recitals

New Lionsgate Indemnitees

   

3.2

New Lionsgate Liabilities

   

2.3(b)

Plan of Arrangement

   

Recitals

Transactions

   

Recitals

Transactions Step Plan

   

2.1(a)

Shared Contract

   

2.12(a)

Specified Ancillary Agreement

   

11.19

Starz

   

Preamble

Starz Accounts

   

2.13(a)

Starz Assets

   

2.2(a)

Starz Financing Arrangements

   

2.14(a)

Starz Indemnitees 

   

3.3

Starz Leases

    Article I

Starz Liabilities

    2.3(a)

Starz Policies

    4.3(c)

Straddle Period

    4.1

Third-Party Claim

    3.5(a)

 

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Terms

   

Sections

Transfer Documents

    2.1(b)

Transition Committee

    2.12

Unreleased New Lionsgate Liability

    2.9(b)(ii)

Unreleased Starz Liability

    2.9(a)(ii)

ARTICLE II

THE TRANSACTIONS

2.1 Transfer of Assets and Assumption of Liabilities.

(a) Subject to Section 2.8, on or prior to the Separation Effective Time, in accordance with the plan and structure set forth on Schedule 2.1(a) (the “Transactions Step Plan”):

(i) Transfer and Assignment of Starz Assets. Starz and New Lionsgate shall cause New Lionsgate and the members of the New Lionsgate Group to contribute, assign, transfer, convey and deliver to Starz Group or certain members of the Starz Group designated by Starz, and Starz or such other members of the Starz Group shall accept from New Lionsgate and such members of the New Lionsgate Group, all of New Lionsgate’s and such members’ respective direct or indirect right, title and interest in and to all Starz Assets held by New Lionsgate or a member of the New Lionsgate Group (to the extent not previously so transferred);

(ii) Acceptance and Assumption of Starz Liabilities. Starz and the applicable Starz Designees shall accept, assume and agree faithfully to perform, discharge and fulfill all the Starz Liabilities in accordance with their respective terms. Starz and such Starz Designees shall be responsible for all Starz Liabilities, regardless of when or where such Starz Liabilities arose or arise, or whether the facts on which they are based occurred prior to or subsequent to the Separation Effective Time, regardless of where or against whom such Starz Liabilities are asserted or determined (including any Starz Liabilities to the extent arising out of claims made by New Lionsgate’s or Starz’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the New Lionsgate Group or the Starz Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the New Lionsgate Group or the Starz Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates;

(iii) Transfer and Assignment of New Lionsgate Assets. New Lionsgate and Starz shall cause Starz and the members of the Starz Group to contribute, assign, transfer, convey and deliver to New Lionsgate or certain members of the New Lionsgate Group designated by New Lionsgate, and New Lionsgate or such other members of the New Lionsgate Group shall accept from Starz and such members of the Starz Group, all of Starz’s and such members’ respective direct or indirect right, title and interest in and to all New Lionsgate Assets held by Starz or such member of the Starz Group (to the extent not previously so transferred); and

(iv) Acceptance and Assumption of New Lionsgate Liabilities. New Lionsgate and certain of members of the New Lionsgate Group designated by New Lionsgate shall accept and assume and agree faithfully to perform, discharge and fulfill all of the New Lionsgate Liabilities held by Starz or any Starz Designee and New Lionsgate and the applicable members of the New Lionsgate Group shall be responsible for all New Lionsgate Liabilities in accordance with their respective terms, regardless of when or where such New Lionsgate Liabilities arose or arise, whether the facts on which they are based occurred prior to or subsequent to the Separation Effective Time, where or against whom such New Lionsgate Liabilities are asserted or determined (including any such New Lionsgate Liabilities to the extent arising out of claims made by New Lionsgate’s or Starz’s respective directors, officers, employees, agents, Subsidiaries or Affiliates against any member of the New Lionsgate Group or the Starz Group) or whether asserted or determined prior to the date hereof, and regardless of whether

 

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arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the New Lionsgate Group or the Starz Group, or any of their respective directors, officers, employees, agents, Subsidiaries or Affiliates.

(b) Transfer Documents. In furtherance of the contribution, assignment, transfer, conveyance and delivery of the Assets and the assumption of the Liabilities in accordance with Section 2.1(a), (i) each Party shall execute and deliver, and shall cause the applicable members of its Group to execute and deliver, to the other Party, such bills of sale, quitclaim deeds, stock powers, certificates of title, assignments of contracts and other instruments of transfer, conveyance and assignment as and to the extent necessary to evidence the transfer, conveyance and assignment of all of such Party’s and the applicable members of its Group’s right, title and interest in and to such Assets to the other Party and the applicable members of its Group in accordance with Section 2.1(a), and (ii) each Party shall execute and deliver, and shall cause the applicable members of its Group to execute and deliver, to the other Party, such assumptions of contracts and other instruments of assumption as and to the extent necessary to evidence the valid and effective assumption of the Liabilities by such Party and the applicable members of its Group in accordance with Section 2.1(a). All of the foregoing documents contemplated by this Section 2.1(b) shall be referred to collectively herein as the “Transfer Documents.” The Transfer Documents shall effect certain of the transactions contemplated by this Agreement and, notwithstanding anything in this Agreement to the contrary, shall not expand or limit any of the obligations, covenants or agreements in this Agreement. It is expressly agreed that in the event of any conflict between the terms of the Transfer Documents and the terms of this Agreement or the Tax Matters Agreement, the terms of this Agreement or the Tax Matters Agreement, as applicable, shall control.

(c) Misallocations.

(i) In the event that at any time or from time to time (whether prior to, at or after the Separation Effective Time), one Party (or any member of such Party’s Group) shall receive or otherwise possess any Asset that is allocated to the other Party (or any member of such Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such Party shall promptly transfer, or cause to be transferred, such Asset at no additional cost or consideration to the Party so entitled thereto (or to any member of such Party’s Group), and such Party (or member of such Party’s Group) shall accept such Asset. Prior to any such transfer, the Party receiving or possessing such Asset shall hold such Asset in trust for such other Party. In the event that at any time or from time to time (whether prior to, at or after the Separation Effective Time), one Party (or any member of such Party’s Group) shall be liable for or otherwise assume any Liability that is allocated to the other Party (or any member of such Party’s Group) pursuant to this Agreement or any Ancillary Agreement, such other Party shall promptly assume, or cause to be assumed, such Liability and agree to faithfully perform such Liability.

(ii) In the event that any Party is or becomes aware of any Registered IP that is, immediately following the Separation Effective Time, used, or held or developed for use, in or related to the business of one Party (i.e., in the case of New Lionsgate, the LG Studios Business, and in the case of Starz, the Starz Business), but that was as of the Closing, and continues at such time to be, owned by another Party (or any member(s) of such other Party’s Group) (such Registered IP, to the extent it is used, or held or developed for use, in or related to the business of one Party, “Misallocated Registered IP”), and within three (3) years following the date of this Agreement informs such other Party of such belief in writing, then, subject to such other Party’s agreement in writing (acting reasonably and in good faith) that such Registered IP constitutes Misallocated Registered IP, (A) such Misallocated Registered IP shall thereafter be deemed, as applicable, (1) “New Lionsgate Intellectual Property Rights” if the Parties have agreed that such Misallocated Registered IP is used, or held or developed for use, in or related to, the LG Studios Business (to the extent so used, or held or developed for use, in or related to the LG Studios Business), and (2) “Starz Intellectual Property Rights” if the Parties have agreed that such Misallocated Registered IP is used, or held or developed for use, in or related to the Starz Business (to the extent so used, or held or developed for use, in or related to the Starz Business); and (B) such Misallocated Registered IP shall thereafter immediately be deemed contributed, assigned,

 

13

transferred, conveyed and delivered (and the Party that erroneously owns such Misallocated Registered IP hereby contributes, assigns, transfers, conveys and delivers to the other Party such Misallocated Registered IP) in accordance with Section 2.1(a)(i) or (iii), as applicable, and the Parties shall take such actions with respect thereto in accordance with Section 2.1(b). If the Parties do not reach written agreement with respect to the ownership or identification of Misallocated Registered IP within thirty (30) days after a Party is informed by the other Party (acting reasonably and in good faith) of such other Party’s assertion in accordance with this Section 2.1(c) that such Registered IP constitutes Misallocated Registered IP, then the Parties shall use commercially reasonable efforts to promptly resolve such dispute in good faith. To the extent the Parties are not able to so reach a resolution within thirty (30) days of commencing negotiations in respect thereof, the dispute shall be resolved pursuant to Article VI.

(d) Waiver of Bulk-Sale and Bulk-Transfer Laws. Starz hereby waives compliance by each and every member of the New Lionsgate Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the Starz Assets to any member of the Starz Group. New Lionsgate hereby waives compliance by each and every member of the Starz Group with the requirements and provisions of any “bulk-sale” or “bulk-transfer” Laws of any jurisdiction that may otherwise be applicable with respect to the transfer or sale of any or all of the New Lionsgate Assets to any member of the New Lionsgate Group.

(e) Intellectual Property Rights.

(i) If and to the extent that, as a matter of Law in any jurisdiction, New Lionsgate or the applicable members of its Group cannot assign, transfer or convey any of New Lionsgate’s or such New Lionsgate Group members’ respective direct or indirect right, title and interest in and to any Intellectual Property Rights included in the Starz Assets, then, to the extent possible, New Lionsgate shall, and shall cause the applicable members of its Group to, irrevocably grant to Starz, or the applicable Starz Designees, an (to the greatest extent permitted under applicable Law) exclusive, irrevocable, assignable, transferable, sublicenseable, worldwide, perpetual, royalty-free license to use, exploit and commercialize in any manner now known or in the future discovered and for whatever purpose, any such right, title or interest.

(ii) If and to the extent that, as a matter of Law in any jurisdiction, Starz or the applicable members of its Group cannot assign, transfer or convey any of Starz’s or such Starz Group members’ respective direct or indirect right, title and interest in and to any Intellectual Property Rights included in the New Lionsgate Assets, then, to the extent possible, Starz shall, and shall cause the applicable members of its Group to, irrevocably grant to New Lionsgate, or the applicable New Lionsgate Designees, an (to the greatest extent permitted under applicable Law) exclusive, irrevocable, assignable, transferable, sublicenseable, worldwide, perpetual, royalty-free license to use, exploit and commercialize in any manner now known or in the future discovered and for whatever purpose, any such right, title or interest.

(f) Electronic Transfer. All transferred Starz Assets and New Lionsgate Assets, including transferred Audio/Visual Works and Software, that can be delivered by electronic transmission will be so delivered or made available to Starz, New Lionsgate or their respective designees (as applicable), at a designated FTP site or in another electronic form to be determined by the Parties.

2.2 Starz Assets; New Lionsgate Assets.

(a) Starz Assets. For purposes of this Agreement, “Starz Assets” shall mean (without duplication) those Assets of either Party or the members of its Group as of immediately prior to the Separation Effective Time, whether now existing or hereinafter acquired, to the extent used or contemplated to be used or held for use in the

 

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ownership, operation or conduct of the Starz Business or relating to the Starz Business or to a member of the Starz Group, including the following:

(i) all issued and outstanding capital stock or other equity interests of the Starz Entities that are owned by either Party or any members of its Group as of immediately prior to the Separation Effective Time;

(ii) except as otherwise set forth in this Section 2.2(a), all Assets of any Party or any members of its Group included or reflected as assets of the Starz Group on the Starz Balance Sheet, subject to any dispositions of such Assets subsequent to the date of the Starz Balance Sheet; provided, that the amounts set forth on the Starz Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Starz Assets pursuant to this clause (ii);

(iii) except as otherwise set forth in this Section 2.2(a), all Assets of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time that are of a nature or type that would have resulted in such Assets being included as Assets of Starz or members of the Starz Group on a pro forma combined balance sheet of the Starz Group or any notes or subledgers thereto as of immediately prior to the Separation Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Assets included on the Starz Balance Sheet), it being understood that (x) the Starz Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Assets that are included in the definition of Starz Assets pursuant to this clause (iii); and (y) the amounts set forth on the Starz Balance Sheet with respect to any Assets shall not be treated as minimum amounts or limitations on the amount of such Assets that are included in the definition of Starz Assets pursuant to this clause (iii);

(iv) all Assets of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time that are expressly identified by any provision of this Agreement or any Ancillary Agreement as Assets to be transferred to or owned by Starz or any other member of the Starz Group;

(v) all rights and benefits under the Starz Contracts as of immediately prior to the Separation Effective Time and all rights, interests or claims of any Party or any of the members of its Group thereunder as of immediately prior to the Separation Effective Time;

(vi) any and all Starz Accounts Receivable;

(vii) any and all finished goods inventory, supplies, components, packaging materials and other inventories, including any inventory in-transit and other inventories being held by third parties pursuant to consignment and used inventory, and all valuation-related adjustments relating thereto (including those relating to warranty, prompt pay discounts, royalties and other items), in each case, to the extent related to the Starz Business as of immediately prior to the Separation Effective Time;

(viii) any and all Starz Books and Records in the possession of any Party or any member of its Group as of immediately prior to the Separation Effective Time; provided, that New Lionsgate shall be permitted to continue to use and, if applicable, retain copies of, (A) any Starz Books and Records that as of the Separation Effective Time are used in or necessary for the operation or conduct of the LG Studios Business, (B) any Starz Books and Records that New Lionsgate is required by Law to retain (and if copies are not provided to Starz, then, to the extent permitted by Law, such copies will be made available to Starz upon Starz’s reasonable request), (C) one (1) copy of any Starz Books and Records to the extent required to demonstrate compliance with applicable Law or pursuant to internal compliance procedures or related to any New Lionsgate Assets or New Lionsgate’s and/or its Affiliates’ obligations under this Agreement or any of the Ancillary Agreements and (D) “back-up” electronic tapes of such Starz Books and Records maintained by New Lionsgate in the ordinary course of business, and such copies described in clauses (A) through (D) shall be considered “New Lionsgate Assets”;

 

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(ix) all Starz Intellectual Property Rights, together with the right to sue for any past, present or future infringement, misappropriation or other violation of any Starz Intellectual Property Rights, and to seek, recover and retain damages due or accrued for any such past, present or future infringement, misappropriation or violation thereof;

(x) all Starz Audio/Visual Works (provided that the foregoing shall not limit the rights of any member of the New Lionsgate Group with respect to any such Starz Audio/Visual Works pursuant to agreements that survive the Arrangement Effective Time pursuant to Section 2.11);

(xi) all Starz Information Technology;

(xii) all Starz Domains and Social Media;

(xiii) all Starz Permits as of immediately prior to the Separation Effective Time and all rights, interests or claims of any Party or any of the members of its Group thereunder as of immediately prior to the Separation Effective Time;

(xiv) all cash and cash equivalents of Starz or any members of the Starz Group as of immediately prior to the Separation Effective Time, except for any cash or cash equivalents withdrawn from Starz Accounts in accordance with Section 2.13(d);

(xv) all Starz Real Property as of immediately prior to the Separation Effective Time;

(xvi) all Tangible Personal Property to the extent related to the Starz Business;

(xvii) all rights to and benefits and proceeds from insurance policies in the name of any Party or member of its Group for claims declared to the policy prior to the Separation Effective Time to the extent related to the Starz Business or a Starz Asset, subject to Section 4.3;

(xviii) any and all Assets set forth on Schedule 2.2(a)(xviii);

(xix) other than with respect to the matters set forth on Schedule 3.6, all rights to causes of action, lawsuits, judgments, claims (including, subject to Section 4.3, claims against third party insurance providers as may be required pursuant to Section 2.2(a)(xvii)), counterclaims, demands or enforcement rights of any kind of New Lionsgate, its Affiliates, or any member of the New Lionsgate Group against a Person to the extent such causes of action, lawsuits, judgments, claims, counterclaims, demands or enforcement rights relate to the Starz Business, a Starz Asset or a Starz Liability, including all claims made as of the Separation Effective Time; provided, that the Party (or member of its Group) to which any such causes of action, lawsuits, judgments, claims, counterclaims, demands or enforcement rights primarily relate shall control the applicable proceedings unless such Party agrees in writing that the other Party shall control such proceedings;

(xx) the right to enforce the confidentiality or assignment provisions of any confidentiality, non-disclosure or other similar contracts to the extent related to the confidential information of the Starz Business;

(xxi) any Tax assets allocated to Starz or member of its Group pursuant to the Tax Matters Agreement;

(xxii) any employee-related assets allocated to Starz or member of its Group pursuant to the Employee Matters Agreement; and

(xxiii) the benefits of all prepaid expenses, including prepaid leases and prepaid rentals, trade accounts and other accounts, deferred charges and advance payments to the extent related to a Starz Asset.

Notwithstanding the foregoing, the Parties hereby acknowledge and agree that (A) while a single asset may fall within more than one of the clauses (i) through (xx) in this Section 2.2(a), such fact does not imply that (x) such asset shall be transferred more than once or (y) any duplication of such asset is required, and (B) the Starz Assets shall not in any event include any Asset or applicable portion thereof (to the extent used or contemplated to be used or held for use) referred to in clauses (i) through (xviii) of Section 2.2(b).

 

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(b) New Lionsgate Assets. For the purposes of this Agreement, “New Lionsgate Assets” shall mean all Assets of any Party or the members of its Group as of immediately prior to the Separation Effective Time, other than the Starz Assets. Notwithstanding anything herein to the contrary, the New Lionsgate Assets shall include:

(i) all issued and outstanding capital stock or other equity interests of the New Lionsgate Entities that are owned by either Party or any members of its Group as of immediately prior to the Separation Effective Time;

(ii) all Assets that are expressly contemplated by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Assets to be retained by New Lionsgate or any other member of the New Lionsgate Group;

(iii) all contracts and agreements of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time other than the Starz Contracts;

(iv) any and all books and records other than the Starz Books and Records (collectively, “New Lionsgate Books and Records”) in the possession of any Party or any member of its Group as of immediately prior to the Separation Effective Time; provided, that, Starz shall be permitted to continue to use and if applicable, retain copies of, (A) any New Lionsgate Books and Records that as of the Separation Effective Time are used in or necessary for the operation or conduct of the Starz Business, (B) any New Lionsgate Books and Records that Starz is required by Law to retain (and if copies are not provided to New Lionsgate, then, to the extent permitted by Law, such copies will be made available to New Lionsgate upon New Lionsgate’s reasonable request), (C) one (1) copy of any New Lionsgate Books and Records to the extent required to demonstrate compliance with applicable Law or pursuant to internal compliance procedures or related to any Starz Assets or Starz’s and/or its Affiliates’ obligations under this Agreement or any of the Ancillary Agreements and (D) “back-up” electronic tapes of such New Lionsgate Books and Records maintained by Starz in the ordinary course of business, and such copies described in clauses (A) through (D) shall be considered “Starz Assets”;

(v) all New Lionsgate Intellectual Property Rights, together with the right to sue for any past, present or future infringement, misappropriation or other violation of any New Lionsgate Intellectual Property Rights, and to seek, recover and retain damages due or accrued for any such past, present or future infringement, misappropriation or violation thereof;

(vi) all Information Technology, other than Starz Information Technology, owned by any Party or any member of its Group as of immediately prior to the Separation Effective Time;

(vii) the Domains and Social Media set forth on Schedule 2.2(b)(vii), and all other Domains and Social Media other than Starz Domains and Social Media;

(viii) all Accounts Receivable, other than the Starz Accounts Receivable;

(ix) all Permits of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time (other than the Starz Permits) and all rights, interests or claims of any Party or any of the members of its Group thereunder as of immediately prior to the Separation Effective Time;

(x) all Real Property of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time (other than the Starz Real Property);

(xi) all cash and cash equivalents of any Party or any of the members of its Group as of immediately prior to the Separation Effective Time (other than cash and cash equivalents of Starz or any other member of the Starz Group as of immediately prior to the Separation Effective Time, except for any cash or cash equivalents withdrawn from Starz Accounts in accordance with Section 2.13(d)); and

(xii) all rights to causes of action, lawsuits, judgments, claims (including, subject to Section 4.3, claims against third party insurance providers as may be required pursuant to

 

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Section 2.2(b)(xvii)), counterclaims, demands or enforcement rights of any kind of Starz, its Affiliates, or any member of the Starz Group against a Person to the extent such causes of action, lawsuits, judgments, claims, counterclaims, demands or enforcement rights relate to the LG Studios Business, a New Lionsgate Asset or a New Lionsgate Liability, including all claims made as of the Separation Effective Time; provided, that the Party (or member of its Group) to which any such causes of action, lawsuits, judgments, claims, counterclaims, demands or enforcement rights primarily relate shall control the applicable proceedings unless such Party agrees in writing that the other Party shall control such proceedings;

(xiii) the right to enforce the confidentiality or assignment provisions of any confidentiality, non-disclosure or other similar contracts to the extent related to the confidential information of the LG Studios Business;

(xiv) the benefits of all prepaid expenses, including prepaid leases and prepaid rentals, trade accounts and other accounts, deferred charges and advance payments to the extent related to a New Lionsgate Asset;

(xv) any Tax assets allocated to New Lionsgate or member of its Group pursuant to the Tax Matters Agreement;

(xvi) any employee-related assets allocated to New Lionsgate or member of its Group pursuant to the Employee Matters Agreement; and

(xvii) all rights to and benefits and proceeds from insurance policies in the name of any Party or member of its Group for claims declared to the policy prior to the Separation Effective Time to the extent related to the LG Studios Business or a New Lionsgate Asset, subject to Section 4.3; and

(xviii) any and all Assets set forth on Schedule 2.2(b)(xviii).

Notwithstanding the foregoing, the Parties hereby acknowledge and agree that (A) while a single asset may fall within more than one of the clauses (i) through (xiv) in this Section 2.2(a), such fact does not imply that (x) such asset shall be transferred more than once or (y) any duplication of such asset is required, and (B) the New Lionsgate Assets shall not in any event include any Asset or applicable portion thereof (to the extent used or contemplated to be used or held for use) referred to in clauses (i) through (xviii) of Section 2.2(b).

2.3 Starz Liabilities; New Lionsgate Liabilities.

(a) Starz Liabilities. For the purposes of this Agreement, “Starz Liabilities” shall mean the following Liabilities of any Party or any of the members of its Group:

(i) any and all Liabilities included or reflected as liabilities or obligations of Starz or the members of the Starz Group on the Starz Balance Sheet, subject to any discharge of such Liabilities subsequent to the date of the Starz Balance Sheet; provided, that the amounts set forth on the Starz Balance Sheet with respect to any Liabilities shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Starz Liabilities pursuant to this clause (i);

(ii) any and all Liabilities as of immediately prior to the Separation Effective Time that are of a nature or type that would have resulted in such Liabilities being included or reflected as liabilities or obligations of Starz or the members of the Starz Group on a pro forma combined balance sheet of the Starz Group or any notes or subledgers thereto as of immediately prior to the Separation Effective Time (were such balance sheet, notes and subledgers to be prepared on a basis consistent with the determination of the Liabilities included on the Starz Balance Sheet) except as otherwise allocated to New Lionsgate or any member of the New Lionsgate Group listed on Section 2.3(b), it being understood that (x) the Starz Balance Sheet shall be used to determine the types of, and methodologies used to determine, those Liabilities that are included in the definition of Starz Liabilities pursuant to this clause (ii) and (y) the amounts set forth on the Starz Balance Sheet with respect to any Liabilities

 

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shall not be treated as minimum amounts or limitations on the amount of such Liabilities that are included in the definition of Starz Liabilities pursuant to this clause (ii);

(iii) any and all Starz Accounts Payable;

(iv) any Tax liabilities allocated to Starz or member of its Group pursuant to the Tax Matters agreement;

(v) any employee-related liabilities allocated to Starz or member of its Group pursuant to the Employee Matters agreement;

(vi) any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by Starz or any other member of the Starz Group, and all agreements, obligations and Liabilities of any member of the Starz Group under this Agreement or any of the Ancillary Agreements;

(vii) any and all Liabilities, relating to, arising out of or resulting from the actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Separation Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Separation Effective Time), in each case to the extent that such Liabilities relate to, arise out of or result from (and only such portion relating to, arising out of or resulting from) the Starz Business or a Starz Asset; and

(viii) any and all Liabilities (x) arising out of any matter set forth on Schedule 2.3(a)(viii) or (y) arising out of any claims made by any Third Party (including New Lionsgate’s or Starz’s respective directors, officers, shareholders, employees and agents, in each case in their respective capacities as such) against any member of the New Lionsgate Group or the Starz Group to the extent relating to, arising out of or resulting from (and only such portion relating to, arising out of or resulting from) the Starz Business or the Starz Assets, or the other business, operations, activities or Liabilities referred to in clauses (i) through (vi) above, including for the avoidance of doubt the claims set forth on Schedule 2.3(a)(viii) and excluding for the avoidance of doubt the Liabilities set forth on Schedule 2.3(b)(v).

Notwithstanding the foregoing, the Parties hereby acknowledge and agree that (A) while a single Liability may fall within more than one of the clauses (i) through (vii) in this Section 2.3(a), such fact does not imply that (x) such Liability shall be transferred more than once or (y) any duplication of such Liability is required, (B) the Starz Liabilities shall not in any event include any Liability referred to in clauses (i) through (vii) of Section 2.3(b), and (C) the Starz Liabilities shall not include claims brought by New Lionsgate’s directors, officers, shareholders, employees and agents, in each case in their respective capacities as such, against any member of the New Lionsgate Group.

(b) New Lionsgate Liabilities. For the purposes of this Agreement, “New Lionsgate Liabilities” shall mean the Liabilities of any Party or members of its Group other than the Starz Liabilities. Without limiting the foregoing, the New Lionsgate Liabilities shall include:

(i) any and all Accounts Payable, other than the Starz Accounts Payable;

(ii) the New Lionsgate Debt Assumption and the obligations thereof;

(iii) any and all Liabilities relating to, arising out of or resulting from actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to, at or after the Separation Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Separation Effective Time) of any member of the New Lionsgate Group, and, prior to the Separation Effective Time, any member of the Starz Group, in each case, to the extent that such Liabilities are not Starz Liabilities;

(iv) any and all Liabilities that are expressly provided by this Agreement or any Ancillary Agreement (or the Schedules hereto or thereto) as Liabilities to be assumed by New Lionsgate or any

 

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other member of the New Lionsgate Group, and all agreements, obligations and Liabilities of any member of the New Lionsgate Group under this Agreement or any of the Ancillary Agreements;

(v) any and all Liabilities (x) arising out of any matter set forth on Schedule 2.3(b)(v) or (y) arising out of any claims made by any Third Party (including New Lionsgate’s or Starz’s respective directors, officers, shareholders, employees and agents, in each case in their respective capacities as such) against any member of the New Lionsgate Group or the Starz Group to the extent relating to, arising out of or resulting from (and only such portion relating to, arising out of or resulting from) the Starz Business or the New Lionsgate Assets, or the other business, operations, activities or Liabilities referred to in clauses (i) through (iii) above, including for the avoidance of doubt the claims set forth on Schedule 2.3(b)(v), in each case, to the extent that such Liabilities are not Starz Liabilities;

(vi) any Tax liabilities allocated to New Lionsgate or member of its Group pursuant to the Tax Matters Agreement;

(vii) any employee-related liabilities allocated to New Lionsgate or member of its Group pursuant to the Employee Matters Agreement; and

(viii) any and all Liabilities set forth on Schedule 2.3(b)(viii).

Notwithstanding the foregoing, the Parties hereby acknowledge and agree that (A) while a single Liability may fall within more than one of the clauses (i) through (vii) in this Section 2.3(a), such fact does not imply that (x) such Liability shall be transferred more than once or (y) any duplication of such Liability is required, (B) the New Lionsgate Liabilities shall not in any event include any Liability referred to in clauses (i) through (vii) of Section 2.3(b), and (C) the New Lionsgate Liabilities shall not include claims brought by Starz directors, officers, shareholders, employees and agents, in each case in their respective capacities as such, against any member of the Starz Group.

2.4 Arrangement Effective Time. Subject to the terms and conditions of this Agreement, the Transactions shall be consummated pursuant to the terms of the Plan of Arrangement at a closing to be held at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019 on the Arrangement Effective Date (as defined in the Arrangement Agreement) or at such other place or on such other date as Lionsgate and LG Studios may mutually agree upon in writing. To the extent that documents and signatures are required to be executed or provided at or prior to the Arrangement Effective Time such matters shall be dealt with by way of a virtual closing through electronic exchange of documents and signatures.

2.5 Changes to the Transactions; Cooperation.

(a) Lionsgate and LG Studios currently intend to effect the Transactions pursuant to the Arrangement; provided, however, that the Lionsgate Board and the LG Studios Board may, upon mutual agreement and subject to the provisions of the Interim Orders, the Final Order, the Plan of Arrangement and applicable law, amend, modify or supplement the Arrangement Agreement, including to determine the Arrangement Effective Time, or otherwise terminate the Transactions.

(b) The Parties shall cooperate to accomplish the Transactions and promptly take any and all actions necessary or desirable to effect the Transactions, including the registration under the Securities Act of the New Lionsgate New Common Shares and Starz Common Shares. Lionsgate shall select any investment bank or manager in connection with the Transactions, as well as any Agent, financial printer, solicitation and/or exchange agent and financial, legal, accounting and other advisors for Lionsgate. Lionsgate and LG Studios, as the case may be, will provide to the Agent all share certificates and any information required in order to complete the Transactions.

 

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2.6 Actions Prior to the Transactions. Prior to the Arrangement Effective Date and subject to the terms and conditions set forth herein and in the Arrangement Agreement, the Parties shall take, or cause to be taken, the following actions in connection with the Transactions:

(a) Registration Statements. Lionsgate and New Lionsgate shall prepare and file the Form S-4, and such amendments or supplements thereto, and use their respective reasonable best efforts to cause the same to become and remain effective and to obtain the applicable acceleration of effectiveness from the SEC, respectively, as required by Law, including filing such amendments to the Form S-4 as may be required by the SEC or federal, state, provincial or foreign securities Laws. Lionsgate and New Lionsgate shall also cooperate in preparing, filing with the SEC and causing to become effective registration statements, and any amendments thereof, which are required to reflect the establishment of, or amendments to, any employee benefit and other plans necessary or appropriate in connection with the Transactions or the other transactions contemplated by this Agreement and the Ancillary Agreements, as well as take all necessary steps in regards to such employee benefit and other plans necessary or appropriate in connection with the Transactions or the other transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Directors and Officers. On or prior to the Arrangement Effective Date, Lionsgate and New Lionsgate shall take all necessary actions so that, as of the completion of the Transactions, the directors and executive officers of Starz and the directors and executive officers of New Lionsgate shall be those set forth in the Form S-4, unless otherwise agreed by the Parties.

(c) Stock Exchange Listings. Lionsgate shall prepare, file and use reasonable best efforts to seek to make effective, an application for listing of the New Lionsgate New Common Shares on the NYSE and the Starz Common Shares on the NASDAQ, as applicable, to be issued in the Transactions, subject to official notice of issuance.

(d) The Agent. New Lionsgate shall enter into an exchange agent agreement and a transfer agent services agreement with the Agent or otherwise provide instructions to the Agent regarding the Transactions, and Lionsgate will enter into an exchange agent agreement and a transfer agent services agreement with the Agent, or will cause the existing Lionsgate agreement to be modified, and Lionsgate may otherwise provide instructions to the Agent regarding Starz and Starz common shares in connection with the Transactions.

(e) Stock-Based Employee Benefit Plan. New Lionsgate and Starz shall take all actions as may be necessary to approve the grants of adjusted equity awards by New Lionsgate (in respect of New Lionsgate New Common Shares) and Starz (in respect of Starz Common Shares) in connection with the Transactions in order to satisfy the requirements of Rule 16b-3 under the Exchange Act and applicable Canadian securities laws.

(f) Interim Orders. Lionsgate and LG Studios shall take all action necessary in accordance with applicable Law and the Arrangement Agreement to obtain the LGEC Interim Order and the Studios Interim Order.

(g) Shareholders Meetings; Other Approvals. Lionsgate and LG Studios shall take all action necessary in accordance with applicable Law, the Interim Orders and the applicable constating documents to set a record date for, duly give notice of, convene and, following the mailing of the applicable meeting materials to shareholders, hold each applicable meeting of shareholders necessary to obtain the approvals required by the Interim Orders, including the LGEC Meeting and the Studios Meeting. Lionsgate and LG Studios shall cooperate in accordance with the Arrangement Agreement to obtain or make, as applicable, any other Approvals or Notifications that may be required in connection with the Arrangement Agreement.

(h) Final Order. Lionsgate and LG Studios shall take the actions set forth in the Arrangement Agreement with respect to obtaining the Final Order.

 

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(i) Shareholders Meetings, Interim Order and Final Order Costs. All third-party costs, fees and expenses relating to the LGEC Meeting, the LGEC Interim Order and the Final Order, including all of the costs of producing, printing, mailing and otherwise distributing the Meeting Materials in respect of the LGEC Meeting shall be borne by each of Lionsgate and New Lionsgate equally, except as set forth on Schedule 9.9. LG Studios shall pay all third-party costs, fees and expenses relating to the Studios Meeting and the Studios Interim Order, including all of the costs of producing, printing, mailing and otherwise distributing the Meeting Materials in respect of the Studios Meeting.

2.7 Conditions to the Transactions.

(a) The consummation of the Transactions will be subject to the satisfaction, or waiver by Lionsgate and LG Studios pursuant to Section 2.7(b) (to the extent such waiver is permitted by applicable Law), of the following conditions:

(i) The transfer of the Starz Assets (other than any Delayed Starz Asset) and Starz Liabilities (other than any Delayed Starz Liability) contemplated to be transferred from New Lionsgate to Starz at or prior to the Separation Effective Time shall have occurred as contemplated by Section 2.1, and the transfer of the New Lionsgate Assets (other than any Delayed New Lionsgate Asset) and New Lionsgate Liabilities (other than any Delayed New Lionsgate Liability) contemplated to be transferred from Starz to New Lionsgate at or prior to the Separation Effective Time shall have occurred as contemplated by Section 2.1, in each case, pursuant to the Transactions Step Plan in a manner reasonably satisfactory to the Parties.

(ii) The Form S-4 shall have been filed and declared effective by the SEC, and there shall be no stop-order in effect with respect thereto, and no proceeding for that purpose shall have been instituted or threatened by the SEC.

(iii) Lionsgate shall have received the U.S. Tax Opinion on terms consistent with the Arrangement Agreement, and such U.S. Tax Opinion shall not have been withdrawn or rescinded.

(iv) All Governmental Approvals necessary to consummate the Transactions shall have been obtained and be in full force and effect.

(v) The LGEC Arrangement Approval shall have been obtained.

(vi) The Studios Arrangement Approval shall have been obtained.

(vii) The Interim Orders and the Final Order shall have been obtained on terms consistent with the Arrangement Agreement.

(viii) The Transactions and related transactions shall have been approved by the Lionsgate Board.

(ix) The Transactions and related transactions shall have been approved by the LG Studios Board.

(x) An independent appraisal firm acceptable to the Lionsgate Board shall have delivered one or more opinions to the Lionsgate Board confirming the solvency and financial viability of Starz after consummation of the Transactions, and such opinions shall be acceptable to the Lionsgate Board in form and substance in the Lionsgate Board’s sole discretion and such opinion(s) shall not have been withdrawn or rescinded.

(xi) The actions and filings necessary or appropriate under applicable U.S. federal, U.S. state, Canadian, or other securities Laws or blue sky laws and the rules and regulations thereunder in connection with the Transactions, if any, shall have been taken or made, and, where applicable, have become effective or been accepted by the applicable Governmental Authority.

(xii) No order, injunction or decree issued by any Governmental Authority of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions or

 

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any of the transactions related thereto shall be in effect, and no other event outside the control of the Parties shall have occurred or failed to occur that prevents the consummation of the Transactions or any related transactions.

(xiii) The other conditions set forth in Article 4.1 of the Arrangement Agreement shall have been satisfied or waived.

(xiv) Each of the Ancillary Agreements shall have been duly executed and delivered, subject to the occurrence of the Separation Effective Time, by the applicable parties thereto.

(xv) No other events or developments shall exist or shall have occurred that, in the judgment of the Lionsgate Board or the LG Studios Board makes it inadvisable to effect the Transactions or the other transactions contemplated by this Agreement or any the Ancillary Agreements.

(b) The foregoing conditions are for the benefit of Lionsgate and LG Studios and shall not give rise to or create any duty on the part of Lionsgate, LG Studios, the Lionsgate Board or the LG Studios Board to waive or not waive any such condition or in any way limit Lionsgate’s or LG Studio’s right to terminate this Agreement as set forth in Article VIII or alter the consequences of any such termination from those specified in such Article. Any determination made, upon mutual agreement, by the Lionsgate Board and the LG Studios Board prior to the Transactions concerning the satisfaction or waiver of any or all of the conditions set forth in Section 2.7(a) shall be conclusive and binding on the Parties.

2.8 Approvals and Notifications.

(a) Approvals and Notifications for Starz Assets and Liabilities. To the extent that the transfer or assignment of any Starz Asset, the assumption of any Starz Liability or the Transactions requires any Approvals or Notifications, the Parties shall use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable and within any time periods required by such Approvals or Notifications; provided, however, that, except to the extent expressly provided in this Agreement or any of the Ancillary Agreements or as otherwise agreed between New Lionsgate and Starz, neither New Lionsgate nor Starz shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation or agreeing to any amended contract terms) to any Person in order to obtain or make such Approvals or Notifications.

(b) Delayed Starz Transfers. If and to the extent that the valid, complete and perfected transfer or assignment to the Starz Group of any Starz Asset or assumption by the Starz Group of any Starz Liability in connection with the Transactions would be a violation of applicable Law or require any Approvals or Notifications that have not been obtained or made by the Separation Effective Time, then, unless the Parties mutually shall otherwise determine, the transfer or assignment to the Starz Group of such Starz Assets or the assumption by the Starz Group of such Starz Liabilities, as the case may be, shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such Starz Assets or Starz Liabilities shall continue to constitute Starz Assets and Starz Liabilities for all other purposes of this Agreement.

(c) Treatment of Delayed Starz Assets and Delayed Starz Liabilities. If any transfer or assignment of any Starz Asset (or a portion thereof) or any assumption of any Starz Liability (or a portion thereof) intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated at or prior to the Separation Effective Time, whether as a result of the provisions of Section 2.8(b) or for any other reason (any such Starz Asset (or a portion thereof), a “Delayed Starz Asset” and any such Starz Liability (or a portion thereof), a “Delayed Starz Liability”), then, insofar as reasonably possible and subject to applicable Law, the member of the New Lionsgate Group retaining such Delayed Starz Asset or such Delayed Starz Liability, as the case may be, shall thereafter hold such Delayed Starz Asset or Delayed Starz Liability, as the case may be, for

 

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the use and benefit (or the performance and obligation, in the case of a Liability) of the member of the Starz Group entitled thereto (at the expense of the member of the Starz Group entitled thereto), and such member of the Starz Group shall be afforded all the benefits and burdens of such Delayed Starz Asset or Delayed Starz Liability, as applicable. In addition, the member of the New Lionsgate Group retaining such Delayed Starz Asset or such Delayed Starz Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed Starz Asset or Delayed Starz Liability in the ordinary course of business in accordance with Starz Group past practice and take such other actions as may be reasonably requested by the member of the Starz Group to whom such Delayed Starz Asset is to be transferred or assigned, or which will assume such Delayed Starz Liability, as the case may be, in order to place such member of the Starz Group in a substantially similar position as if such Delayed Starz Asset or Delayed Starz Liability had been contributed, transferred, assigned or assumed as contemplated hereby and so that all the benefits and burdens relating to such Delayed Starz Asset or Delayed Starz Liability, as the case may be, including use, risk of loss, potential for gain and dominion, control and command over such Delayed Starz Asset or Delayed Starz Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Separation Effective Time (and from any earlier time provided for in a Transfer Document until the Separation Effective Time) to the Starz Group. Each of New Lionsgate and Starz shall, and shall cause the members of its Group to, (i) treat for all Tax purposes any Delayed Starz Asset or Delayed Starz Liability as an Asset owned by, and/or a Liability of, as applicable, Starz or the applicable member(s) of the Starz Group, not later than the Separation Effective Time, and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by applicable Law). For the avoidance of doubt, New Lionsgate shall not dispose of, pledge, sell or otherwise transfer any Delayed Starz Asset without the prior written consent of Starz.

(d) Transfer of Delayed Starz Assets and Delayed Starz Liabilities. If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Delayed Starz Asset or the deferral of assumption of any Delayed Starz Liability pursuant to Section 2.8(b), are obtained or made, and, if and when any other legal impediments to the transfer or assignment of any Delayed Starz Asset or the assumption of any Delayed Starz Liability have been removed, the transfer or assignment of the applicable Delayed Starz Asset or the assumption of the applicable Delayed Starz Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.

(e) Costs for Delayed Starz Assets and Delayed Starz Liabilities. Except as otherwise agreed in writing between the Parties, any member of the New Lionsgate Group retaining a Delayed Starz Asset or Delayed Starz Liability due to the deferral of the transfer or assignment of such Delayed Starz Asset or the deferral of the assumption of such Delayed Starz Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by Starz or the member of the Starz Group entitled to the Delayed Starz Asset or Delayed Starz Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by Starz or the member of the Starz Group entitled to such Delayed Starz Asset or Delayed Starz Liability; provided, however, that the New Lionsgate Group shall not knowingly allow the loss or diminution in value of any Delayed Starz Asset without first providing the Starz Group commercially reasonable notice of such potential loss or diminution in value and affording the Starz Group commercially reasonable opportunity to take action to prevent such loss or diminution in value.

(f) Approvals and Notifications for New Lionsgate Assets and Liabilities. To the extent that the transfer or assignment of any New Lionsgate Asset, the assumption of any New Lionsgate Liability or the Transactions requires any Approvals or Notifications, the Parties shall use their commercially reasonable efforts to obtain or make such Approvals or Notifications as soon as reasonably practicable and within any time periods required by such Approvals or Notifications; provided, however, that, except to the extent expressly provided in this Agreement or any of the Ancillary Agreements or as otherwise agreed between New Lionsgate and Starz, neither New Lionsgate nor Starz shall be obligated to contribute capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation or agreeing to any amended contract terms) to any Person in order to obtain or make such Approvals or Notifications.

 

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(g) Delayed New Lionsgate Transfers. If and to the extent that the valid, complete and perfected transfer or assignment to the New Lionsgate Group of any New Lionsgate Asset or assumption by the New Lionsgate Group of any New Lionsgate Liability in connection with the Transactions would be a violation of applicable Law or require any Approvals or Notifications that have not been obtained or made by the Separation Effective Time then, unless the Parties mutually shall otherwise determine, the transfer or assignment to the New Lionsgate Group of such New Lionsgate Assets or the assumption by the New Lionsgate Group of such New Lionsgate Liabilities, as the case may be, shall be automatically deemed deferred and any such purported transfer, assignment or assumption shall be null and void until such time as all legal impediments are removed or such Approvals or Notifications have been obtained or made. Notwithstanding the foregoing, any such New Lionsgate Assets or New Lionsgate Liabilities shall continue to constitute New Lionsgate Assets and New Lionsgate Liabilities for all other purposes of this Agreement.

(h) Treatment of Delayed New Lionsgate Assets and Delayed New Lionsgate Liabilities. If any transfer or assignment of any New Lionsgate Asset (or a portion thereof) or any assumption of any New Lionsgate Liability (or a portion thereof) intended to be transferred, assigned or assumed hereunder, as the case may be, is not consummated at or prior to the Separation Effective Time whether as a result of the provisions of Section 2.8(g) or for any other reason (any such New Lionsgate Asset (or a portion thereof), a “Delayed New Lionsgate Asset” and any such New Lionsgate Liability (or a portion thereof), a “Delayed New Lionsgate Liability”), then, insofar as reasonably possible and subject to applicable Law, the member of the Starz Group retaining such Delayed New Lionsgate Asset or such Delayed New Lionsgate Liability, as the case may be, shall thereafter hold such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability, as the case may be, for the use and benefit (or the performance or obligation, in the case of a Liability) of the member of the New Lionsgate Group entitled thereto (at the expense of the member of the New Lionsgate Group entitled thereto), and such member of the New Lionsgate Group shall be afforded all the benefits and burdens of such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability, as applicable. In addition, the member of the Starz Group retaining such Delayed New Lionsgate Asset or such Delayed New Lionsgate Liability shall, insofar as reasonably possible and to the extent permitted by applicable Law, treat such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability in the ordinary course of business in accordance with New Lionsgate Group past practice and take such other actions as may be reasonably requested by the member of the New Lionsgate Group to which such Delayed New Lionsgate Asset is to be transferred or assigned, or which will assume such Delayed New Lionsgate Liability, as the case may be, in order to place such member of the New Lionsgate Group in a substantially similar position as if such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability had been contributed, transferred, assigned or assumed as contemplated hereby and so that all the benefits and burdens relating to such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability, as the case may be, including use, risk of loss, potential for gain, and dominion, control and command over such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability, as the case may be, and all costs and expenses related thereto, shall inure from and after the Separation Effective Time (and from any earlier time provided for in a Transfer Document until the Separation Effective Time) to the New Lionsgate Group. Each of New Lionsgate and Starz shall, and shall cause the members of its Group to, (i) treat for all Tax purposes any Delayed New Lionsgate Asset or Delayed New Lionsgate Liability as an Asset owned by, and/or a Liability of, as applicable, New Lionsgate or the applicable member(s) of the New Lionsgate Group, not later than the Separation Effective Time, and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by applicable Law).

(i) Transfer of Delayed New Lionsgate Assets and Delayed New Lionsgate Liabilities. If and when the Approvals or Notifications, the absence of which caused the deferral of transfer or assignment of any Delayed New Lionsgate Asset or the deferral of assumption of any Delayed New Lionsgate Liability pursuant to Section 2.8(g), are obtained or made, and, if and when any other legal impediments to the transfer or assignment of any Delayed New Lionsgate Asset or the assumption of any Delayed New Lionsgate Liability have been removed, the transfer or assignment of the applicable Delayed New Lionsgate Asset or the assumption of the applicable Delayed New Lionsgate Liability, as the case may be, shall be effected in accordance with the terms of this Agreement and/or the applicable Ancillary Agreement.

 

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(j) Costs for Delayed New Lionsgate Assets and Delayed New Lionsgate Liabilities. Except as otherwise agreed in writing between the Parties, any member of the Starz Group retaining a Delayed New Lionsgate Asset or Delayed New Lionsgate Liability due to the deferral of the transfer or assignment of such Delayed New Lionsgate Asset or the deferral of the assumption of such Delayed New Lionsgate Liability, as the case may be, shall not be obligated, in connection with the foregoing, to expend any money unless the necessary funds are advanced (or otherwise made available) by New Lionsgate or the member of the New Lionsgate Group entitled to the Delayed New Lionsgate Asset or Delayed New Lionsgate Liability, other than reasonable out-of-pocket expenses, attorneys’ fees and recording or similar fees, all of which shall be promptly reimbursed by New Lionsgate or the member of the New Lionsgate Group entitled to such Delayed New Lionsgate Asset or Delayed New Lionsgate Liability; provided, however, that the Starz Group shall not knowingly allow the loss or diminution in value of any Delayed New Lionsgate Asset without first providing the New Lionsgate Group commercially reasonable notice of such potential loss or diminution in value and affording the New Lionsgate Group commercially reasonable opportunity to take action to prevent such loss or diminution in value.

2.9 Assignment and Novation of Liabilities.

(a) Assignment and Novation of Starz Liabilities.

(i) Prior to the Arrangement Effective Time or as soon as practicable thereafter, each of New Lionsgate and Starz, at the request of the other, shall use its commercially reasonable efforts to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all Starz Liabilities and obtain in writing the unconditional release of each member of the New Lionsgate Group that is a party to or otherwise obligated under any such arrangements, to the extent permitted by applicable Law, so that, in any such case, the members of the Starz Group shall be solely responsible for such Starz Liabilities; provided, however, that, except as otherwise expressly provided in this Agreement or any of the Ancillary Agreements, neither New Lionsgate nor Starz shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation or agreeing to any amended contract terms) to any third (3rd) Person from whom any such consent, substitution, approval, amendment or release is requested. To the extent such substitution contemplated by the first sentence of this Section 2.9(a)(i) has been effected, the members of the New Lionsgate Group shall, from and after the Arrangement Effective Time, cease to have any obligation whatsoever arising from or in connection with such Starz Liabilities.

(ii) If New Lionsgate or Starz is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release, and the applicable member of the New Lionsgate Group continues to be bound by such agreement, lease, license or other obligation or Liability (each, an “Unreleased Starz Liability”), Starz shall, to the extent not prohibited by Law, (A) use its commercially reasonable efforts (subject to the proviso set forth in Section 2.9(a)(i) above) to effect such consent, substitution, approval, amendment or release as soon as practicable following the Arrangement Effective Time, and (B) as indemnitor, guarantor, agent or subcontractor for such member of the New Lionsgate Group, as the case may be, (1) pay, perform and discharge fully all the obligations or other Liabilities of such member of the New Lionsgate Group that constitute Unreleased Starz Liabilities from and after the Arrangement Effective Time and (2) use its commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the New Lionsgate Group. If and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased Starz Liabilities shall otherwise become assignable or able to be novated, New Lionsgate shall promptly assign, or cause to be assigned, and Starz or the applicable member of the Starz Group shall assume, such Unreleased Starz Liabilities without exchange of further consideration.

(iii) If New Lionsgate or Starz is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release as set forth in clause (ii) of this

 

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Section 2.9(a), Starz and any relevant member of its Group that has assumed the applicable Unreleased Starz Liability shall indemnify, defend and hold harmless New Lionsgate against or from such Unreleased Starz Liability in accordance with the provisions of Article III and shall, as agent or subcontractor for New Lionsgate, pay, perform and discharge fully all the obligations or other Liabilities of New Lionsgate thereunder.

(b) Assignment and Novation of New Lionsgate Liabilities.

(i) Prior to the Arrangement Effective Time or as soon as practicable thereafter, each of Starz and New Lionsgate, at the request of the other, shall use its commercially reasonable efforts (subject to the proviso set forth in Section 2.9(a)(i) above) to obtain, or to cause to be obtained, as soon as reasonably practicable, any consent, substitution, approval or amendment required to novate or assign all New Lionsgate Liabilities and obtain in writing the unconditional release of each member of the Starz Group that is a party to or otherwise obligated under any such arrangements, to the extent permitted by applicable Law, so that, in any such case, the members of the New Lionsgate Group shall be solely responsible for such New Lionsgate Liabilities; provided, however, that, except as otherwise expressly provided in this Agreement or any of the Ancillary Agreements, neither New Lionsgate nor Starz shall be obligated to contribute any capital or pay any consideration in any form (including providing any letter of credit, guaranty or other financial accommodation or agreeing to any amended contract terms) to any third (3rd) Person from whom any such consent, substitution, approval, amendment or release is requested. To the extent such substitution contemplated by the first sentence of this Section 2.9(b)(i) has been effected, the members of the Starz Group shall, from and after the Arrangement Effective Time, cease to have any obligation whatsoever arising from or in connection with such New Lionsgate Liabilities.

(ii) If New Lionsgate or Starz is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release and the applicable member of the Starz Group continues to be bound by such agreement, lease, license or other obligation or Liability (each, an “Unreleased New Lionsgate Liability”), New Lionsgate shall, to the extent not prohibited by Law, (A) use its commercially reasonable effort (subject to the proviso set forth in Section 2.9(a)(i) above) to effect such consent, substitution, approval, amendment or release as soon as practicable following the Arrangement Effective Time, and (B) as indemnitor, guarantor, agent or subcontractor for such member of the Starz Group, as the case may be, (1) pay, perform and discharge fully all the obligations or other Liabilities of such member of the Starz Group that constitute Unreleased New Lionsgate Liabilities from and after the Arrangement Effective Time and (2) use its commercially reasonable efforts to effect such payment, performance or discharge prior to any demand for such payment, performance or discharge is permitted to be made by the obligee thereunder on any member of the Starz Group. If and when any such consent, substitution, approval, amendment or release shall be obtained or the Unreleased New Lionsgate Liabilities shall otherwise become assignable or able to be novated, Starz shall promptly assign, or cause to be assigned, and New Lionsgate or the applicable member of the New Lionsgate Group shall assume, such Unreleased New Lionsgate Liabilities without exchange of further consideration.

(iii) If Starz or New Lionsgate is unable to obtain, or to cause to be obtained, any such required consent, substitution, approval, amendment or release as set forth in clause (ii) of this Section 2.9(b), New Lionsgate and any relevant member of its Group that has assumed the applicable Unreleased New Lionsgate Liability shall indemnify, defend and hold harmless Starz against or from such Unreleased New Lionsgate Liability in accordance with the provisions of Article III and shall, as agent or subcontractor for Starz, pay, perform and discharge fully all the obligations or other Liabilities of Starz thereunder.

2.10 Release of Guarantees. In furtherance of, and not in limitation of, the obligations set forth in Section 2.9 and Section 2.17:

(a) At or prior to the Arrangement Effective Time or as soon as practicable thereafter, each of New Lionsgate and Starz shall, at the request of the other Party and with the reasonable cooperation of such other Party and the applicable member(s) of such other Party’s Group, use commercially reasonable efforts (subject to

 

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the proviso set forth in Section 2.9(a)(i) above) to (i) have any member(s) of the New Lionsgate Group removed as guarantor of or obligor for any Starz Liability to the extent such guarantee or obligation relates to Starz Liabilities, including the removal of any Security Interest on or in any New Lionsgate Asset that may serve as collateral or security for any such Starz Liability; and (ii) have any member(s) of the Starz Group removed as guarantor of or obligor for any New Lionsgate Liability to the extent such guarantee or obligation relates to New Lionsgate Liabilities, including the removal of any Security Interest on or in any Starz Asset that may serve as collateral or security for any such New Lionsgate Liability.

(b) To the extent required to obtain a release from a guarantee of:

(i) any member of the New Lionsgate Group, Starz shall (or shall cause a member of the Starz Group to) execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any New Lionsgate Asset that may serve as collateral or security for any such Starz Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (x) with which Starz (or any member of the Starz Group) would be reasonably unable to comply or (y) which Starz (or any member of the Starz Group) would not reasonably be able to avoid breaching; and

(ii) any member of the Starz Group, New Lionsgate shall (or shall cause a member of the New Lionsgate Group to) execute a guarantee agreement in the form of the existing guarantee or such other form as is agreed to by the relevant parties to such guarantee agreement, which agreement shall include the removal of any Security Interest on or in any Starz Asset that may serve as collateral or security for any such New Lionsgate Liability, except to the extent that such existing guarantee contains representations, covenants or other terms or provisions either (x) with which New Lionsgate (or any member of the New Lionsgate Group) would be reasonably unable to comply or (y) which New Lionsgate (or any member of the New Lionsgate Group) would not reasonably be able to avoid breaching.

(c) If New Lionsgate or Starz is unable to obtain, or to cause to be obtained, any such required removal or release, or is expressly not required to do so, in each case as set forth in Section 2.10(a) and (b), as applicable, (i) the Party or the relevant member of its Group that is responsible pursuant to this Agreement for the Liability associated with such guarantee shall indemnify, defend and hold harmless the guarantor or obligor, as applicable, against or from any Liability arising from or relating thereto in accordance with the provisions of Article III and shall, as agent or subcontractor for such guarantor or obligor, pay, perform and discharge fully all the obligations or other Liabilities of such guarantor or obligor thereunder; and (ii) each of New Lionsgate and Starz, on behalf of itself and the other members of their respective Group, agrees not to renew or extend the term of, increase any obligations under, or transfer to a Third Party, any loan, guarantee, lease, contract or other obligation for which the other Party or a member of its Group is or may be liable unless all obligations of such other Party and the members of such other Party’s Group with respect thereto are thereupon terminated by documentation reasonably satisfactory in form and substance to such other Party.

2.11 Termination of Agreements.

(a) In furtherance of the releases and other provisions of Section 3.1, Starz and each member of the Starz Group, on the one hand, and New Lionsgate and each member of the New Lionsgate Group, on the other hand, hereby terminate the agreements set forth on Schedule 2.11(a), effective as of the Arrangement Effective Time, and no such terminated agreement, arrangement, commitment or understanding (including any provision thereof which purports to survive termination) shall be of any further force or effect after the Arrangement Effective Time. Any and all other agreements, arrangements, commitments or understandings, whether or not in writing, between or among Starz and/or any member of the Starz Group, on the one hand, and New Lionsgate and/or any member of the New Lionsgate Group, on the other hand, shall not be affected by the Transactions, except as otherwise provided in or expressly contemplated by this Agreement or any Ancillary Agreement. Each

 

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Party shall, at the reasonable request of the other Party, take, or cause to be taken, such other actions as may be necessary to effect the foregoing.

(b) Except as set forth on Schedule 2.11(b), all of the intercompany accounts receivable and accounts payable between any member of the New Lionsgate Group, on the one hand, and any member of the Starz Group, on the other hand, outstanding as of the Arrangement Effective Time and arising out of the contracts or agreements described in Schedule 2.11(a) shall be repaid or settled immediately prior to or as promptly as practicable after the Arrangement Effective Time. All other intercompany accounts receivable and accounts payable between any member of the New Lionsgate Group, on the one hand, and any member of the Starz Group, on the other hand, outstanding as of the Arrangement Effective Time shall be repaid or settled following the Arrangement Effective Time in the ordinary course of business or, if otherwise mutually agreed prior to the Arrangement Effective Time by duly authorized representatives of New Lionsgate and Starz, cancelled.

2.12 Treatment of Shared Contracts.

(a) Subject to applicable Law and without limiting the generality of the obligations set forth in Section 2.1, unless the Parties otherwise agree or the benefits of any contract, agreement, arrangement, commitment or understanding described in this Section 2.12 are expressly conveyed to the applicable Party pursuant to this Agreement or an Ancillary Agreement, any contract or agreement, a portion of which relates to matters that would be the subject of a Starz Asset, but the remainder of which relates to matters that would be the subject of a New Lionsgate Asset, or vice versa (any such contract or agreement, including those set forth on Schedule 2.12(a), a “Shared Contract”), shall be assigned in relevant part to the applicable member(s) of the applicable Group, if so assignable, or appropriately amended prior to, on or after the Arrangement Effective Time, so that each Party or the member of its Group shall, as of the Arrangement Effective Time, be entitled to the rights and benefits, and shall assume the related portion of any Liabilities, inuring to its respective businesses; provided, however, that (i) in no event shall any member of any Group be required to assign (or amend) any Shared Contract in its entirety or to assign a portion of any Shared Contract which is not assignable (or cannot be amended) by its terms (including any terms imposing consents or conditions on an assignment where such consents or conditions have not been obtained or fulfilled) and (ii) if any Shared Contract cannot be so partially assigned by its terms or otherwise, or cannot be amended or if such assignment or amendment would impair the benefit the parties thereto derive from such Shared Contract, then the Parties shall, and shall cause each of the members of their respective Groups to, take such other reasonable and permissible actions (including by providing prompt notice to the other Party with respect to any relevant claim of Liability or other relevant matters arising in connection with a Shared Contract so as to allow such other Party the ability to exercise any applicable rights under such Shared Contract) to cause a member of the Starz Group or the New Lionsgate Group, as the case may be, to receive the rights and benefits of that portion of each Shared Contract that relates to the Starz Business or the LG Studios Business, as the case may be (in each case, to the extent so related), as if such Shared Contract had been assigned to a member of the applicable Group (or amended to allow a member of the applicable Group to exercise applicable rights under such Shared Contract) pursuant to this Section 2.12, and to bear the burden of the corresponding Liabilities (including any Liabilities that may arise by reason of such arrangement), as if such Liabilities had been assumed by a member of the applicable Group pursuant to this Section 2.12.

(b) Each of New Lionsgate and Starz shall, and shall cause the members of its Group to, (i) treat for all Tax purposes the portion of each Shared Contract inuring to its respective businesses as an Asset owned by, and/or a Liability of, as applicable, such Party, or the members of its Group, as applicable, not later than the Arrangement Effective Time (or such earlier time as provided under a Transfer Document), and (ii) neither report nor take any Tax position (on a Tax Return or otherwise) inconsistent with such treatment (unless required by applicable Law).

(c) Nothing in this Section 2.12 shall require any member of any Group to make any non-de-minimis payment (except to the extent advanced, assumed or agreed in advance to be reimbursed by any member of the

 

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other Group), incur any non-de-minimis obligation or grant any non-de-minimis concession for the benefit of any member of any other Group in order to effect any transaction contemplated by this Section 2.12.

2.13 Bank Accounts; Cash Balances.

(a) Each Party agrees to take, or cause the members of its Group to take, at the Arrangement Effective Time (or such earlier time as the Parties may agree), all actions necessary to amend all contracts or agreements governing each bank and brokerage account owned by Starz or any other member of the Starz Group (collectively, the “Starz Accounts”) and all contracts or agreements governing each bank or brokerage account owned by New Lionsgate or any other member of the New Lionsgate Group (collectively, the “New Lionsgate Accounts”) so that each such Starz Account and New Lionsgate Account, if currently linked (whether by automatic withdrawal, automatic deposit or any other authorization to transfer funds from or to, hereinafter “Linked”) to any New Lionsgate Account or Starz Account, respectively, is de-Linked from such New Lionsgate Account or Starz Account, respectively.

(b) It is intended that, following consummation of the actions contemplated by Section 2.13(a), there will be in place a cash management process pursuant to which the Starz Accounts will be managed and funds collected will be transferred into one (1) or more accounts maintained by Starz or a member of the Starz Group.

(c) It is intended that, following consummation of the actions contemplated by Section 2.13(a), there will continue to be in place a cash management process pursuant to which the New Lionsgate Accounts will be managed and funds collected will be transferred into one (1) or more accounts maintained by New Lionsgate or a member of the New Lionsgate Group.

(d) With respect to any outstanding checks issued or payments initiated by New Lionsgate, Starz, or any of the members of their respective Groups prior to the Arrangement Effective Time, such outstanding checks and payments shall be honored following the Arrangement Effective Time by the Person or Group owning the account on which the check is drawn or from which the payment was initiated, respectively.

(e) As between New Lionsgate and Starz, and the members of their respective Groups, all payments made and reimbursements, credits, returns or rebates received after the Arrangement Effective Time by any Party (or member of its Group) that relate to a business, Asset or Liability of another Party (or member of its Group), shall be held by such Party in trust for the use and benefit of the Party entitled thereto and, promptly following receipt by such Party of any such payment or reimbursement, credit, return or rebate such Party shall pay over, or shall cause the applicable member of its Group to pay over, to the applicable other Party the amount of such payment or reimbursement, credit, return or rebate without right of set-off.

2.14 Ancillary Agreements. Effective at or prior to the Arrangement Effective Time, each of the Parties will, or will cause the applicable members of their Groups to, execute and deliver all Ancillary Agreements to which it is a party.

2.15 Transition Committee. Upon or prior to the Arrangement Effective Time, the Parties shall establish a transition committee (the “Transition Committee”) that shall consist of two members from each of New Lionsgate and Starz. From and until the date that is two (2) years from the Arrangement Effective Time, the Transition Committee shall be responsible for monitoring and managing all matters related to any of the transactions contemplated by this Agreement or any Ancillary Agreements. From and after the Arrangement Effective Time, the Transition Committee shall have the authority to (a) establish one or more subcommittees from time to time as it deems appropriate or as may be described in any Ancillary Agreements, with each such subcommittee comprised of one or more members of the Transition Committee or one or more employees of any of the Parties or any members of their respective Groups, and each such subcommittee having such scope of responsibility as may be determined by the Transition Committee from time to time; (b) delegate to any such committee any of the monitoring and managing authority of the Transition Committee; and (c) combine, modify

 

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the scope of responsibility of, and disband any such subcommittees, and to modify or reverse any such delegations. The Transition Committee shall establish general procedures for managing the responsibilities delegated to it under this Section 2.15 and may modify such procedures from time to time. All decisions by the Transition Committee or any subcommittee thereof shall be effective only if mutually agreed by each of the applicable Parties. The Parties shall utilize the procedures set forth in Article VI to resolve any matters as to which the Transition Committee is not able to reach a decision.

2.16 Disclaimer of Representations and Warranties. EACH OF NEW LIONSGATE (ON BEHALF OF ITSELF AND EACH MEMBER OF THE NEW LIONSGATE GROUP) AND STARZ (ON BEHALF OF ITSELF AND EACH MEMBER OF THE STARZ GROUP) UNDERSTANDS AND AGREES THAT, EXCEPT AS EXPRESSLY SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, NO PARTY TO THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR ANY OTHER AGREEMENT OR DOCUMENT CONTEMPLATED BY THIS AGREEMENT, ANY ANCILLARY AGREEMENT OR OTHERWISE, IS REPRESENTING OR WARRANTING IN ANY WAY AS TO THE ASSETS, BUSINESSES OR LIABILITIES TRANSFERRED OR ASSUMED AS CONTEMPLATED HEREBY OR THEREBY, AS TO ANY CONSENTS OR APPROVALS REQUIRED IN CONNECTION THEREWITH (INCLUDING GOVERNMENTAL APPROVALS OR PERMITS OF ANY KIND), AS TO THE VALUE OR FREEDOM FROM ANY SECURITY INTERESTS OF, OR ANY OTHER MATTER CONCERNING, ANY ASSETS OF SUCH PARTY, OR AS TO THE ABSENCE OF ANY DEFENSES OR RIGHT OF SETOFF OR FREEDOM FROM COUNTERCLAIM WITH RESPECT TO ANY CLAIM OR OTHER ASSET, INCLUDING ANY ACCOUNTS RECEIVABLE, OF ANY PARTY, OR AS TO THE LEGAL SUFFICIENCY OF ANY ASSIGNMENT, DOCUMENT OR INSTRUMENT DELIVERED HEREUNDER TO CONVEY TITLE TO ANY ASSET OR THING OF VALUE UPON THE EXECUTION, DELIVERY AND FILING HEREOF OR THEREOF. EXCEPT AS MAY EXPRESSLY BE SET FORTH HEREIN OR IN ANY ANCILLARY AGREEMENT, ALL SUCH ASSETS ARE BEING TRANSFERRED ON AN “AS IS,” “WHERE IS” BASIS (AND, IN THE CASE OF ANY REAL PROPERTY, BY MEANS OF A QUITCLAIM OR SIMILAR FORM OF DEED OR CONVEYANCE) AND THE RESPECTIVE TRANSFEREES SHALL BEAR, WITHOUT LIMITATION, THE ECONOMIC AND LEGAL RISKS THAT (I) ANY CONVEYANCE WILL PROVE TO BE INSUFFICIENT TO VEST IN THE TRANSFEREE GOOD AND MARKETABLE TITLE, FREE AND CLEAR OF ANY SECURITY INTEREST, AND (II) ANY NECESSARY APPROVALS OR NOTIFICATIONS ARE NOT OBTAINED OR MADE OR THAT ANY REQUIREMENTS OF LAWS OR JUDGMENTS ARE NOT COMPLIED WITH.

2.17 Financing Arrangements.

(a) At or prior to the Arrangement Effective Time, (i) Starz and/or other members of the Starz Group shall enter into and/or assume or remain party to the financing arrangements set forth on Schedule 2.17(a)(i) (the “Starz Financing Arrangements”) and (ii) New Lionsgate and/or other members of the New Lionsgate Group shall enter into and/or assume or remain party to the financing arrangements set forth on Schedule 2.17(a)(ii) (the “Studios Financing Arrangements”).

(b) Each of New Lionsgate and Starz hereby agree to take all necessary actions to assure the full release and discharge of (x) New Lionsgate and the other members of the New Lionsgate Group from all obligations (including guarantees, if any) in connection with the Starz Financing Arrangements and (y) Starz and the other members of the Starz Group from all obligations (including guarantees, if any) in connection with the Studios Financing Arrangements. Each of New Lionsgate and Starz hereby further agree that (x) Starz or any other member of the Starz Group, as the case may be, and not New Lionsgate or any other member of the New Lionsgate Group, are and shall be responsible for all costs and expenses incurred in connection with the Starz Financing Arrangements and (y) New Lionsgate or any other member of the New Lionsgate Group, as the case may be, and not Starz or any other member of the Starz Group, are and shall be responsible for all costs and expenses incurred in connection with the Studios Financing Arrangements.

 

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(c) Prior to the Arrangement Effective Time, each of New Lionsgate and Starz shall cooperate in the preparation of all materials as may be necessary or advisable to execute each of the Starz Financing Arrangements and the Studios Financing Arrangements.

ARTICLE III

MUTUAL RELEASES; INDEMNIFICATION

3.1 Release of Pre-Transactions Claims.

(a) Starz Release of New Lionsgate. Except as provided in Section 3.1(c) and Section 3.1(d), effective as of the Arrangement Effective Time, Starz does hereby, for itself and each other member of the Starz Group, and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Arrangement Effective Time have been equityholders, directors, officers, agents or employees of any member of the Starz Group or have served as directors, officers, agents or employees of another Person at the request of any member of the Starz Group (in each case, in their respective capacities as such), remise, release and forever discharge (i) New Lionsgate and the members of the New Lionsgate Group and LG Studios and the members of the LG Studios Group, and their respective successors and assigns, and (ii) all Persons who at any time prior to the Arrangement Effective Time have been equityholders, directors, officers, agents or employees of any member of the New Lionsgate Group or the LG Studios Group or have served as directors, officers, agents or employees of another Person at the request of any member of the New Lionsgate Group or the LG Studios Group (in each case, in their respective capacities as such), who are not, as of immediately following the Arrangement Effective Time, equityholders, directors, officers, agents or employees of Starz or a member of the Starz Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, and (iii) all Persons who at any time prior to the Arrangement Effective Time are or have been equityholders, directors, officers, agents or employees of a Starz Entity or a wholly owned Subsidiary of a Starz Entity and who are not, as of immediately following the Arrangement Effective Time, directors, officers or employees of Starz or a member of the Starz Group (in each case, in their respective capacities as such), in each case from (A) all Starz Liabilities, (B) all Liabilities arising from or in connection with the Transactions and all other activities to implement the Transactions, in each case, excluding any indemnification or contribution obligations of the Parties set forth in this Agreement, any Ancillary Agreement, or as set forth in Schedule 3.6 and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Arrangement Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Arrangement Effective Time), in each case to the extent relating to, arising out of or resulting from the Starz Business, the Starz Assets or the Starz Liabilities. The foregoing release includes a release of any rights and benefits conferred by or under California Civil Code Section 1542 or any applicable Law, which is similar, comparable, or equivalent to California Civil Code Section 1542, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

Starz hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Liabilities that are presently unknown, unanticipated and unsuspected, and further agrees that this release has been negotiated and agreed upon in light of that awareness and nevertheless each Party expressly waives any and all rights which they may have under Section 1542 of the California Civil Code or any other state or federal statute or common law principle of similar effect.

(b) New Lionsgate and LG Studios Release of Starz. Except as provided in Section 3.1(c) and Section 3.1(d), effective as of the Arrangement Effective Time, each of New Lionsgate and LG Studios does

 

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hereby, for itself and each other member of the New Lionsgate Group and the LG Studios Group and their respective successors and assigns, and, to the extent permitted by Law, all Persons who at any time prior to the Arrangement Effective Time have been equityholders, directors, officers, agents or employees of any member of the New Lionsgate Group or the LG Studios Group or have served as directors, officers, agents or employees of another Person at the request of any member of the New Lionsgate Group or the LG Studios Group (in each case, in their respective capacities as such), remise, release and forever discharge (i) Starz and the members of the Starz Group and their respective successors and assigns, (ii) all Persons who at any time prior to the Arrangement Effective Time have been equityholders, directors, officers, agents or employees of any member of the Starz Group or have served as directors, officers, agents or employees of another Person at the request of any member of the New Lionsgate Group or the LG Studios Group (in each case, in their respective capacities as such) who are not, as of immediately following the Arrangement Effective Time, equityholders, directors, officers, agents or employees of New Lionsgate or a member of the New Lionsgate Group (in each case, in their respective capacities as such), and their respective heirs, executors, administrators, successors and assigns, and (iii) all Persons who at any time prior to the Arrangement Effective Time are or have been equityholders, directors, officers, agents or employees of a New Lionsgate Transferred Entity or a wholly owned Subsidiary of a New Lionsgate Transferred Entity and who are not, as of immediately following the Arrangement Effective Time, directors, officers or employees of New Lionsgate or a member of the New Lionsgate Group (in each case, in their respective capacities as such), in each case from (A) all New Lionsgate Liabilities, (B) all Liabilities arising from or in connection with the Transactions and all other activities to implement the Transactions, in each case, excluding any indemnification or contribution obligations of the Parties set forth in this Agreement, any Ancillary Agreement, or as set forth in Schedule 3.6 and (C) all Liabilities arising from or in connection with actions, inactions, events, omissions, conditions, facts or circumstances occurring or existing prior to the Arrangement Effective Time (whether or not such Liabilities cease being contingent, mature, become known, are asserted or foreseen, or accrue, in each case before, at or after the Arrangement Effective Time), in each case to the extent relating to, arising out of or resulting from the LG Studios Business, the New Lionsgate Assets or the New Lionsgate Liabilities. The foregoing release includes a release of any rights and benefits conferred by or under California Civil Code Section 1542 or any applicable Law, which is similar, comparable, or equivalent to California Civil Code Section 1542, which provides:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

New Lionsgate hereby acknowledges that it is aware that factual matters now unknown to it may have given or may hereafter give rise to Liabilities that are presently unknown, unanticipated and unsuspected, and further agrees that this release has been negotiated and agreed upon in light of that awareness and nevertheless each Party expressly waives any and all rights which they may have under Section 1542 of the California Civil Code or any other state or federal statute or common law principle of similar effect.

(c) Obligations Not Affected. Nothing contained in Section 3.1(a) or 3.1(b) shall impair any right of any Person to enforce this Agreement, any Ancillary Agreement or any agreements, arrangements, commitments or understandings that are specified in Section 2.11(a) or the applicable Schedules to this Agreement or any Ancillary Agreement as not to terminate as of the Arrangement Effective Time, in each case in accordance with their respective terms. Nothing contained in Section 3.1(a) or 3.1(b) shall release any Person from:

(i) any Liability provided in or resulting from any agreement among any members of the New Lionsgate Group or any members of the Starz Group that is specified in Section 2.11(b) or the applicable Schedules to this Agreement or any Ancillary Agreement as not to terminate as of the Arrangement Effective Time, or any other Liability specified in Section 2.11(b) as not to terminate as of the Arrangement Effective Time;

(ii) any Liability, contingent or otherwise, assumed, transferred, assigned or allocated to the Group of which such Person is a member in accordance with, or any other Liability of any member of

 

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any Group, including with respect to indemnification or contribution, under, this Agreement or any Ancillary Agreement;

(iii) any Liability for the sale, lease, construction or receipt of goods, property or services purchased, obtained or used in the ordinary course of business by a member of one Group from a member of the other Group prior to the Arrangement Effective Time;

(iv) any Liability for unpaid amounts for products or services or refunds owing on products or services due on a value received basis for work done by a member of one Group at the request or on behalf of a member of the other Group;

(v) any Liability provided in or resulting from any contract or understanding that is entered into after the Arrangement Effective Time between any Party (and/or a member of such Party’s Group), on the one hand, and any other Party (and/or a member of the other Party’s Group), on the other hand;

(vi) any Liability provided in or resulting from any agreement between any Person, who after the Arrangement Effective Time is an employee of the Starz Group, on the one hand, and any member of the New Lionsgate Group, on the other hand, including any Liability resulting from any obligation of any such Person in respect of confidentiality, non-competition, non-disparagement or assignment of rights;

(vii) any Liability provided in or resulting from any agreement between any Person, who after the Arrangement Effective Time is an employee of the New Lionsgate Group, on the one hand, and any member of the Starz Group, on the other hand, including any Liability resulting from any obligation of any such Person in respect of confidentiality, non-competition, non-disparagement or assignment of rights;

(viii) any Liability that the Parties may have with respect to any indemnification or contribution or other obligation pursuant to this Agreement, any Ancillary Agreement or otherwise for claims brought against the Parties by third Persons, which Liability shall be governed by the provisions of this Article III and Article IV and, if applicable, the appropriate provisions of the Ancillary Agreements;

(ix) any Liability arising out of agreements and understandings set forth on Schedule 3.6, other than to the extent set forth therein; or

(x) any Liability the release of which would result in the release of any Person other than a Person expressly contemplated to be released pursuant to this Section 3.1.

In addition, nothing contained in Section 3.1(a) shall release any member of the Lionsgate Group or LG Studios Group from honoring its existing obligations to indemnify any director, officer or employee of Starz who was a director, officer or employee of any member of the Lionsgate Group or LG Studios Group at or prior to the Arrangement Effective Time, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which such director, officer or employee was entitled to such indemnification pursuant to such existing obligations; it being understood that, if the underlying obligation giving rise to such Action is a Starz Liability, Starz shall indemnify New Lionsgate for such Liability (including New Lionsgate’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article III.

In addition, nothing contained in Section 3.1(b) shall release any member of the Starz Group from honoring its existing obligations to indemnify any director, officer or employee of New Lionsgate who was a director, officer or employee of any member of the Starz Group at or prior to the Arrangement Effective Time, to the extent such director, officer or employee is or becomes a named defendant in any Action with respect to which such director, officer or employee was entitled to such indemnification pursuant to such existing obligations; it being understood that, if the underlying obligation giving rise to such Action is a New Lionsgate Liability, New

 

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Lionsgate shall indemnify Starz for such Liability (including Starz’s costs to indemnify the director, officer or employee) in accordance with the provisions set forth in this Article III.

(d) No Claims. Starz shall not make, and shall not permit any other member of the Starz Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against New Lionsgate or any other member of the New Lionsgate Group, or any other Person released pursuant to Section 3.1(a), with respect to any Liabilities released pursuant to Section 3.1(a). New Lionsgate shall not make, and shall not permit any other member of the New Lionsgate Group to make, any claim or demand, or commence any Action asserting any claim or demand, including any claim of contribution or any indemnification, against Starz or any other member of the Starz Group, or any other Person released pursuant to Section 3.1(b), with respect to any Liabilities released pursuant to Section 3.1(b).

(e) Execution of Further Releases. At any time at or after the Arrangement Effective Time, at the request of any Party, the applicable Party shall cause each member of its Group to execute and deliver releases reflecting the provisions of this Section 3.1.

3.2 Indemnification by Starz. Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, Starz shall, and shall cause the other members of the Starz Group to, indemnify, defend and hold harmless New Lionsgate, each member of the New Lionsgate Group and each of their respective past, present and future directors, officers, employees and agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “New Lionsgate Indemnitees”), from and against any and all Liabilities of the New Lionsgate Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any Starz Liability;

(b) any failure of Starz, any other member of the Starz Group or any other Person to pay, perform or otherwise promptly discharge any Starz Liabilities in accordance with their terms, whether prior to, on or after the Arrangement Effective Time;

(c) any breach by Starz or any other member of the Starz Group of this Agreement or any of the Ancillary Agreements (other than the Transition Services Agreement and Arrangement Agreement, of which indemnification obligations of the Parties are specified thereunder);

(d) except to the extent it relates to a New Lionsgate Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the Starz Group by any member of the New Lionsgate Group that survives following the Transactions; and

(e) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information (i) contained in the Form S-4 or any prospectus (including in any amendments or supplements thereto) to the extent such information pertains to (x) any member of the Starz Group or (y) the Starz Business, (ii) contained in any public filings made by Starz with the SEC or the Canadian Securities Authorities following the date of the Transactions or (iii) provided by Starz to New Lionsgate specifically for inclusion in New Lionsgate’s annual or quarterly or current reports following the date of the Transactions to the extent (A) such information pertains to (x) a member of the Starz Group or (y) the Starz Business or (B) New Lionsgate has provided prior written notice to Starz that such information will be included in one or more annual or quarterly or current reports, specifying how such information will be presented, and the information is included in such annual or quarterly or current reports; provided, that this subclause (B) shall not apply to the extent that any such Liability arises out of or results from, or in connection with, any action or inaction of any

 

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member of the New Lionsgate Group, including as a result of any misstatement or omission of any information by any member of the New Lionsgate Group to Starz.

3.3 Indemnification by New Lionsgate. Except as otherwise specifically set forth in this Agreement or in any Ancillary Agreement, to the fullest extent permitted by Law, New Lionsgate shall, and shall cause the other members of the New Lionsgate Group to, indemnify, defend and hold harmless Starz, each member of the Starz Group and each of their respective past, present and future directors, officers, employees or agents, in each case in their respective capacities as such, and each of the heirs, executors, successors and assigns of any of the foregoing (collectively, the “Starz Indemnitees”), from and against any and all Liabilities of the Starz Indemnitees relating to, arising out of or resulting from, directly or indirectly, any of the following items (without duplication):

(a) any New Lionsgate Liability;

(b) any failure of New Lionsgate, any other member of the New Lionsgate Group or any other Person to pay, perform or otherwise promptly discharge any New Lionsgate Liabilities in accordance with their terms, whether prior to, on or after the Arrangement Effective Time;

(c) any breach by New Lionsgate or any other member of the New Lionsgate Group of this Agreement or any of the Ancillary Agreements (other than the Transition Services Agreement and Arrangement Agreement, of which indemnification obligations of the Parties are specified thereunder);

(d) except to the extent it relates to a Starz Liability, any guarantee, indemnification or contribution obligation, surety bond or other credit support agreement, arrangement, commitment or understanding for the benefit of any member of the New Lionsgate Group by any member of the Starz Group that survives following the Transactions;

(e) any Liability set forth on Schedule 3.3(e); and

(f) any untrue statement or alleged untrue statement of a material fact or omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, with respect to all information (i) contained in the Form S-4 or any prospectus (including in any amendments or supplements thereto) to the extent such information pertains to (x) any member of the New Lionsgate Group or (y) the LG Studios Business, (ii) contained in any public filings made by New Lionsgate with the SEC or the Canadian Securities Authorities following the date of the Transactions or (iii) provided by New Lionsgate to Starz specifically for inclusion in Starz’s annual or quarterly or current reports following the date of the Transactions to the extent (A) such information pertains to (x) a member of the New Lionsgate Group or (y) the LG Studios Business or (B) Starz has provided written notice to New Lionsgate that such information will be included in one or more annual or quarterly or current reports, specifying how such information will be presented, and the information is included in such annual or quarterly or current reports; provided, that this subclause (B) shall not apply to the extent that any such Liability arises out of or results from, or in connection with, any action or inaction of any member of the Starz Group, including as a result of any misstatement or omission of any information by any member of the Starz Group to New Lionsgate.

3.4 Indemnification Obligations Net of Insurance Proceeds and Other Amounts.

(a) The Parties intend that any Liability subject to indemnification, contribution or reimbursement pursuant to this Article III or Article IV (i) will be net of Insurance Proceeds or other amounts in each case actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of any indemnifiable Liability, and (ii) shall take into account (determined on a with and without basis) any Tax benefit realized in cash or a reduction in Taxes otherwise payable by the Person entitled to indemnification or contribution hereunder (an “Indemnitee”) and any Tax cost

 

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incurred by the Indemnitee arising from the incurrence or payment of the indemnifiable Liabilities. Accordingly, the amount which any Party (an “Indemnifying Party”) is required to pay to any Indemnitee will be reduced by any Insurance Proceeds or other amounts in each case actually recovered (net of any out-of-pocket costs or expenses incurred in the collection thereof) from any Person by or on behalf of the Indemnitee in respect of the related Liability. If an Indemnitee receives a payment (an “Indemnity Payment”) required by this Agreement from an Indemnifying Party in respect of any Liability and subsequently receives Insurance Proceeds or any other amounts in respect of such Liability, then within ten (10) calendar days of receipt of such Insurance Proceeds, the Indemnitee will pay to the Indemnifying Party an amount equal to the excess of the Indemnity Payment received over the amount of the Indemnity Payment that would have been due if the Insurance Proceeds or such other amounts (net of any out-of-pocket costs or expenses incurred in the collection thereof) had been received, realized or recovered before the Indemnity Payment was made.

(b) The Parties agree that an insurer that would otherwise be obligated to pay any claim shall not be relieved of the responsibility with respect thereto or, solely by virtue of any provision contained in this Agreement or any Ancillary Agreement, have any subrogation rights with respect thereto, it being understood that no insurer or any other Third Party shall be entitled to a “windfall” (i.e., a benefit they would not be entitled to receive in the absence of the indemnification provisions) by virtue of the indemnification and contribution provisions hereof. Each Party shall, and shall cause the members of its Group to, use commercially reasonable efforts (taking into account the probability of success on the merits and the cost of expending such efforts, including attorneys’ fees and expenses) to collect or recover any Insurance Proceeds that may be collectible or recoverable respecting the Liabilities for which indemnification or contribution may be available under this Article III. Notwithstanding the foregoing, an Indemnifying Party may not delay making any indemnification payment required under the terms of this Agreement, or otherwise satisfying any indemnification obligation, pending the outcome of any Action to collect or recover Insurance Proceeds, and an Indemnitee need not attempt to collect any Insurance Proceeds prior to making a claim for indemnification or contribution or receiving any Indemnity Payment otherwise owed to it under this Agreement or any Ancillary Agreement.

3.5 Procedures for Indemnification of Third-Party Claims.

(a) Notice of Claims. If, at or following the Arrangement Effective Time, an Indemnitee shall receive notice or otherwise learn of the assertion by a Person (including any Governmental Authority) who is not a member of the New Lionsgate Group or the Starz Group of any claim or of the commencement by any such Person of any Action (collectively, a “Third-Party Claim”) with respect to which an Indemnifying Party may be obligated to provide indemnification to such Indemnitee pursuant to Section 3.2 or 3.3, or any other Section of this Agreement or any Ancillary Agreement, such Indemnitee shall give such Indemnifying Party written notice thereof as soon as practicable, but in any event within fourteen (14) days (or sooner if the nature of the Third-Party Claim so requires) after becoming aware of such Third-Party Claim. Any such notice shall describe the Third-Party Claim in reasonable detail, including the facts and circumstances giving rise to such claim for indemnification, and include copies of all material notices and documents (including court papers) received by the Indemnitee relating to the Third-Party Claim. Notwithstanding the foregoing, the failure of an Indemnitee to provide timely notice in accordance with this Section 3.5(a) shall not relieve an Indemnifying Party of its indemnification obligations under this Agreement, except to the extent to which the Indemnifying Party is actually prejudiced by the Indemnitee’s failure to provide notice in accordance with this Section 3.5(a).

(b) Control of Defense. Subject to any insurer’s rights pursuant to any Policies of any Party, an Indemnifying Party may elect to defend (and seek to settle or compromise), at its own expense and with its own counsel, any Third-Party Claim; provided, that, prior to the Indemnifying Party assuming and controlling the defense of such Third-Party Claim, it shall first confirm to the Indemnitee in writing that, assuming the facts presented to the Indemnifying Party by the Indemnitee are true, the Indemnifying Party shall indemnify the Indemnitee for any such damages to the extent resulting from, or arising out of, such Third-Party Claim. Notwithstanding the foregoing, if the Indemnifying Party assumes such defense and, in the course of defending such Third-Party Claim, (i) the Indemnifying Party discovers that the facts presented at the time the

 

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Indemnifying Party acknowledged its indemnification obligation in respect of such Third-Party Claim were not true in all material respects and (ii) such untruth provides a reasonable basis for asserting that the Indemnifying Party does not have an indemnification obligation in respect of such Third-Party Claim, then (A) the Indemnifying Party shall not be bound by such acknowledgment, (B) the Indemnifying Party shall promptly thereafter provide the Indemnitee written notice of its assertion that it does not have an indemnification obligation in respect of such Third-Party Claim and (C) the Indemnitee shall have the right to assume the defense of such Third-Party Claim. Within thirty (30) days after the receipt of a notice from an Indemnitee in accordance with Section 3.5(a) (or sooner, if the nature of the Third-Party Claim so requires), the Indemnifying Party shall provide written notice to the Indemnitee indicating whether the Indemnifying Party shall assume responsibility for defending the Third-Party Claim and specifying any reservations or exceptions to its defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim as provided in this Section 3.5(b) or fails to notify an Indemnitee of its election within thirty (30) days after receipt of the notice from an Indemnitee as provided in Section 3.5(a), then the Indemnitee that is the subject of such Third-Party Claim shall be entitled to continue to conduct and control the defense of such Third-Party Claim.

(c) Allocation of Defense Costs. If an Indemnifying Party has elected to assume the defense of a Third-Party Claim, whether with or without any reservations or exceptions with respect to such defense, then such Indemnifying Party shall be solely liable for all fees and expenses incurred by it in connection with the defense of such Third-Party Claim and shall not be entitled to seek any indemnification or reimbursement from the Indemnitee for any such fees or expenses incurred by the Indemnifying Party during the course of the defense of such Third-Party Claim by such Indemnifying Party, regardless of any subsequent decision by the Indemnifying Party to reject or otherwise abandon its assumption of such defense. If an Indemnifying Party elects not to assume responsibility for defending any Third-Party Claim or fails to notify an Indemnitee of its election within thirty (30) days after receipt of a notice from an Indemnitee as provided in Section 3.5(a), and the Indemnitee conducts and controls the defense of such Third-Party Claim and the Indemnifying Party has an indemnification obligation with respect to such Third-Party Claim, then the Indemnifying Party shall be liable for all reasonable and documented fees and expenses incurred by the Indemnitee in connection with the defense of such Third-Party Claim.

(d) Right to Monitor and Participate. An Indemnitee that does not conduct and control the defense of any Third-Party Claim, or an Indemnifying Party that does not elect or is not entitled to defend any Third-Party Claim as contemplated hereby, nevertheless shall have the right to employ separate counsel (including local counsel as reasonably necessary) of its own choosing to monitor and participate in (but not control) the defense of any Third-Party Claim for which it is a potential Indemnitee or Indemnifying Party, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnifying Party, as the case may be, and the provisions of Section 3.5(c) shall not apply to such fees and expenses. Notwithstanding the foregoing, but subject to Sections 5.7 and 5.8, such Party shall cooperate with the Party entitled to conduct and control the defense of such Third-Party Claim in such defense and make available to the controlling Party, at the non-controlling Party’s expense, all witnesses, information and materials in such Party’s possession or under such Party’s custody or control relating thereto as are reasonably required by the controlling Party. In addition to the foregoing, if any outside legal counsel to the Indemnitee reasonably determines in good faith that such Indemnitee and the Indemnifying Party have actual or potential differing defenses or conflicts of interest between them that make joint representation inappropriate, then the Indemnitee shall have the right to employ separate counsel (including local counsel as reasonably necessary) and to participate in (but not control) the defense, compromise, or settlement thereof, and in such case the Indemnifying Party shall bear the reasonable and documented fees and expenses of such counsel for all Indemnitees.

(e) No Settlement. No Party may settle or compromise any Third-Party Claim for which any Party is seeking to be indemnified hereunder without the prior written consent of the other Party, which consent may not be unreasonably withheld, conditioned or delayed, unless such settlement or compromise is solely for monetary damages that are fully payable by the settling or compromising Party, does not involve any admission, finding or determination of wrongdoing or violation of Law by the other Party or another member of its Group or the

 

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Indemnitee and provides for a full, unconditional and irrevocable release of the other Party and any applicable members of its Group or the Indemnitee from all Liability in connection with the Third-Party Claim. The Parties hereby agree that if a Party presents the other Party with a written notice containing a proposal to settle or compromise a Third-Party Claim for which any Party is seeking to be indemnified hereunder and the Party receiving such proposal does not respond in any manner to the Party presenting such proposal within thirty (30) Business Days (or within any such shorter time period that may be required by applicable Law or court order) of receipt of such proposal, then the Party receiving such proposal shall be deemed to have consented to the terms of such proposal; provided that the Party presenting such proposal shall confirm that it intends to settle or compromise the applicable Third-Party Claim in a second notice sent at least five (5) Business Days (or within any such shorter time period that may be required by applicable Law or court order) prior to the expiration of such thirty (30) Business Day period.

(f) Tax Matters Agreement Coordination. The provisions of Section 3.2 through Section 3.10 hereof (other than Section 3.4(a)(ii) in respect of certain Tax benefits to the extent provided therein) do not apply with respect to Taxes or Tax matters (it being understood and agreed that claims with respect to Taxes and Tax matters, including the control of Tax-related proceedings, shall be governed by the Tax Matters Agreement to the extent provided therein). In the case of any conflict or inconsistency between this Agreement and the Tax Matters Agreement in relation to any matters addressed by the Tax Matters Agreement, the Tax Matters Agreement shall prevail.

3.6 Cost Sharing. Except as set forth on Schedule 3.6, New Lionsgate and Lionsgate agree that New Lionsgate will bear the costs (including legal fees and expenses) of the Transaction to the extent that those costs relate exclusively to the LG Studios Business, and Lionsgate will bear the costs of the Transaction to the extent those costs relates exclusively to the Starz Business.

3.7 Additional Matters.

(a) Timing of Payments. Indemnification or contribution payments in respect of any Liabilities for which an Indemnitee is entitled to indemnification or contribution under this Article III shall be paid reasonably promptly (but in any event within thirty (30) days of the final determination of the amount that the Indemnitee is entitled to indemnification or contribution under this Article III) by the Indemnifying Party to the Indemnitee as such Liabilities are incurred upon demand by the Indemnitee, including reasonably satisfactory documentation setting forth the basis for the amount of such indemnification or contribution payment, including documentation with respect to calculations made and consideration of any Insurance Proceeds that actually reduce the amount of such Liabilities. The indemnity and contribution provisions contained in this Article III shall remain operative and in full force and effect, regardless of (i) any investigation made by or on behalf of any Indemnitee, and (ii) the knowledge by the Indemnitee of Liabilities for which it might be entitled to indemnification hereunder.

(b) Notice of Direct Claims. Any claim for indemnification or contribution under this Agreement or any Ancillary Agreement that does not result from a Third-Party Claim shall be asserted by written notice given by the Indemnitee to the applicable Indemnifying Party; provided, that the failure by an Indemnitee to so assert any such claim shall not prejudice the ability of the Indemnitee to do so at a later time except to the extent (if any) that the Indemnifying Party is actually prejudiced thereby. Such Indemnifying Party shall have a period of thirty (30) Business Days after the receipt of such notice within which to respond thereto. If such Indemnifying Party does not respond within such thirty (30) Business Day period, such specified claim shall be conclusively deemed a Liability of the Indemnifying Party under this Section 3.6(b) or, in the case of any written notice in which the amount of the claim (or any portion thereof) is estimated, on such later date when the amount of the claim (or such portion thereof) becomes finally determined; provided that the Indemnitee shall issue a second “reminder” notice at least five (5) Business Days prior to the expiration of such thirty (30) Business Day period. If such Indemnifying Party does not respond within such thirty (30)-day period or rejects such claim in whole or in part, such Indemnitee shall, subject to the provisions of Article VI, be free to pursue such remedies as may be available to such Party as contemplated by this Agreement and the Ancillary Agreements, as applicable, without prejudice to its continuing rights to pursue indemnification or contribution hereunder.

 

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(c) Pursuit of Claims Against Third Parties. If (i) a Party incurs any Liability arising out of this Agreement or any Ancillary Agreement; (ii) an adequate legal or equitable remedy is not available for any reason against the other Party to satisfy the Liability incurred by the incurring Party; and (iii) a legal or equitable remedy may be available to the other Party against a Third Party for such Liability, then the other Party shall use its commercially reasonable efforts to cooperate with the incurring Party, at the incurring Party’s expense, to permit the incurring Party to obtain the benefits of such legal or equitable remedy against the Third Party.

(d) Subrogation. In the event of payment by or on behalf of any Indemnifying Party to any Indemnitee in connection with any Third-Party Claim, such Indemnifying Party shall be subrogated to and shall stand in the place of such Indemnitee as to any events or circumstances in respect of which such Indemnitee may have any right, defense or claim relating to such Third-Party Claim against any claimant or plaintiff asserting such Third-Party Claim or against any other Person. Such Indemnitee shall cooperate with such Indemnifying Party in a reasonable manner, and at the cost and expense of such Indemnifying Party, in prosecuting any subrogated right, defense or claim.

(e) Substitution. In the event of an Action in which the Indemnifying Party is not a named defendant, if either the Indemnitee or Indemnifying Party shall so request, the Parties shall endeavor to substitute the Indemnifying Party for the named defendant. If such substitution or addition cannot be achieved for any reason or is not requested, the named defendant shall allow the Indemnifying Party to manage the Action as set forth in Section 3.5 and this Section 3.6 and the Indemnifying Party shall fully indemnify the named defendant against all reasonable costs of defending the Action (including court costs, sanctions imposed by a court, attorneys’ fees, experts fees and all other external expenses), the costs of any judgment or settlement and the cost of any interest or penalties relating to any judgment or settlement.

3.8 Right of Contribution.

(a) Contribution. If any right of indemnification contained in Section 3.2 or Section 3.3 is held unenforceable or is unavailable for any reason, or is insufficient to hold harmless an Indemnitee in respect of any Liability for which such Indemnitee is entitled to indemnification hereunder, then the Indemnifying Party shall contribute to the amounts paid or payable by the Indemnitees as a result of such Liability (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and the members of its Group, on the one hand, and the Indemnitees entitled to contribution, on the other hand, as well as any other relevant equitable considerations.

(b) Allocation of Relative Fault. Solely for purposes of determining relative fault pursuant to this Section 3.7: (i) any fault associated with the business conducted with the Delayed Starz Assets or Delayed Starz Liabilities (except for the gross negligence or intentional misconduct of a member of the New Lionsgate Group) or with the ownership, operation or activities of the Starz Business prior to the Arrangement Effective Time shall be deemed to be the fault of Starz and the other members of the Starz Group, and no such fault shall be deemed to be the fault of New Lionsgate or any other member of the New Lionsgate Group and (ii) any fault associated with the business conducted with Delayed New Lionsgate Assets or Delayed New Lionsgate Liabilities (except for the gross negligence or intentional misconduct of a member of the Starz Group) or with the ownership, operation or activities of the LG Studios Business prior to the Arrangement Effective Time shall be deemed to be the fault of New Lionsgate and the other members of the New Lionsgate Group, and no such fault shall be deemed to be the fault of Starz or any other member of the Starz Group.

3.9 Covenant Not to Sue. Each Party hereby covenants and agrees that none of it, the members of such Party’s Group or any Person claiming through it shall bring suit or otherwise assert any claim against any Indemnitee, or assert a defense against any claim asserted by any Indemnitee, before any court, arbitrator, mediator or administrative agency anywhere in the world, alleging that: (a) the retention or assumption (as applicable) of any Starz Liabilities by Starz or a member of the Starz Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; (b) the retention or

 

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assumption (as applicable) of any New Lionsgate Liabilities by New Lionsgate or a member of the New Lionsgate Group on the terms and conditions set forth in this Agreement and the Ancillary Agreements is void or unenforceable for any reason; or (c) the provisions of this Article III are void or unenforceable for any reason.

3.10 Remedies Cumulative. The remedies provided in this Article III shall be cumulative and, subject to the provisions of Article VI, shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against any Indemnifying Party.

3.11 Survival of Indemnities. The rights and obligations of each of New Lionsgate and Starz and their respective Indemnitees under this Article III shall survive (a) the sale or other transfer by any Party or any member of its Group of any Assets or businesses or the assignment by it of any Liabilities; or (b) any merger, consolidation, business combination, sale of all or substantially all of its Assets, restructuring, recapitalization, reorganization, spin-off or similar transaction involving any Party or any of the members of its Group.

ARTICLE IV

CERTAIN OTHER MATTERS

4.1 Starz Financial Information Certifications; Certain Audit Matters. Lionsgate’s disclosure controls and procedures and internal control over financial reporting (as each is contemplated by the Exchange Act) are currently applicable to Starz as its Subsidiary. In order to enable the principal executive officer and principal financial officer of Starz to make the certifications required of them under Section 302 of the Sarbanes-Oxley Act of 2002 following the Arrangement Effective Date in respect of any quarterly or annual fiscal period of Starz that begins prior to the Arrangement Effective Date in respect of which financial statements are not included in the Form S-4 (a “Straddle Period”), New Lionsgate, on or before the date that is ten (10) days prior to the latest date on which Starz may file the periodic report pursuant to Section 13 of the Exchange Act for any such Straddle Period (not taking into account any possible extensions), shall provide Starz with one or more certifications with respect to such disclosure controls and procedures and the effectiveness thereof and whether there were any changes in the internal controls over financial reporting that have materially affected or are reasonably likely to materially affect the internal control over financing reporting, which certification(s) shall be (a) with respect to the applicable Straddle Period (it being understood that no certification need be provided with respect to any period or portion of any period after the Arrangement Effective Date) and (b) in substantially the same form as those that had been provided by officers or employees of Lionsgate in similar certifications delivered prior to the Arrangement Effective Date, with such changes thereto as New Lionsgate may reasonably determine. Such certification(s) shall be provided by New Lionsgate (and not by any officer or employee in their individual capacity). In addition, and without limiting the foregoing, the Parties agree to take the actions set forth on Schedule 4.1.

4.2 Reserved.

4.3 Insurance Matters.

(a) New Lionsgate and Starz agree to cooperate in good faith to provide for an orderly transition of insurance coverage from the date hereof through the Arrangement Effective Date. In no event shall New Lionsgate, any other member of the New Lionsgate Group or any New Lionsgate Indemnitee have any Liability or obligation whatsoever to any member of the Starz Group arising from the fact that (i) any insurance policy or insurance policy related contract shall be terminated or otherwise cease to be in effect for any reason, shall be unavailable or inadequate to cover any Liability of any member of the Starz Group for any reason or shall be cancelled or not be renewed or extended beyond the current expiration date or (ii) any insurer declines, denies, delays or obstructs any claim payment.

 

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(b) New Lionsgate and Starz acknowledge that, prior to the Arrangement Effective Date, New Lionsgate intends to take such action, in its sole discretion as it may deem necessary or desirable, to remove the members of the Starz Group and their respective employees, officers and directors as insured parties, or limit the coverage provided to such parties, under some or all Policies issued to the New Lionsgate Group. The date(s) on which New Lionsgate removes the members of the Starz Group and their respective employees, officers and directors as insured parties, or limits the coverage provided to such parties, under a particular Policy or Policies shall constitute the “Insurance Termination Time” for such Policy or Policies. Starz further acknowledges and agrees that, from and after the applicable Insurance Termination Time for a particular Policy, neither Starz nor any member of the Starz Group shall have any rights to or under such Policy other than as expressly provided in Section 4.3(d).

(c) At the applicable Insurance Termination Time, Starz shall use commercially reasonable efforts to place in effect all insurance programs required to comply with Starz’s contractual obligations and such other Policies required by Law or as reasonably necessary or appropriate for companies operating a business similar to Starz’s. With respect to such provided policies, if any, procured by Starz for the sole benefit of the Starz Group (“Starz Policies”), Starz shall use commercially reasonable efforts to continue to maintain such insurance coverage through the Arrangement Effective Date in a manner no less favorable than currently provided.

(d) From and after the applicable Insurance Termination Time for a particular Policy, with respect to any losses, damages and Liability incurred by any member of the Starz Group prior to such Insurance Termination Time only, New Lionsgate will provide Starz with access to, and Starz may make claims under, such New Lionsgate Group Policy in place immediately prior to the applicable Insurance Termination Time (and any extended reporting periods for claims-made Policies) and the New Lionsgate Group’s historical Policies, but solely to the extent that such Policies provided coverage for members of the Starz Group or the Starz Business prior to the applicable Insurance Termination Time; provided, that such access to, and the right to make claims under, such Policies shall be subject to the terms, conditions and exclusions of such Policies, including any limits on coverage or scope, any deductibles, self-insured retentions and other fees and expenses, and shall be subject to the following additional conditions:

(i) Starz shall notify New Lionsgate, as promptly as practicable, of any claim made by the Starz Group pursuant to this Section 4.3(d);

(ii) Starz and the members of the Starz Group shall indemnify, hold harmless and reimburse New Lionsgate and the members of the New Lionsgate Group for any deductibles, self-insured retention, fees, indemnity payments, settlements, judgments, legal fees, allocated claims expenses and claim handling fees, retrospective premiums, captive reinsurance, matching deductibles, collateral obligations, indemnity agreements, and other losses and expenses incurred by New Lionsgate or any members of the New Lionsgate Group to the extent resulting from any access to, or any claims made by Starz or any other members of the Starz Group under, any insurance (including any self-insured program) provided pursuant to this Section 4.3, whether such claims are made by Starz, its employees or third Persons; and

(iii) Starz shall exclusively bear (and neither New Lionsgate nor any members of the New Lionsgate Group shall have any obligation to repay or reimburse Starz or any member of the Starz Group for) and shall be liable for all excluded, uninsured, uncovered, unavailable or uncollectible amounts of all such claims made by Starz or any member of the Starz Group under the Policies as provided for in this Section 4.3. In the event an insurance policy aggregate is exhausted, or believed likely to be exhausted, due to noticed claims, the Starz Group, on the one hand, the New Lionsgate Group, on the other hand, shall be responsible for their pro rata portion of the reinstatement premium, if any, based upon the losses of such Group submitted to New Lionsgate’s insurance carrier(s) (including any submissions prior to the applicable Insurance Termination Time). To the extent that the New Lionsgate Group or the Starz Group is allocated more than its pro rata portion of such premium due to the timing of losses submitted to New Lionsgate’s insurance carrier(s), the other Party shall

 

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promptly pay the first Party an amount such that each Group has been properly allocated its pro rata portion of the reinstatement premium. Subject to the following sentence, a Party may elect not to reinstate the policy aggregate. In the event that a Party elects not to reinstate the policy aggregate, it shall provide prompt written notice to the other Party, and if the other Party elects to reinstate the policy aggregate, such other Party shall be responsible for all reinstatement premiums and other costs associated with such reinstatement.

In the event that any member of the New Lionsgate Group incurs any losses, damages or Liability prior to or in respect of the period prior to the applicable Insurance Termination Time for which such member of the New Lionsgate Group is entitled to coverage under Starz’s Policies, the same process pursuant to this Section 4.3(d) shall apply, substituting “New Lionsgate” for “Starz” and “Starz” for “New Lionsgate,” including for purposes of the first sentence of Section 4.3(e).

(e) Neither Starz nor any member of the Starz Group, in connection with making a claim under any insurance policy of New Lionsgate or any member of the New Lionsgate Group pursuant to Section 4.3(d), shall take any action that would be reasonably likely to (i) have a material and adverse impact on the then-current relationship between New Lionsgate or any member of the New Lionsgate Group, on the one hand, and the applicable insurance company, broker or third-party claims administrator, on the other hand; (ii) result in the applicable insurance company terminating or materially reducing coverage, or materially increasing the amount of any premium owed by New Lionsgate or any member of the New Lionsgate Group under the applicable insurance policy; or (iii) otherwise compromise, jeopardize or interfere in any material respect with the rights of New Lionsgate or any member of the New Lionsgate Group under the applicable insurance policy.

(f) All payments and reimbursements by Starz pursuant to Section 4.3(d) will be made within thirty (30) days after Starz’s receipt of an invoice therefor from New Lionsgate, unless otherwise agreed in writing by the Parties. If New Lionsgate incurs costs to enforce Starz’s obligations herein, Starz agrees to indemnify and hold harmless New Lionsgate for such enforcement costs, including reasonable attorneys’ fees, pursuant to Section 3.6(b). New Lionsgate shall retain the exclusive right to control its Policies and programs, including the right to exhaust, settle, release, commute, buy-back or otherwise resolve disputes with respect to any of its Policies and programs and to amend, modify or waive any rights under any such Policies and programs, notwithstanding whether any such Policies or programs apply to any Starz Liabilities and/or claims Starz has made or could make in the future, and no member of the Starz Group shall erode, exhaust, settle, release, commute, buyback or otherwise resolve disputes with New Lionsgate’s insurers with respect to any of New Lionsgate’s Policies and programs, or amend, modify or waive any rights under any such Policies and programs. Starz shall cooperate with New Lionsgate and share such information as is reasonably necessary in order to permit New Lionsgate to manage and conduct its insurance matters as New Lionsgate deems appropriate. Neither New Lionsgate nor any member of the New Lionsgate Group shall have any obligation to secure extended reporting for any claims under any Policies of New Lionsgate or any member of the New Lionsgate Group for any acts or omissions by any member of the Starz Group incurred prior to the applicable Insurance Termination Time. For the avoidance of doubt, without limiting Section 3.5(e), each Party and any member of its applicable Group has the sole right to settle or otherwise resolve third-party claims made against it or any member of its applicable Group covered under an applicable insurance Policy.

(g) This Agreement shall not be considered as an attempted assignment of any policy of insurance or as a contract of insurance and shall not be construed to waive any right or remedy of any member of the New Lionsgate Group in respect of any insurance policy or any other contract or policy of insurance.

(h) Starz does hereby, for itself and each other member of the Starz Group, agree that no member of the New Lionsgate Group shall have any Liability whatsoever as a result of the Policies and practices of New Lionsgate and the members of the New Lionsgate Group as in effect at any time, including as a result of the level or scope of any such insurance, the creditworthiness of any insurance carrier, the terms and conditions of any policy, or the adequacy or timeliness of any notice to any insurance carrier with respect to any claim or potential claim or otherwise.

 

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4.4 Late Payments. Except as expressly provided to the contrary in this Agreement or in any Ancillary Agreement, or as otherwise agreed in writing by the Parties, any amount not paid when due pursuant to this Agreement or any Ancillary Agreement (and any amounts billed or otherwise invoiced or demanded and properly payable that are not paid within ninety (90) days of such bill, invoice or other demand) shall accrue interest at a rate per annum equal to the Prime Rate plus two (2%) percent; provided, that with respect to any disputed payments, no interest payment shall be due until such dispute is resolved and the interest which shall be payable thereon shall be based on the finally-resolved amount of such payment, calculated from the original date on which the disputed payment was due through the date on which payment is actually made.

4.5 Inducement. Starz acknowledges and agrees that New Lionsgate’s willingness to cause, effect and consummate the Transactions has been conditioned upon and induced by Starz’s covenants and agreements in this Agreement and the Ancillary Agreements, including Starz’s assumption of the Starz Liabilities pursuant to the Transactions and the provisions of this Agreement and Starz’s covenants and agreements contained in Article III and this Article IV. New Lionsgate acknowledges and agrees that Starz’s willingness to cause, effect and consummate the Transactions has been conditioned upon and induced by New Lionsgate’s covenants and agreements in this Agreement and the Ancillary Agreements, including New Lionsgate’s assumption of the New Lionsgate Liabilities pursuant to the Transactions and the provisions of this Agreement and New Lionsgate’s covenants and agreements contained in Article III and this Article IV.

4.6 Post-Arrangement Effective Time Conduct. The Parties acknowledge that, after the Arrangement Effective Time, each Party shall be independent of the other Party, with responsibility for its own actions and inactions and its own Liabilities relating to, arising out of or resulting from the conduct of its business, operations and activities following the Arrangement Effective Time, except as may otherwise be provided in any Ancillary Agreement, and each Party shall (except as otherwise provided in Article III) use commercially reasonable efforts to prevent such Liabilities from being inappropriately borne by the other Party.

ARTICLE V

EXCHANGE OF INFORMATION; CONFIDENTIALITY

5.1 Agreement for Exchange of Information. Subject to Section 5.9 and any other applicable confidentiality obligations, each of New Lionsgate and Starz, on behalf of itself and each member of its Group, agrees to use commercially reasonable efforts to provide or make available, or cause to be provided or made available, to the other Party and the members of such other Party’s Group, at any time before, on or after the Arrangement Effective Time, as soon as reasonably practicable after written request therefor is received by such Party’s legal department from the requesting Party’s legal department, any information (or a copy thereof) in the possession, custody or control of such Party or its Group which the requesting Party’s legal department requests (including any Starz Books and Records or New Lionsgate Books and Records, as applicable, and any information held by a third party on such Party’s or a member of its Group’s behalf) to the extent that (i) such information relates to the Starz Business, or any Starz Asset or Starz Liability, if Starz is the requesting Party, or to the LG Studios Business, or any New Lionsgate Asset or New Lionsgate Liability, if New Lionsgate is the requesting Party (including, for the avoidance of doubt, such information the requesting Party reasonably believes is relevant to the requesting Party’s claim or defense in ongoing or anticipated litigation or other legal proceeding and would be proportional to the needs of the matter); (ii) such information is required by the requesting Party to comply with its obligations under this Agreement or any Ancillary Agreement; (iii) such information is required by the requesting Party to comply with any obligation, audit, inspection, inquiry, or request from any Governmental Authority; or (iv) such information is required by the requesting Party to comply with any obligation imposed by a court order or any other compulsory legal process; or (v) such information is required by the requesting Party in order to prepare and complete a tax return or other tax filing (if, but only to the extent that, the exchange of such information is not otherwise addressed in the Tax Matters Agreement); provided, however, that, in the event that the Party to whom the request has been made determines that any such provision of information could be detrimental to the Party providing the information, violate any Law or

 

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agreement, or waive any privilege available under applicable Law, including any attorney-client privilege, then the Parties shall use commercially reasonable efforts to permit compliance with such obligations to the extent and in a manner that avoids any such harm or consequence (including by way of redaction). The Party providing information pursuant to this Section 5.1 shall only be obligated to provide such information in the form, condition and format in which it then exists and in no event shall such Party be required to perform any improvement, modification, conversion, updating or reformatting of any such information, and nothing in this Section 5.1 shall expand the obligations of any Party under Section 5.4. Without limiting the generality of the foregoing, until the end of Starz’s fiscal year during which the Arrangement Effective Date occurs (and for a reasonable period of time afterwards as required for each Party to prepare consolidated financial statements or complete a financial statement audit for the fiscal year during which the Arrangement Effective Date occurs), each Party shall use its commercially reasonable efforts to cooperate with the other Party’s information requests to enable (i) the other Party to meet its timetable for dissemination of its earnings releases, financial statements and management’s assessment of the effectiveness of its disclosure controls and procedures and its internal control over financial reporting in accordance with Items 307 and 308, respectively, of Regulation S-K promulgated under the Exchange Act; and (ii) the other Party’s accountants to timely complete their review of the quarterly financial statements and audit of the annual financial statements, including, to the extent applicable to such Party, its auditor’s audit of its internal control over financial reporting and management’s assessment thereof in accordance with Section 404 of the Sarbanes-Oxley Act of 2002, the SEC’s and Public Company Accounting Oversight Board’s rules and auditing standards thereunder and any other applicable Laws.

5.2 Ownership of Information. The provision of any information pursuant to Section 5.1 or Section 5.7 shall not affect the ownership of such information (which shall be determined solely in accordance with the terms of this Agreement and the Ancillary Agreements), or constitute a grant of rights in or to any such information.

5.3 Compensation for Providing Information. The Party requesting information agrees to reimburse the other Party for the reasonable costs, if any, of creating, gathering, copying, transporting, redacting and otherwise complying with the request with respect to such information (including any reasonable costs and expenses incurred in any review of information for purposes of protecting the Privileged Information of the providing Party or in connection with the restoration of backup media for purposes of providing the requested information). Except as may be otherwise specifically provided elsewhere in this Agreement, any Ancillary Agreement or any other agreement between the Parties, such costs shall be computed in accordance with the providing Party’s standard methodology and procedures.

5.4 Record Retention.

(a) To facilitate the possible exchange of information pursuant to this Article V and other provisions of this Agreement after the Arrangement Effective Time, the Parties agree to use their commercially reasonable efforts, which shall be no less rigorous than those used for retention of such Party’s own information, to retain all information in their respective possession or control at the Arrangement Effective Time in substantial accordance with the policies of New Lionsgate as in effect at the Arrangement Effective Time or such other policies as may be adopted by Starz after the Arrangement Effective Time (provided that Starz notifies New Lionsgate in writing of any such change). Notwithstanding the foregoing, the Tax Matters Agreement will exclusively govern the retention of Tax-related records and the exchange of Tax-related information, and the Employee Matters Agreement will exclusively govern the retention of employment- and benefits-related records.

(b) Each Party shall preserve and keep all documents subject to a litigation hold as of the date of this Agreement until such Party has been notified that such litigation hold is no longer applicable.

5.5 Limitations of Liability. No Party shall have any Liability to any other Party arising from the fact that any information exchanged or provided pursuant to this Agreement is found to be inaccurate in the absence of gross negligence, bad faith, fraud or willful misconduct by the Party providing such information. No Party shall have any Liability to any other Party if any information is destroyed notwithstanding commercially reasonable efforts by such Party to comply with the provisions of Section 5.4.

 

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5.6 Other Agreements Providing for Exchange of Information.

(a) The rights and obligations granted under this Article V are subject to any specific limitations, qualifications or additional provisions on the sharing, exchange, retention, destruction or confidential treatment of information set forth in any Ancillary Agreement.

(b) Any Party that receives, pursuant to a request for information in accordance with this Article V, Tangible Information that is not relevant to its request shall, at the request of the providing Party, (i) return it to the providing Party or, at the providing Party’s request, destroy such Tangible Information; and (ii) deliver to the providing Party written confirmation that such Tangible Information was returned or destroyed, as the case may be, which confirmation shall be signed by an authorized representative of the requesting Party.

5.7 Production of Witnesses; Records; Cooperation.

(a) After the Arrangement Effective Time, except in the case of a Dispute between New Lionsgate and Starz, or any members of their respective Groups, each Party shall use its commercially reasonable efforts to make available to the other Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its Group as witnesses and any books, records or other documents within its possession, custody or control, or which it otherwise has the ability to make available without undue burden, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with any Action in which the requesting Party (or member of its Group) may from time to time be involved, regardless of whether such Action is a matter with respect to which indemnification may be sought hereunder. The requesting Party shall bear all costs and expenses in connection therewith.

(b) If an Indemnifying Party chooses to defend or to seek to compromise or settle any Third-Party Claim, the other Parties shall make available to such Indemnifying Party, upon written request, the former, current and future directors, officers, employees, other personnel and agents of the members of its Group as witnesses and any books, records or other documents within its possession, custody or control, to the extent that any such person (giving consideration to business demands of such directors, officers, employees, other personnel and agents) or books, records or other documents may reasonably be required in connection with such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be, and shall otherwise cooperate in such defense, settlement or compromise, or such prosecution, evaluation or pursuit, as the case may be.

(c) Without limiting the foregoing, except in the case of a Dispute between New Lionsgate and Starz, or any members of their respective Groups, each Party shall use its commercially reasonable efforts to cooperate and consult to the extent reasonably necessary with respect to any Actions.

(d) Without limiting any provision of this Section 5.7, each of the Parties agrees to cooperate, and to cause each member of its Group to cooperate, with each other in the defense of any infringement or similar claim with respect to any Intellectual Property Rights and shall not claim to acknowledge, or permit any member of its Group to claim to acknowledge, the validity or infringing use of any Intellectual Property Rights of a third Person in a manner that would hamper or undermine the defense of such infringement or similar claim.

(e) The obligation of the Parties to provide witnesses pursuant to this Section 5.7 is intended to be interpreted in a manner so as to facilitate cooperation and shall include the obligation to provide as witnesses directors, officers, employees, other personnel and agents without regard to whether such Person or the employer of such Person could assert a possible business conflict (subject to the exception set forth in the first sentence of Section 5.7(a)).

 

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5.8 Privileged Matters.

(a) The Parties recognize that legal and other professional services that have been and will be provided prior to the Arrangement Effective Time have been and will be rendered for the collective benefit of each of the members of the New Lionsgate Group and the Starz Group, and that each of the members of the New Lionsgate Group and the Starz Group should be deemed to be the client with respect to such services for the purposes of asserting all privileges which may be asserted under applicable Law in connection therewith. The Parties recognize that legal and other professional services will be provided following the Arrangement Effective Time, which services will be rendered solely for the benefit of the New Lionsgate Group or the Starz Group, as the case may be. In furtherance of the foregoing, each Party shall authorize the delivery to and/or retention by the other Party of materials existing as of the Arrangement Effective Time that are necessary for such other Party to perform such services.

(b) The Parties agree as follows:

(i) New Lionsgate shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the LG Studios Business and not to the Starz Business, whether or not the Privileged Information is in the possession or under the control of any member of the New Lionsgate Group or any member of the Starz Group. New Lionsgate shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any New Lionsgate Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of any member of the New Lionsgate Group or any member of the Starz Group;

(ii) Starz shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to the Starz Business and not to the LG Studios Business, whether or not the Privileged Information is in the possession or under the control of any member of the Starz Group or any member of the New Lionsgate Group. Starz shall also be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any Privileged Information that relates solely to any Starz Liabilities resulting from any Actions that are now pending or may be asserted in the future, whether or not the Privileged Information is in the possession or under the control of any member of the Starz Group or any member of the New Lionsgate Group; and

(iii) if the Parties do not agree as to whether certain information is Privileged Information, then such information shall be treated as Privileged Information, and the Party that believes that such information is Privileged Information shall be entitled to control the assertion or waiver of all privileges and immunities in connection with any such information unless the Parties otherwise agree. The Parties shall use the procedures set forth in Article VI to resolve any disputes as to whether any information relates solely to the LG Studios Business, solely to the Starz Business, or to both the LG Studios Business and the Starz Business.

(c) Subject to the remaining provisions of this Section 5.8, the Parties agree that they shall have a shared privilege or immunity with respect to all privileges and immunities not allocated pursuant to Section 5.8(b) and all privileges and immunities relating to any Actions or other matters that involve both Parties (or one or more members of their respective Groups) and in respect of which both Parties have Liabilities under this Agreement, and that no such shared privilege or immunity may be waived by any Party without the consent of the other Party.

(d) If any Dispute arises between the Parties or any members of their respective Groups regarding whether a privilege or immunity should be waived to protect or advance the interests of any Party and/or any member of their respective Groups, each Party agrees that it shall (i) negotiate with the other Party in good faith; (ii) endeavor to minimize any prejudice to the rights of the other Party; and (iii) not unreasonably withhold consent to any request for waiver by the other Party. Further, each Party specifically agrees that it shall not

 

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withhold its consent to the waiver of a privilege or immunity for any purpose except in good faith to protect its own legitimate interests.

(e) Upon receipt by any Party, or by any member of its Group, of any subpoena, discovery or other request that may reasonably be expected to result in the production or disclosure of Privileged Information subject to a shared privilege or immunity or as to which another Party has the sole right hereunder to assert a privilege or immunity, or if any Party obtains knowledge that any of its, or any member of its Group’s, current or former directors, officers, agents or employees have received any subpoena, discovery or other requests that may reasonably be expected to result in the production or disclosure of such Privileged Information, such Party shall promptly notify the other Party of the existence of the request (which notice shall be delivered to such other Party no later than five (5) Business Days following the receipt of any such subpoena, discovery or other request) and shall provide the other Party a reasonable opportunity to review the Privileged Information and to assert any rights it or they may have under this Section 5.8 or otherwise, to prevent the production or disclosure of such Privileged Information.

(f) Any furnishing of, or access or transfer of, any information pursuant to this Agreement is made in reliance on the agreement of New Lionsgate and Starz set forth in this Section 5.8 and in Section 5.9 to maintain the confidentiality of Privileged Information and to assert and maintain all applicable privileges and immunities. The Parties agree that their respective rights to any access to information, witnesses and other Persons, the furnishing of notices and documents and other cooperative efforts between the Parties contemplated by this Agreement, and the transfer of Privileged Information between the Parties and members of their respective Groups as needed pursuant to this Agreement, shall not be deemed a waiver of any privilege or immunity that has been or may be asserted under this Agreement or otherwise.

(g) In connection with any matter contemplated by Section 5.7 or this Section 5.8, the Parties agree to, and to cause the applicable members of their Group to, use commercially reasonable efforts to maintain their respective separate and joint privileges and immunities, including by executing joint defense and/or common interest agreements where necessary or useful for this purpose.

5.9 Confidentiality.

(a) Confidentiality. Subject to Section 5.10, and without prejudice to any longer period that may be provided for in any of the Ancillary Agreements, from and after the Arrangement Effective Time until the five (5)-year anniversary of the Arrangement Effective Time, each of New Lionsgate and Starz, on behalf of itself and each member of its Group, agrees to hold, and to cause its respective Representatives to hold, in strict confidence, with at least the same degree of care that applies to such Party’s confidential and proprietary information pursuant to policies in effect as of the Arrangement Effective Time, all confidential and proprietary information concerning the other Party or any member of the other Party’s Group or their respective businesses (giving effect to the Transactions) that is either in its possession (including confidential and proprietary information in its possession prior to the date hereof) or furnished by any such other Party or any member of such Party’s Group or their respective Representatives at any time pursuant to this Agreement, any Ancillary Agreement or otherwise, and shall not use any such confidential and proprietary information other than for such purposes as shall be expressly permitted hereunder or thereunder, except, in each case, to the extent that such confidential and proprietary information has been (i) in the public domain or generally available to the public, other than as a result of a disclosure by such Party or any member of such Party’s Group or any of their respective Representatives in violation of this Agreement, (ii) later lawfully acquired from other sources by such Party (or any member of such Party’s Group) which sources are not, to the best of such Party’s knowledge, themselves bound by a confidentiality obligation or other contractual, legal or fiduciary obligation of confidentiality with respect to such confidential and proprietary information, or (iii) independently developed or generated without reference to or use of any proprietary or confidential information of the other Party or any member of such Party’s Group. Notwithstanding the foregoing five (5)-year period, New Lionsgate’s and Starz’s obligations with respect to confidential and proprietary information that constitutes trade secrets shall survive and

 

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continue for so long as such confidential and proprietary information retains its status as a trade secret. If any confidential and proprietary information of one Party or any member of its Group is disclosed to the other Party or any member of such other Party’s Group in connection with providing services to such first Party or any member of such first Party’s Group under this Agreement or any Ancillary Agreement, then such disclosed confidential and proprietary information shall be used only as required to perform such services.

(b) No Release; Return or Destruction. Each Party agrees not to release or disclose, or permit to be released or disclosed, any information addressed in Section 5.9(a) to any other Person, except its Representatives who need to know such information in their capacities as such (who shall be advised of their obligations hereunder with respect to such information), and except in compliance with Section 5.10. Without limiting the foregoing, when any such information is no longer needed for the purposes contemplated by this Agreement or any Ancillary Agreement, and is no longer subject to any legal hold or other document preservation obligation, each Party will promptly after request of the other Party either return to the other Party all such information in a tangible form (including all copies thereof and all notes, extracts or summaries based thereon) or notify the other Party in writing that it has destroyed such information (and such copies thereof and such notes, extracts or summaries based thereon); provided, that the Parties may retain electronic back-up versions of such information maintained on routine computer system backup tapes, disks or other backup storage devices; provided further, that any such information so retained shall remain subject to the confidentiality provisions of this Agreement or any Ancillary Agreement.

(c) Third-Party Information; Privacy or Data Protection Laws. Each Party acknowledges that it and members of its Group may presently have and, following the Arrangement Effective Time, may gain access to or possession of confidential or proprietary information of, or legally protected personal information relating to, Third Parties (i) that was received under privacy policies or notices and/or confidentiality or non-disclosure agreements entered into between such Third Parties, on the one hand, and the other Party or members of such other Party’s Group, on the other hand, prior to the Arrangement Effective Time; or (ii) that, as between the two Parties, was originally collected by the other Party or members of such other Party’s Group and that may be subject to and protected by privacy policies or notices, as well as privacy, data protection or other applicable Laws. Each Party agrees that it shall hold, protect and use, and shall cause the members of its Group and its and their respective Representatives to hold, protect and use, in strict confidence the confidential and proprietary information of, or legally protected personal information relating to, Third Parties in accordance with privacy policies or notices and privacy, data protection or other applicable Laws and the terms of any agreements that were either entered into before the Arrangement Effective Time or affirmative commitments or representations that were made before the Arrangement Effective Time by, between or among the other Party or members of the other Party’s Group, on the one hand, and such Third Parties, on the other hand.

5.10 Protective Arrangements. In the event that a Party or any member of its Group either determines on the advice of its counsel that it is required to disclose any information pursuant to applicable Law or receives any request or demand under lawful process or from any Governmental Authority to disclose or provide information of the other Party (or any member of the other Party’s Group) that is subject to the confidentiality provisions hereof, such Party shall notify the other Party (to the extent legally permitted) as promptly as practicable under the circumstances prior to disclosing or providing such information and shall cooperate, at the expense of the other Party, in seeking any appropriate protective order requested by the other Party. In the event that such other Party fails to receive such appropriate protective order in a timely manner and the Party receiving the request or demand reasonably determines that its failure to disclose or provide such information shall actually prejudice the Party receiving the request or demand, then the Party that received such request or demand may thereafter disclose or provide information to the extent required by such Law (as so advised by its counsel) or by lawful process or such Governmental Authority or to the extent necessary for such Party to not be so prejudiced, and the disclosing Party shall promptly provide the other Party with a copy of the information so disclosed, in the same form and format so disclosed, together with a list of all Persons to whom such information was disclosed, in each case to the extent legally permitted.

 

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ARTICLE VI

DISPUTE RESOLUTION

6.1 Good Faith Officer Negotiation. Subject to Section 6.4, any Party seeking resolution of any dispute, controversy or claim arising out of or relating to this Agreement or any Ancillary Agreement (other than the Tax Matters Agreement), including regarding whether any Assets are Starz Assets or New Lionsgate Assets, any Liabilities are Starz Liabilities or New Lionsgate Liabilities or the validity, interpretation, breach or termination of this Agreement or any Ancillary Agreement (other than the Tax Matters Agreement) (a “Dispute”), which dispute could not be resolved by the Transition Committee, shall provide written notice thereof to the other Party (the “Officer Negotiation Request”). Within thirty (30) days of the delivery of the Officer Negotiation Request, the Parties shall attempt to resolve the Dispute through good faith negotiation. All such negotiations shall be conducted by executives who hold, at a minimum, the title of Senior Vice President (or a position substantially equivalent thereto) and who have authority to settle the Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence. If the Parties are unable for any reason to resolve a Dispute within thirty (30) days of receipt of the Officer Negotiation Request, and such thirty (30)-day period is not extended by mutual written consent of the Parties, the Chief Executive Officers of the Parties shall engage in good-faith negotiations in accordance with Section 6.2.

6.2 Good-Faith Negotiation; Mediation.

(a) If any Dispute is not resolved pursuant to Section 6.1, the Party that delivered the Officer Negotiation Request shall provide written notice of such Dispute to the Chief Executive Officer of each Party (a “CEO Negotiation Request”). As soon as reasonably practicable following receipt of a CEO Negotiation Request, the Chief Executive Officers of the Parties shall begin conducting good-faith negotiations with respect to such Dispute. All such negotiations shall be confidential and shall be treated as compromise and settlement negotiations for purposes of applicable rules of evidence.

(b) If the Chief Executive Officers of the Parties are unable for any reason to resolve a Dispute within thirty (30) days of receipt of a CEO Negotiation Request, and such thirty (30)-day period is not extended by mutual written consent of the Parties, then any Party shall initiate a non-binding mediation by providing written notice (a “Mediation Notice”) to the other Party within five (5) Business Days following the expiration of such thirty (30) day period.

(c) Upon receipt of a Mediation Notice, the applicable Dispute shall be submitted within five (5) Business Days following such receipt of such Mediation Notice for non-binding mediation conducted in accordance with the Commercial Mediation Rules of the American Arbitration Association (“Arbitration Association”), and the Parties agree to bear equally the costs of such mediation (including any fees or expenses of the applicable mediator); provided that each Party shall bear its own costs in connection with participating in such mediation. The Parties agree to participate in good faith in such mediation for a period of thirty (30) days or such longer period as the Parties may mutually agree following receipt of such Mediation Notice (the “Mediation Period”).

(d) In connection with such mediation, the Parties shall cooperate with the Arbitration Association and with one another in selecting a neutral mediator with relevant industry experience and in scheduling the mediation proceedings during the applicable Mediation Period. If the Parties are unable to agree on a neutral mediator within five (5) Business Days of submitting a Dispute for mediation pursuant to Section 6.2(c), application shall be made by the Parties to the Arbitration Association for the Arbitration Association to select and appoint a neutral mediator on the Parties’ behalf in accordance with the Commercial Mediation Rules of the Arbitration Association.

(e) The Parties further agree that all information, whether oral or written, provided in the course of any such mediation by any Party or their Representatives, and by the applicable mediator and any employees of the mediation service, is confidential, privileged, and inadmissible for any purpose, including impeachment, in any Action involving the Parties; provided that any such information that is otherwise admissible or discoverable shall not be rendered inadmissible or non-discoverable as a result of its use in such mediation.

 

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(f) If the Parties are unable to resolve a Dispute for any reason, on and following the expiration of the Mediation Period, the Dispute shall be submitted to arbitration in accordance with Section 6.3.

6.3 Arbitration.

(a) In the event that a Dispute has not been resolved within thirty (30) days of the receipt of a CEO Negotiation Request in accordance with Section 6.2, or within such longer period as the Parties may agree to in writing, then such Dispute shall, upon the written request of a Party (the “Arbitration Request”) be submitted to be finally resolved by binding arbitration in accordance with the then-current JAMS Comprehensive Arbitration Rules and Procedures (“JAMS Rules”), except as modified herein. The arbitration shall be held in (i) Los Angeles, California, or (ii) such other place as the Parties may mutually agree in writing. Unless otherwise agreed by the Parties in writing, any Dispute to be decided pursuant to this Section 6.3 will be decided (i) before a sole arbitrator if the amount in dispute, inclusive of all claims and counterclaims, totals less than $1 (one) million; or (ii) by a panel of three (3) arbitrators if the amount in dispute, inclusive of all claims and counterclaims, totals $1 (one) million or more.

(b) The panel of three (3) arbitrators will be chosen as follows: (i) within thirty (30) days from the date of the receipt of the Arbitration Request, each Party will name an arbitrator; and (ii) the two (2) Party-appointed arbitrators will thereafter, within thirty (30) days from the date on which the second of the two (2) arbitrators was named, name a third independent arbitrator who will act as chairperson of the arbitral tribunal. In the event that any Party fails to name an arbitrator within thirty (30) days from the date of receipt of the Arbitration Request, then upon written application by any Party, that arbitrator shall be appointed pursuant to the JAMS Rules. In the event that the two (2) Party-appointed arbitrators fail to appoint the third, then the third independent arbitrator will be appointed pursuant to the JAMS Rules. If the arbitration will be before a sole independent arbitrator, then the sole independent arbitrator will be appointed by agreement of the Parties within thirty (30) days of the date of receipt of the Arbitration Request. If the Parties cannot agree to a sole independent arbitrator during such thirty (30) day period, then upon written application by any Party, the sole independent arbitrator will be appointed pursuant to the JAMS Rules.

(c) The arbitrator(s) will have the right to award, on a preliminary or interim basis, or include in the final award, any relief that it/they deem proper in the circumstances, including money damages (with interest on unpaid amounts from the due date), injunctive relief (including specific performance) and attorneys’ fees and costs; provided, that the arbitrator(s) will not award any relief not specifically requested by the Parties nor any relief not permitted by the terms of any commercial or other applicable agreement between the Parties and, in any event, will not award any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages (other than any such Liability arising from a payment actually made to a Third Party with respect to a Third-Party Claim). Upon selection of the arbitrator(s) following any grant of interim relief by a special arbitrator or court pursuant to Section 6.4, the arbitrator(s) may affirm or disaffirm that relief, and the Parties will seek modification or rescission of the order entered by the court as necessary to accord with the decision of the arbitrator(s). The award of the arbitrator(s) shall be final and binding on the Parties, and may be enforced in any court of competent jurisdiction. The initiation of arbitration pursuant to this Article VI will toll the applicable statute of limitations for the duration of any such proceedings. Notwithstanding applicable state Law, the arbitration and this agreement to arbitrate shall be governed by the Federal Arbitration Act, 9 U.S.C. § 1, et seq.

6.4 Litigation and Unilateral Commencement of Arbitration. Notwithstanding the foregoing provisions of this Article VI, (a) a Party may seek preliminary provisional or injunctive judicial relief with respect to a Dispute (unless, but only to the extent, such relief is not permitted by the terms of any commercial or other applicable agreement between the Parties) without first complying with the procedures set forth in Section 6.1, Section 6.2 and Section 6.3 if such action is reasonably necessary to avoid irreparable damage (it being understood that such initiating Party may, at its election, pursue arbitration, including seeking arbitral relief on a preliminary or interim basis, in lieu of such judicial relief) and (b) any Party may initiate arbitration before the

 

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expiration of the periods specified in Section 6.1, Section 6.2 and/or Section 6.3 if such Party has submitted an Officer Negotiation Request, a CEO Negotiation Request and/or an Arbitration Request, as applicable, and the applicable other Party has failed to comply with Section 6.1, Section 6.2 and/or Section 6.3, as applicable, in good faith with respect to such negotiation and/or the commencement and engagement in arbitration. In the circumstances contemplated by clause (b) of the immediately preceding sentence, the other Party may commence and prosecute such arbitration unilaterally in accordance with the JAMS Rules.

6.5 Conduct During Dispute Resolution Process. Unless otherwise agreed in writing, the Parties shall, and shall cause the respective members of their Groups to, continue to honor all commitments under this Agreement and each Ancillary Agreement to the extent required by such agreements during the course of dispute resolution pursuant to the provisions of this Article VI, unless such commitments are the specific subject of the Dispute at issue.

ARTICLE VII

FURTHER ASSURANCES AND ADDITIONAL COVENANTS

7.1 Further Assurances.

(a) In addition to the actions specifically provided for elsewhere in this Agreement, except as otherwise expressly provided in this Agreement or any of the Ancillary Agreements, each of the Parties shall use its reasonable best efforts, prior to, on and after the Arrangement Effective Time, to take, or cause to be taken, all actions, and to do, or cause to be done, all things, reasonably necessary, proper or advisable under applicable Laws, regulations and agreements to consummate and make effective the transactions contemplated by this Agreement and the Ancillary Agreements.

(b) Without limiting the foregoing, prior to, on and after the Arrangement Effective Time, each Party hereto shall cooperate with the other Party, and without any further consideration, but at the expense of the requesting Party, to execute and deliver, or use its reasonable best efforts to cause to be executed and delivered, all instruments, including instruments of conveyance, assignment and transfer, and to make all filings with, and to obtain all Approvals or Notifications of, any Governmental Authority or any other Person under any permit, license, agreement, indenture or other instrument (including any consents or Governmental Approvals), and to take all such other actions as such Party may reasonably be requested to take by the other Party from time to time, consistent with the terms of this Agreement and the Ancillary Agreements, in order to effectuate the provisions and purposes of this Agreement and the Ancillary Agreements and the transfers of the Starz Assets and the New Lionsgate Assets and the assignment and assumption of the Starz Liabilities and the New Lionsgate Liabilities and the other transactions contemplated hereby and thereby. Without limiting the foregoing, each Party will, at the reasonable request, cost and expense of the other Party, take such other actions as may be reasonably necessary to vest in such other Party good and marketable title to the Assets allocated to such Party under this Agreement or any of the Ancillary Agreements, free and clear of any Security Interest, if and to the extent it is practicable to do so.

(c) At or prior to the Arrangement Effective Time, New Lionsgate and Starz, in their respective capacities as direct and indirect shareholders of the members of their Groups, shall each ratify any actions which are reasonably necessary or desirable to be taken by New Lionsgate, Starz or any of the members of their respective Groups, as the case may be, to effectuate the transactions contemplated by this Agreement and the Ancillary Agreements.

 

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ARTICLE VIII

TERMINATION

8.1 Termination. This Agreement may not be terminated, except by an agreement in writing signed by a duly authorized officer of each of the Parties or as otherwise required by applicable Law.

8.2 Effect of Termination. In the event of any termination of this Agreement prior to the Arrangement Effective Date, this Agreement shall become null and void and no Party (nor any of its directors, officers or employees) shall have any Liability or further obligation to the other Party or any member of the other Party’s Group by reason of this Agreement or the Ancillary Agreements.

ARTICLE IX

MISCELLANEOUS

9.1 Counterparts; Entire Agreement; Corporate Power.

(a) This Agreement and each Ancillary Agreement may be executed in one 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 or the parties thereto, respectively, and delivered to the other Party or other parties thereto, respectively.

(b) This Agreement, the Ancillary Agreements and the Exhibits, Schedules and appendices hereto and thereto contain the entire agreement between the Parties with respect to the subject matter hereof, supersede all previous agreements, negotiations, discussions, writings, understandings, commitments and conversations with respect to such subject matter, and there are no agreements or understandings between the Parties other than those set forth or referred to herein or therein. This Agreement and the Ancillary Agreements together govern the arrangements in connection with the Transactions and would not have been entered into independently.

(c) Each Party represents on behalf of itself and each other member of its Group, as follows:

(i) each such Person has the requisite corporate or other power and authority and has taken all corporate or other action necessary in order to execute, deliver and perform this Agreement and each Ancillary Agreement to which it is a party and to consummate the transactions contemplated hereby and thereby; and

(ii) this Agreement and each Ancillary Agreement to which it is a party has been duly executed and delivered by it and constitutes a valid and binding agreement of it enforceable in accordance with the terms thereof.

(d) Each Party acknowledges that it and each other Party is executing this Agreement and certain of the Ancillary Agreements by facsimile, stamp or mechanical signature, and that delivery of an executed counterpart of a signature page to this Agreement or any Ancillary Agreement (whether executed by manual, stamp or mechanical signature) by facsimile or by e-mail in portable document format (PDF) shall be effective as delivery of such executed counterpart of this Agreement or any Ancillary Agreement. Each Party expressly adopts and confirms each such facsimile, stamp or mechanical signature (regardless of whether delivered in person, by mail, by courier, by facsimile or by e-mail in portable document format (PDF)) made in its name as if it were a manual signature delivered in person, agrees that it will not assert that any such signature or delivery is not adequate to bind such Party to the same extent as if it were signed manually and delivered in person and agrees that, at the reasonable request of the other Party at any time, it will as promptly as reasonably practicable cause each such Ancillary Agreement to be manually executed (any such execution to be as of the date of the initial date thereof) and delivered in person, by mail or by courier.

 

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9.2 Governing Law. This Agreement and, unless expressly provided therein, each Ancillary Agreement (and any claims or disputes arising out of or related hereto or thereto or to the transactions contemplated hereby and thereby or to the inducement of any party to enter herein and therein, whether for breach of contract, tortious conduct or otherwise and whether predicated on common law, statute or otherwise) shall be governed by and construed and interpreted in accordance with the Laws of the State of Delaware irrespective of the choice of laws principles of the State of Delaware including all matters of validity, construction, effect, enforceability, performance and remedies. For clarity, all matters relating to the duties of the directors and officer of New Lionsgate and Lionsgate shall be governed by, and construed in accordance with, the laws of British Columbia, Canada, and the federal laws of Canada applicable therein.

9.3 Assignability. Except as set forth in any Ancillary Agreement, this Agreement and each Ancillary Agreement shall be binding upon and inure to the benefit of the Parties and the parties thereto, respectively, and their respective successors and permitted assigns; provided, however, that no Party nor any such party thereto may assign its rights or delegate its obligations under this Agreement or any Ancillary Agreement without the express prior written consent of the other Party hereto or other parties thereto, as applicable (whether pursuant to a merger, by operation of Law or otherwise). Notwithstanding the foregoing, no such consent shall be required for the assignment of a Party’s rights and obligations under this Agreement and the Ancillary Agreements (except as may be otherwise provided in any such Ancillary Agreement) in whole (i.e., the assignment of a Party’s rights and obligations under this Agreement and all Ancillary Agreements all at the same time) in connection with a Change of Control of a Party so long as the resulting, surviving or transferee Person assumes all the obligations of the relevant Party hereto or relevant party thereto, as applicable, by operation of Law or pursuant to an agreement in form and substance reasonably satisfactory to the other Party or other Party thereto, as applicable.

9.4 Third-Party Beneficiaries. Except for the indemnification rights under this Agreement and each Ancillary Agreement of any New Lionsgate Indemnitee or Starz Indemnitee in their respective capacities as such, (a) the provisions of this Agreement and each Ancillary Agreement are solely for the benefit of the Parties and the parties thereto, respectively, and are not intended to confer upon any Person except the Parties and the parties thereto any rights or remedies hereunder or thereunder, and (b) there are no third-party beneficiaries of this Agreement or any Ancillary Agreement and neither this Agreement nor any Ancillary Agreement shall provide any third person with any remedy, claim, Liability, reimbursement, claim of action or other right in excess of those existing without reference to this Agreement or any Ancillary Agreement.

9.5 Notices. All notices, requests, claims, demands or other communications under this Agreement and, to the extent, applicable and unless otherwise provided therein, under each of the Ancillary Agreements shall be in writing and shall be given or made (and, except as otherwise provided herein, shall be deemed to have been duly given or made upon receipt) by delivery in person, by overnight courier service, by certified mail, return receipt requested, or by electronic mail so long as confirmation of receipt thereof is requested and received, to the respective Parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 9.5):

If to Lionsgate (prior to the Arrangement Effective Time), to:

Lions Gate Entertainment Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Attention: James W. Barge

E-mail: jbarge@lionsgate.com

If to Starz (after the Arrangement Effective Time), to:

Starz Entertainment Corp.

1647 Stewart Street

Santa Monica, CA 90404

 

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Attention: General Counsel

E-mail: Audrey.Lee@starz.com

If to LG Studios (prior to the Arrangement Effective Time) or New Lionsgate (after the Arrangement Effective Time), to:

Lionsgate Studios Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Attention: Bruce Tobey

E-mail: btobey@lionsgate.com

A Party may, by notice to the other Party, change the address to which such notices are to be given.

9.6 Severability. If any provision of this Agreement or any Ancillary Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof or thereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon a suitable and equitable provision to effect the original intent of the Parties.

9.7 Force Majeure. No Party shall be deemed in default of this Agreement or, unless otherwise expressly provided therein, any Ancillary Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder or thereunder so long as and to the extent to which any delay or failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of Force Majeure. In the event of any such excused delay, the time for performance of such obligations (other than a payment obligation) shall be extended for a period equal to the time lost by reason of the delay. A Party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other Party of the nature and extent of any such Force Majeure condition; and (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement and the Ancillary Agreements, as applicable, as soon as reasonably practicable.

9.8 No Set-Off. Except as expressly set forth in any Ancillary Agreement or as otherwise mutually agreed to in writing by the Parties, no Party nor any member of such Party’s Group shall have any right of set-off or other similar rights with respect to (a) any amounts received pursuant to this Agreement or any Ancillary Agreement; or (b) any other amounts claimed to be owed to the other Party or any member of its Group arising out of this Agreement or any Ancillary Agreement.

9.9 Expenses. Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all third-party fees, costs and expenses, and all other fees, costs and expenses, in each case incurred at or prior to the Arrangement Effective Time in connection with the preparation, execution, delivery and implementation of this Agreement, including the Transactions, and any Ancillary Agreement, the Form S-4, the Meeting Materials, the Plan of Arrangement, and the consummation of the transactions contemplated hereby and thereby will be borne by the Party or its applicable Subsidiary incurring such fees, costs or expenses. Except as otherwise expressly set forth in this Agreement or any Ancillary Agreement, or as otherwise agreed to in writing by the Parties, all third-party fees, costs and expenses, and all other fees, costs and expenses, in each case incurred after the Arrangement Effective Time in connection with the Transactions and the consummation of the transactions contemplated hereby and thereby will be borne by the Party or its applicable Subsidiary incurring such fees, costs or expenses. The Parties agree that certain specified costs and expenses shall be allocated between the Parties, and borne and be the responsibility of the applicable Party, as set forth on Schedule 3.6.

 

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9.10 Headings. The article, section and paragraph headings contained in this Agreement and in the Ancillary Agreements are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement or any Ancillary Agreement.

9.11 Survival of Covenants. Except as expressly set forth in this Agreement or any Ancillary Agreement, the covenants, representations and warranties contained in this Agreement and each Ancillary Agreement, and Liability for the breach of any obligations contained herein, shall survive the Transactions and shall remain in full force and effect.

9.12 Waivers of Default. Waiver by a Party of any default by the other Party of any provision of this Agreement or any Ancillary Agreement shall not be deemed a waiver by the waiving Party of any subsequent or other default, nor shall it prejudice the rights of the other Party. No failure or delay by a Party in exercising any right, power or privilege under this Agreement or any Ancillary Agreement shall operate as a waiver thereof, nor shall a single or partial exercise thereof prejudice any other or further exercise thereof or the exercise of any other right, power or privilege.

9.13 Specific Performance. Subject to the provisions of Article VI, and except as otherwise set forth in any applicable Ancillary Agreement, in the event of any actual or threatened default in, or breach of, any of the terms, conditions and provisions of this Agreement or any Ancillary Agreement, the Party or Parties who are, or are to be, thereby aggrieved shall have the right to specific performance and injunctive or other equitable relief in respect of its or their rights under this Agreement or such Ancillary Agreement, in addition to any and all other rights and remedies at law or in equity, and all such rights and remedies shall be cumulative. The Parties agree that the remedies at law for any breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any Action for specific performance that a remedy at law would be adequate is waived. Any requirements for the securing or posting of any bond with such remedy are waived by each of the Parties.

9.14 Amendments. No provisions of this Agreement or any Ancillary Agreement shall be deemed waived, amended, supplemented or modified by a Party, unless such waiver, amendment, supplement or modification is in writing and signed by the authorized representative of the Party against whom it is sought to enforce such waiver, amendment, supplement or modification.

9.15 Interpretation. In this Agreement and any Ancillary Agreement, (a) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other genders as the context requires; (b) the terms “hereof,” “herein,” and “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement (or the applicable Ancillary Agreement) as a whole (including all of the Schedules, Exhibits and Appendices hereto and thereto) and not to any particular provision of this Agreement (or such Ancillary Agreement); (c) Article, Section, Schedule, Exhibit and Appendix references are to the Articles, Sections, Schedules, Exhibits and Appendices to this Agreement (or the applicable Ancillary Agreement) unless otherwise specified; (d) unless otherwise stated, all references to any agreement (including this Agreement and each Ancillary Agreement) shall be deemed to include the exhibits, schedules and annexes (including all Schedules, Exhibits and Appendices) to such agreement; (e) the word “including” and words of similar import when used in this Agreement (or the applicable Ancillary Agreement) shall mean “including, without limitation,” unless otherwise specified; (f) the word “or” need not be exclusive; (g) unless otherwise specified in a particular case, the word “days” refers to calendar days; (h) references herein to this Agreement or any other agreement contemplated herein shall be deemed to refer to this Agreement or such other agreement as of the date on which it is executed and as it may be amended, modified or supplemented thereafter, unless otherwise specified; (i) unless expressly stated to the contrary in this Agreement or in any Ancillary Agreement, all references to “the date hereof,” “the date of this Agreement” and words of similar import shall all be references to May 6, 2025; and (j) the word “extent” and the phrase “to the extent” shall mean the degree (if any) to which a subject or other thing extends, and such word or phrase shall not merely mean “if”.

 

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9.16 Limitations of Liability. Notwithstanding anything in this Agreement to the contrary, neither Starz or any member of the Starz Group, on the one hand, nor New Lionsgate or any member of the New Lionsgate Group, on the other hand, shall be liable under this Agreement to the other for any indirect, punitive, exemplary, remote, speculative or similar damages in excess of compensatory damages of the other arising in connection with the transactions contemplated hereby (other than any such Liability actually paid or payable in respect of a Third-Party Claim).

9.17 Performance. New Lionsgate will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the New Lionsgate Group. Starz will cause to be performed, and hereby guarantees the performance of, all actions, agreements and obligations set forth in this Agreement or in any Ancillary Agreement to be performed by any member of the Starz Group. Each Party (including its permitted successors and assigns) further agrees that it will (a) give timely notice of the terms, conditions and continuing obligations contained in this Agreement and any applicable Ancillary Agreement to all of the other members of its Group and (b) cause all of the other members of its Group not to take any action or fail to take any such action inconsistent with such Party’s obligations under this Agreement, any Ancillary Agreement or the transactions contemplated hereby or thereby.

9.18 Mutual Drafting. This Agreement and the Ancillary Agreements shall be deemed to be the joint work product of the Parties and any rule of construction that a document shall be interpreted or construed against a drafter of such document shall not be applicable.

9.19 Conflict Among Ancillary Agreements. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Transition Services Agreement, the Tax Matters Agreement, the Employee Matters Agreement or the Amendment to the Tax Matters Agreement (each, a “Specified Ancillary Agreement”), the terms of the applicable Specified Ancillary Agreement shall control with respect to the subject matter addressed by such Specified Ancillary Agreement to the extent of such conflict or inconsistency. In the event of any conflict or inconsistency between the terms of this Agreement or any Specified Ancillary Agreement, on the one hand, and any Transfer Document, on the other hand, including with respect to the allocation of Assets and Liabilities as among the Parties or the members of their respective Groups, this Agreement or such Specified Ancillary Agreement shall control. In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Arrangement Agreement, the terms of the Arrangement Agreement shall control solely as it relates to the Arrangement or the Plan of Arrangement.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused this Separation Agreement to be executed by their duly authorized representatives as of the date first written above.

 

LIONSGATE STUDIOS HOLDING CORP.

By:

  

/s/ Adrian Kuzycz

 

Name: Adrian Kuzycz

 

Title: Chief Executive Officer, Principal Executive Officer, President and Secretary

LIONSGATE STUDIOS CORP.

By:

  

/s/ Bruce Tobey

 

Name: Bruce Tobey

 

Title: General Counsel

LG SIRIUS HOLDINGS ULC

By:

  

/s/ Adrian Kuzycz

 

Name: Adrian Kuzycz

 

Title: President

LIONS GATE ENTERTAINMENT CORP.

By:

  

/s/ James W. Barge

 

Name: James W. Barge

 

Title: Chief Financial Officer

 

 

[Signature Page to Separation Agreement]

Exhibit 3.2

 

     

These articles were deposited in the company’s registered and records office, and adopted by the company, on May 6, 2025, effective at 1:28 p.m. Pacific time pursuant to a plan of arrangement.

LIONSGATE STUDIOS CORP.

LIONSGATE STUDIOS HOLDING CORP.

Incorporation Number: BC1521046

Translation of the company name that the company intends to use outside of Canada: N/A

(the “Company”)

ARTICLES

TABLE OF CONTENTS

 

1.

   Interpretation      1  
  1.1    Definitions      1  
  1.2    Business Corporations Act and Interpretation Act Definitions Applicable      1  

2.

   Shares and Share Certificates      2  
  2.1    Authorized Share Structure      2  
  2.2    Form of Share Certificate      2  
  2.3    Shareholder Entitled to Certificate or Acknowledgment      2  
  2.4    Delivery by Mail      2  
  2.5    Replacement of Worn Out or Defaced Certificate or Acknowledgment      2  
  2.6    Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment      2  
  2.7    Splitting Share Certificates      3  
  2.8    Certificate Fee      3  
  2.9    Recognition of Trusts      3  

3.

   Issue of Shares      3  
  3.1    Directors Authorized      3  
  3.2    Commissions and Discounts      3  
  3.3    Brokerage      3  
  3.4    Conditions of Issue      4  
  3.5    Share Purchase Warrants and Rights      4  

4.

   Share Registers      4  
  4.1    Central Securities Register      4  
  4.2    Closing Register      4  

5.

   Share Transfers      4  
  5.1    Registering Transfers      4  
  5.2    Form of Instrument of Transfer      5  
  5.3    Transferor Remains Shareholder      5  
  5.4    Signing of Instrument of Transfer      5  
  5.5    Enquiry as to Title Not Required      5  
  5.6    Transfer Fee      5  

6.

   Transmission Of Shares      6  
  6.1    Legal Personal Representative Recognized on Death      6  
  6.2    Rights of Legal Personal Representative      6  

7.

   Purchase Of Shares      6  
  7.1    Company Authorized to Purchase Shares      6  
  7.2    Purchase When Insolvent      6  
  7.3    Sale and Voting of Purchased Shares      6  

8.

   Borrowing Powers      7  
  8.1    General Powers      7  
  8.2    Terms of Debt Obligations      7  
  8.3    Powers of Directors      7  

9.

   Alterations      7  
  9.1    Alteration of Authorized Share Structure      7  
  9.2    Special Rights and Restrictions      8  
  9.3    Change of Name      8  
  9.4    Other Alterations      8  

10.

   Meetings Of Shareholders      8  
  10.1    Annual General Meetings      8  
  10.2    Resolution Instead of Annual General Meeting      9  
  10.3    Calling of Meetings of Shareholders      9  
  10.4    Notice for Meetings of Shareholders      9  
  10.5    Record Date for Notice      9  
  10.6    Record Date for Voting      9  
  10.7    Failure to Give Notice and Waiver of Notice      9  
  10.8    Notice of Special Business at Meetings of Shareholders      10  
  10.9    Advance Notice for Nomination of Directors      10  

11.

   Proceedings At Meetings Of Shareholders      14  
  11.1    Special Business      14  
  11.2    Special Majority      15  
  11.3    Quorum      15  
  11.4    One Shareholder May Constitute Quorum      15  
  11.5    Other Persons May Attend      15  
  11.6    Requirement of Quorum      15  
  11.7    Lack of Quorum      15  
  11.8    Lack of Quorum at Succeeding Meeting      16  
  11.9    Chair      16  
  11.10    Selection of Alternate Chair      16  
  11.11    Adjournments      16  
  11.12    Notice of Adjourned Meeting      16  
  11.13    Decisions by Show of Hands or Poll      17  
  11.14    Declaration of Result      17  
  11.15    Motion Need Not be Seconded      17  
  11.16    Casting Vote      17  
  11.17    Manner of Taking Poll      17  
  11.18    Demand for Poll on Adjournment      17  
  11.19    Chair Must Resolve Dispute      18  
  11.20    Casting of Votes      18  
  11.21    Demand for Poll      18  
  11.22    Demand for Poll Not to Prevent Continuance of Meeting      18  
  11.23    Retention of Ballots and Proxies      18  

12.

   Votes Of Shareholders      18  
  12.1    Number of Votes by Shareholder or by Shares      18  
  12.2    Votes of Persons in Representative Capacity      18  
  12.3    Votes by Joint Holders      19  
  12.4    Legal Personal Representatives as Joint Shareholders      19  
  12.5    Representative of a Corporate Shareholder      19  

 

- 2 -

  12.6    When Proxy Provisions Do Not Apply to the Company      19  
  12.7    Appointment of Proxy Holders      20  
  12.8    Alternate Proxy Holders      20  
  12.9    When Proxy Holder Need Not Be Shareholder      20  
  12.10    Deposit of Proxy      20  
  12.11    Validity of Proxy Vote      20  
  12.12    Form of Proxy      21  
  12.13    Revocation of Proxy      21  
  12.14    Revocation of Proxy Must Be Signed      21  
  12.15    Production of Evidence of Authority to Vote      22  

13.

   Directors      22  
  13.1    First Directors; Number of Directors      22  
  13.2    Change in Number of Directors      22  
  13.3    Directors’ Acts Valid Despite Vacancy      22  
  13.4    Qualifications of Directors      23  
  13.5    Remuneration of Directors      23  
  13.6    Reimbursement of Expenses of Directors      23  
  13.7    Special Remuneration for Directors      23  
  13.8    Gratuity, Pension or Allowance on Retirement of Director      23  

14.

   Election and Removal of Directors      23  
  14.1    Election at Annual General Meeting      23  
  14.2    Consent to be a Director      24  
  14.3    Failure to Elect or Appoint Directors      24  
  14.4    Places of Retiring Directors Not Filled      24  
  14.5    Directors May Fill Casual Vacancies      24  
  14.6    Remaining Directors Power to Act      24  
  14.7    Shareholders May Fill Vacancies      25  
  14.8    Additional Directors      25  
  14.9    Ceasing to be a Director      25  
  14.10    Removal of Director by Shareholders      25  
  14.11    Removal of Director by Directors      25  

15.

   Powers and Duties of Directors      26  
  15.1    Powers of Management      26  
  15.2    Appointment of Attorney of Company      26  

16.

   Disclosure of Interest of Directors      26  
  16.1    Obligation to Account for Profits      26  
  16.2    Restrictions on Voting by Reason of Interest      26  
  16.3    Interested Director Counted in Quorum      26  
  16.4    Disclosure of Conflict of Interest or Property      26  
  16.5    Director Holding Other Office in the Company      27  
  16.6    No Disqualification      27  
  16.7    Professional Services by Director or Officer      27  
  16.8    Director or Officer in Other Corporations      27  

17.

   Proceedings of Directors      27  
  17.1    Meetings of Directors      27  
  17.2    Voting at Meetings      27  
  17.3    Chair of Meetings      27  
  17.4    Meetings by Telephone or Other Communications Medium      28  
  17.5    Calling of Meetings      28  

 

- 3 -

  17.6    Notice of Meetings      28  
  17.7    When Notice Not Required      28  
  17.8    Meeting Valid Despite Failure to Give Notice      29  
  17.9    Waiver of Notice of Meetings      29  
  17.10    Quorum      29  
  17.11    Validity of Acts Where Appointment Defective      29  
  17.12    Consent Resolutions in Writing      29  

18.

   Executive and Other Committees      29  
  18.1    Appointment and Powers of Executive Committee      29  
  18.2    Appointment and Powers of Other Committees      30  
  18.3    Obligations of Committees      30  
  18.4    Powers of Board      30  
  18.5    Committee Meetings      31  

19.

   Officers      31  
  19.1    Directors May Appoint Officers      31  
  19.2    Functions, Duties and Powers of Officers      31  
  19.3    Qualifications      31  
  19.4    Remuneration and Terms of Appointment      31  

20.

   Indemnification      32  
  20.1    Definitions      32  
  20.2    Mandatory Indemnification of Directors, Officers, Former Officers and Former Directors      32  
  20.3    Indemnification of Other Persons      32  
  20.4    Non-Compliance with Business Corporations Act      32  
  20.5    Company May Purchase Insurance      32  
  20.6    Transitionary requirement to advance expenses      33  

21.

   Dividends      33  
  21.1    Payment of Dividends Subject to Special Rights and Restrictions      33  
  21.2    Declaration of Dividends      33  
  21.3    No Notice Required      33  
  21.4    Record Date      34  
  21.5    Manner of Paying Dividend      34  
  21.6    Settlement of Difficulties      34  
  21.7    When Dividend Payable      34  
  21.8    Dividends to be Paid in Accordance with Number of Shares      34  
  21.9    Receipt by Joint Shareholders      34  
  21.10    Dividend Bears No Interest      34  
  21.11    Fractional Dividends      34  
  21.12    Payment of Dividends      35  
  21.13    Capitalization of Surplus      35  

22.

   Documents, Records and Reports      35  
  22.1    Recording of Financial Affairs      35  
  22.2    Inspection of Accounting Records      35  
  22.3    Remuneration of Auditor      35  

23.

   Notices      35  
  23.1    Method of Giving Notice      35  
  23.2    Deemed Receipt of Mailing      36  
  23.3    Certificate of Sending      36  
  23.4    Notice to Joint Shareholders      36  
  23.5    Notice to Trustees      36  

 

- 4 -

24.

   Seal      37  
  24.1    Who May Attest Seal      37  
  24.2    Sealing Copies      37  
  24.3    Mechanical Reproduction of Seal      37  

25.

   Special Rights and Restrictions of Preference Shares      37  
  25.1    Special Rights and Restrictions of Preference Shares, as a Class      37  

 

- 5 -

Articles adopted on amalgamation of SEAC II Acquisitions Corp. and LG Orion Holdings ULC on May 13, 2024.

These articles were deposited in the company’s registered and records office, and adopted by the company, on May 6, 2025, effective at 1:28 p.m. Pacific time pursuant to a plan of arrangement.

LIONSGATE STUDIOS CORP.

LIONSGATE STUDIOS HOLDING CORP.

Incorporation Number: BC1521046

Translation of the company name that the company intends to use outside of Canada: N/A

(the “Company”)

ARTICLES

The Company has as its articles the following articles:

 

1.

INTERPRETATION

 

1.1

Definitions

In these Articles, unless the context otherwise requires:

 

(a)

“board of directors”, “directors” and “board” mean the directors or sole director of the Company for the time being;

 

(b)

“Business Corporations Act” means the Business Corporations Act, S.B.C. 2002, c. 57, as amended from time to time, as well as any successor legislation, and includes any regulations made thereunder;

 

(c)

“Interpretation Act” means the Interpretation Act, R.S.B.C. 1996, c. 238, as amended from time to time, as well as any successor legislation, and includes any regulations made thereunder.

 

(d)

“legal personal representative” means the personal or other legal representative of the shareholder;

 

(e)

“registered address” of a shareholder means the shareholder’s address as recorded in the central securities register;

 

(f)

“seal” means the seal of the Company, if any.

 

1.2

Business Corporations Act and Interpretation Act Definitions Applicable

The definitions in the Business Corporations Act and the definitions and rules of construction in the Interpretation Act, with the necessary changes, so far as applicable, and unless the context requires otherwise, apply to these Articles as if they were an enactment. If there is a conflict between a definition in the Business Corporations Act and a definition or rule in the Interpretation Act relating to a term used in these Articles, the definition in the Business Corporations Act will prevail in relation to the use of the term in these Articles. If there is a conflict between these Articles and the Business Corporations Act, the Business Corporations Act will prevail.

2.

SHARES AND SHARE CERTIFICATES

 

2.1

Authorized Share Structure

The authorized share structure of the Company consists of shares of the class or classes and series, if any, described in the Notice of Articles of the Company.

 

2.2

Form of Share Certificate

Each share certificate issued by the Company must comply with, and be signed as required by, the Business Corporations Act.

 

2.3

Shareholder Entitled to Certificate or Acknowledgment

Unless the shares are uncertificated shares within the meaning of the Business Corporations Act, each shareholder is entitled, without charge, to: (a) one share certificate representing the shares of each class or series of shares registered in the shareholder’s name; or (b) a non-transferable written acknowledgment of the shareholder’s right to obtain such a share certificate; provided that in respect of a share held jointly by several persons, the Company is not bound to issue more than one share certificate or acknowledgment and delivery of a share certificate or acknowledgment to one of several joint shareholders or to a duly authorized agent or one of the shareholders’ duly authorized agents will be sufficient delivery to all.

 

2.4

Delivery by Mail

Any share certificate or non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate may be sent to the shareholder by mail at the shareholder’s registered address and neither the Company nor any director, officer or agent of the Company is liable for any loss to the shareholder because the share certificate or acknowledgment is lost in the mail or stolen.

 

2.5

Replacement of Worn Out or Defaced Certificate or Acknowledgment

If the directors are satisfied that a share certificate or a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate is worn out or defaced, they must, on production to them of the share certificate or acknowledgment, as the case may be, and on such other terms, if any, as they think fit:

 

(a)

order the share certificate or acknowledgment, as the case may be, to be cancelled; and

 

(b)

issue a replacement share certificate or acknowledgment, as the case may be.

 

2.6

Replacement of Lost, Stolen or Destroyed Certificate or Acknowledgment

If a share certificate or a non-transferable written acknowledgment of a shareholder’s right to obtain a share certificate is lost, stolen or destroyed, a replacement share certificate or acknowledgment, as the case may be, must be issued to the person entitled to that share certificate or acknowledgment, as the case may be, if the directors receive:

 

(a)

proof satisfactory to them that the share certificate or acknowledgment is lost, stolen or destroyed; and

 

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(b)

any indemnity the directors consider adequate.

 

2.7

Splitting Share Certificates

If a shareholder surrenders a share certificate to the Company with a written request that the Company issue in the shareholder’s name two or more share certificates, each representing a specified number of shares and in the aggregate representing the same number of shares as the share certificate so surrendered, the Company must cancel the surrendered share certificate and issue replacement share certificates in accordance with that request.

 

2.8

Certificate Fee

There must be paid to the Company, in relation to the issue of any share certificate under Articles 2.5, 2.6 or 2.7, the amount, if any and which must not exceed the amount prescribed under the Business Corporations Act, determined by the directors.

 

2.9

Recognition of Trusts

Except as required by law or statute or these Articles, no person will be recognized by the Company as holding any share upon any trust, and the Company is not bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or fraction of a share or (except as required by law or statute or these Articles provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in the shareholder.

 

3.

ISSUE OF SHARES

 

3.1

Directors Authorized

Subject to the Business Corporations Act and the rights of the holders of issued shares of the Company, the Company may issue, allot, sell or otherwise dispose of the unissued shares, and issued shares held by the Company, at the times, to the persons, including directors, in the manner, on the terms and conditions and for the issue prices (including any premium at which shares with par value may be issued) that the directors may determine. The issue price for a share with par value must be equal to or greater than the par value of the share.

 

3.2

Commissions and Discounts

The Company may at any time, pay a reasonable commission or allow a reasonable discount to any person in consideration of that person purchasing or agreeing to purchase shares of the Company from the Company or any other person or procuring or agreeing to procure purchasers for shares of the Company.

 

3.3

Brokerage

The Company may pay such brokerage fee or other consideration as may be lawful for or in connection with the sale or placement of its securities.

 

- 3 -

3.4

Conditions of Issue

Except as provided for by the Business Corporations Act, no share may be issued until it is fully paid. A share is fully paid when:

 

(a)

consideration is provided to the Company for the issue of the share by one or more of the following:

 

  (i)

past services performed for the Company;

 

  (ii)

property;

 

  (iii)

money; and

 

(b)

the value of the consideration received by the Company equals or exceeds the issue price set for the share under Article 3.1.

 

3.5

Share Purchase Warrants and Rights

Subject to the Business Corporations Act, the Company may issue share purchase warrants, options and rights upon such terms and conditions as the directors determine, which share purchase warrants, options and rights may be issued alone or in conjunction with debentures, debenture stock, bonds, shares or any other securities issued or created by the Company from time to time.

 

4.

SHARE REGISTERS

 

4.1

Central Securities Register

As required by and subject to the Business Corporations Act, the Company may maintain its central securities register at any location designated by the directors, and may maintain its central securities register in electronic form, and may maintain branch securities registers at locations designated by the directors. The directors may, subject to the Business Corporations Act, appoint an agent to maintain the central securities register. The directors may also appoint one or more agents, including the agent which keeps the central securities register, as transfer agent for its shares or any class or series of its shares, as the case may be, and the same or another agent as registrar for its shares or such class or series of its shares, as the case may be. The directors may terminate such appointment of any agent at any time and may appoint another agent in its place.

 

4.2

Closing Register

The Company must not at any time close its central securities register.

 

5.

SHARE TRANSFERS

 

5.1

Registering Transfers

A transfer of a share of the Company must not be registered unless:

 

(a)

a duly signed instrument of transfer in respect of the share has been received by the Company;

 

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(b)

if a share certificate has been issued by the Company in respect of the share to be transferred, that share certificate has been surrendered to the Company; and

 

(c)

if a non-transferable written acknowledgment of the shareholder’s right to obtain a share certificate has been issued by the Company in respect of the share to be transferred, that acknowledgment has been surrendered to the Company.

 

5.2

Form of Instrument of Transfer

The instrument of transfer in respect of any share of the Company must be either in the form, if any, on the back of the Company’s share certificates or in any other form that may be approved by the directors from time to time.

 

5.3

Transferor Remains Shareholder

Except to the extent that the Business Corporations Act otherwise provides, the transferor of shares is deemed to remain the holder of the shares until the name of the transferee is entered in a securities register of the Company in respect of the transfer.

 

5.4

Signing of Instrument of Transfer

If a shareholder, or their duly authorized attorney, signs an instrument of transfer in respect of shares registered in the name of the shareholder, the signed instrument of transfer constitutes a complete and sufficient authority to the Company and its directors, officers and agents to register the number of shares specified in the instrument of transfer or specified in any other manner, or, if no number is specified, all the shares represented by the share certificates or set out in the written acknowledgments deposited with the instrument of transfer:

 

(a)

in the name of the person named as transferee in that instrument of transfer; or

 

(b)

if no person is named as transferee in that instrument of transfer, in the name of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered.

 

5.5

Enquiry as to Title Not Required

Neither the Company nor any director, officer or agent of the Company is bound to inquire into the title of the person named in the instrument of transfer as transferee or, if no person is named as transferee in the instrument of transfer, of the person on whose behalf the instrument is deposited for the purpose of having the transfer registered or is liable for any claim related to registering the transfer by the shareholder or by any intermediate owner or holder of the shares, of any interest in the shares, of any share certificate representing such shares or of any written acknowledgment of a right to obtain a share certificate for such shares.

 

5.6

Transfer Fee

There must be paid to the Company, in relation to the registration of any transfer, the amount, if any, determined by the directors.

 

- 5 -

6.

TRANSMISSION OF SHARES

 

6.1

Legal Personal Representative Recognized on Death

In case of the death of a shareholder, the legal personal representative, or if the shareholder was a joint holder, the surviving joint holder, will be the only person recognized by the Company as having any title to the shareholder’s interest in the shares. Before recognizing a person as a legal personal representative, the directors may require proof of appointment by a court of competent jurisdiction, a grant of letters probate, letters of administration or such other evidence or documents as the directors consider appropriate.

 

6.2

Rights of Legal Personal Representative

The legal personal representative has the same rights, privileges and obligations that attach to the shares held by the shareholder, including the right to transfer the shares in accordance with these Articles, provided the documents required by the Business Corporations Act and the directors have been deposited with the Company.

 

7.

PURCHASE OF SHARES

 

7.1

Company Authorized to Purchase Shares

Subject to Article 7.2, the special rights and restrictions attached to the shares of any class or series and the Business Corporations Act, the Company may, if authorized by the directors, purchase or otherwise acquire any of its shares at the price and upon the terms specified in such resolution.

 

7.2

Purchase When Insolvent

The Company must not make a payment or provide any other consideration to purchase or otherwise acquire any of its shares if there are reasonable grounds for believing that:

 

(a)

the Company is insolvent; or

 

(b)

making the payment or providing the consideration would render the Company insolvent.

 

7.3

Sale and Voting of Purchased Shares

If the Company retains a share redeemed, purchased or otherwise acquired by it, the Company may sell, gift or otherwise dispose of the share, but, while such share is held by the Company, it:

 

(a)

is not entitled to vote the share at a meeting of its shareholders;

 

(b)

must not pay a dividend in respect of the share; and

 

(c)

must not make any other distribution in respect of the share.

 

- 6 -

8.

BORROWING POWERS

 

8.1

General Powers

The Company, if authorized by the directors, may:

 

(a)

borrow money in the manner and amount, on the security, from the sources and on the terms and conditions that they consider appropriate;

 

(b)

issue bonds, debentures and other debt obligations either outright or as security for any liability or obligation of the Company or any other person and at such discounts or premiums and on such other terms as they consider appropriate;

 

(c)

guarantee the repayment of money by any other person or the performance of any obligation of any other person; and

 

(d)

mortgage, charge, whether by way of specific or floating charge, grant a security interest in, or give other security on, the whole or any part of the present and future assets and undertaking of the Company.

 

8.2

Terms of Debt Obligations

Any bonds, debentures or other debt obligations of the Company may be issued at a discount, premium or otherwise, and with any special privileges as to redemption, surrender, drawing, allotment of or conversion into or exchange for shares or other securities, attending and voting at general meetings of the Company and appointment of the directors or otherwise all as the directors may determine. The directors may make any bonds, debentures or other debt obligations issued by the Company by their terms assignable free from any equities between the Company and the person to whom they may be issued or any other person who lawfully acquires them by assignment, purchase or otherwise.

 

8.3

Powers of Directors

For greater certainty, the powers of the directors under this Part 8 may be exercised by a committee or other delegate, direct or indirect, of the board authorized to exercise such powers.

 

9.

ALTERATIONS

 

9.1

Alteration of Authorized Share Structure

Subject to Article 9.2 and the Business Corporations Act, the Company may by special resolution:

 

(a)

create one or more classes or series of shares or, if none of the shares of a class or series of shares are allotted or issued, eliminate that class or series of shares;

 

(b)

increase, reduce or eliminate the maximum number of shares that the Company is authorized to issue out of any class or series of shares or establish a maximum number of shares that the Company is authorized to issue out of any class or series of shares for which no maximum is established;

 

(c)

subdivide or consolidate all or any of its unissued, or fully paid issued, shares;

 

(d)

if the Company is authorized to issue shares of a class of shares with par value:

 

  (i)

decrease the par value of those shares; or

 

- 7 -

  (ii)

if none of the shares of that class of shares are allotted or issued, increase the par value of those shares;

 

(e)

change all or any of its unissued, or fully paid issued, shares with par value into shares without par value or any of its unissued shares without par value into shares with par value;

 

(f)

alter the identifying name of any of its shares; or

 

(g)

otherwise alter its shares or authorized share structure when required or permitted to do so by the Business Corporations Act.

 

9.2

Special Rights and Restrictions

Subject to the Business Corporations Act, the Company may by special resolution:

 

(a)

create special rights or restrictions for, and attach those special rights or restrictions to, the shares of any class or series of shares, whether or not any or all of those shares have been issued; or

 

(b)

vary or delete any special rights or restrictions attached to the shares of any class or series of shares, whether or not any or all of those shares have been issued.

 

9.3

Change of Name

The Company may by special resolution authorize an alteration of its Notice of Articles in order to change its name.

 

9.4

Other Alterations

If the Business Corporations Act does not specify the type of resolution and these Articles do not specify another type of resolution, the Company may by ordinary resolution alter these Articles or the Notice of Articles.

 

10.

MEETINGS OF SHAREHOLDERS

 

10.1

Annual General Meetings

Unless an annual general meeting is deferred or waived in accordance with the Business Corporations Act, the Company must hold its first annual general meeting within 18 months after the date on which it was incorporated or otherwise recognized, and after that must hold an annual general meeting at least once in each calendar year and not more than 15 months after the last annual reference date at such time and location, within or outside of British Columbia, and as an electronic meeting or otherwise, as may be determined by a resolution of the directors. Any shareholders’ meeting held as a fully electronic meeting without a physical location or place, shall, if required by the Business Corporations Act or applicable law and not otherwise determined by a resolution of the directors in connection with the meeting, be deemed to have the physical location or place of the meeting at the Company’s registered office in British Columbia.

 

- 8 -

10.2

Resolution Instead of Annual General Meeting

If all the shareholders who are entitled to vote at an annual general meeting consent by a unanimous resolution under the Business Corporations Act to all of the business that is required to be transacted at that annual general meeting, the annual general meeting is deemed to have been held on the date of the unanimous resolution. The shareholders must, in any unanimous resolution passed under this Article 10.2, select as the Company’s annual reference date a date that would be appropriate for the holding of the applicable annual general meeting.

 

10.3

Calling of Meetings of Shareholders

The directors may, whenever they think fit, call a meeting of shareholders.

 

10.4

Notice for Meetings of Shareholders

The Company must send notice of the date, time and location of any meeting of shareholders, in the manner provided in these Articles, or in such other manner, if any, as may be prescribed by ordinary resolution (whether previous notice of the resolution has been given or not), to each shareholder entitled to attend the meeting, to each director and to the auditor of the Company, unless these Articles otherwise provide, at least the following number of days before the meeting:

 

(a)

if and for so long as the Company is a public company, 21 days;

 

(b)

otherwise, 10 days.

 

10.5

Record Date for Notice

The directors may set a date as the record date for the purpose of determining shareholders entitled to notice of any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. The record date must not precede the date on which the meeting is held by fewer than:

 

(a)

if and for so long as the Company is a public company, 21 days;

 

(b)

otherwise, 10 days.

If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

 

10.6

Record Date for Voting

The directors may set a date as the record date for the purpose of determining shareholders entitled to vote at any meeting of shareholders. The record date must not precede the date on which the meeting is to be held by more than two months or, in the case of a general meeting requisitioned by shareholders under the Business Corporations Act, by more than four months. If no record date is set, the record date is 5 p.m. on the day immediately preceding the first date on which the notice is sent or, if no notice is sent, the beginning of the meeting.

 

10.7

Failure to Give Notice and Waiver of Notice

The accidental omission to send notice of any meeting to, or the non-receipt of any notice by, any of the persons entitled to notice does not invalidate any proceedings at that meeting. Any person entitled to notice of a meeting of shareholders may, in writing or otherwise, waive or reduce the period of notice of such meeting.

 

- 9 -

10.8

Notice of Special Business at Meetings of Shareholders

If a meeting of shareholders is to consider special business within the meaning of Article 11.1, the notice of meeting must:

 

(a)

state the general nature of the special business; and

 

(b)

if the special business includes considering, approving, ratifying, adopting or authorizing any document or the signing of or giving of effect to any document, have attached to it a copy of the document or state that a copy of the document will be available for inspection by shareholders:

 

  (i)

at the Company’s records office, or at such other reasonably accessible location in British Columbia as is specified in the notice; and

 

  (ii)

during statutory business hours on any one or more specified days before the day set for the holding of the meeting.

 

10.9

Advance Notice for Nomination of Directors

 

(a)

If and for so long as the Company is a public company, subject only to the Business Corporations Act, Applicable Securities Laws (defined in Article 10.9(g)), any rules of a stock exchange on which securities of the Company are listed and these Articles, only persons who are nominated in accordance with the procedures in this Article 10.9 will be eligible for election as directors of the Company. Nominations of persons for election to the board of directors may be made at any annual general meeting of shareholders or at any special meeting of shareholders if one of the purposes for which the special meeting is called is for the election of directors:

 

  (i)

by or at the direction of the board of directors, including pursuant to a notice of meeting;

 

  (ii)

by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Business Corporations Act, or a requisition of the shareholders made in accordance with the provisions of the Business Corporations Act; or

 

  (iii)

by any shareholder of the Company (a “Nominating Shareholder”) who:

 

  (A)

at the close of business on the date of the giving of the notice provided for in this Article 10.9 and on the record date for notice of such meeting, is entered in the securities register of the Company as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting on the election of directors; and

 

  (B)

who complies with the notice procedures set forth in this Article 10.9.

 

(b)

In addition to any other requirements under applicable laws, for a nomination to be made by a Nominating Shareholder, the Nominating Shareholder must have given timely notice thereof in proper written form to the secretary of the Company in accordance with the provisions of this Article 10.9.

 

- 10 -

(c)

To be timely, a Nominating Shareholder’s notice must be received by the secretary of the Company:

 

  (i)

in the case of an annual general meeting of shareholders, not less than 30 days prior to the date of the annual general meeting of shareholders; provided, however, that in the event that the annual general meeting of shareholders is to be held on a date that is less than 50 days after the date on which the first Public Announcement (defined in Article 10.9(g)) of the date of the annual general meeting is made (the “Meeting Notice Date”), the Nominating Shareholder’s notice must be received not later than the close of business on the tenth day after the Meeting Notice Date; and

 

  (ii)

in the case of a special meeting of shareholders (which is not also an annual general meeting of shareholders) called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business on the fifteenth day following the day on which the first Public Announcement of the date of the special meeting is made.

 

(d)

Notwithstanding the provisions of this Article 10.9, in no event will any Public Announcement or any adjournment or postponement of an annual general meeting or special meeting (or the announcement thereof) commence a new time period for giving a Nominating Shareholder’s notice as described in this Article 10.9.

 

(e)

To be in proper written form, a Nominating Shareholder’s notice to the secretary of the Company must set forth:

 

  (i)

as to each person whom the Nominating Shareholder proposes to nominate for election as a director:

 

  (A)

the name, age, business address and residential address of the person;

 

  (B)

the principal occupation or employment of the person;

 

  (C)

the class or series and number of shares of the Company that are owned beneficially or of record by the person, if any;

 

  (D)

any other information relating to the person that would be required to be disclosed in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Business Corporations Act, Applicable Securities Laws and any rules of a stock exchange on which securities of the Company are listed; and

 

  (ii)

as to the Nominating Shareholder giving the notice:

 

  (A)

the class or series and number of shares of the Company which are owned beneficially or of record by the Nominating Shareholder as of the record date for the meeting (if such date has made publicly available and will have occurred);

 

  (B)

full particulars of any proxy, contract, arrangement, understanding or relationship pursuant to which such Nominating Shareholder, or any of its Affiliates or Associates, or any person acting jointly or in concert with such person, has any interests, rights or obligations relating to the right to vote or direct the voting of any shares of the Company;

 

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  (C)

be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected; and

 

  (D)

any other information relating to such Nominating Shareholder that would be required to be made in a dissident’s proxy circular in connection with solicitations of proxies for election of directors pursuant to the Business Corporations Act, Applicable Securities Laws and any rules of a stock exchange on which securities of the Company are listed.

The Company may require any proposed nominee for election as a director to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company in accordance with the Business Corporations Act, Applicable Securities Laws and any rules of a stock exchange on which securities of the Company are listed or that could be material to a reasonable shareholder’s understanding of the independence, or lack thereof, of such proposed nominee.

 

(f)

No person will be eligible for election as a director of the Company unless nominated in accordance with the provisions of this Article 10.9; provided, however, that nothing in this Article 10.9 will be deemed to preclude discussion by a shareholder or proxy holder (as distinct from nominating directors) at a meeting of shareholders any matter in respect of which the shareholder would have been entitled to submit a proposal pursuant to the provisions of the Business Corporations Act or at the discretion of the chair of the meeting. The chair of the meeting will have the power and duty to determine whether a nomination was made in accordance with the provisions of this Article 10.9 and, if any proposed nomination is not in compliance with such foregoing provisions, to declare that such defective nomination will be disregarded.

 

(g)

For purposes of this Article 10.9:

 

  (i)

“Affiliate”, when used to indicate a relationship with a specific person, shall mean a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified person;

 

  (ii)

“Applicable Securities Laws” means the applicable securities legislation in the United States and each relevant province and territory of Canada, as amended from time to time, the rules, regulations and forms made or promulgated under any such statute and the published national instruments, multilateral instruments, policies, bulletins and notices of the securities commission and similar regulatory authority of the United States and each province and territory of Canada;

 

  (iii)

“Associate”, when used to indicate a relationship with a specified person, shall mean (i) any body corporate or trust of which such person beneficially owns, directly or indirectly, voting securities carrying more than 10% of the voting rights attached to all voting securities of such body corporate or trust for the time being outstanding, (ii) any partner of that person, (iii) any trust or estate in which such person has a substantial beneficial interest or as to which such person serves as trustee or in a similar capacity, (iv) a spouse of such specified person, (v) any person of either sex with whom such specified person is living in conjugal relationship outside marriage or (vi) any relative of such specified person or of a person mentioned in clauses (iv) or (v) of this definition if that relative has the same residence as the specified person;

 

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  (iv)

“beneficially owns” or “beneficially owned” means, in connection with the ownership of shares in the capital of the Company by a person, (i) any such shares as to which such person or any of such person’s Affiliates or Associates owns at law or in equity, or has the right to acquire or become the owner at law or in equity, where such right is exercisable immediately or after the passage of time and whether or not on condition or the happening of any contingency or the making of any payment, upon the exercise of any conversion right, exchange right or purchase right attaching to any securities, or pursuant to any agreement, arrangement, pledge or understanding whether or not in writing; (ii) any such shares as to which such person or any of such person’s Affiliates or Associates has the right to vote, or the right to direct the voting, where such right is exercisable immediately or after the passage of time and whether or not on condition or the happening of any contingency or the making of any payment, pursuant to any agreement, arrangement, pledge or understanding whether or not in writing; (iii) any such shares which are beneficially owned, directly or indirectly, by a Counterparty (or any of such Counterparty’s Affiliates or Associates) under any Derivatives Contract (without regard to any short or similar position under the same or any other Derivatives Contract) to which such person or any of such person’s Affiliates or Associates is a Receiving Party; provided, however that the number of shares that a person beneficially owns pursuant to this clause (iii) in connection with a particular Derivatives Contract shall not exceed the number of Notional Securities with respect to such Derivatives Contract; provided, further, that the number of securities owned beneficially by each Counterparty (including their respective Affiliates and Associates) under a Derivatives Contract shall for purposes of this clause be deemed to include all securities that are owned beneficially, directly or indirectly, by any other Counterparty (or any of such other Counterparty’s Affiliates or Associates) under any Derivatives Contract to which such first Counterparty (or any of such first Counterparty’s Affiliates or Associates) is a Receiving Party and this proviso shall be applied to successive Counterparties as appropriate; and (iv) any such shares which are owned beneficially within the meaning of this definition by any other person with whom such person is acting jointly or in concert with respect to the Company or any of its securities;

 

  (v)

“close of business” means 5:00 p.m. (Vancouver time) on a business day in British Columbia, Canada;

 

  (vi)

“Derivatives Contract” shall mean a contract between two parties (the “Receiving Party” and the “Counterparty”) that is designed to expose the Receiving Party to economic benefits and risks that correspond substantially to the ownership by the Receiving Party of a number of shares in the capital of the Company or securities convertible into such shares specified or referenced in such contract (the number corresponding to such economic benefits and risks, the “Notional Securities”), regardless of whether obligations under such contract are required or permitted to be settled through the delivery of cash, shares in the capital of the Company or securities convertible into such shares or other property, without regard to any short position under the same or any other Derivatives Contract; for the avoidance of doubt, interests in broad-based index options, broad-based index futures and broad-based publicly traded market baskets of stocks approved for trading by the appropriate governmental authority shall not be deemed to be Derivatives Contracts; and

 

  (vii)

“Public Announcement” means disclosure in a press release disseminated by a nationally recognized news service in Canada or in a document publicly filed by the Company with the US Securities and Exchange Commission or under its profile on the System of Electronic Document Analysis and Retrieval at www.sedarplus.com.

 

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(h)

Notwithstanding any other provision of these Articles, notice given to the secretary of the Company pursuant to this Article 10.9 may only be given by personal delivery, facsimile transmission or by email to the Company’s principal executive offices as set forth in the Company’s filings with the US Securities and Exchange Commission, and will be deemed to have been given and made only at the time it is served by personal delivery to the secretary of the Company at the registered office of the Company, sent by email (to the address above-mentioned) or sent by facsimile transmission (provided the receipt of confirmation of such transmission has been received); provided that if such delivery or electronic communication is made on a day which is not a business day or after the close of business on a day which is a business day, then such delivery or electronic communication will be deemed to have been on the subsequent day that is a business day.

 

(i)

All information to be provided in a timely notice pursuant to this Article 10.9 shall be provided as of the record date for determining shareholders entitled to vote at the meeting (if such date shall then have been publicly announced) and as of the date of such notice. The Nominating Shareholder shall update such information to the extent necessary so that it is true and correct as of the date that is 10 business days prior to the date of the meeting, or any adjournment or postponement thereof.

 

(j)

For the avoidance of doubt, this Article 10.9 shall be the exclusive means for any person to bring nominations for election to the board at or in connection with any annual general or special meeting of the shareholders of the Company.

 

(k)

Notwithstanding the provisions of this Article 10.9, the board may, in its sole discretion, waive any requirement in this Article 10.9.

 

11.

PROCEEDINGS AT MEETINGS OF SHAREHOLDERS

 

11.1

Special Business

At a meeting of shareholders, the following business is special business:

 

(a)

at a meeting of shareholders that is not an annual general meeting, all business is special business except business relating to the conduct of or voting at the meeting;

 

(b)

at an annual general meeting, all business is special business except for the following:

 

  (i)

business relating to the conduct of or voting at the meeting;

 

  (ii)

consideration of any financial statements of the Company presented to the meeting;

 

  (iii)

consideration of any reports of the directors or auditor;

 

  (iv)

the setting or changing of the number of directors;

 

  (v)

the election or appointment of directors;

 

  (vi)

the appointment of an auditor;

 

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  (vii)

the setting of the remuneration of an auditor;

 

  (viii)

business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution;

 

  (ix)

any other business which, under these Articles or the Business Corporations Act, may be transacted at a meeting of shareholders without prior notice of the business being given to the shareholders.

 

11.2

Special Majority

The majority of votes required for the Company to pass a special resolution at a meeting of shareholders is two-thirds of the votes cast on the resolution.

 

11.3

Quorum

Subject to the special rights or restrictions attached to the shares of any class or series of shares, the quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, one or more shareholders who, in the aggregate, hold at least 10% of the outstanding shares of the Company entitled to be voted at the meeting.

 

11.4

One Shareholder May Constitute Quorum

If there is only one shareholder entitled to vote at a meeting of shareholders:

 

(a)

the quorum is one person who is, or who represents by proxy, that shareholder; and

 

(b)

that shareholder, present in person or by proxy, may constitute the meeting.

 

11.5

Other Persons May Attend

The directors, the president (if any), the secretary (if any), the assistant secretary (if any), any lawyer for the Company, the auditor of the Company and any other persons invited by the directors are entitled to attend any meeting of shareholders, but if any of those persons does attend a meeting of shareholders, that person is not to be counted in the quorum and is not entitled to vote at the meeting unless that person is a shareholder or proxy holder entitled to vote at the meeting.

 

11.6

Requirement of Quorum

No business, other than the election of a chair of the meeting and the adjournment of the meeting, may be transacted at any meeting of shareholders unless a quorum of shareholders entitled to vote is present at the commencement of the meeting, but such quorum need not be present throughout the meeting.

 

11.7

Lack of Quorum

If, within one-half hour from the time set for the holding of a meeting of shareholders, a quorum is not present

 

(a)

in the case of a general meeting requisitioned by shareholders, the meeting is dissolved, and

 

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(b)

in the case of any other meeting of shareholders, the meeting stands adjourned to the same day in the next week at the same time and place.

 

11.8

Lack of Quorum at Succeeding Meeting

If, at the meeting to which the meeting referred to in Article 11.7(b) was adjourned, a quorum is not present within one-half hour from the time set for the holding of the meeting, the person or persons present and being, or representing by proxy, one or more shareholders entitled to attend and vote at the meeting constitute a quorum.

 

11.9

Chair

The following individual is entitled to preside as chair at a meeting of shareholders:

 

(a)

the chair of the board, if any;

 

(b)

if the chair of the board is absent or unwilling to act as chair of the meeting, the Vice-Chair of the Company, if any;

 

(c)

if the chair of the board and the Vice Chair of the Company, if any, are both absent or unwilling to act as chair of the meeting, the Chief Executive Officer of the Company, if any;

 

(d)

if the chair of the board, the Vice Chair of the Company, and the Chief Executive Officer of the Company, if any, are all absent or unwilling to act as chair of the meeting, the Chief Financial Officer of the Company, if any;

 

(e)

if the chair of the board, the Vice Chair of the Company, the Chief Executive Officer of the Company, and the Chief Financial Officer of the Company, if any, are all absent or unwilling to act as chair of the meeting, the General Counsel or Chief Legal Officer of the Company, if any.

 

11.10

Selection of Alternate Chair

If, at any meeting of shareholders, there is no individual present within 15 minutes after the time set for holding the meeting that is entitled, under Article 11.9, to act as chair of the meeting, or if all of the eligible individuals present are unwilling to act as chair of the meeting, the directors present may choose one of their number to be chair of the meeting, or if all of the directors present decline to take the chair or fail to so choose or if no director is present, the shareholders entitled to vote at the meeting who are present in person or by proxy may choose any individual present at the meeting to chair the meeting.

 

11.11

Adjournments

The chair of a meeting of shareholders may, and if so directed by the meeting must, adjourn the meeting from time to time and from place to place, but no business may be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

 

11.12

Notice of Adjourned Meeting

It is not necessary to give any notice of an adjourned meeting or of the business to be transacted at an adjourned meeting of shareholders except that, when a meeting is adjourned for 30 days or more, notice of the adjourned meeting must be given as in the case of the original meeting.

 

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11.13

Decisions by Show of Hands or Poll

Subject to the Business Corporations Act, every motion put to a vote at a meeting of shareholders will be decided on a show of hands unless a poll, before or on the declaration of the result of the vote by show of hands, is directed by the chair or demanded by at least one shareholder entitled to vote who is present in person or by proxy.

 

11.14

Declaration of Result

The chair of a meeting of shareholders must declare to the meeting the decision on every question in accordance with the result of the show of hands or the poll, as the case may be, and that decision must be entered in the minutes of the meeting. A declaration of the chair that a resolution is carried by the necessary majority or is defeated is, unless a poll is directed by the chair or demanded under Article 11.13, conclusive evidence without proof of the number or proportion of the votes recorded in favour of or against the resolution.

 

11.15

Motion Need Not be Seconded

No motion proposed at a meeting of shareholders need be seconded unless the chair of the meeting rules otherwise, and the chair of any meeting of shareholders is entitled to propose or second a motion.

 

11.16

Casting Vote

In case of an equality of votes, the chair of a meeting of shareholders does not, either on a show of hands or on a poll, have a second or casting vote in addition to the vote or votes to which the chair may be entitled as a shareholder.

 

11.17

Manner of Taking Poll

Subject to Article 11.8, if a poll is duly demanded at a meeting of shareholders:

 

(a)

the poll must be taken:

 

  (i)

at the meeting, or within seven days after the date of the meeting, as the chair of the meeting directs; and

 

  (ii)

in the manner, at the time and at the place that the chair of the meeting directs;

 

(b)

the result of the poll is deemed to be the decision of the meeting at which the poll is demanded; and

 

(c)

the demand for the poll may be withdrawn by the person who demanded it.

 

11.18

Demand for Poll on Adjournment

A poll demanded at a meeting of shareholders on a question of adjournment must be taken immediately at the meeting.

 

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11.19

Chair Must Resolve Dispute

In the case of any dispute as to the admission or rejection of a vote given on a poll, the chair of the meeting must determine the dispute, and their determination made in good faith is final and conclusive.

 

11.20

Casting of Votes

On a poll, a shareholder entitled to more than one vote need not cast all the votes in the same way.

 

11.21

Demand for Poll

No poll may be demanded in respect of the vote by which a chair of a meeting of shareholders is elected.

 

11.22

Demand for Poll Not to Prevent Continuance of Meeting

The demand for a poll at a meeting of shareholders does not, unless the chair of the meeting so rules, prevent the continuation of a meeting for the transaction of any business other than the question on which a poll has been demanded.

 

11.23

Retention of Ballots and Proxies

The Company must, for at least three months after a meeting of shareholders, keep each ballot cast on a poll and each proxy voted at the meeting, and, during that period, make them available for inspection during normal business hours by any shareholder or proxyholder entitled to vote at the meeting. At the end of such three month period, the Company may destroy such ballots and proxies.

 

12.

VOTES OF SHAREHOLDERS

 

12.1

Number of Votes by Shareholder or by Shares

Subject to any special rights or restrictions attached to any shares and to the restrictions imposed on joint shareholders under Article 12.3:

 

(a)

on a vote by show of hands every person present who is a shareholder or proxy holder and entitled to vote on the matter has one vote; and

 

(b)

on a poll, every shareholder entitled to vote on the matter has one vote in respect of each share entitled to be voted on the matter and held by that shareholder and may exercise that vote either in person or by proxy.

 

12.2

Votes of Persons in Representative Capacity

A person who is not a shareholder may vote at a meeting of shareholders, whether on a show of hands or on a poll, and may appoint a proxy holder to act at the meeting, if, before doing so, the person satisfies the chair of the meeting, or the directors, that the person is a legal personal representative or a trustee in bankruptcy for a shareholder who is entitled to vote at the meeting.

 

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12.3

Votes by Joint Holders

If there are joint shareholders registered in respect of any share:

 

(a)

any one of the joint shareholders may vote at any meeting, either personally or by proxy, in respect of the share as if that joint shareholder were solely entitled to it; or

 

(b)

if more than one of the joint shareholders is present at any meeting, personally or by proxy, and more than one of them votes in respect of that share, then only the vote of the joint shareholder present whose name stands first on the central securities register in respect of the share will be counted.

 

12.4

Legal Personal Representatives as Joint Shareholders

Two or more legal personal representatives of a shareholder in whose sole name any share is registered are, for the purposes of Article 12.3, deemed to be joint shareholders.

 

12.5

Representative of a Corporate Shareholder

If a corporation, that is not a subsidiary of the Company, is a shareholder, that corporation may appoint a person to act as its representative at any meeting of shareholders of the Company, and:

 

(a)

for that purpose, the instrument appointing a representative must:

 

  (i)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice for the receipt of proxies, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

 

  (ii)

be provided at the meeting to the chair of the meeting or to a person designated by the chair of the meeting;

 

(b)

if a representative is appointed under this Article 12.5:

 

  (i)

the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a shareholder who is an individual, including, without limitation, the right to appoint a proxy holder; and

 

  (ii)

the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a shareholder present in person at the meeting.

Evidence of the appointment of any such representative may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

 

12.6

When Proxy Provisions Do Not Apply to the Company

If and for so long as the Company is a public company, Articles 12.7 to 12.15 apply only insofar as they are not inconsistent with the Business Corporations Act, Applicable Securities Laws, or any rules of an exchange on which securities of the Company are listed.

 

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12.7

Appointment of Proxy Holders

Every shareholder of the Company, including a corporation that is a shareholder but not a subsidiary of the Company, entitled to vote at a meeting of shareholders of the Company may, by proxy, appoint one or more (but not more than five) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.

 

12.8

Alternate Proxy Holders

A shareholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.

 

12.9

When Proxy Holder Need Not Be Shareholder

A person must not be appointed as a proxy holder unless the person is a shareholder, although a person who is not a shareholder may be appointed as a proxy holder if:

 

(a)

the person appointing the proxy holder is a corporation or a representative of a corporation appointed under Article 12.5;

 

(b)

the Company has at the time of the meeting for which the proxy holder is to be appointed only one shareholder entitled to vote at the meeting; or

 

(c)

the shareholders present in person or by proxy at and entitled to vote at the meeting for which the proxy holder is to be appointed, by a resolution on which the proxy holder is not entitled to vote but in respect of which the proxy holder is to be counted in the quorum, permit the proxy holder to attend and vote at the meeting.

 

12.10

Deposit of Proxy

A proxy for a meeting of shareholders must:

 

(a)

be received at the registered office of the Company or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, two business days before the day set for the holding of the meeting; or

 

(b)

unless the notice provides otherwise, be provided at the meeting to the chair of the meeting or to a person designated by the chair of the meeting.

A proxy may be sent to the Company by written instrument, fax or any other method of transmitting legibly recorded messages.

 

12.11

Validity of Proxy Vote

A vote given in accordance with the terms of a proxy is valid notwithstanding the death or incapacity of the shareholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:

 

(a)

at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

 

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(b)

by the chair of the meeting, before the vote is taken.

 

12.12

Form of Proxy

A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:

(NAME OF COMPANY)

(the “Company”)

 

The undersigned, being a shareholder of the Company, hereby appoints [ name ] or, failing that person, [ name ], as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of shareholders of the Company to be held on [ month, day, year ] and at any adjournment of that meeting.

Number of shares in respect of which this proxy is given (if no number is specified, then this proxy if given in respect of all shares registered in the name of the shareholder):          

 

Signed [month, day, year]

[Signature of shareholder]

[Name of shareholder—printed]

 

12.13

Revocation of Proxy

Subject to Article 12.14, every proxy may be revoked by an instrument in writing that is:

 

(a)

received at the registered office of the Company at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used; or

 

(b)

provided, at the meeting, to the chair of the meeting.

 

12.14

Revocation of Proxy Must Be Signed

An instrument referred to in Article 12.13 must be signed as follows:

 

(a)

if the shareholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the shareholder or their legal personal representative or trustee in bankruptcy; or

 

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(b)

if the shareholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Article 12.5.

 

12.15

Production of Evidence of Authority to Vote

The chair of any meeting of shareholders may, but need not, inquire into the authority of any person to vote at the meeting and may, but need not, demand from that person production of evidence as to the existence of the authority to vote.

 

13.

DIRECTORS

 

13.1

First Directors; Number of Directors

The first directors are the persons designated as directors of the Company in the Notice of Articles that applies to the Company when it is recognized under the Business Corporations Act. The number of directors, excluding additional directors appointed under Article 14.8, is set at:

 

(a)

subject to Articles 13.1(b) and 13.1(c), the number of directors that is equal to the number of the Company’s first directors;

 

(b)

if the Company is a public company, the greater of three and the most recently set of:

 

  (i)

the number of directors set by directors’ resolution;

 

  (ii)

the number of directors set under Article 14.4; and

 

(c)

if the Company is not a public company, the greater of one and the most recently set of:

 

  (i)

the number of directors set by directors’ resolution; and

 

  (ii)

the number of directors set under Article 14.4.

 

13.2

Change in Number of Directors

If the number of directors is set under Article 13.1(b)(i) or 13.1(c)(i):

 

(a)

the shareholders may elect or appoint the directors needed to fill any vacancies in the board of directors up to that number; and

 

(b)

if the shareholders do not elect or appoint the directors needed to fill any vacancies in the board of directors up to that number, then the directors may appoint, or the shareholders may elect or appoint, directors to fill those vacancies.

 

13.3

Directors’ Acts Valid Despite Vacancy

An act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these Articles is in office.

 

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13.4

Qualifications of Directors

A director is not required to hold a share of the Company as qualification for their office but must be qualified as required by the Business Corporations Act to become, act or continue to act as a director.

 

13.5

Remuneration of Directors

The directors are entitled to the remuneration for acting as directors, if any, as the directors may from time to time determine. If the directors so decide, the remuneration of the directors, if any, will be determined by the shareholders. That remuneration may be in addition to any salary or other remuneration paid to any officer or employee of the Company as such, who is also a director,

 

13.6

Reimbursement of Expenses of Directors

The Company must reimburse each director for the reasonable expenses that they may incur in and about the business of the Company.

 

13.7

Special Remuneration for Directors

If any director performs any professional or other services for the Company that in the opinion of the directors are outside the ordinary duties of a director, or if any director is otherwise specially occupied in or about the Company’s business, they may be paid remuneration fixed by the directors, or, at the option of that director, fixed by ordinary resolution, and such remuneration may be either in addition to, or in substitution for, any other remuneration that they may be entitled to receive.

 

13.8

Gratuity, Pension or Allowance on Retirement of Director

Unless otherwise determined by ordinary resolution, the directors on behalf of the Company may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the Company or to their spouse or dependants and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.

 

14.

ELECTION AND REMOVAL OF DIRECTORS

 

14.1

Election at Annual General Meeting

At every annual general meeting and in every unanimous resolution contemplated by Article 10.2:

 

(a)

the shareholders entitled to vote at the annual general meeting for the election of directors may elect, or in the unanimous resolution appoint, a board of directors consisting of the number of directors for the time being set under these Articles; and

 

(b)

all the directors cease to hold office immediately before the election or appointment of directors under Article 14.1(b), but are eligible for re-election or re-appointment.

 

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14.2

Consent to be a Director

No election, appointment or designation of an individual as a director is valid unless:

 

(a)

that individual consents to be a director in the manner provided for in the Business Corporations Act;

 

(b)

that individual is elected or appointed at a meeting at which the individual is present and the individual does not refuse, at the meeting, to be a director; or

 

(c)

with respect to first directors, the designation is otherwise valid under the Business Corporations Act.

 

14.3

Failure to Elect or Appoint Directors

If:

 

(a)

the Company fails to hold an annual general meeting, and all the shareholders who are entitled to vote at an annual general meeting fail to pass the unanimous resolution contemplated by Article 10.2, on or before the date by which the annual general meeting is required to be held under the Business Corporations Act; or

 

(b)

the shareholders fail, at the annual general meeting or in the unanimous resolution contemplated by Article 10.2, to elect or appoint any directors;

then each director then in office continues to hold office until the earlier of:

 

(c)

the date on which their successor is elected or appointed; and

 

(d)

the date on which they otherwise ceases to hold office under the Business Corporations Act or these Articles.

 

14.4

Places of Retiring Directors Not Filled

If, at any meeting of shareholders at which there should be an election of directors, the places of any of the retiring directors are not filled by that election, those retiring directors who are not re-elected and who are asked by the newly elected directors to continue in office will, if willing to do so, continue in office to complete the number of directors for the time being set pursuant to these Articles until further new directors are elected at a meeting of shareholders convened for that purpose. If any such election or continuance of directors does not result in the election or continuance of the number of directors for the time being set pursuant to these Articles, the number of directors of the Company is deemed to be set at the number of directors actually elected or continued in office.

 

14.5

Directors May Fill Casual Vacancies

Any casual vacancy occurring in the board of directors may be filled by the directors.

 

14.6

Remaining Directors Power to Act

The directors may act notwithstanding any vacancy in the board of directors, but if the Company has fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of shareholders for the purpose of filling any vacancies on the board of directors or, subject to the Business Corporations Act, for any other purpose.

 

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14.7

Shareholders May Fill Vacancies

If the Company has no directors or fewer directors in office than the number set pursuant to these Articles as the quorum of directors, the shareholders may elect or appoint directors to fill any vacancies on the board of directors.

 

14.8

Additional Directors

Notwithstanding Articles 13.1 and 13.2, between annual general meetings or unanimous resolutions contemplated by Article 10.2, the directors may appoint one or more additional directors, but the number of additional directors appointed under this Article 14.8 must not at any time exceed:

 

(a)

one-third of the number of first directors, if, at the time of the appointments, one or more of the first directors have not yet completed their first term of office; or

 

(b)

in any other case, one-third of the number of the current directors who were elected or appointed as directors other than under this Article 14.8.

Any director so appointed ceases to hold office immediately before the next election or appointment of directors under Article 14.1(a), but is eligible for re-election or re-appointment.

 

14.9

Ceasing to be a Director

A director ceases to be a director when:

 

(a)

the term of office of the director expires;

 

(b)

the director dies;

 

(c)

the director resigns as a director by notice in writing provided to the Company or a lawyer for the Company; or

 

(d)

the director is removed from office pursuant to Articles 14.10 or 14.11.

 

14.10

Removal of Director by Shareholders

The Company may remove any director before the expiration of their term of office by special resolution. In that event, the shareholders may elect, or appoint by ordinary resolution, a director to fill the resulting vacancy. If the shareholders do not elect or appoint a director to fill the resulting vacancy contemporaneously with the removal, then the directors may appoint or the shareholders may elect, or appoint by ordinary resolution, a director to fill that vacancy.

 

14.11

Removal of Director by Directors

The directors may remove any director before the expiration of their term of office if the director is convicted of an indictable offence, or if the director ceases to be qualified to act as a director of a company and does not promptly resign, and the directors may appoint a director to fill the resulting vacancy.

 

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15.

POWERS AND DUTIES OF DIRECTORS

 

15.1

Powers of Management

The directors must, subject to the Business Corporations Act and these Articles, manage or supervise the management of the business and affairs of the Company and have the authority to exercise all such powers of the Company as are not, by the Business Corporations Act or by these Articles, required to be exercised by the shareholders of the Company.

 

15.2

Appointment of Attorney of Company

The directors may from time to time, by power of attorney or other instrument, under seal if so required by law, appoint any person to be the attorney of the Company for such purposes, and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the directors under these Articles and excepting the power to fill vacancies in the board of directors, to remove a director, to change the membership of, or fill vacancies in, any committee of the directors, to appoint or remove officers appointed by the directors and to declare dividends) and for such period, and with such remuneration and subject to such conditions as the directors may think fit. Any such power of attorney may contain such provisions for the protection or convenience of persons dealing with such attorney as the directors think fit. Any such attorney may be authorized by the directors to sub-delegate all or any of the powers, authorities and discretions for the time being vested in him or her.

 

16.

DISCLOSURE OF INTEREST OF DIRECTORS

 

16.1

Obligation to Account for Profits

A director or senior officer who holds a disclosable interest (as that term is used in the Business Corporations Act) in a contract or transaction into which the Company has entered or proposes to enter is liable to account to the Company for any profit that accrues to the director or senior officer under or as a result of the contract or transaction only if and to the extent provided in the Business Corporations Act.

 

16.2

Restrictions on Voting by Reason of Interest

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter is not entitled to vote on any directors’ resolution to approve that contract or transaction, unless all the directors have a disclosable interest in that contract or transaction, in which case any or all of those directors may vote on such resolution.

 

16.3

Interested Director Counted in Quorum

A director who holds a disclosable interest in a contract or transaction into which the Company has entered or proposes to enter and who is present at the meeting of directors at which the contract or transaction is considered for approval may be counted in the quorum at the meeting whether or not the director votes on any or all of the resolutions considered at the meeting.

 

16.4

Disclosure of Conflict of Interest or Property

A director or senior officer who holds any office or possesses any property, right or interest that could result, directly or indirectly, in the creation of a duty or interest that materially conflicts with that individual’s duty or interest as a director or senior officer, must disclose the nature and extent of the conflict as required by the Business Corporations Act.

 

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16.5

Director Holding Other Office in the Company

A director may hold any office or place of profit with the Company, other than the office of auditor of the Company, in addition to their office of director for the period and on the terms (as to remuneration or otherwise) that the directors may determine.

 

16.6

No Disqualification

No director or intended director is disqualified by their office from contracting with the Company either with regard to the holding of any office or place of profit the director holds with the Company or as vendor, purchaser or otherwise, and no contract or transaction entered into by or on behalf of the Company in which a director is in any way interested is liable to be voided for that reason.

 

16.7

Professional Services by Director or Officer

Subject to the Business Corporations Act, a director or officer, or any person in which a director or officer has an interest, may act in a professional capacity for the Company, except as auditor of the Company, and the director or officer or such person is entitled to remuneration for professional services as if that director or officer were not a director or officer.

 

16.8

Director or Officer in Other Corporations

A director or officer may be or become a director, officer or employee of, or otherwise interested in, any person in which the Company may be interested as a shareholder or otherwise, and, subject to the Business Corporations Act, the director or officer is not accountable to the Company for any remuneration or other benefits received by him or her as director, officer or employee of, or from their interest in, such other person.

 

17.

PROCEEDINGS OF DIRECTORS

 

17.1

Meetings of Directors

The directors may meet together for the conduct of business, adjourn and otherwise regulate their meetings as they think fit, and meetings of the directors held at regular intervals may be held at the place, at the time and on the notice, if any, as the directors may from time to time determine.

 

17.2

Voting at Meetings

Questions arising at any meeting of directors are to be decided by a majority of votes and, in the case of an equality of votes, the chair of the meeting does not have a second or casting vote.

 

17.3

Chair of Meetings

The following individual is entitled to preside as chair at a meeting of directors if such individual is a duly appointed or elected director of the Company:

 

(a)

the chair of the board, if any;

 

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(b)

if the chair of the board is absent or unwilling to act as chair of the meeting, the Vice-Chair of the Company, if any;

 

(c)

if the chair of the board and the Vice Chair of the Company, if any, are both absent or unwilling to act as chair of the meeting, the Chief Executive Officer of the Company, if any;

 

(d)

if the chair of the board, the Vice Chair of the Company, and the Chief Executive Officer of the Company, if any, are all absent or unwilling to act as chair of the meeting, the Chief Financial Officer of the Company, if any;

 

(e)

if the chair of the board, the Vice Chair of the Company, the Chief Executive Officer of the Company, and the Chief Financial Officer of the Company, if any, are all absent or unwilling to act as chair of the meeting, the General Counsel or Chief Legal Officer of the Company, if any;

 

(f)

if the chair of the board, the Vice Chair of the Company, the Chief Executive Officer of the Company, the Chief Financial Officer of the Company, and the General Counsel or Chief Legal Officer of the Company, if any, are all absent or unwilling to act as chair of the meeting, any other director chosen by the directors present.

 

17.4

Meetings by Telephone or Other Communications Medium

A director may participate in a meeting of the directors or of any committee of the directors in person or by telephone or other communications medium if all directors participating in the meeting, whether in person or by telephone or other communications medium, are able to communicate with each other. A director who participates in a meeting in a manner contemplated by this Article 17.4 is deemed for all purposes of the Business Corporations Act and these Articles to be present at the meeting and to have agreed to participate in that manner. Meetings of the board of directors may be held as electronic meetings.

 

17.5

Calling of Meetings

A director may, and the secretary or an assistant secretary of the Company, if any, on the request of a director must, call a meeting of the directors at any time.

 

17.6

Notice of Meetings

Other than for meetings held at regular intervals as determined by the directors pursuant to Article 17.1, reasonable notice of each meeting of the directors, specifying the place, day and time of that meeting must be given to each of the directors by any method set out in Article 24.1 or orally or by telephone.

 

17.7

When Notice Not Required

It is not necessary to give notice of a meeting of the directors to a director if:

 

(a)

the meeting is to be held immediately following a meeting of shareholders at which that director was elected or appointed, or is the meeting of the directors at which that director is appointed; or

 

(b)

the director, as the case may be, has waived notice of the meeting.

 

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17.8

Meeting Valid Despite Failure to Give Notice

The accidental omission to give notice of any meeting of directors to, or the non-receipt of any notice by, any director, does not invalidate any proceedings at that meeting.

 

17.9

Waiver of Notice of Meetings

Any director may send to the Company a document signed by him or her waiving notice of any past, present or future meeting or meetings of the directors and may at any time withdraw that waiver with respect to meetings held after that withdrawal. After sending a waiver with respect to all future meetings and until that waiver is withdrawn, no notice of any meeting of the directors need be given to that director and, unless the director otherwise requires by notice in writing to the Company and all meetings of the directors so held are deemed not to be improperly called or constituted by reason of notice not having been given to such director.

 

17.10

Quorum

The quorum necessary for the transaction of the business of the directors may be set by the directors and, if not so set, is deemed to be set at a majority of the board of directors or, if the number of directors is set at one, is deemed to be set at one director, and that director may constitute a meeting.

 

17.11

Validity of Acts Where Appointment Defective

Subject to the Business Corporations Act, an act of a director or officer is not invalid merely because of an irregularity in the election or appointment or a defect in the qualification of that director or officer.

 

17.12

Consent Resolutions in Writing

A resolution of the directors or of any committee of the directors consented to in writing by all of the directors entitled to vote on it, whether by signed document, fax, email or any other method of transmitting legibly recorded messages, is as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors duly called and held. Such resolution may be in two or more counterparts which together are deemed to constitute one resolution in writing. A resolution passed in that manner is effective on the date stated in the resolution or on the latest date stated on any counterpart. A resolution of the directors or of any committee of the directors passed in accordance with this Article 17.12 is deemed to be a proceeding at a meeting of directors or of the committee of the directors and to be as valid and effective as if it had been passed at a meeting of the directors or of the committee of the directors that satisfies all the requirements of the Business Corporations Act and all the requirements of these Articles relating to meetings of the directors or of a committee of the directors.

 

18.

EXECUTIVE AND OTHER COMMITTEES

 

18.1

Appointment and Powers of Executive Committee

The directors may, by resolution, appoint an executive committee consisting of the director or directors that they consider appropriate, and this committee has, during the intervals between meetings of the board of directors, all of the directors’ powers, except:

 

(a)

the power to fill vacancies in the board of directors;

 

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(b)

the power to remove a director;

 

(c)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

 

(d)

such other powers, if any, as may be set out in the resolution or any subsequent directors’ resolution.

 

18.2

Appointment and Powers of Other Committees

The directors may, by resolution:

 

(a)

appoint one or more committees (other than the executive committee) consisting of the director or directors that they consider appropriate;

 

(b)

delegate to a committee appointed under Article 18.2(a) any of the directors’ powers, except:

 

  (i)

the power to fill vacancies in the board of directors;

 

  (ii)

the power to remove a director;

 

  (iii)

the power to change the membership of, or fill vacancies in, any committee of the directors; and

 

  (iv)

the power to appoint or remove officers appointed by the directors; and

 

(c)

make any delegation referred to in Article 18.2(b) subject to the conditions set out in the resolution or any subsequent directors’ resolution.

 

18.3

Obligations of Committees

Any committee appointed under Articles 18.1 or 18.2, in the exercise of the powers delegated to it, must:

 

(a)

conform to any rules that may from time to time be imposed on it by the directors; and

 

(b)

report every act or thing done in exercise of those powers at such times as the directors may require.

 

18.4

Powers of Board

The directors may, at any time, with respect to a committee appointed under Articles 18.1 or 18.2:

 

(a)

revoke or alter the authority given to the committee, or override a decision made by the committee, except as to acts done before such revocation, alteration or overriding;

 

(b)

terminate the appointment of, or change the membership of, the committee; and

 

(c)

fill vacancies in the committee.

 

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18.5

Committee Meetings

Subject to Article 18.3(a) and unless the directors otherwise provide in the resolution appointing the committee or in any subsequent resolution, with respect to a committee appointed under Articles 18.1 or 18.2:

 

(a)

the committee may meet and adjourn as it thinks proper;

 

(b)

the committee may elect a chair of its meetings but, if no chair of a meeting is elected, or if at a meeting the chair of the meeting is not present within 15 minutes after the time set for holding the meeting, the directors present who are members of the committee may choose one of their number to chair the meeting;

 

(c)

a majority of the members of the committee constitutes a quorum of the committee; and

 

(d)

questions arising at any meeting of the committee are determined by a majority of votes of the members present, and in case of an equality of votes, the chair of the meeting does not have a second or casting vote.

 

19.

OFFICERS

 

19.1

Directors May Appoint Officers

The directors may, from time to time, appoint such officers, if any, as the directors determine and the directors may, at any time, terminate any such appointment.

 

19.2

Functions, Duties and Powers of Officers

The directors may, for each officer:

 

(a)

determine the functions and duties of the officer;

 

(b)

entrust to and confer on the officer any of the powers exercisable by the directors on such terms and conditions and with such restrictions as the directors think fit; and

 

(c)

revoke, withdraw, alter or vary all or any of the functions, duties and powers of the officer.

 

19.3

Qualifications

No officer may be appointed unless that officer is qualified in accordance with the Business Corporations Act. One person may hold more than one position as an officer of the Company. Any person appointed as the chair of the board or as the managing director must be a director. Any other officer need not be a director.

 

19.4

Remuneration and Terms of Appointment

All appointments of officers are to be made on the terms and conditions and at the remuneration (whether by way of salary, fee, commission, participation in profits or otherwise) that the directors think fit and are subject to termination at the pleasure of the directors, and an officer may in addition to such remuneration be entitled to receive, after they cease to hold such office or leave the employment of the Company, a pension or gratuity.

 

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20.

INDEMNIFICATION

 

20.1

Definitions

In this Article 20:

 

(a)

“eligible penalty” means a judgment, penalty or fine awarded or imposed in, or an amount paid in settlement of, an eligible proceeding;

 

(b)

“eligible proceeding” means a legal proceeding or investigative action, whether current, threatened, pending or completed, in which a director, officer, former director or former officer of the Company (an “eligible party”) or any of the heirs and legal personal representatives of the eligible party, by reason of the eligible party being or having been a director or officer of the Company:

 

  (i)

is or may be joined as a party; or

 

  (ii)

is or may be liable for or in respect of a judgment, penalty or fine in, or expenses related to, the proceeding;

 

(c)

“expenses” has the meaning set out in the Business Corporations Act.

 

20.2

Mandatory Indemnification of Directors, Officers, Former Officers and Former Directors

Subject to the Business Corporations Act, the Company must indemnify a director, officer, former director and former officer of the Company and his or her heirs and legal personal representatives against all eligible penalties to which such person is or may be liable, and the Company must, after the final disposition of an eligible proceeding, pay the expenses actually and reasonably incurred by such person in respect of that proceeding. Each director and officer is deemed to have contracted with the Company on the terms of the indemnity contained in this Article 20.2.

 

20.3

Indemnification of Other Persons

Subject to any restrictions in the Business Corporations Act, the Company may indemnify any person.

 

20.4

Non-Compliance with Business Corporations Act

The failure of a director or officer of the Company to comply with the Business Corporations Act or these Articles does not invalidate any indemnity to which he or she is entitled under this Part.

 

20.5

Company May Purchase Insurance

The Company may purchase and maintain insurance for the benefit of any person (or his or her heirs or legal personal representatives) who:

 

(a)

is or was a director, officer, employee or agent of the Company;

 

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(b)

is or was a director, officer, employee or agent of a corporation at a time when the corporation is or was an Affiliate of the Company;

 

(c)

at the request of the Company, is or was a director, officer, employee or agent of a corporation or of a partnership, trust, joint venture or other unincorporated entity; or

 

(d)

at the request of the Company, holds or held a position equivalent to that of a director or officer of a partnership, trust, joint venture or other unincorporated entity;

against any liability incurred by him or her as such director, officer, employee or agent or person who holds or held such equivalent position.

 

20.6

Transitionary requirement to advance expenses

 

(a)

This Article 20.6 will apply for six (6) years from the date the Company first adopts this Article 20.6 in its Articles, and will expire and cease to be of force or effect as a term of the Company’s Articles on the day following the six (6) year anniversary of the date the Company first adopts this Article 20.6 in its Articles.

 

(b)

Subject to the Business Corporations Act, the Company must pay, as they are incurred in advance of a final disposition of an eligible proceeding, the expenses actually and reasonably incurred by an eligible party for whom the Company is obligated or has elected to indemnify pursuant to these Articles in respect of that proceeding if the Company has first received from the eligible party a written undertaking that, if it is ultimately determined that the payment of expenses is prohibited by the Business Corporations Act, the eligible party will repay the amounts advanced.

 

(c)

Neither any amendment nor repeal of this Article 20.6, nor the adoption by amendment of these Articles of any provision inconsistent with this Article 20.6, will eliminate or reduce the effect of this Article 20.6 in respect of any matter occurring, or any action or proceeding accruing or arising prior to such amendment or repeal or adoption of an inconsistent provision.

 

21.

DIVIDENDS

 

21.1

Payment of Dividends Subject to Special Rights and Restrictions

The provisions of this Article 21 are subject to the rights, if any, of shareholders holding shares with special rights as to dividends.

 

21.2

Declaration of Dividends

Subject to the Business Corporations Act, the directors may from time to time declare and authorize payment of such dividends as they may deem advisable.

 

21.3

No Notice Required

The directors need not give notice to any shareholder of any declaration under Article 21.2.

 

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21.4

Record Date

The directors may set a date as the record date for the purpose of determining shareholders entitled to receive payment of a dividend. The record date must not precede the date on which the dividend is to be paid by more than two months. If no record date is set, the record date is 5 p.m. on the date on which the directors pass the resolution declaring the dividend.

 

21.5

Manner of Paying Dividend

A resolution declaring a dividend may direct payment of the dividend wholly or partly by the distribution of specific assets or of fully paid shares or of bonds, debentures or other securities of the Company, or in any one or more of those ways.

 

21.6

Settlement of Difficulties

If any difficulty arises in regard to a distribution under Article 21.5, the directors may settle the difficulty as they deem advisable, and, in particular, may:

 

(a)

set the value for distribution of specific assets;

 

(b)

determine that cash payments in substitution for all or any part of the specific assets to which any shareholders are entitled may be made to any shareholders on the basis of the value so fixed in order to adjust the rights of all parties; and

 

(c)

vest any such specific assets in trustees for the persons entitled to the dividend.

 

21.7

When Dividend Payable

Any dividend may be made payable on such date as is fixed by the directors.

 

21.8

Dividends to be Paid in Accordance with Number of Shares

All dividends on shares of any class or series of shares must be declared and paid according to the number of such shares held.

 

21.9

Receipt by Joint Shareholders

If several persons are joint shareholders of any share, any one of them may give an effective receipt for any dividend, bonus or other money payable in respect of the share.

 

21.10

Dividend Bears No Interest

No dividend bears interest against the Company.

 

21.11

Fractional Dividends

If a dividend to which a shareholder is entitled includes a fraction of the smallest monetary unit of the currency of the dividend, that fraction may be disregarded in making payment of the dividend and that payment represents full payment of the dividend.

 

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21.12

Payment of Dividends

Any dividend or other distribution payable in cash in respect of shares may be paid by cheque, made payable to the order of the person to whom it is sent, and mailed to the address of the shareholder, or in the case of joint shareholders, to the address of the joint shareholder who is first named on the central securities register, or to the person and to the address the shareholder or joint shareholders may direct in writing. The mailing of such cheque will, to the extent of the sum represented by the cheque (plus the amount of the tax required by law to be deducted), discharge all liability for the dividend unless such cheque is not paid on presentation or the amount of tax so deducted is not paid to the appropriate taxing authority.

 

21.13

Capitalization of Surplus

Notwithstanding anything contained in these Articles, the directors may from time to time capitalize any surplus of the Company and may from time to time issue, as fully paid, shares or any bonds, debentures or other securities of the Company as a dividend representing the surplus or any part of the surplus.

 

22.

DOCUMENTS, RECORDS AND REPORTS

 

22.1

Recording of Financial Affairs

The directors must cause adequate accounting records to be kept to record properly the financial affairs and condition of the Company and to comply with the Business Corporations Act.

 

22.2

Inspection of Accounting Records

Unless the directors determine otherwise, or unless otherwise determined by ordinary resolution, no shareholder of the Company is entitled to inspect or obtain a copy of any accounting records of the Company.

 

22.3

Remuneration of Auditor

The directors may set the remuneration of the Company’s auditor (if any).

 

23.

NOTICES

 

23.1

Method of Giving Notice

Unless the Business Corporations Act or these Articles provides otherwise, a notice, statement, report or other record required or permitted by the Business Corporations Act or these Articles to be sent by or to a person may be sent by any one of the following methods:

 

(a)

mail addressed to the person at the applicable address for that person as follows:

 

  (i)

for a record mailed to a shareholder, the shareholder’s registered address;

 

  (ii)

for a record mailed to a director or officer, the prescribed address for mailing shown for the director or officer in the records kept by the Company or the mailing address provided by the recipient for the sending of that record or records of that class; and

 

  (iii)

in any other case, the mailing address of the intended recipient;

 

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(b)

delivery at the applicable address for that person as follows, addressed to the person:

 

  (i)

for a record delivered to a shareholder, the shareholder’s registered address;

 

  (ii)

for a record delivered to a director or officer, the prescribed address for delivery shown for the director or officer in the records kept by the Company or the delivery address provided by the recipient for the sending of that record or records of that class; and

 

  (iii)

in any other case, the delivery address of the intended recipient;

 

(c)

sending the record by fax to the fax number provided by the intended recipient for the sending of that record or records of that class;

 

(d)

sending the record by email to the email address provided by the intended recipient for the sending of that record or records of that class; or

 

(e)

physical delivery to the intended recipient.

 

23.2

Deemed Receipt of Mailing

A record that is mailed to a person by ordinary mail to the applicable address for that person referred to in Article 23.1 is deemed to be received by the person to whom it was mailed on the day, Saturdays, Sundays and holidays excepted, following the date of mailing.

 

23.3

Certificate of Sending

A certificate signed by the secretary, if any, or other officer of the Company or of any other corporation acting in that behalf for the Company stating that a notice, statement, report or other record was addressed as required by Article 23.1, prepaid and mailed or otherwise sent as permitted by Article 23.1 is conclusive evidence of that fact.

 

23.4

Notice to Joint Shareholders

A notice, statement, report or other record may be provided by the Company to the joint shareholders of a share by providing the notice to the joint shareholder first named in the central securities register in respect of the share.

 

23.5

Notice to Trustees

A notice, statement, report or other record may be provided by the Company to the persons entitled to a share in consequence of the death, bankruptcy or incapacity of a shareholder by:

 

(a)

mailing the record, addressed to them:

 

  (i)

by name, by the title of the legal personal representative of the deceased or incapacitated shareholder, by the title of trustee of the bankrupt shareholder or by any similar description; and

 

  (ii)

at the address, if any, supplied to the Company for that purpose by the persons claiming to be so entitled; or

 

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(b)

if an address referred to in Article 23.5(a)(ii) has not been supplied to the Company, by giving the notice in a manner in which it might have been given if the death, bankruptcy or incapacity had not occurred.

 

24.

SEAL

 

24.1

Who May Attest Seal

Except as provided in Articles 24.2 and 24.3, the Company’s seal, if any, must not be impressed on any record except when that impression is attested by the signatures of:

 

(a)

any two directors;

 

(b)

any officer, together with any director;

 

(c)

if the Company only has one director, that director; or

 

(d)

any one or more directors or officers or persons as may be determined by the directors.

 

24.2

Sealing Copies

For the purpose of certifying under seal a certificate of incumbency of the directors or officers of the Company or a true copy of any resolution or other document, despite Article 24.1, the impression of the seal may be attested by the signature of any director or officer.

 

24.3

Mechanical Reproduction of Seal

The directors may authorize the seal to be impressed by third parties on share certificates or bonds, debentures or other securities of the Company as they may determine appropriate from time to time. To enable the seal to be impressed on any share certificates or bonds, debentures or other securities of the Company, whether in definitive or interim form, on which facsimiles of any of the signatures of the directors or officers of the Company are, in accordance with the Business Corporations Act or these Articles, printed or otherwise mechanically reproduced, there may be delivered to the person employed to engrave, lithograph or print such definitive or interim share certificates or bonds, debentures or other securities one or more unmounted dies reproducing the seal and the chair of the board or any senior officer together with the secretary, treasurer, secretary-treasurer, an assistant secretary, an assistant treasurer or an assistant secretary-treasurer may in writing authorize such person to cause the seal to be impressed on such definitive or interim share certificates or bonds, debentures or other securities by the use of such dies. Share certificates or bonds, debentures or other securities to which the seal has been so impressed are for all purposes deemed to be under and to bear the seal impressed on them.

 

25.

SPECIAL RIGHTS AND RESTRICTIONS OF PREFERENCE SHARES

 

25.1

Special Rights and Restrictions of Preference Shares, as a Class

The following special rights and restrictions shall be attached to the preference shares without par value:

 

(a)

The preference shares as a class shall have attached thereto the special rights and restrictions specified in this Article 25.1.

 

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(b)

Preference shares may at any time and from time to time be issued in one or more series. The directors may from time to time, by resolution passed before the issue of any preference shares of any particular series, alter the Notice of Articles of the Company to fix the number of preference shares in, and to determine the designation of the preference shares of, that series and alter the Articles to create, define and attach special rights and restrictions to the preference shares of that series, including, but without in any way limiting or restricting the generality of the foregoing, the rate or amount of dividends, whether cumulative, non-cumulative or partially cumulative, the dates, places and currencies of payment thereof, the consideration for, and the terms and conditions of, any purchase for cancellation or redemption thereof, including redemption after a fixed term or at a premium, conversion or exchange rights, the terms and conditions of any share purchase plan or sinking fund, the restrictions respecting payment of dividends on, or the repayment of capital in respect of, any other shares of the Company and voting rights and restrictions; but no special right or restriction so created, defined or attached shall contravene the provisions of clause (c) of this Article 25.1.

 

(c)

Holders of preference shares shall be entitled, on the distribution of assets of the Company or on the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, or on any other distribution of assets of the Company among its members for the purpose of winding up its affairs, to receive before any distribution shall be made to holders of common shares or any other shares of the Company ranking junior to the preference shares with respect to repayment of capital, the amount paid up with respect to each preference share held by them, plus any accrued and unpaid cumulative dividends (if any and if preferential) thereon. After payment to holders of preference shares of the amounts so payable to them, such holders shall not be entitled to share in any further distribution of the property or assets of the Company except as specifically provided in the special rights and restrictions attached to any particular series of the preference shares.

 

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Exhibit 4.1

EXECUTION VERSION

 

 
 

INDENTURE

Dated as of May 8, 2024

Among

LIONS GATE CAPITAL HOLDINGS 1, INC.,

THE GUARANTORS NAMED HEREIN

and

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

as Trustee

5.500% EXCHANGE NOTES DUE 2029

 

 
 

TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE

      1  

Section 1.01

   Definitions      1  

Section 1.02

   Other Definitions      41  

Section 1.03

   Rules of Construction      43  

Section 1.04

   Interpretation Matters      44  

Section 1.05

   Acts of Holders      46  

ARTICLE 2 THE NOTES

      48  

Section 2.01

   Form and Dating; Terms      48  

Section 2.02

   Execution and Authentication      49  

Section 2.03

   Registrar and Paying Agent      50  

Section 2.04

   Paying Agent to Hold Money in Trust      50  

Section 2.05

   Holder Lists      50  

Section 2.06

   Transfer and Exchange      51  

Section 2.07

   Replacement Notes      52  

Section 2.08

   Outstanding Notes      52  

Section 2.09

   Treasury Notes      53  

Section 2.10

   Temporary Notes      53  

Section 2.11

   Cancellation      53  

Section 2.12

   Defaulted Interest      53  

Section 2.13

   CUSIP Numbers and ISINs      54  

ARTICLE 3 REDEMPTION

      54  

Section 3.01

   Notices to Trustee      54  

Section 3.02

   Selection of Notes to Be Redeemed or Purchased      54  

Section 3.03

   Notice of Redemption      55  

Section 3.04

   Effect of Notice of Redemption      56  

Section 3.05

   Deposit of Redemption or Purchase Price      56  

Section 3.06

   Notes Redeemed or Purchased in Part      56  

Section 3.07

   Optional Redemption      57  

Section 3.08

   Offers to Repurchase by Application of Excess Proceeds      58  

ARTICLE 4 COVENANTS

      60  

Section 4.01

   Payment of Notes; Additional Amounts      60  

Section 4.02

   Maintenance of Office or Agency      62  

Section 4.03

   Reports and Other Information      63  

Section 4.04

   Compliance Certificate      64  

Section 4.05

   [reserved]      64  

 

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Section 4.06

   Stay, Extension and Usury Laws      64  

Section 4.07

   Limitation on Restricted Payments      64  

Section 4.08

   Limitation on Restrictions on Distribution from Restricted Subsidiaries      70  

Section 4.09

   Limitation on Indebtedness      72  

Section 4.10

   Sales of Assets      77  

Section 4.11

   Limitation on Affiliate Transactions      80  

Section 4.12

   Limitation on Liens      82  

Section 4.13

   Corporate Existence      83  

Section 4.14

   Offer to Repurchase Upon Change of Control      83  

Section 4.15

   Future Guarantees      85  

Section 4.16

   Effectiveness of Covenants      86  

Section 4.17

   Limitation on Lines of Business      87  

Section 4.18

   Ratings      87  

ARTICLE 5 SUCCESSORS

      88  

Section 5.01

   Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets      88  

Section 5.02

   Successor Entity Substituted      90  

ARTICLE 6 DEFAULTS AND REMEDIES

      90  

Section 6.01

   Events of Default      90  

Section 6.02

   Acceleration      93  

Section 6.03

   Other Remedies      93  

Section 6.04

   Waiver of Past Defaults      94  

Section 6.05

   Control by Majority      94  

Section 6.06

   Limitation on Suits      94  

Section 6.07

   Rights of Holders to Receive Payment      95  

Section 6.08

   Collection Suit by Trustee      95  

Section 6.09

   Restoration of Rights and Remedies      95  

Section 6.10

   Rights and Remedies Cumulative      95  

Section 6.11

   Delay or Omission Not Waiver      95  

Section 6.12

   Trustee May File Proofs of Claim      96  

Section 6.13

   Priorities      96  

Section 6.14

   Undertaking for Costs      97  

ARTICLE 7 TRUSTEE

      97  

Section 7.01

   Duties of Trustee      97  

Section 7.02

   Rights of Trustee      98  

Section 7.03

   Individual Rights of Trustee      99  

Section 7.04

   Trustee’s Disclaimer      99  

Section 7.05

   Notice of Defaults      100  

Section 7.06

   [reserved]      100  

Section 7.07

   Compensation and Indemnity      100  

Section 7.08

   Replacement of Trustee      101  

 

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Section 7.09

   Successor Trustee by Merger, etc.      102  

Section 7.10

   Eligibility; Disqualification      102  

Section 7.11

   [reserved]      102  

Section 7.12

   Quebec Power of Attorney      102  

ARTICLE 8 LEGAL DEFEASANCE AND COVENANT DEFEASANCE

      102  

Section 8.01

   Option to Effect Legal Defeasance or Covenant Defeasance      102  

Section 8.02

   Legal Defeasance and Discharge      103  

Section 8.03

   Covenant Defeasance      103  

Section 8.04

   Conditions to Legal or Covenant Defeasance      104  

Section 8.05

   Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions      105  

Section 8.06

   Repayment to the Issuer      106  

Section 8.07

   Reinstatement      106  

ARTICLE 9 AMENDMENT, SUPPLEMENT AND WAIVER

      106  

Section 9.01

   Without Consent of Holders      106  

Section 9.02

   With Consent of Holders      108  

Section 9.03

   Successor Issuer Supplemental Indenture      109  

Section 9.04

   Effect of Consents      109  

Section 9.05

   Notation on or Exchange of Notes      109  

Section 9.06

   Trustee to Sign Amendments, etc.      110  

ARTICLE 10 GUARANTEES

      110  

Section 10.01

   Notes Guarantee      110  

Section 10.02

   Limitation on Guarantor Liability      111  

Section 10.03

   Execution and Delivery      113  

Section 10.04

   Subrogation      113  

Section 10.05

   Benefits Acknowledged      113  

Section 10.06

   Release of Notes Guarantees      113  

Section 10.07

   Indemnity and Subrogation      114  

Section 10.08

   Contribution and Subrogation      115  

Section 10.09

   Subordination      115  

ARTICLE 11 SATISFACTION AND DISCHARGE

      115  

Section 11.01

   Satisfaction and Discharge      115  

Section 11.02

   Application of Trust Money      116  

ARTICLE 12 MISCELLANEOUS

      117  

Section 12.01

   Trust Indenture Act      117  

Section 12.02

   Notices      117  

Section 12.03

   Communication by Holders with Other Holders      119  

Section 12.04

   Certificate and Opinion as to Conditions Precedent      119  

 

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Section 12.05

  

Statements Required in Certificate or Opinion

      120  

Section 12.06

  

Rules by Trustee and Agents

      120  

Section 12.07

  

No Personal Liability of Directors, Officers, Employees and Stockholders

      120  

Section 12.08

  

Governing Law

      120  

Section 12.09

  

Waiver of Jury Trial

      120  

Section 12.10

  

Force Majeure

      121  

Section 12.11

  

No Adverse Interpretation of Other Agreements

      121  

Section 12.12

  

Successors

      121  

Section 12.13

  

Severability

      121  

Section 12.14

  

Counterpart Originals

      121  

Section 12.15

  

Table of Contents, Headings, etc.

      121  

Section 12.16

  

U.S.A. PATRIOT Act

      121  

Section 12.17

  

Consent to Jurisdiction; Appointment of Agent for Service of Process

      122  

Section 12.18

  

Judgment Currency

      122  

Section 12.19

  

Separation Transaction

      123  

 

Appendix A   Provisions Relating to Initial Notes and Additional Notes
Schedule 1   Initial Unrestricted Subsidiaries
Exhibit A   Form of Note
Exhibit B   Form of Transferee Letter of Representation
Exhibit C   Form of Supplemental Indenture to be Delivered by Subsequent Guarantors
Exhibit D   Form of Supplemental Indenture to be Delivered by Successor Issuer

 

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INDENTURE, dated as of May 8, 2024, among Lions Gate Capital Holdings 1, Inc., a Delaware corporation, as the Initial Issuer, the Guarantors named herein and U.S. Bank Trust Company, National Association, as the Trustee.

W I T N E S S E T H

WHEREAS, the Initial Issuer has duly authorized the creation and issue of $389,861,000 aggregate principal amount of 5.500% Exchange Notes due 2029 (the “Initial Notes”);

WHEREAS, the Initial Issuer has received good and valuable consideration for the execution and delivery of this Indenture and the Notes;

WHEREAS, all necessary acts and things have been done to make: (1) the Notes, when duly issued and executed by the Initial Issuer and authenticated and delivered hereunder, the legal, valid and binding obligations of the Initial Issuer; and (2) this Indenture a legal, valid and binding agreement of the Initial Issuer in accordance with the terms of this Indenture; and

NOW, THEREFORE, the Initial Issuer and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders of the Notes.

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01 Definitions.

“Additional Assets” means:

(1) any property, plant, equipment or other assets (excluding working capital or current assets for the avoidance of doubt) to be used by Parent or a Restricted Subsidiary in a Related Business; or

(2) an investment in any one or more businesses or capital expenditures (which for purposes of this definition, shall include the acquisition of any item of Product) and any Permitted Investment, in each case used or useful to a Related Business.

“Additional Notes” means additional Notes (other than the Initial Notes) issued from time to time under this Indenture in accordance with Sections 2.01 and 4.09.

“Adjusted EBITDA” means, with respect to any Person for any period, the Consolidated Net Income of such Person for such period plus, without duplication, to the extent the same was deducted in calculating Consolidated Net Income, in each case as to such Person and its Restricted Subsidiaries on a consolidated basis:

(1) Consolidated Taxes; plus

(2) Consolidated Interest Expense; plus

(3) Consolidated Adjusted Charges; plus

 

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(4) restructuring charges, reserves or expenses and one-time charges (which, for the avoidance of doubt, shall include, without limitation, retention, severance, systems establishment costs, contract termination costs, integration costs and future lease commitments); plus

(5) business optimization expenses; provided that any such business optimization expenses added back pursuant to this clause (5), together with the Non-S-X Adjustment Amount for such period, shall not exceed 25% of Adjusted EBITDA for such period; plus

(6) non-operating expenses (minus non-operating income); plus

(7) charges, costs and expenses relating to any issuance or incurrence of Capital Stock, any incurrence or repayment of Indebtedness or the consummation of any Investment, acquisition or disposition, in each case permitted by this Indenture and whether or not successful, including fees, charges and expenses relating to the Transactions; plus

(8) start-up costs relating to the Comic Con business; plus

(9) other start-up costs in an aggregate amount not to exceed $25,000,000 for the relevant four-quarter reference period; plus

(10) the amount of loss or discount on sale of assets and any commissions, yield and other fees and charges, in each case in connection with a Qualified Receivables Financing;

less, without duplication,

(11) non-cash items increasing Consolidated Net Income for such period (excluding the recognition of deferred revenue or any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period and any items for which cash was received in a prior period);

provided that effects of purchase accounting adjustments (including the effects of such adjustments pushed down to such Person and such Subsidiaries and including, without limitation, the effects of adjustments to (x) Finance Lease Obligations or (y) any other deferrals of income) in amounts required or permitted by GAAP, resulting from the application of purchase accounting or the amortization or write-off of any amounts thereof shall be excluded from the calculation of Adjusted EBITDA.

“Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as agent for the lenders under the Senior Credit Facility, or any successor agent, and any other future agent or trustee in respect of any Senior Credit Facility.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) when used with respect to any Person means possession, directly or indirectly, of the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

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“Affiliated Persons” means, with respect to any specified Person, (1) such specified Person’s parents, spouse, siblings, descendants, step children, step grandchildren, nieces and nephews and their respective spouses, (2) the estate, legatees and devisees of such specified Person and each of the Persons referred to in clause (1), and (3) any company, partnership, trust or other entity or investment vehicle controlled by any of the Persons referred to in clause (1) or (2) or the holdings of which are for the primary benefit of any of such Persons.

“Agent” means any Registrar or Paying Agent.

“Amendment No. 1” means that certain Amendment No. 1 to the Credit Agreement, dated as of December 11, 2017 (together with any exhibits and schedules thereto), among LGEC, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

“Amendment No. 2” means that certain Amendment No. 2 to the Credit Agreement, dated as of March 22, 2018 (together with any exhibits and schedules thereto), among LGEC, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

“Amendment No. 3” means that certain Amendment No. 3 to the Credit Agreement, dated as of March 11, 2019 (together with any exhibits and schedules thereto), among LGEC, LGCH, as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

“Amendment No. 4” means that certain Amendment No. 4 to the Credit Agreement, dated as of April 6, 2021 (together with any exhibits and schedules thereto), among LGEC, LGCH, as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent.

“Amendment No. 5” means that certain Amendment No. 5 to the Credit Agreement, dated as of June 14, 2023 (together with any exhibits and schedules thereto), among LGCH, as borrower, and JPMorgan Chase Bank, N.A., as Administrative Agent.

“Asset Sale” means any direct or indirect sale, lease, transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, including any Sale/Leaseback Transaction, of (x) shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares) or (y) other than in the ordinary course of business, other property or other assets (each referred to for the purposes of this definition as a “disposition”) by Parent or any of the Restricted Subsidiaries, including any disposition by means of a merger, amalgamation, consolidation or similar transaction; provided that transfers of assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein), including by a Receivables Subsidiary in a Qualified Receivables Financing, shall not constitute Asset Sales.

 

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Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) a disposition of assets by a Restricted Subsidiary to Parent or by Parent or a Restricted Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a Restricted Subsidiary to another Restricted Subsidiary, Parent directly and/or indirectly owns an equal or greater percentage of the Common Stock of the transferee than of the transferor;

(2) the sale of Cash Equivalents or tax credits;

(3) a disposition of inventory, including without limitation, Product (not constituting the sale of a Product that in the aggregate would be considered a “library”), in the ordinary course of business;

(4) a disposition of obsolete or worn out equipment or equipment that is no longer useful in the conduct of the business of Parent and the Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business (including the abandonment of any intellectual property or surrender or transfer for no consideration) or otherwise as may be required pursuant to the terms of any lease, sublease, license or sublicense;

(5) the disposition of all or substantially all of the assets of Parent in a manner permitted under Section 5.01 or any disposition that constitutes a Change of Control;

(6) an issuance of Capital Stock by a Restricted Subsidiary to Parent or to a Wholly-Owned Subsidiary;

(7) any Permitted Investment and any Restricted Payment that is permitted to be made, and is made, under Section 4.07;

(8) dispositions of assets or issuance or sale of Capital Stock of a Restricted Subsidiary in a single transaction or series of related transactions with an aggregate Fair Market Value of less than $20,000,000;

(9) the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or insolvency or similar proceedings and exclusive of factoring or similar arrangements;

(11) the issuance by a Restricted Subsidiary of Preferred Stock that is permitted under Section 4.09;

(12) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of Parent and the Restricted Subsidiaries;

(13) foreclosure on assets;

 

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(14) any sale of Capital Stock in, Indebtedness or other securities of or Investments in, an Unrestricted Subsidiary;

(15) any exchange of assets (including Capital Stock) (including a combination of assets and Cash Equivalents) for assets (including Capital Stock) related to a Related Business of comparable or greater market value or usefulness to the business of Parent and the Restricted Subsidiaries as a whole, as determined in good faith by the Issuer;

(16) sales of Product outside of the ordinary course of business (including the sale of Product that in the aggregate would be considered a “library”) if sold for not less than Fair Market Value and not in excess of $45,000,000 in the aggregate from the Issue Date;

(17) sales of all or a portion of an interest in a Foreign Subsidiary that is not a Guarantor; provided that the consideration received is not less than Fair Market Value;

(18) (a) the sale or transfer of Product or intellectual property Product to any ProdCo as part of any Permitted Slate Transaction or (b) any Permitted Slate Financing, including the sale or transfer of any interests in copyrights, distribution rights and/or financial proceeds as contemplated by the definition thereof;

(19) the creation of revenue participations of the type described in Section 4.09(c)(16); and

(20) the Separation Transactions and any disposition made in connection with the Separation Transactions.

“Assumption Date” means December 8, 2016.

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Bankruptcy Law” means (1) Title 11, U.S. Code, the Bankruptcy and Insolvency Act (Canada), (2) the Companies’ Creditors Arrangement Act (Canada) or (3) other similar (a) U.S. federal or state law, (b) Canadian federal or provincial law, or (c) law of any other applicable jurisdiction, in each case relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors or plans of arrangement.

“Board of Directors” means, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.

“Business Day” means any day other than a Saturday, Sunday or other day on which banks are required or permitted to close in the State of New York, the State of California, the Province of British Columbia or the Province of Ontario.

 

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“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock and limited liability or partnership interests (whether general or limited), but excluding any Indebtedness convertible into such equity.

“Cash Equivalents” means:

(1) Dollars, Canadian dollars, pound sterling, euros, the national currency of any member state of the European Union or, in the case of any Foreign Subsidiary, such other local currencies held by it from time to time in the ordinary course of business;

(2) securities issued or directly and fully Guaranteed or insured by the United States, Canada, Switzerland, the United Kingdom or any country that is a member of the European Union or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than two years from the date of acquisition;

(3) marketable general obligations issued by any State of the United States of America or any political subdivision thereof or any Canadian province or any public instrumentality thereof maturing within two years from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either S&P or Moody’s or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments;

(4) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than two years from the date of acquisition thereof issued by any commercial bank having a short term deposit rating at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P, or “P-2” or the equivalent thereof by Moody’s, or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments;

(5) repurchase obligations for underlying securities of the types described in clauses (2), (3) and (4) entered into with any bank meeting the qualifications specified in clause (4) above;

(6) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P or “P-2” or the equivalent thereof by Moody’s, or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments and in any case maturing within one year after the date of acquisition thereof;

(7) Indebtedness issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;

 

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(8) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (7) above; and

(9) instruments equivalent to those referred to in clauses (1) through (8) above denominated in any foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction.

“CCQ” means the Civil Code of Quebec as in effect in the province of Quebec from time to time.

“Change of Control” means:

(a) Prior to the Separation Closing Date,

(1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than any Permitted Holder, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of LGEC (or its successor by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of LGEC held by a parent entity, if such person or group “beneficially owns” (as defined above), directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent entity);

(2) the first day on which Continuing Directors cease to constitute a majority of the members of the Board of Directors of LGEC or any Permitted Parent Holdco;

(3) sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation, consolidation or plan of arrangement), in one or a series of related transactions, of all or substantially all of the assets of LGEC and the Restricted Subsidiaries taken as a whole, to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than any Permitted Holder or a Restricted Subsidiary; or

(4) LGEC (or its successor(s) by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) ceases to own, directly or indirectly, more than 50.0% of the Voting Stock of the Initial Issuer.

(b) From and after the Separation Closing Date,

 

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(1) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than any Permitted Holder, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of StudioCo Parent (or its successor by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of StudioCo Parent held by a parent entity, if such person or group “beneficially owns” (as defined above), directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent entity);

(2) the first day on which Continuing Directors cease to constitute a majority of the members of the Board of Directors of StudioCo Parent or any Permitted Parent Holdco;

(3) sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation, consolidation or plan of arrangement), in one or a series of related transactions, of all or substantially all of the assets of StudioCo Parent and the Restricted Subsidiaries taken as a whole, to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than any Permitted Holder or a Restricted Subsidiary; or

(4) StudioCo Parent (or its successor(s) by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) ceases to own, directly or indirectly, more than 50.0% of the Voting Stock of the Successor Issuer.

(c) Notwithstanding anything to the contrary in clause (a) or (b) of this definition or otherwise, in no event shall a Separation Transaction be deemed to constitute a Change of Control.

“Code” means the Internal Revenue Code of 1986, as amended.

“Comic Con” means that certain subscription video on demand service (as such service may continue to organically evolve) or other related service operated by Parent, its Subsidiaries or its designees under the name “Comic Con HQ” or other derivation of the word “Comic Con.”

“Common Stock” means with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Complete” or “Completed” or “Completion” means with respect to any item of Product, that

 

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(1) either (a) sufficient elements have been delivered by Parent or applicable Restricted Subsidiary to, and accepted, deemed or determined to be accepted and/or exploited by, a Person (other than Parent or applicable Restricted Subsidiary or Affiliates thereof) to permit such Person to exhibit the item of Product in the theatrical or other medium for which the item of Product is intended for initial exploitation or (b) an independent laboratory has in its possession a complete final 35 mm or 70 mm (or other size which has become standard in the industry) composite positive print, video master or other equivalent master copy of the item of Product as finally cut, main and end titled, edited, scored and assembled with sound track printed thereon in perfect synchronization with the photographic action and fit and ready for exhibition and distribution in the theatrical or other medium for which the item of Product is intended for initial exploitation, and

(2) if such item of Product was acquired by Parent or a Restricted Subsidiary from an unaffiliated third party, the entire acquisition price or minimum advance shall have been paid to the extent then due and there is no condition or event (including, without limitation, the payment of money not yet due) the occurrence of which might result in Parent or such Restricted Subsidiary losing any of its rights in such item of Product.

“Completion Guaranty” means, with respect to any item of Product, a completion guaranty, in customary form consistent with Parent’s past practice or otherwise reasonable and customary for transactions of such nature, which (1) names the production financier to the extent such item of Product is financed in accordance with Section 4.09(a), Section 4.09(b) or Section 4.09(c)(12) as a beneficiary thereof to the extent of Parent’s or applicable Restricted Subsidiary’s financial interest in such item of Product and (2) guarantees that such item of Product will be Completed in a timely manner, or else payment may be made to such production financier of an amount of up to the aggregate amount expended on the production of such item of Product by, or for the account of, Parent or applicable Restricted Subsidiary plus interest on, and other bank charges with respect to, such amount.

“Consolidated Adjusted Charges” means, with respect to any Person for any period, the sum, without duplication, of:

(1) depreciation; plus

(2) amortization other than direct operating expenses; plus

(3) other non-cash expenses (including, without limitation, stock based compensation expenses including for stock appreciation rights or write-off of deferred financing charges, and non-cash reductions of Consolidated Net Income attributable to consideration paid to any Person in Capital Stock) of such Person and its Restricted Subsidiaries reducing Consolidated Net Income of such Person for such period on a consolidated basis and otherwise determined in accordance with GAAP,

(but for each of clauses (1) through (3) excluding any such charge which consists of or requires an accrual of, or cash reserve for, anticipated cash charges for any future period (other than accruals for stock appreciation rights)); plus

 

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(4) print and advertising expenses (irrespective of whether such Person has actually made a cash payment in respect thereof during such period) for which such Person has an off-setting right of payment and/or guarantee (including, for the avoidance of doubt, any partial guarantee which such Person believes in good faith to be sufficient in size to cover any reasonably anticipated loses from these expenses) from a third-party producer (less the amortization of participation charges that would have been expensed had the print and advertising expense not been expensed in the GAAP financial statements, such amortization to be calculated in accordance with accounting based on the film forecasting method); plus

(5) any non-cash accelerated amortization of content or programming costs and other intangibles. For the avoidance of doubt, the amortization of the allocation of the purchase price of a business to increase or decrease the carrying value of the assets and liabilities in accordance with GAAP is considered a non-cash expense.

“Consolidated Applicable Interest Charge” means, with respect to any Person for any period, the sum, without duplication, of:

(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including the interest component of Finance Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and excluding amortization of original issue discount and deferred financing fees and expensing of any bridge or other financing fees, but excluding commissions, discounts, yield and other fees and charges related to any Qualified Receivables Financing); plus

(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, other than capitalized interest included in the cost of any item of Product; minus

(3) interest income for such period (other than interest income attributable to the discounting of accounts receivable); minus

(4) interest expense accrued as a result of the Financial Accounting Standards Board Staff Position No. APB 14-1, to the extent such interest expense was included in clause (1) of this definition.

“Consolidated Debt” shall mean, as of any date of determination, the sum of (without duplication) the principal amount of all Indebtedness of the type set forth in clauses (1), (2), (3) (other than to the extent undrawn), (5), (6), (7) (to the extent related to any Indebtedness that would otherwise constitute Consolidated Debt) and (8) (to the extent related to any Indebtedness that would otherwise constitute Consolidated Debt) of the definition of “Indebtedness” of Parent and its Restricted Subsidiaries determined on a consolidated basis on such date; provided that the amount of any Indebtedness with respect to which the applicable obligors have entered into currency hedging arrangements shall be calculated giving effect to such currency hedging arrangements; provided, further, that neither (i) unfunded commitments for Indebtedness nor (ii) Other Permitted Priority Indebtedness shall be included in the calculation of Consolidated Debt.

 

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“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(1) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including the interest component of Finance Lease Obligations, and net payments and receipts (if any) pursuant to interest rate Hedging Obligations and including amortization of deferred financing fees, debt issuance costs and expensing of any bridge or other financing fees); plus

(2) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, other than capitalized interest included in the cost of any item of Product; minus

(3) interest income for such period (other than interest income attributable to the discounting of accounts receivables).

“Consolidated Net Income” means, for any period, the net income (loss) of Parent and its Restricted Subsidiaries determined on a consolidated basis in accordance with GAAP; provided, however, that there will not be included in such Consolidated Net Income:

(1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary or that is accounted for by the equity method of accounting, except that, subject to the limitations contained in clauses (3) through (6) below, equity of Parent or any Restricted Subsidiary in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to Parent or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (2) below);

(2) any net income (but not loss) of any Restricted Subsidiary (other than (a) a Guarantor, (b) Pilgrim JV, (c) any other Restricted Subsidiary to the extent any such restriction relates to a Joint Venture, charter or other agreement or instrument entered into by Parent or a Restricted Subsidiary with a minority shareholder to the extent Parent has a call option on such minority shareholder’s Capital Stock and (d) other than for purposes of any calculation under Section 4.07(a)(4)(C), any other Restricted Subsidiary of which at least 80.0% of the Capital Stock having voting control is owned or controlled, directly or indirectly by Parent or any other Restricted Subsidiary) if such Subsidiary is subject to prior government approval or other restrictions due to the operation of its charter or any agreement, instrument, judgment, decree, order statute, rule or government regulation (which have not been waived), directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to Parent, except that, subject to the limitations contained in clauses (3) through (6) below, Parent’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to Parent or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause);

(3) any gain or loss (less all fees and expenses relating thereto) realized upon sales or other dispositions of any assets of Parent or such Restricted Subsidiary, other than in the ordinary course of business, as determined in good faith by the Issuer;

 

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(4) any after-tax effect of income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments;

(5) any extraordinary, nonrecurring or unusual gain or loss; and

(6) the cumulative effect of a change in accounting principles;

provided that notwithstanding any classification of any Person, business, assets or operations as discontinued operations because a definitive agreement for the sale, transfer or other disposition in respect thereof has been entered into, the Issuer may elect to include for any purposes under this Indenture any such net after-tax income or loss or any such net after-tax gains or losses attributable to such Person until such sale, transfer or other disposition has been consummated.

“Consolidated Taxes” means provision for taxes based on income, profits or capital, including, without limitation, state, franchise and similar taxes taken into account in calculating Consolidated Net Income.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of Parent or Permitted Parent Holdco, as the case may be, who: (1) was a member of such Board of Directors, with respect to LGEC prior to the Separation Closing Date, on the Issue Date or, with respect to StudioCo Parent from and after the Separation Closing Date, on the Separation Closing Date (or, in the case of a Permitted Parent Holdco, the date such Permitted Parent Holdco acquired 100% of the Voting Stock of Parent if the members of the Board of Directors of such Permitted Parent Holdco were approved for the purpose of this definition, on or prior to such date, by a majority of the Continuing Directors of Parent); or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board of Directors at the time of such nomination or election.

“Corporate Trust Office of the Trustee” shall be at the address of the Trustee specified in Section 12.02 or such other address as to which the Trustee may give notice to the Holders and the Issuer.

“Credit Agreement” means that certain Credit and Guarantee Agreement dated as of December 8, 2016 among LGEC, as borrower, the guarantors referred to therein, the lenders referred to therein, and JPMorgan Chase Bank, N.A., as Administrative Agent, as amended by Amendment No. 1, as further amended by Amendment No. 2, as further amended by Amendment No. 3, as further amended by Amendment No. 4, as further amended by Amendment No. 5 and as the same may be further amended, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (including increasing the amount loaned thereunder, provided that such additional Indebtedness is Incurred in accordance with Section 4.09).

“Currency Agreement” means in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

 

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“Default” means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Definitive Note” means a certificated Initial Note or Additional Note (bearing the Restricted Notes Legend if the transfer of such Note is restricted by applicable law) that does not include the Global Notes Legend.

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 as the Depositary with respect to the Notes, and any and all successors thereto appointed as Depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“Designated Non-cash Consideration” means the Fair Market Value of non-cash consideration received by Parent or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Non-cash Consideration pursuant to an Officers’ Certificate, setting forth such valuation, less the amount of Cash Equivalents received in connection with a subsequent sale of such Designated Non-cash Consideration.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(2) is convertible into or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of Parent or a Restricted Subsidiary (it being understood that upon such conversion or exchange it shall be an Incurrence of such Indebtedness or Disqualified Stock)); or

(3) is redeemable at the option of the holder of the Capital Stock in whole or in part, in each case on or prior to the date that is 91 days after the earlier of (a) the Stated Maturity of the Notes or (b) the date on which there are no Notes outstanding; provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require Parent or its Subsidiaries to repurchase such Capital Stock upon the occurrence of a change of control or asset sale (each defined in a substantially identical manner to the corresponding definitions in this Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that Parent or its Subsidiaries, as applicable, may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to compliance by the Issuer under Section 4.10 and Section 4.14 and such repurchase or redemption complies with Section 4.07.

 

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“Distribution Agreements” means

(1) any and all agreements entered into by Parent or any other Guarantor pursuant to which such Person has sold, leased, licensed or assigned distribution rights or other exploitation rights to any item of Product to a Person that is not an Affiliate of Parent or any other Guarantor and

(2) any and all agreements hereafter entered into by Parent or any other Guarantor pursuant to which such Person sells, leases, licenses or assigns distribution rights or other exploitation rights to any item of Product to a Person that is not an Affiliate of Parent or any other Guarantor.

“Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

“DTC” means The Depository Trust Company.

“Equity Offering” means an offering for cash by Parent or any direct or indirect parent entity of its Common Stock, or options, warrants or rights with respect to its Common Stock, other than (1) offerings with respect to such Common Stock, or options, warrants or rights, registered on Form S-4 or S-8 and (2) an issuance to any Subsidiary.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Exchange Agreement” means that certain Exchange Agreement, dated as of May 2, 2024, by and among LGEC, the Initial Issuer, LGCH and the noteholder parties from time to time party thereto, together with all exhibits, annexes and schedules attached thereto and as amended, restated, amended and restated, supplemented or otherwise modified from time to time.

“Excluded Contributions” means Net Cash Proceeds received by Parent from:

(1) contributions to its common equity capital; or

(2) the sale (other than to a Subsidiary of Parent or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of Parent or any Subsidiary) of Capital Stock (other than Disqualified Stock) of Parent;

in each case designated as Excluded Contributions pursuant to an Officers’ Certificate executed by the principal financial officer of Parent on the date such capital contributions are made or the date such equity interests are sold, as the case may be.

“Fair Market Value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by the Issuer in good faith.

“Finance Lease Obligations” means an obligation that is required to be classified and accounted for as a finance lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any

 

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other amount due under such lease prior to the first date such lease may be terminated without penalty; provided that obligations of Parent or the Restricted Subsidiaries, or of a special purpose or other entity not consolidated with Parent and the Restricted Subsidiaries, either existing on the Assumption Date or created thereafter that (x) initially were not included on the consolidated balance sheet of Parent as finance leases and were subsequently characterized as finance leases or, in the case of such a special purpose or other entity becoming consolidated with Parent and the Restricted Subsidiaries were required to be characterized as finance leases upon such consideration, in either case, due to a change in accounting treatment or otherwise, or (y) did not exist on the Assumption Date and were required to be characterized as finance leases but would not have been required to be treated as finance leases on the Assumption Date had they existed at that time, shall for all purposes not be treated as Finance Lease Obligations or Indebtedness.

“Fitch” means Fitch Group, Inc., a jointly-owned subsidiary of Hearst Corporation and Fimalac, S.A., and any successor to its rating agency business.

“Foreign Subsidiary” means any Restricted Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia and any Subsidiary of such Restricted Subsidiary.

“GAAP” means generally accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect on the Issue Date. All ratios and computations based on GAAP will be computed in conformity with GAAP, except that in the event Parent is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Indenture.

“Government Securities” means securities that are:

(1) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged; or

(2) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally Guaranteed as a full faith and credit obligation of the United States of America,

which, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depositary receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depositary receipt.

 

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“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” will not include endorsements for collection or deposit or for indemnification in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantor” means each of (1) Parent and (2) each Restricted Subsidiary in existence on the Issue Date that provides a Notes Guarantee on the Issue Date (and any other Restricted Subsidiary that provides a Notes Guarantee in accordance with this Indenture after the Issue Date); provided that upon release or discharge of Parent or such Restricted Subsidiary from its Notes Guarantee in accordance with this Indenture, Parent or such Restricted Subsidiary shall cease to be a Guarantor.

“Headquarters JV” means either (1) LGJW Colorado Partners, LLC or (2) any other entity which is directly or indirectly owned in whole or in part by Parent and which is formed for the sole purpose of constructing, maintaining and owning an office building to be used as a headquarters of Parent and/or Subsidiaries thereof.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

“Holder” means a Person in whose name a Note is registered on the Registrar’s books.

“Incur” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

 

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(2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 90 days of Incurrence);

(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto, except (a) any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business and (b) any earn-out obligation until the amount of such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP;

(5) Finance Lease Obligations of such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor);

(6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of Parent that is not a Guarantor, any Preferred Stock;

(7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons;

(8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor); and

(9) to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time).

Notwithstanding anything in this Indenture to the contrary, (x) Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Financial Accounting Standards Board Accounting Standards Codification 825 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness and any such amounts that would have constituted Indebtedness under this Indenture but for the application of this sentence shall not be deemed an Incurrence of Indebtedness under this Indenture, and (y) Indebtedness shall not include obligations under or in respect of any Qualified Receivables Financing.

 

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“Indenture” means this Indenture, as amended or supplemented from time to time.

“Initial Issuer” means Lions Gate Capital Holdings 1, Inc., a Delaware corporation, and any successor thereof, and not any of its Subsidiaries.

“Initial Notes” has the meaning set forth in the recitals hereto.

“Initial Unrestricted Subsidiaries” means each Subsidiary of Parent as of the Issue Date set forth in Schedule 1 of this Indenture as an “Initial Unrestricted Subsidiary.”

“Interest Payment Date” means April 15 and October 15 of each year to the Stated Maturity of the Notes.

“Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit or indemnity provision) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such other Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:

(1) Hedging Obligations entered into in compliance with this Indenture;

(2) endorsements of negotiable instruments and documents in the ordinary course of business;

(3) an acquisition of assets, Capital Stock or other securities by Parent or a Subsidiary for consideration to the extent such consideration consists of Common Stock of Parent;

(4) accounts receivable, trade credit and advances to customers in the ordinary course of business;

(5) commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business; and

(6) any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business.

 

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For purposes of Section 4.07,

(1) “Investment” will include the portion (proportionate to Parent’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Parent will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) Parent’s aggregate “Investment” in such Subsidiary as of the time of such redesignation less (b) the portion (proportionate to Parent’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary;

(2) any property transferred to or from an Unrestricted Subsidiary will be valued at its Fair Market Value at the time of such transfer; and

(3) if Parent or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of Parent, Parent shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Capital Stock of such Subsidiary not sold or disposed of.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s, BBB- (or the equivalent) by S&P, BBB- (or the equivalent) by Fitch, or an equivalent rating by any Rating Agency.

“Issue Date” means May 8, 2024.

“Issuer” means prior to the consummation of the Separation Transaction, the Initial Issuer, and from and after the consummation of the Separation Transaction, the Successor Issuer.

“Joint Venture” means a joint venture or similar venture with one or more unrelated parties (whether structured as a corporation, partnership, limited liability company or other entity) in which Parent or any of its Restricted Subsidiaries own Capital Stock and which is formed and operated to conduct a Related Business.

“LGCH” means Lions Gate Capital Holdings LLC, a Delaware limited liability company, and any successor thereof, and not any of its Subsidiaries.

“LGCH Notes” means LGCH’s outstanding $325,123,000 principal amount of 5.500% Senior Notes due 2029, originally issued pursuant to the indenture, dated as of April 1, 2021, among LGCH and Deutsche Bank Trust Company Americas, as trustee (as amended, supplemented or otherwise modified from time to time, the “LGCH Indenture”).

“LGEC” means Lions Gate Entertainment Corp., a corporation organized under the laws of the Province of British Columbia, Canada, and, except in connection with any Separation Transaction, any successor thereof, and not any of its Subsidiaries.

“LGF” means Lions Gate Films Inc. and its successors.

 

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“LGT” means Lions Gate Television Inc. and its successors.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any other agreement to give a security interest in and any filing of or agreement to give any financing statement under the applicable PPSA, the CCQ, or UCC (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease be deemed to constitute a Lien.

“Luxembourg” means the Grand Duchy of Luxembourg.

“Material Indebtedness” means Indebtedness of the types described in clauses (1), (2), (5) and (8) (only with respect to Guarantees of Indebtedness of the types described in clauses (1), (2) and (5) of the definition of “Indebtedness”) of the definition of “Indebtedness” of the Issuer or any Guarantors in an aggregate principal amount equal to or greater than $75,000,000, other than Other Permitted Priority Indebtedness; provided that notwithstanding the foregoing the LGCH Notes shall not constitute Material Indebtedness.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“MQP” means MQP, LLC and its successors.

“Negative Pick-up Obligation” means a commitment to pay a certain sum of money or other Investment made by Parent or Restricted Subsidiary in order to obtain ownership, distribution rights or sales agency rights in any item of Product, including, for the avoidance of doubt, any item of Product produced by Parent or any Restricted Subsidiary. Negative Pick-up Obligation includes both “traditional” negative pickup arrangements and indirect structures.

“Net Available Cash” from an Asset Sale means cash payments actually received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable, but only as and when actually received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Sale or received in any other non-cash form) therefrom, in each case net of:

(1) all legal, accounting, investment banking, title and recording taxes, fees, expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP or otherwise payable (in the good faith determination of the Issuer) in connection with such Asset Sale (including any repatriation of the proceeds of such Asset Sale);

(2) all payments made on any Indebtedness that is secured by any assets subject to such Asset Sale, in accordance with the terms of such Indebtedness, or which must by its terms, or in order to obtain a necessary consent to such Asset Sale, or by applicable law be repaid out of the proceeds from such Asset Sale;

 

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(3) all distributions and other payments required to be made to minority interest holders in Subsidiaries or Joint Ventures as a result of such Asset Sale;

(4) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Sale and retained by Parent or any Restricted Subsidiary after such Asset Sale; and

(5) in the case of any Asset Sale by a Subsidiary which is not a Wholly-Owned Subsidiary, a portion of the cash payments received by such Subsidiary equal to the portion of the economic interests in such Subsidiary which are not directly or indirectly owned by Parent.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock or any Incurrence of Indebtedness, means the cash proceeds of such issuance or sale or such Incurrence net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees, discounts or commissions and brokerage, consultant and other fees, expenses and charges actually Incurred in connection with such issuance or sale or such Incurrence and net of taxes paid or payable (in the good faith determination of the Issuer) in connection with such issuance or sale or such Incurrence (including any repatriation of the proceeds of such sale or Incurrence).

“Net Secured Leverage Ratio” shall mean, as of any date of determination, the ratio of:

(1) (a) the total principal amount of Secured Funded Indebtedness that would appear on a balance sheet of Parent and the Restricted Subsidiaries as of such determination date, minus (b) Unrestricted Cash as of such determination date in an amount not to exceed $300,000,000, to

(2) Adjusted EBITDA of Parent, calculated on a Pro Forma Basis, for the most recent Test Period.

“Net Total Leverage Ratio” shall mean, as of any date of determination, the ratio of:

(1) (a) the total principal amount of Consolidated Debt that would appear on a balance sheet of Parent and the Restricted Subsidiaries as of such determination date, minus (b) Unrestricted Cash as of such determination date in an amount not to exceed $300,000,000, to

(2) Adjusted EBITDA of Parent, calculated on a Pro Forma Basis for the most recent Test Period.

“Non-Guarantor Subsidiary” means any Restricted Subsidiary that is not a Guarantor.

“Notes” means, collectively, the Initial Notes and more particularly means any Note authenticated and delivered under this Indenture, including any Additional Notes and any Notes issued and authenticated upon transfer, replacement or exchange of Notes.

 

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“Notes Guarantee” means, individually, any Guarantee of the Issuer’s Obligations under this Indenture by any Guarantor pursuant to the terms of this Indenture and any supplemental indenture thereto and, collectively, the Notes Guarantees.

“Obligations” means, with respect to any Indebtedness, all obligations (whether in existence on the Issue Date or arising afterwards, absolute or contingent, direct or indirect) for or in respect of principal (when due, upon acceleration, upon redemption, upon mandatory repayment or repurchase pursuant to a mandatory offer to purchase, or otherwise), premium, interest, penalties, fees, indemnification, reimbursement and other amounts payable and liabilities with respect to such Indebtedness, including all interest accrued or accruing after the commencement of any bankruptcy, insolvency or reorganization or similar case or proceeding at the contract rate (including, without limitation, any contract rate applicable upon default) specified in the relevant documentation, whether or not the claim for such interest is allowed as a claim in such case or proceeding.

“Offer to Purchase” means an Asset Sale Offer or a Change of Control Offer.

“Officer” means, as to the Issuer, the Manager, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer, Chief Strategic Officer, any President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Issuer. “Officer” of any Guarantor has a correlative meaning and, in the case of any Luxembourg Guarantor, means any director manager or authorized signatory.

“Officers’ Certificate” means a certificate signed by two Officers or by an Officer and either an Assistant Treasurer or an Assistant Secretary of the Issuer or Parent.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to Parent.

“Other Permitted Priority Indebtedness” means Indebtedness which is (a) permitted to be Incurred after the Issue Date by Section 4.09(c)(12), Section 4.09(c)(13), Section 4.09(c)(14), Section 4.09(c)(17) or Section 4.09(c)(18) or (b) incurred prior to the Issue Date but of any type described in the foregoing clause (a).

“Parent” means prior to the consummation of the Separation Transaction, LGEC, and from and after the consummation of the Separation Transaction, StudioCo Parent.

“Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the Notes (without giving effect to collateral arrangements).

“Permitted Holder” means, at any time, each of:

(1) (a) Dr. Mark H. Rachesky, M.D., (b) John C. Malone, (c) the Consenting Noteholders (as defined in the LGCH Supplemental Indenture) and (d) any Affiliate of such Persons, or any Affiliated Persons of such Persons;

(2) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) of which any Person described in clause (1) hereof is a member; provided that Persons described in clause (1) hereof beneficially own a majority of the Voting Stock of Parent beneficially owned by all members of such group;

 

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(3) any Person (including Parent upon a sale of all or substantially all of its assets to a Subsidiary thereof in a transaction permitted under Section 5.01) (x) that acquires (or otherwise holds), directly or indirectly, 100% of the voting power of the Voting Stock of Parent and, immediately after giving effect to such acquisition and any related transactions, has no material assets other than Capital Stock of Parent and (y) of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) other than any of the Permitted Holders specified in clauses (1) and (2) above, holds more than 50% of the total voting power of the Voting Stock thereof (any Person described in clause (3) hereof, a “Permitted Parent Holdco”); and

(4) from and after the Separation Closing Date, LGEC and its Subsidiaries.

“Permitted Investment” means:

(1) an Investment by Parent or any Restricted Subsidiary in Parent or a Restricted Subsidiary;

(2) an Investment by Parent or any Restricted Subsidiary in a Person that is engaged in a Related Business if as a result of such Investment:

(A) such Person becomes a Restricted Subsidiary; or

(B) such Person, in one transaction or a series of related transactions, is merged, amalgamated or consolidated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into Parent or a Restricted Subsidiary,

and, in each case, any Investment held by such Person; provided, that such Investment was not acquired by such Person in contemplation of such acquisition, merger, amalgamation, consolidation or transfer;

(3) cash and Cash Equivalents;

(4) receivables owing to Parent or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as Parent or any such Restricted Subsidiary deems reasonable under the circumstances;

(5) payroll, travel, services (e.g., shared services arrangements) to the extent permitted by Section 4.11(b)(7) and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(6) loans or advances to employees, officers or directors of Parent or any Restricted Subsidiary not in excess of $10,000,000;

 

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(7) any Investment acquired by Parent or any of its Restricted Subsidiaries:

(A) in exchange for any other Investment or accounts receivable held by Parent or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, insolvency, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable; or

(B) as a result of a foreclosure (or similar remedy) by Parent or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(8) Investments made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 or any other disposition of assets not constituting an Asset Sale;

(9) Investments in existence on the Issue Date and all exchanges, extensions, refinancings and renewals thereof;

(10) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 4.09;

(11) Guarantees and other Investments issued in accordance with Section 4.09 relating to Negative Pick-up Obligations, Program Acquisition Guarantees, minimum guarantees to acquire items of Product or interests therein or similar activities, in each case in the ordinary course of business;

(12) Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan in an amount not to exceed the amount of compensation expense recognized by Parent and its Restricted Subsidiaries in connection with such plans;

(13) Investments made pursuant to investment commitments existing on the Issue Date in (a) Playco Holdings Limited and (b) other Joint Ventures in existence on the Issue Date;

(14) with respect to the purchase price and/or construction costs expended by the Issuer and the Guarantors for Parent’s headquarters or any other real property of the Issuer and the Guarantors, the portion of such purchase prices in excess of any mortgage related to such purchase price;

(15) Investments in the Headquarters JV, at any time outstanding, not to exceed $40,000,000 (exclusive of any permitted guarantee);

(16) Investments in Joint Ventures and Unrestricted Subsidiaries, in an amount, at any time outstanding, not to exceed the greater of (a) $315,000,000 and (b) 3.0% of Total Assets when made;

(17) Investments (including debt obligations) received in connection with the bankruptcy, insolvency or reorganization of suppliers, customers or other debtors or in settlement of delinquent obligations arising in the ordinary course of business;

 

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(18) nominal Investments in Special Purpose Producers;

(19) Investments in and Guarantees of obligations of Parent, any Restricted Subsidiary, or any of their respective direct or indirect Subsidiaries or Joint Ventures (which Subsidiaries or Joint Ventures may engage in business unrelated to such Investment to the extent otherwise permissible under this Indenture) in connection with co-productions, co-ventures or co-financing arrangements related to the production, distribution and/or acquisition of Product or an interest therein, in each case in the ordinary course of business consistent with past practice;

(20) Investments in an aggregate amount at any time outstanding not to exceed the greater of (a) $345,000,000 and (b) 3.0% of Total Assets when made; provided that at the time of and after giving effect to such Investment, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(21) (a) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness, and (b) any Investment in an entity which is not a Restricted Subsidiary to which Parent or a Restricted Subsidiary sells Receivables Financing Assets pursuant to a Receivables Financing;

(22) any acquisition or production of Product in the ordinary course of business, to the extent such action would be considered an Investment;

(23) Letters of credit as to which Parent or a Restricted Subsidiary is the beneficiary and which are issued for the account of third party investors in Product of Parent or a Restricted Subsidiary;

(24) Investments consisting of the contribution or transfer of the (A) Comic Con business or (B) Spanish-language OTT to an Unrestricted Subsidiary or Joint Venture (or the transfer of Capital Stock in a Subsidiary that owns the Comic Con business or Spanish-language OTT, as the case may be, such that such Subsidiary becomes a Joint Venture); provided that at the time of and after giving effect to such Investment, (x) no Default shall have occurred and be continuing or would occur as a consequence thereof and (y) the Net Secured Leverage Ratio shall be not greater than 5.25 to 1.00 on a Pro Forma Basis;

(25) Investments in any ProdCo in accordance with the definition of “Permitted Slate Transaction”;

(26) Guarantees made in accordance with Section 4.09 and Section 4.15; and

(27) the Transactions.

“Permitted Liens” means, with respect to any Person:

(1) Liens securing Indebtedness and other obligations Incurred pursuant to Section 4.09(c)(1)(A) or Section 4.09(c)(1)(B) (and Hedging Obligations and banking services or cash management obligations secured therewith), including any Guarantees thereof;

 

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(2) pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(3) Liens imposed by law, including carriers’, warehousemen’s, mechanics’, materialmen’s and repairmen’s Liens;

(4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or that are being contested in good faith by appropriate proceedings; provided that any appropriate reserves required pursuant to GAAP have been made in respect thereof;

(5) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(6) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions or agreements (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially impair their use in the operation of the business of such Person;

(7) Liens securing Hedging Obligations so long as the related Indebtedness is permitted under this Indenture;

(8) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of Parent or any of the Restricted Subsidiaries;

(9) Liens arising out of attachments, judgments (to the extent not resulting in an Event of Default) or awards as to which an appeal or other appropriate proceedings for contest or review are timely commenced (and as to which foreclosure and other enforcement proceedings shall not have been commenced (unless fully bonded or otherwise effectively stayed)) and as to which any appropriate reserves have been established in accordance with GAAP;

(10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Finance Lease Obligations, mortgage financings, purchase money obligations or other payments Incurred to finance assets or property (other than Capital Stock or other Investments) acquired, constructed or improved; provided that:

(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under this Indenture and does not exceed the cost of the assets or property so acquired, constructed or improved; and

 

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(b) such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of Parent or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(11) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution;

(12) Liens arising from any applicable UCC, CCQ or PPSA financing statement filings or other similar filings regarding operating leases entered into by Parent and the Restricted Subsidiaries;

(13) Liens existing on the Issue Date (other than Liens permitted under clause (1) of this definition);

(14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided, further, however, that any such Lien may not extend to any other property owned by Parent or any Restricted Subsidiary;

(15) Liens on property at the time Parent or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger, amalgamation or consolidation with or into, or plan of arrangement with, Parent or any Restricted Subsidiary; provided, however, that such Liens are not created in connection with, or in contemplation of, such acquisition; provided, further, however, that such Liens may not extend to any other property owned by Parent or any Restricted Subsidiary;

(16) (a) Liens on assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing, and (b) Liens securing obligations under or in respect of any Qualified Receivables Financing;

(17) [reserved];

(18) Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (10), (13), (14), (15), (18), (25) and (38) of this definition; provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

 

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(19) any interest or title of a lessor under any Finance Lease Obligation or operating lease;

(20) [reserved];

(21) Liens to secure payment and performance obligations of the Issuer and Guarantors in connection with a revenue participation purchase agreement or similar arrangement for third-party investments in Product produced, acquired or distributed by the Issuer and such Guarantors in the ordinary course of business consistent with past practice;

(22) Liens under industrial revenue, municipal or similar bonds;

(23) Liens to secure Negative Pick-up Obligations, Program Acquisition Guarantees and other direct or indirect guarantees (including minimum guarantees) related to the acquisition, production or distribution of items of Product in the ordinary course of business to the extent such Lien is limited solely to such item of Product related to such Negative Pick-up Obligation, Program Acquisition Guarantee or other guarantee;

(24) Liens to secure Other Permitted Priority Indebtedness to the extent such Lien is limited solely to the item or items of Product or related Production Accounts relating to such Other Permitted Priority Indebtedness;

(25) Liens securing Indebtedness in an aggregate principal amount outstanding at any one time not to exceed at the time of Incurrence thereof, together with all other outstanding (x) Indebtedness secured by Liens pursuant to this clause (25) and (y) Refinancing Indebtedness secured by Liens incurred under clause (18) above in respect of Indebtedness previously secured by Liens under this clause (25), the greater of (a) $125,000,000 and (b) 1.25% of Total Assets;

(26) Liens on assets of a Subsidiary that is not a Guarantor securing Indebtedness of a Subsidiary that is not a Guarantor permitted to be Incurred pursuant to Section 4.09;

(27) Liens in favor of guilds or unions (whether pursuant to written security agreements, any producer’s or distributor’s assumption agreements, or otherwise), in each case which are required in the ordinary course of business pursuant to collective bargaining agreements;

(28) Liens to secure distribution, exhibition and/or exploitation rights of licensees pursuant to Distribution Agreements or of licensors from whom any of Parent or the Restricted Subsidiaries has (directly or indirectly) obtained any distribution rights or other exploitation rights to any item of Product (or of Persons providing financing to obtain such rights) or Liens to secure production advances on an item of Product; provided that such Liens are limited to such distribution, exhibition and/or exploitation rights and the applicable revenue therefrom;

 

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(29) Liens customarily granted or incurred in the ordinary course of business with regard to services rendered by laboratories and post-production houses, record warehouses and suppliers of materials and equipment which secure outstanding trade payables;

(30) possessory Liens (other than those of laboratories and production houses) which (a) occur in the ordinary course of business, (b) secure normal trade debt which is not yet due and payable and (c) do not secure Indebtedness;

(31) customary Liens in favor of completion guarantors granted in connection with Completion Guaranties;

(32) Liens granted by Parent or any Restricted Subsidiary that is a Special Purpose Producer to secure outside production financing otherwise permitted under this Indenture;

(33) Liens granted in connection with any Permitted Slate Financing in accordance with the definition thereof;

(34) Liens to secure Replication Advances permitted by Section 4.09(c)(14);

(35) (a) Liens on tax credits to secure Indebtedness which is otherwise non-recourse to Parent or any Restricted Subsidiary, other than customary representations and warranties, and (b) Liens on Parent’s or any Restricted Subsidiary’s rights and interests in any tax credit and any refund or similar receipt attributable to such tax credit to the extent such tax credit is owned by an Unrestricted Subsidiary or Special Purpose Producer and such Lien secures the obligation of Parent or such Restricted Subsidiary, in its capacity as agent for such Unrestricted Subsidiary or Special Purpose Producer, to remit such refund or similar receipt attributable to such tax credit to such Unrestricted Subsidiary or Special Purpose Producer, as applicable;

(36) Liens granted by either MQP, any Services Company that is Parent or any Restricted Subsidiary, LGF or LGT to secure MQP’s obligations to SGF pursuant to the SGF Co-Financing Arrangement;

(37) Liens in connection with reversion or turnaround rights with respect to a project in development;

(38) Liens granted by one or more of Parent and its Restricted Subsidiaries to secure Secured Funded Indebtedness permitted to be Incurred pursuant to Section 4.09(a), or any refinancing of such Indebtedness permitted pursuant to Section 4.09(c)(11);

(39) [reserved];

(40) rights or other interests granted under the Co-Publishing Agreement, dated April 5, 2013 and effective as of January 1, 2012, among Lions Gate Music Publishing LLC and Lions Gate Records, Inc. and Warner/Chappell and its affiliated entities (as the same may be amended, restated, supplemented, or otherwise modified from time to time);

 

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(41) Liens granted by Parent or any Restricted Subsidiary on Capital Stock or other equity interests of any Unrestricted Subsidiary to secure Indebtedness whose incurrence is not prohibited hereunder; and

(42) Liens incurred in connection with the Separation Transaction.

“Permitted Slate Financing” means a financing arrangement in which two or more of the Issuer and/or Guarantor’s (as applicable) audio visual works (including motion pictures) are partially financed through an arrangement with a third party (“Permitted Financier”) who may be granted an interest in or share of the copyright, distribution rights, and/or certain financial proceeds from the subject audio visual works (collectively, “Permitted Financier Rights”) in connection with such financing arrangement; provided that (i) the only recourse of the Permitted Financier in connection with such arrangement against the Issuer or such Guarantor shall be limited to the Permitted Financier Rights, interests in related Production Accounts (if any), and customary representations and warranties given by the Issuer and/or Guarantor in connection with such arrangement and (ii) any such interest granted to the Permitted Financier in the Permitted Financier Rights and the other terms of such arrangement shall be reasonable and on an arm’s length basis and consistent with customary practice for transactions of such nature (as determined in good faith by the Issuer).

“Permitted Slate Transaction” shall mean a transaction which the Issuer and/or the Guarantors may at their option consummate and which satisfies all of the following criteria:

(1) the borrower or the issuer in such transaction (each, a “ProdCo”) will be a new corporation, limited liability company or limited partnership formed solely for the purpose of a Permitted Slate Transaction;

(2) each ProdCo will not engage in any business other than producing, acquiring or funding the print and advertising expenses of items of Product to be distributed by the Issuer or one or more Guarantors;

(3) the Issuer or any Guarantor and the other third party investors or financiers in such transaction will acquire (a) shares, membership interests, limited partnership interests, or other Capital Stock, in the applicable ProdCo and/or (b) revenue participations in the items of Product to be produced by such ProdCo;

(4) such ProdCo will not be a Guarantor;

(5) each ProdCo will acquire from the Issuer or the Guarantors ownership of items of Product;

(6) each ProdCo will grant to the Issuer or any Guarantor distribution and exploitation rights in those items of Product acquired by such ProdCo;

(7) nothing in the documentation and/or structure for a Permitted Slate Transaction shall permit ProdCo to distribute the contractually mandated revenue generated thereby except on a pro rata or a basis which is greater than pro rata in favor of the Issuer or a Guarantor, other than a customary production fee or interest return on the amount invested (provided, however, that if this condition is not satisfied, such transaction will qualify as a Permitted Slate Transaction, but the Investment in such transaction will be included in and subject to the Slate Cap); and

 

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(8) ProdCo may not Incur Indebtedness other than Subordinated Obligations (provided, however, that if this condition is not satisfied, such transaction will qualify as a Permitted Slate Transaction, but the Investment in such transaction will be included in and subject to the Slate Cap).

“Person” shall mean any natural person, corporation, division of a corporation, limited liability company, partnership, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

“Pilgrim JV” means Pilgrim Media Group, LLC.

“PPSA” shall mean the Personal Property Security Act, B.C. 1996 chapter 359 as heretofore and hereafter amended and in effect in the Province of British Columbia, or, where the context requires, the legislation of the other provinces or territories of Canada (other than Quebec) relating to security in personal property generally, including accounts receivable, as adopted by and in effect from time to time in such provinces or territories of Canada, as applicable.

“Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends upon liquidation, dissolution or winding up.

“Pro Forma Basis” shall mean, as to any Person, for any events as described that occur subsequent to the commencement of a period, such calculation as will give pro forma effect to such events as if such events occurred on the first day of such period (the “Reference Period”):

(1) the Transactions, any Asset Sale, any asset acquisition or Investment (or series of related Investments) permitted under this Indenture, in each case, in excess of $25,000,000, any merger, amalgamation, consolidation (or any similar transaction or transactions) and any dividend, distribution or other similar payment;

(2) any operational changes or restructurings of the business of Parent or any of its Restricted Subsidiaries that Parent or any of its Restricted Subsidiaries has determined to make and/or made during or subsequent to the Reference Period (including in connection with an Asset Sale or asset acquisition described in clause (1) above) and which are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and other operational changes and other cost savings in connection therewith;

(3) the designation of any Subsidiary as an Unrestricted Subsidiary or of any Unrestricted Subsidiary as a Subsidiary;

(4) any incurrence, repayment, repurchase or redemption of Indebtedness (or any issuance, repurchase or redemption of Disqualified Stock or Preferred Stock), other than fluctuations in revolving borrowings in the ordinary course of business (and not resulting from a transaction as described in clause (1) above); and

 

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(5) any other event, in each case that by the terms of this Indenture requires a test, financial ratio or covenant to be calculated on a “Pro Forma Basis.”

Pro forma calculations made pursuant to this definition shall be determined in good faith by the Issuer, and shall be made without duplication of amounts already included pursuant to the definition of “Adjusted EBITDA.” Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of the Issuer to reflect operating expense reductions, other operating improvements, synergies or such operational changes or restructurings described in clause (2) of the immediately preceding paragraph reasonably expected to result from the applicable pro forma event in the 24 month period following the consummation of such pro forma event; provided that the aggregate amount of such adjustments described in clause (2) of the immediately preceding paragraph that do not (X) comply with Article 11 of Regulation S-X for any Reference Period or (Y) relate to or arise from the Transactions (the “Non-S-X Adjustment Amount”) shall not, when aggregated with the amount of any increase to Adjusted EBITDA pursuant to clause (5) thereof for such Reference Period, exceed 25% of Adjusted EBITDA for such Reference Period.

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date on which the relevant calculation is being made had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). Interest on a Finance Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Issuer to be the rate of interest implicit in such Finance Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period, except to the extent the outstanding borrowings thereunder are reasonably expected to increase as a result of any transactions described in clause (1) of the first paragraph of this definition of “Pro Forma Basis” which occurred during the respective period or thereafter and on or prior to the date of determination. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such applicable optional rate as the Issuer may designate.

In the event that any financial ratio is being calculated for purposes of determining whether Indebtedness or any Lien relating thereto may be incurred, the Issuer may elect, pursuant to an Officers’ Certificate thereof delivered to the Trustee, to treat all or any portion of the commitment relating thereto as being incurred at the time of such commitment (such election to be consistently applied for all purposes under this Indenture), in which case Indebtedness in an amount equal to such commitment shall be deemed to be outstanding for all financial calculations until such commitment is terminated, but any subsequent Incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an incurrence at such subsequent time.

“Product” means any motion picture, live event, film, music or video tape or other audio-visual work or episode thereof produced for theatrical, non-theatrical or television release or for exploitation in any other medium (including, without limitation; interactive media, multi-channel and digital platforms, stage plays, museum tours, theme parks or other location-based

 

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entertainment), in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter devised, with respect to which Parent or any of its Restricted Subsidiaries (1) is the copyright owner or (2) acquires an equity interest or distribution or sales agency rights. The term “item of Product” shall include, without limitation, the scenario, screenplay or script upon which such item of Product is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of Parent and the Restricted Subsidiaries, and all rights therein and thereto, of every kind and character.

“Production Account” means any demand deposit account established by the Issuer or any Guarantor at a commercial bank for the sole purpose of paying the production costs of a particular item of Product (or, in connection with any Permitted Slate Financing, the audio visual works (including motion pictures) to which such Permitted Slate Financing relates) in the ordinary course of business.

“Program Acquisition Guarantees” means any commitment of Parent or any Restricted Subsidiary to a producer or owner (including, for the avoidance of doubt, any Restricted Subsidiary, Unrestricted Subsidiary or third party) of Product in conjunction with the acquisition of Product, distribution rights or sales agency rights in Product by Parent or such Restricted Subsidiary to the effect that (1) the gross revenues to be generated in the future from the exploitation of such Product or the net revenues to be received by such producer or owner from the exploitation of such Product are reasonably anticipated by the Issuer to equal or exceed an amount specified in the acquisition agreement related to such Product or (2) otherwise requires payment by Parent or such Restricted Subsidiary of a minimum amount specified in the acquisition agreement related to such Product regardless of actual performance of such Product.

“Qualified Receivables Financing” means any Receivables Financing that meets the following conditions:

(1) Parent shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to Parent or the applicable Subsidiary, as the case may be;

(2) all sales of Receivables Financing Assets and related assets by Parent or the applicable Subsidiary (other than a Receivables Subsidiary) either to the applicable Receivables Subsidiary or directly to the applicable third-party financing providers (as the case may be) are made at Fair Market Value (as determined in good faith by Parent); and

(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by Parent) and may include Standard Undertakings.

“Rating Agencies” means S&P, Moody’s or a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuer.

 

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“Receivables Financing” means any transaction or series of transactions that may be entered into by Parent or any of its Subsidiaries pursuant to which Parent or any of its Subsidiaries may sell, assign, convey or otherwise transfer to any other Person, or may grant a security interest in, any Receivables Financing Assets (whether now existing or arising in the future) of Parent or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such Receivables Financing Assets, all contracts and all guarantees or other obligations in respect of such Receivables Financing Assets, proceeds of such Receivables Financing Assets and other assets which are customarily sold, assigned, conveyed, or transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions or factoring transactions involving Receivables Financing Assets and any Hedging Obligations entered into by Parent or any such Subsidiary in connection with such Receivables Financing Assets.

“Receivables Financing Assets” means any of the following assets (or interests therein) from time to time originated, acquired or otherwise owned by Parent or any Restricted Subsidiary or in which Parent or any Restricted Subsidiary has any rights or interests, in each case, without regard to where such assets or interest are located: (1) receivables, payment obligations, installment contracts, and similar rights, whether currently existing or arising or estimated to arise in the future, and whether in the form of accounts, chattel paper, general intangibles, instruments or otherwise (including any drafts, bills of exchange or similar notes and instruments), (2) royalty and other similar payments made related to the use of trade names and other intellectual property, business support, training and other services, including without limitation licensing fees, lease payments and similar revenue streams relating to Product, (3) revenues related to distribution and merchandising of the products of Parent and its Restricted Subsidiaries, (4) intellectual property rights relating to the generation of any of the foregoing types of assets, and (5) any other assets and property to the extent customarily included in securitization transactions or factoring transactions of the relevant type in the applicable jurisdictions (as determined by Parent in good faith).

“Receivables Financing Fees” means distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and all other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.

“Receivables Financing Repurchase Obligation” means any obligation of a seller of Receivables Financing Assets in a Qualified Receivables Financing to repurchase Receivables Financing Assets arising as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a Receivables Financing Asset or portion thereof becoming subject to any asserted defense, dispute, dilution, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

“Receivables Subsidiary” means a Restricted Subsidiary that is a Wholly-Owned Subsidiary (or another Person formed for the purposes of engaging in Qualified Receivables Financing with Parent or any of its Subsidiaries in which Parent or any of its Subsidiaries makes an Investment and to which Parent or any of its Subsidiaries transfers Receivables Financing Assets and related assets) which engages in no activities other than in connection with the financing of Receivables Financing Assets of Parent and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business and:

 

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(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (a) is guaranteed by Parent or any other Restricted Subsidiary (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Undertakings), (b) is recourse to or obligates Parent or any other Restricted Subsidiary in any way other than pursuant to Standard Undertakings, or (c) subjects any property or asset of Parent or any other Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Undertakings;

(2) with which neither Parent nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding other than on terms which Parent reasonably believes to be no less favorable to Parent or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of Parent (other than pursuant to Standard Undertakings); and

(3) to which neither Parent nor any Restricted Subsidiary has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than pursuant to Standard Undertakings).

“Record Date” for the interest payable on any applicable Interest Payment Date means April 1 or October 1 (whether or not a Business Day) next preceding such Interest Payment Date.

“Refinancing Indebtedness” means Indebtedness that is Incurred in exchange for, or to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, with “refinance,” “refinances” and “refinanced” each having a correlative meaning) any Indebtedness being refinanced (or previous refinancing thereof); provided, however, that:

(1) the Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of (a) the Stated Maturity of the Indebtedness being refinanced or (b) 91 days later than the stated Maturity of the Notes;

(2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the lesser of (a) the remaining Average Life of the Indebtedness being refinanced or (b) 91 days after the remaining Average Life of the Notes;

(3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, interest or premiums required by the instruments governing such existing Indebtedness, any tender premiums with respect thereto, and fees and expenses Incurred in connection therewith);

(4) if the Indebtedness being refinanced is subordinated in right of payment to the Notes or the Notes Guarantee, such Refinancing Indebtedness is subordinated in right of payment to the Notes or the Notes Guarantee on terms in the aggregate not materially less favorable to the Holders than those contained in the documentation governing the Indebtedness being refinanced (as determined by the Issuer in good faith); and

 

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(5) Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor Subsidiary that refinances Indebtedness of the Issuer or a Guarantor.

“Related Business” means any of the following:

(1) development, production, distribution, acquisition or disposition of intellectual properties including films, live event, television, interactive media, music and video product or any other audio-visual work and/or rights therein or thereto,

(2) operation of physical production facilities,

(3) acquisition and operation of television channels and internet or digital distribution platforms or

(4) any business which is related, ancillary or complementary to any of the foregoing activities, including, without limitation, the acquisition and operation of theme parks, museum tours, stage plays or other live or location-based entertainment.

“Replication Advances” means advances incurred pursuant to DVD replication, tape duplication or film processing transactions which require repayment if certain volume commitments are not fulfilled; provided that repayment of such advances (1) may not be accelerated or be required to be paid on demand unless such repayment obligation is completely unsecured, (2) do not require cash payments of interest and (3) are on terms at least as favorable as Parent’s or such Restricted Subsidiary’s current replication deals.

“Responsible Officer” means, when used with respect to the Trustee, any officer within the corporate trust department of the Trustee having direct responsibility for the administration of this Indenture, any other officer to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” means any Subsidiary of Parent other than an Unrestricted Subsidiary.

“S&P” means S&P Global Ratings and any successor to its rating agency business.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Issuer or a Restricted Subsidiary transfers such property to a Person (other than Parent or any of its Restricted Subsidiaries) and Parent or a Restricted Subsidiary leases it from such Person.

“SEAC Transaction” means the Transactions (as defined in that certain Business Combination Agreement, dated as of December 22, 2023, by and among Screaming Eagle Acquisition Corp., LGEC and the other parties from time to time party thereto, as amended, restated, supplemented or otherwise modified from time to time).

 

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“SEC” means the U.S. Securities and Exchange Commission.

“Secured Funded Indebtedness” shall mean Consolidated Debt of Parent and its Restricted Subsidiaries that is secured by a Lien on any asset of Parent or any Restricted Subsidiary which is (a) not a Permitted Lien or (b) a Permitted Lien incurred pursuant to (x) clause (1), (10), (13), (15), (25) or (38) of the definition thereof or (y) clause (18) thereof to the extent the Lien incurred pursuant to clause (18) refinanced a Lien previously incurred pursuant to a clause set forth in the foregoing clause (x).

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

“Senior Credit Facility” means

(1) the credit facilities under the Credit Agreement and

(2) if the Senior Credit Facility described in clause (1) is not outstanding, if designated by the Issuer to be included in the definition of “Senior Credit Facility,” one or more related debt facilities or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, debt securities, indentures or other forms of debt financing, in each case with the same or different borrowers or issuers, and as the same may be amended, supplemented, restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time.

“Separation Closing Date” means the date on which the Separation Transaction has been consummated as determined by LGEC in its sole discretion and set forth in an Officers’ Certificate delivered to the Trustee, which certificate shall be conclusive.

“Separation Transaction” means one or more transactions that results in the separation of the Studio Business and the STARZ Business, the form and structure of which may be determined by LGEC in its sole and absolute discretion so long as LGEC reasonably determines that such transaction(s) separates the Studio Business and the STARZ Business and any related transactions entered into in connection therewith; provided that, for the avoidance of doubt, the SEAC Transactions in and of themselves shall not constitute a Separation Transaction.

“Services Company” means a corporation (which may or may not be a Subsidiary of Parent) having a permanent establishment in Québec which provides production services pursuant to a production services agreement between MQP and such Services Company.

“SGF” means SGF Entertainment Inc., a Subsidiary of the Société Générale Financement du Québec and its successors.

“SGF Co-Financing Arrangement” means the co-financing arrangement by and among MQP, LGEC and SGF pursuant to which, among other things, (1) MQP agreed to sell revenue participation interests in certain motion pictures and television productions to SGF pursuant to that certain Revenue Participation Purchase Agreement among MQP, SGF, LGF and LGT dated as of July 25, 2007, (2) MQP licensed certain motion pictures to LGF pursuant to that certain Master Distribution Agreement (Film Productions) between MQP and LGF, dated as of July 25, 2007 and (3) MQP agreed to license certain television productions to LGT pursuant to that certain Master Distribution Agreement (Television Productions) between MQP and LGT, dated as of July 25, 2007.

 

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“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of Parent within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Slate Cap” shall mean, at any time, the greater of (a) $300,000,000 (plus any returns of capital actually received by the Issuer and the Guarantors in respect of Investments made after the Assumption Date by them in all Permitted Slate Transactions) or (b) 3.5% of Total Assets at such time.

“Spanish-language OTT” means Parent’s current Spanish-language subscription video on demand service (as such service may continue to organically evolve) or other related service operated by Parent, its Subsidiaries or its designees.

“Special Purpose Producer” means a special purpose corporation or limited liability company formed solely for the purpose of producing Product or any audio-visual product or live or location-based entertainment which, in each case, will be purchased or distributed in whole or in part by Parent or any of its Restricted Subsidiaries.

“Standard Undertakings” means representations, warranties, covenants, indemnities, reimbursement obligations, performance undertakings, guarantees of performance, and similar customary payment obligations entered into by Parent or any of its Subsidiaries, whether joint and several or otherwise, which Parent has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary, it being understood that any Receivables Financing Repurchase Obligation shall be deemed to be a Standard Undertaking.

“STARZ Business” means substantially all of the assets and liabilities constituting LGEC’s “Media Networks” segment (as determined by LGEC in its sole discretion).

“Stated Maturity” means, with respect to any security, the date specified in the agreement governing or certificate relating to such Indebtedness as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Studio Business” means substantially all of the assets and liabilities constituting LGEC’s “Motion Picture” and “Television Production” segments and a substantial portion of LGEC’s corporate general and administrative functions (as determined by LGEC in its sole discretion).

“StudioCo Parent” means the ultimate public parent entity of the Studio Business at the time of the consummation of the Separation Transaction and any successor thereto.

 

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“Subordinated Obligation” means any Indebtedness of the Issuer or any Guarantor (whether outstanding on the Issue Date or thereafter Incurred) that is subordinated or junior in right of payment to the Notes or the Notes Guarantees pursuant to a written agreement. For the avoidance of doubt, such determination will be made without reference to the presence or absence of security in respect of any such Indebtedness.

“Subsidiary” of any Person means (x) (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company, unlimited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or Persons performing similar functions) or (2) any partnership, joint venture, limited liability company, unlimited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (1) and (2), at the time owned or controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of such Person and (y) any corporation, association or other business entity (including any partnership, joint venture, limited liability company, unlimited liability company or similar entity) (1) as to which such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies thereof, whether through the ownership of voting securities, by contract or otherwise and (2) which is consolidated with such Person pursuant to GAAP. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of Parent.

“Successor Issuer” means a Wholly-Owned Subsidiary of StudioCo Parent as determined by LGEC in its sole discretion.

“Successor Issuer Supplemental Indenture” means the supplemental indenture entered into in connection with the Separation Transaction substantially in the form attached hereto as Exhibit D.

“Test Period” means, on any date of determination, the period of four consecutive fiscal quarters of Parent most recently ended for which financial statements of Parent have been (or were required to be) delivered pursuant to Section 4.03; provided that prior to the first date financial statements are required to be so delivered, the Test Period in effect shall be the most recently ended full four fiscal quarter period prior to the Issue Date for which financial statements would have been required to be delivered hereunder had the Issue Date occurred prior to the end of such period.

“Total Assets” means the total assets of Parent and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent balance sheet of Parent.

“Transaction Expenses” means any fees, costs or expenses incurred or paid by Parent or its Restricted Subsidiaries in connection with the Transactions.

“Transactions” means, collectively

(a) the Separation Transaction,

(b) the issue and sale of the Notes pursuant to the Exchange Agreement and this Indenture,

(c) the payment of any Transaction Expenses and

 

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(d) all transactions directly relating thereto or reasonably required to effect the foregoing in all respects.

“Transfer Restricted Notes” means Definitive Notes and any other Notes that bear or are required to bear the Restricted Notes Legend.

“Trust Indenture Act” means the Trust Indenture Act of 1939, as amended.

“Trustee” means U.S. Bank Trust Company, National Association, as trustee, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in applicable jurisdictions of the United States of America.

“Unrestricted Cash” means, as of any date, all cash and Cash Equivalents owned by Parent or any Restricted Subsidiary which would not appear as “restricted” on a consolidated balance sheet of Parent as of such date. For purposes of determining the ability to Incur any other Indebtedness permitted to be incurred under Section 4.09, the proceeds of any such Incurred Indebtedness shall be disregarded in determining Unrestricted Cash when calculating the Net Secured Leverage Ratio and/or the Net Total Leverage Ratio as of such date.

“Unrestricted Subsidiary” means:

(1) any Subsidiary of Parent that at the time of determination shall be designated an Unrestricted Subsidiary by the Issuer or Parent in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Issuer or Parent may designate any Subsidiary of Parent (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger, amalgamation or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

(1) such Subsidiary (or any of its Subsidiaries) does not own any Capital Stock of any Subsidiary which, following such designation, will remain a Restricted Subsidiary, or hold any Lien on any property of Parent or any Subsidiary which, following such designation, will remain a Restricted Subsidiary of Parent;

(2) any Guarantee by Parent or any Restricted Subsidiary of any Indebtedness of such Subsidiary (or any of its Subsidiaries) shall be deemed an “Incurrence” of such Indebtedness and an “Investment” by Parent or such Restricted Subsidiary and complies with Section 4.09;

(3) such designation and the Investment in such Subsidiary complies with Section 4.07;

(4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of Parent and its Subsidiaries.

 

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Any such designation by the Issuer or Parent shall be evidenced to the Trustee by filing with the Trustee an Officers’ Certificate giving effect to such designation and certifying that such designation complies with the foregoing conditions.

An Officer of the Issuer or Parent may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, (x) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and (y) the Net Secured Leverage Ratio, on a Pro Forma Basis, would not be greater than 5.25 to 1.00.

For the avoidance of doubt, Parent shall be permitted to designate any Subsidiary to be a Restricted Subsidiary or Unrestricted Subsidiary, in each case, in accordance with the terms of this Indenture, notwithstanding the designation of such Subsidiary under any other agreement; provided, however, that (x) no Subsidiary may be designated as an Unrestricted Subsidiary or subsequently re-designated as a Restricted Subsidiary unless it is simultaneously so designated or re-designated, as applicable, under the Senior Credit Facility (to the extent outstanding) and (y) the Issuer shall not be permitted to be an Unrestricted Subsidiary.

Notwithstanding the foregoing, as of the Issue Date, the Initial Unrestricted Subsidiaries and each of their Subsidiaries shall be Unrestricted Subsidiaries.

“U.S.” means the United States of America.

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable, of such Person.

“Wholly-Owned Subsidiary” means a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by Parent or another Wholly-Owned Subsidiary.

Section 1.02 Other Definitions.

 

Term

   

Defined in Section

“Additional Amounts”    4.01(c)(3)
“Affiliate Transaction”    4.11(a)
“Agent Members”    2.1(d) of Appendix A
“Applicable AML Law”    12.16
“Applicable Procedures”    1.1(a) of Appendix A
“Asset Sale Offer”    4.10(b)
“Asset Sale Offer Amount”    3.08(b)
“Asset Sale Offer Period”    3.08(b)
“Asset Sale Purchase Date”    3.08(b)
“Asset Sale Threshold Amount”    3.08(b)
“Authentication Order”    2.02(c)
“Automatic Exchange”    2.3(e) of Appendix A
“Automatic Exchange Date”    2.3(e) of Appendix A
“Automatic Exchange Notice”    2.3(e) of Appendix A
“Automatic Exchange Notice Date”    2.3(e) of Appendix A

 

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“Change of Control Offer”    4.14(a)
“Change of Control Payment”    4.14(a)
“Change of Control Payment Date”    4.14(a)(2)
“Claiming Guarantor”    10.08
“Clearstream”    1.1(a) of Appendix A
“Contributing Guarantor”    10.08
“Covenant Defeasance”    8.03
“Covenant Suspension Event”    4.16(a)(2)
“Distribution Compliance Period”    1.1(a) of Appendix A
“Euroclear”    1.1(a) of Appendix A
“Event of Default”    6.01(a)
“Excess Proceeds”    4.10(b)
“Executed Documentation”    12.02(i)
“Expiration Date”    1.05(j)
“Fixed Amounts”    1.04(d)
“Global Note”    2.1(b) of Appendix A
“Global Notes Legend”    2.3(f)(i) of Appendix A
“IAI”    1.1(a) of Appendix A
“IAI Global Note”    2.1(b) of Appendix A
“Incremental Equivalent Debt”    4.09(c)(1)
“Incurrence Based Amounts”    1.04(d)
“Initial Global Note”    2.1(b) of Appendix A
“Intra-Group Liabilities”    10.02
“LCT Election”    1.04(c)
“LCT Test Date”    1.04(c)
“LGCH Indenture”    1.01 – definition of “LGCH Notes”
“LGCH Supplemental Indenture”    12.19
“Legal Defeasance”    8.02(a)
“Limited Condition Transaction”    1.04(e)
“Luxembourg Guarantor”    10.02
“Non-S-X Adjustment Amount”    1.01 – definition of “Pro Forma Basis”
“Note Register”    2.03(a)
“OID Notes Legend”    2.3(f)(i) of Appendix A
“Paying Agent”    2.03(a)
“Permitted Financier”    1.01 – definition of “Permitted Slate Financing”
“Permitted Parent Holdco”    1.01 – definition of “Permitted Holder”
“ProdCo”    1.01 – definition of “Permitted Slate Transaction”
“QIB”    1.1(a) of Appendix A
“Reference Period”    1.01 – definition of “Pro Forma Basis”
“Registrar”    2.03(a)
“Regulation”    10.02(b)
“Regulation S”    1.1(a) of Appendix A
“Regulation S Global Note”    2.1(b) of Appendix A
“Regulation S Notes”    1.1(a) of Appendix A
“Regulation S Permanent Global Notes”    1.1(a) of Appendix A
“Regulation S Temporary Global Notes”    1.1(a) of Appendix A
“Regulation S Temporary Global Notes Legend”    2.3(f)(i) of Appendix A
“Reinstatement Date”    4.16(b)

 

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“Relevant Taxing Authority”    4.01(c)
“Relevant Taxing Jurisdiction”    4.01(c)
“Restricted Asset Sale Amount”    4.10(d)
“Restricted Notes Legend”    2.3(f)(i) of Appendix A
“Restricted Payment”    4.07(a)
“Rule 144”    1.1(a) of Appendix A
“Rule 144A”    1.1(a) of Appendix A
“Rule 144A Global Note”    2.1(b) of Appendix A
“Rule 144A Notes”    1.1(a) of Appendix A
“Rule 501”    1.1(a) of Appendix A
“Rule 904”    1.1(a) of Appendix A
“Successor Guarantor”    5.01(c)(1)
“Successor Person”    5.01(a)(1)
“Suspended Covenants”    4.16(a)(2)
“Suspension Period”    4.16(b)
“Trustee”    8.05(a)
“Unrestricted Global Note”    1.1(a) of Appendix A

Section 1.03 Rules of Construction.

Unless the context otherwise requires:

(1) a term defined in Section 1.01 or 1.02 has the meaning assigned to it therein;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) words in the singular include the plural, and words in the plural include the singular;

(5) wherever herein any determination may be made by the Issuer or an Officer thereof, such determination may also be made, for purposes of this Indenture, by Parent or an Officer thereof; wherever herein any determination may be made by Parent or an Officer thereof, such determination may also be made by the Issuer or an Officer thereof; wherever herein any Officers’ Certificate is required to be delivered by the Issuer, such certificate may be delivered by Parent; and wherever herein any Officers’ Certificate is required to be delivered by Parent, such certificate may be delivered by the Issuer;

(6) unless the context otherwise requires, any reference to an “Article,” “Section,” “clause,” “Schedule” or “Exhibit” refers to an Article, Section, clause, Schedule or Exhibit, as the case may be, of this Indenture;

(7) the words “herein,” “hereof” and other words of similar import refer to this Indenture as a whole and not any particular Article, Section, clause or other subdivision;

 

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(8) “including” means including without limitation;

(9) references to sections of, or rules under, the Securities Act, the Exchange Act or the Trust Indenture Act shall be deemed to include substitute, replacement or successor sections or rules adopted by the SEC from time to time;

(10) unless otherwise provided, references to agreements and other instruments shall be deemed to include all amendments and other modifications to such agreements or instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Indenture; and

(11) unless otherwise provided, in the event that a transaction meets the criteria of more than one category of permitted transactions or listed exceptions, the Issuer may classify such transaction as it, in its sole discretion, determines.

Section 1.04 Interpretation Matters.

(a) All terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (x) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of Parent or any Subsidiary at “fair value”, as defined therein, (y) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof and (z) for the avoidance of doubt, except as provided in the definition of “Consolidated Net Income”, without giving effect to the financial condition, results and performance of the Unrestricted Subsidiaries.

(b) In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of determining compliance with any provision of this Indenture which requires that no Default or Event of Default, as applicable, has occurred, is continuing or would result from any such action, as applicable, such condition shall, at the option of the Issuer, be deemed satisfied, so long as no Default or Event of Default, as applicable, exists on the date (i) the definitive agreement for such Limited Condition Transaction is entered into, (ii) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (iii) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7 announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction. For the avoidance of doubt, if the Issuer has exercised its option under the immediately preceding sentence, and any Default or Event of Default, as applicable, occurs following the date the (i) definitive agreement for the applicable Limited Condition Transaction is entered into, (ii) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (iii) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7

 

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announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction, and, in each case, prior to the consummation of such Limited Condition Transaction, any such Default or Event of Default, as applicable, shall be deemed to not have occurred or be continuing for purposes of determining whether any action being taken in connection with such Limited Condition Transaction is permitted under this Indenture.

(c) In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of (i) determining compliance with any provision of the Indenture which requires the calculation of the Net Secured Leverage Ratio or Net Total Leverage Ratio or (ii) testing baskets set forth in this Indenture (including baskets measured as a percentage of Total Assets or Adjusted EBITDA), in each case, at the option of the Issuer (the Issuer’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), the date of determination of whether any such action is permitted hereunder, shall be deemed to be the date (x) the definitive agreement for such Limited Condition Transaction is entered into, (y) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (z) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7 announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction, as applicable (the “LCT Test Date”), and if, after giving pro forma effect to the Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds of such incurrence) as if they had occurred at the beginning of the most recent four consecutive fiscal quarters ending prior to the LCT Test Date for which consolidated financial statements of the Issuer are available, the Issuer could have taken such action on the relevant LCT Test Date in compliance with such ratio, basket or amount, such ratio, basket or amount shall be deemed to have been complied with; provided that (a) if financial statements for one or more subsequent fiscal quarters shall have become available, the Issuer may elect, in its sole discretion, to redetermine all such ratios, baskets or amounts (including as to the absence of any continuing Default or Event of Default) on the basis of such financial statements, in which case, such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date for purposes of such ratios, baskets or amounts and (b) except as contemplated in the foregoing clause (a), compliance with such ratios, baskets or amounts (and any related requirements and conditions) (including as to the absence of any continuing Default or Event of Default) shall not be determined or tested at any time after the applicable LCT Test Date for such Limited Condition Transaction and any actions or transactions being taken in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds of such incurrence). For the avoidance of doubt, if the Issuer has made an LCT Election and any of the ratios, baskets or amounts for which compliance was determined or tested as of the LCT Test Date is exceeded as a result of fluctuations in any such ratio, basket or amount, including due to fluctuations in Adjusted EBITDA or Total Assets of the Issuer or the Person subject to such Limited Condition Transaction or any applicable currency exchange rate, at or prior to the consummation of the relevant transaction or action, such baskets, ratios or amounts will not be deemed to have been exceeded as a result of such fluctuations. If the Issuer has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio, basket or amount (other than with respect to Section 4.07(a)(4)(C)) on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited

 

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Condition Transaction is consummated or the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio, basket or amount shall be calculated on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds thereof) have been consummated.

(d) Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of any covenant in this Indenture that does not require compliance with a financial ratio or test (including the Net Secured Leverage Ratio or Net Total Leverage Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently or in a series of related transactions with any amounts incurred or transactions entered into (or consummated) in reliance on a provision in such covenant that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) in such covenant shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in such covenant in connection with such incurrence, but full pro forma effect shall be given to all applicable and related transactions (including the use of proceeds of all Indebtedness to be incurred and any repayments, repurchases and redemptions of Indebtedness) and all other permitted pro forma adjustments. For the avoidance of doubt, the Trustee shall have no duty to (i) calculate, or verify the calculation of, any ratio, basket, amount or test in connection with a Limited Condition Transaction, Fixed Amounts, or Incurrence Based Amounts, (ii) determine whether any Default or Event of Default has occurred, is continuing or would result from any action, or (iii) determine whether the Issuer has satisfied any condition precedent to any action or transaction in connection with a Limited Condition Transaction.

(e) As used herein, the term “Limited Condition Transaction” means (x) any acquisition or investment (including by way of merger, amalgamation, consolidation or other business combination or the acquisition of Capital Stock or otherwise), by one or more of the Issuer and its Restricted Subsidiaries of or in any assets, business or Person, in each case, whose consummation is not conditioned on the availability of, or on obtaining, third-party financing or (y) any redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock by one or more of the Issuer and its Subsidiaries requiring irrevocable notice in advance of such redemption, purchase, repurchase, defeasance, satisfaction and discharge or prepayment.

Section 1.05 Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent duly appointed in writing. Except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments or record or both are delivered to the Trustee and, where it is hereby expressly required, to the Issuer and the Guarantors.

 

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(b) The fact and date of the execution by any Person of any such instrument or writing may be proved (1) by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the execution thereof or (2) in any other manner deemed reasonably sufficient by the Trustee. Where such execution is by or on behalf of any legal entity other than an individual, such certificate or affidavit shall also constitute proof of the authority of the Person executing the same. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient.

(c) The ownership of Notes shall be proved by the Note Register.

(d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of any action taken, suffered or omitted by the Trustee, the Issuer or the Guarantors in reliance thereon, whether or not notation of such action is made upon such Note.

(e) The Issuer may set a record date for purposes of determining the identity of Holders entitled to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, or to vote on any action authorized or permitted to be taken by Holders. If any record date is set pursuant to this clause (e), the Holders on such record date, and only such Holders, shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless made, given or taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Notes, or each affected Holder, as applicable, on such record date. Promptly after any record date is set pursuant to this paragraph, the Issuer, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder in the manner set forth in Section 12.02.

(f) The Trustee may set any day as a record date for the purpose of determining the Holders entitled to join in the giving or making of (1) any notice of Default, (2) any declaration of acceleration referred to in Section 6.02, (3) any direction referred to in Section 6.05 or (4) any request to pursue remedies referred to in Section 6.06(b). If any record date is set pursuant to this Section 1.05(f), the Holders on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided that no such action shall be effective hereunder unless made, given or taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Notes or each affected Holder, as applicable, on such record date. Promptly after any record date is set pursuant to this Section 1.05(f), the Trustee, at the Issuer’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Issuer and to each Holder in the manner set forth in Section 12.02.

(g) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Note may do so with regard to all or any part of the principal amount of such Note or by one or more duly appointed agents, each of which may do so pursuant to such appointment with regard to all or any part of such principal amount. Any notice given or action taken by a Holder or its agents with regard to different parts of such principal amount pursuant to this Section 1.05(g) shall have the same effect as if given or taken by separate Holders of each such different part.

 

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(h) Without limiting the generality of the foregoing, a Holder, including a Depositary that is the Holder of a Global Note, may make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders, and a Depositary that is the Holder of a Global Note may provide its proxy or proxies to the beneficial owners of interests in any such Global Note through such Depositary’s standing instructions and customary practices.

(i) The Issuer may fix a record date for the purpose of determining the Persons who are beneficial owners of interests in any Global Note held by a Depositary entitled under the procedures of such Depositary, if any, to make, give or take, by a proxy or proxies duly appointed in writing, any request, demand, authorization, direction, notice, consent, waiver or other action provided in this Indenture to be made, given or taken by Holders; provided that if such a record date is fixed, only the Holders on such record date or their duly appointed proxy or proxies shall be entitled to make, give or take such request, demand, authorization, direction, notice, consent, waiver or other action, whether or not such Holders remain Holders after such record date. No such request, demand, authorization, direction, notice, consent, waiver or other action shall be effective hereunder unless made, given or taken on or prior to the applicable Expiration Date.

(j) With respect to any record date set pursuant to this Section 1.05, the party hereto that sets such record dates may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Notes in the manner set forth in Section 12.02, on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.05, the party hereto which set such record date shall be deemed to have initially designated the 120th day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this clause (j).

ARTICLE 2

THE NOTES

Section 2.01 Form and Dating; Terms.

(a) Provisions relating to the Initial Notes and Additional Notes are set forth in Appendix A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Initial Notes and the Trustee’s certificate of authentication, and any Additional Notes and the Trustee’s certificate of authentication, shall each be substantially in the form of Exhibit A hereto, which is hereby incorporated in and expressly made a part of this Indenture. The Notes may have notations, legends or endorsements required by law, rules or agreements with national securities exchanges to which the Issuer or any Guarantor is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Issuer). Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

 

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(b) The aggregate principal amount of Notes that may be authenticated and delivered under this Indenture is unlimited.

(c) The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Initial Issuer, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(d) Additional Notes ranking pari passu with the Initial Notes may be created and issued from time to time by the Issuer without notice to or consent of the Holders and shall be consolidated with and form a single class with the Initial Notes and shall have the same terms as to status, redemption or otherwise (other than issue date, issue price and first Interest Payment Date) as the Initial Notes; provided that the Issuer’s ability to issue Additional Notes shall be subject to the Issuer’s compliance with Section 4.09; and provided, further, that if any such Additional Notes are not fungible for U.S. federal income tax purposes with the Initial Notes, such Additional Notes will be issued with a separate CUSIP number and ISIN. Any Additional Notes shall be issued with the benefit of an indenture supplemental to this Indenture.

(e) For purposes of the Interest Act (Canada), the rate of interest payable under the Notes, when expressed as an annual rate of interest, is equivalent to (x) the applicable rate payable based on a year of 360 days, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest is payable (or compounded) ends, and (z) divided by 360.

Section 2.02 Execution and Authentication.

(a) At least one Officer shall execute the Notes on behalf of the Issuer by electronic, manual or facsimile signature. If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note shall nevertheless be valid.

(b) A Note shall not be entitled to any benefit under this Indenture or be valid or obligatory for any purpose until authenticated substantially in the form of Exhibit A by the electronic or manual signature of the Trustee. The Trustee’s signature shall be conclusive evidence that the Note has been duly authenticated and delivered under this Indenture.

(c) On the Issue Date, the Trustee shall, upon receipt of a written order of the Initial Issuer signed by an Officer (an “Authentication Order”), authenticate and deliver the Initial Notes. In addition, at any time, from time to time, the Trustee shall upon an Authentication Order authenticate and deliver any Additional Notes for an aggregate principal amount specified in such Authentication Order for such Additional Notes issued hereunder.

(d) The Trustee may appoint an authenticating agent acceptable to the Issuer to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Issuer.

 

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Section 2.03 Registrar and Paying Agent.

(a) The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”) and at least one office or agency where Notes may be presented for payment (“Paying Agent”). The Registrar shall keep a register of the Notes (“Note Register”) and of their transfer and exchange. The Issuer may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar, and the term “Paying Agent” includes any additional paying agent. The Issuer may change any Paying Agent or Registrar without prior notice to any Holder. The Issuer shall notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Issuer fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. Parent or any of the Restricted Subsidiaries may act as Paying Agent or Registrar.

(b) The Initial Issuer initially appoints DTC to act as Depositary with respect to the Global Notes. The Initial Issuer initially appoints the Trustee to act as the Paying Agent and Registrar for the Notes and to act as Custodian with respect to the Global Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

The Issuer shall, no later than 11:00 a.m. (New York City time) on each due date for the payment of principal of and premium, if any, and interest on any of the Notes, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held in trust for the Holders entitled to the same, and (unless such Paying Agent is the Trustee) the Issuer shall promptly notify the Trustee of its action or failure so to act. The Issuer shall require each Paying Agent other than the Trustee to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of and premium, if any, and interest on the Notes, and shall notify the Trustee of any default by the Issuer in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Issuer or a Subsidiary) shall have no further liability for the money. If the Issuer or a Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Issuer, the Trustee shall serve as Paying Agent for the Notes.

Section 2.05 Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders. If the Trustee is not the Registrar, the Issuer shall furnish to the Trustee at least two Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders.

 

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Section 2.06 Transfer and Exchange.

(a) The Notes shall be issued in registered form and shall be transferable only upon the surrender of a Note for registration of transfer and in compliance with Appendix A.

(b) To permit registrations of transfers and exchanges, the Issuer shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 or at the Registrar’s request.

(c) No service charge shall be made to a holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange (other than pursuant to Section 2.07), but the Holders shall be required to pay any transfer tax or other governmental taxes and fees in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Section 2.10, 3.06, 3.08, 4.10, 4.14 and 9.05).

(d) Neither the Registrar nor the Issuer shall be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(e) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(f) Neither the Issuer or the Registrar shall be required (1) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 and ending at the close of business on the day of selection, (2) to register the transfer of or to exchange any Note so selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part or (3) to register the transfer of or to exchange a Note between a Record Date and the next succeeding Interest Payment Date.

(g) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuer may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and premium, if any, and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuer shall be affected by notice to the contrary.

(h) Upon surrender for registration of transfer of any Note at the office or agency of the Issuer designated pursuant to Section 4.02, the Issuer shall execute, and the Trustee shall authenticate and mail (or cause to be transferred by book entry), in the name of the designated transferee or transferees, one or more replacement Notes of any authorized denomination or denominations of a like aggregate principal amount.

(i) At the option of the Holder, Notes may be exchanged for other Notes of any authorized denomination or denominations of a like aggregate principal amount upon surrender of the Notes to be exchanged at such office or agency. Whenever any Global Notes or Definitive Notes are so surrendered for exchange, the Issuer shall execute, and the Trustee shall authenticate and mail (or cause to be transferred by book entry), the replacement Global Notes and Definitive Notes which the Holder making the exchange is entitled to in accordance with the provisions of Section 2.02.

 

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(j) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by mail or by facsimile or electronic transmission.

Section 2.07 Replacement Notes.

If a mutilated Note is surrendered to the Trustee or if a Holder claims that its Note has been lost, destroyed or wrongfully taken and the Trustee receives evidence to its satisfaction of the ownership and loss, destruction or theft of such Note, the Issuer shall issue and the Trustee, upon receipt of an Authentication Order, shall authenticate a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Issuer, an indemnity bond must be provided by the Holder that is sufficient in the judgment of the Trustee and the Issuer to protect the Issuer, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Issuer may charge the Holder for the expenses of the Issuer and the Trustee in replacing a Note. Every replacement Note is a contractual obligation of the Issuer and shall be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08 Outstanding Notes.

(a) The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note; provided that Notes held by Parent or a Subsidiary of the Issuer will not be deemed to be outstanding for purposes of Section 3.07(d) or Section 4.14(f).

(b) If a Note is replaced pursuant to Section 2.07 it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser, as such term is defined in Section 8-303 of the Uniform Commercial Code in effect in the State of New York.

(c) If the principal amount of any Note is considered paid under Section 4.01, from and after such date it ceases to be outstanding and interest on it ceases to accrue.

(d) If the Paying Agent (other than the Issuer, a Subsidiary or an Affiliate of any thereof) holds, on the maturity date, any redemption date or any date of purchase pursuant to an Offer to Purchase, money sufficient to pay Notes payable or to be redeemed or purchased on that date, then on and after that date such Notes shall be deemed to be no longer outstanding and shall cease to accrue interest.

 

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Section 2.09 Treasury Notes.

In determining whether the Holders of the requisite principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer, or by any Affiliate of the Issuer, shall be considered as though not outstanding, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes that a Responsible Officer of the Trustee knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right to deliver any such direction, waiver or consent with respect to the Notes and that the pledgee is not the Issuer or any obligor upon the Notes or any Affiliate of the Issuer or of such other obligor.

Section 2.10 Temporary Notes.

Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee, upon receipt of an Authentication Order, shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes and as shall be reasonably acceptable to the Trustee. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Notes in exchange for temporary Notes. Holders and beneficial holders, as the case may be, of temporary Notes shall be entitled to all of the benefits accorded to Holders, or beneficial holders, respectively, of Notes under this Indenture.

Section 2.11 Cancellation.

The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent shall forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee or, at the direction of the Trustee, the Registrar or the Paying Agent and no one else shall cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and shall destroy canceled Notes in accordance with its customary procedures (subject to the record retention requirement of the Exchange Act). Certification of the destruction of all canceled Notes shall, upon the written request of the Issuer, be delivered to the Issuer. The Issuer may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

Section 2.12 Defaulted Interest.

(a) If the Issuer defaults in a payment of interest on the Notes, it shall pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01. The Issuer shall notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment, and at the same time the Issuer shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such defaulted interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such defaulted interest as provided in this Section 2.12. The Trustee shall fix or cause to be fixed each such special record date and payment date; provided that no such special record date shall be less than 10 days prior to the related payment date for such defaulted interest. The Trustee shall promptly notify the Issuer of such special record date. At least 10 days before the special record date, the Issuer (or, upon the written request of the Issuer, the Trustee in the name and at the expense of the Issuer) shall send, or cause to be sent to each Holder a notice that states the special record date, the related payment date and the amount of such interest to be paid.

 

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(b) Subject to the foregoing provisions of this Section 2.12 and for greater certainty, each Note delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Note shall carry the rights to interest accrued and unpaid, and to accrue interest, which were carried by such other Note.

Section 2.13 CUSIP Numbers and ISINs

The Issuer in issuing the Notes may use CUSIP numbers and/or ISINs (if then generally in use) and, if so, the Trustee shall use CUSIP numbers and/or ISINs in notices of redemption or exchange or in Offers to Purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of redemption or exchange or in Offers to Purchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such redemption or exchange or Offer to Purchase shall not be affected by any defect in or omission of such numbers. The Issuer shall as promptly as practicable notify the Trustee in writing of any change in the CUSIP numbers and/or ISINs.

ARTICLE 3

REDEMPTION

Section 3.01 Notices to Trustee.

If the Issuer elects to redeem Notes pursuant to Section 3.07, it shall furnish to the Trustee, at least five Business Days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to Section 3.03 (unless a shorter notice period shall be agreed to by the Trustee), an Officers’ Certificate setting forth (1) the paragraph or subparagraph of such Note and/or Section of this Indenture pursuant to which the redemption shall occur, (2) the redemption date, (3) the principal amount of the Notes to be redeemed and (4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

(a) If less than all of the Notes are to be so redeemed pursuant to Section 3.07 or purchased in an Offer to Purchase at any time, the Trustee shall select the Notes to be redeemed or purchased on a pro rata basis or by lot or by such other method as the Trustee shall deem fair and appropriate, and, in the case of Global Notes, in accordance with the procedures of the Depositary unless otherwise required by law. In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased shall be selected, unless otherwise provided herein, not less than 10 nor more than 60 days prior to the redemption date by the Trustee from the then outstanding Notes not previously called for redemption or purchase.

(b) The Trustee shall promptly notify the Issuer in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the portion of the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected shall be in amounts of $1,000 or whole multiples of $1,000 in excess thereof; no Notes of $2,000 or less shall be redeemed in part, except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder, even if not $2,000 or a multiple of $1,000 in excess thereof, shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

 

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(c) After the redemption date, upon surrender of a Note to be redeemed in part only, a new Note or Notes in principal amount equal to the unredeemed portion of the original Note representing the same Indebtedness to the extent not redeemed shall be issued in the name of the Holder of the Notes upon cancellation of the original Note (or appropriate book entries shall be made to reflect such partial redemption).

Section 3.03 Notice of Redemption.

(a) Subject to Section 3.08, the Issuer shall send, or cause to be sent notices of redemption of Notes at least 10 days (or solely for the purposes of Section 4.14(f), 30 days) but not more than 60 days before the redemption date to each Holder whose Notes are to be redeemed pursuant to this Article at such Holder’s registered address or otherwise in accordance with the procedures of the Depositary, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with Article 8 or Article 12, or is delayed in accordance with Section 3.07(e). Notices of redemption may be conditional as set forth in Section 3.07(e).

(b) The notice shall identify the Notes to be redeemed and shall state:

(1) the redemption date;

(2) the redemption price and the amount of any accrued and unpaid interest to the redemption date;

(3) if any Note is to be redeemed in part only, the portion of the principal amount of that Note that is to be redeemed;

(4) the name and address of the Paying Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6) that, unless the Issuer defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Notes called for redemption ceases to accrue on and after the redemption date;

(7) the paragraph or subparagraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed;

(8) that no representation is made as to the correctness or accuracy of the CUSIP number or ISIN, if any, listed in such notice or printed on the Notes; and

(9) any condition to such redemption.

 

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(c) At the Issuer’s request, the Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s expense; provided that the Issuer shall have delivered to the Trustee, at least five Business Days before notice of redemption is required to be sent or caused to be sent to Holders pursuant to this Section 3.03 (unless a shorter notice shall be agreed to by the Trustee), an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in Section 3.03(b).

Section 3.04 Effect of Notice of Redemption.

Once notice of redemption is sent in accordance with Section 3.03, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price (except as provided for in Section 3.07(e)). The notice, if sent in a manner herein provided, shall be conclusively presumed to have been given, whether or not the Holder receives such notice. In any case, failure to give such notice or any defect in the notice to the Holder of any Note designated for redemption in whole or in part shall not affect the validity of the proceedings for the redemption of any other Note. Subject to Section 3.05, on and after the redemption date, interest ceases to accrue on Notes or portions of Notes called for redemption.

Section 3.05 Deposit of Redemption or Purchase Price.

(a) Prior to 11:00 a.m. (New York City time) on the redemption or purchase date, the Issuer shall deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued and unpaid interest on all Notes to be redeemed or purchased on that date. The Paying Agent shall promptly pay to each Holder (and, in the case of an Asset Sale Offer, if applicable, to holders of Pari Passu Indebtedness) to be redeemed or repurchased the applicable redemption or purchase price thereof and accrued and unpaid interest thereon. The Trustee or the Paying Agent shall promptly return to the Issuer any money deposited with the Trustee or the Paying Agent by the Issuer in excess of the amounts necessary to pay the redemption or purchase price of, and accrued and unpaid interest on, all Notes to be redeemed or purchased.

(b) If the Issuer complies with the provisions of Section 3.05(a), on and after the redemption or purchase date, interest shall cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after a Record Date but on or prior to the related Interest Payment Date, then any accrued and unpaid interest, if any, to the redemption or purchase date shall be paid on the relevant Interest Payment Date to the Person in whose name such Note was registered at the close of business on such Record Date. If any Note called for redemption or purchase shall not be so paid upon surrender for redemption or purchase because of the failure of the Issuer to comply with Section 3.05(a), interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest accrued to the redemption or purchase date not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01.

Section 3.06 Notes Redeemed or Purchased in Part.

Upon surrender of a Note that is redeemed or purchased in part, the Issuer shall issue and, upon receipt of an Authentication Order, the Trustee shall promptly authenticate and mail (or cause to be transferred by book entry) to the Holder at the expense of the Issuer a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered representing the same Indebtedness to the extent not redeemed or purchased; provided that each new Note shall be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. It is understood that, notwithstanding anything in this Indenture to the contrary, only an Authentication Order and not an Opinion of Counsel or Officers’ Certificate is required for the Trustee to authenticate such new Note.

 

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Section 3.07 Optional Redemption.

(a) [Reserved].

(b) Prior to the Separation Closing Date, the Issuer may redeem the Notes, in whole or in part, upon notice as described in Section 3.03, at the redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

 

Year

    Percentage  

2024

      102.750 % 

2025

      101.375 % 

2026 and thereafter

      100.000 % 
  

 

 

  

(c) On or after the Separation Closing Date, the Issuer may redeem the Notes, in whole or in part, upon notice as described in Section 3.03, at the redemption prices (expressed as percentages of the principal amount of the Notes to be redeemed) set forth below, plus accrued and unpaid interest thereon, if any, to, but not including, the applicable redemption date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date), if redeemed during the twelve-month period beginning on the Separation Closing Date of the years indicated below:

 

Year

    Percentage  

The Separation Closing Date until, but excluding, the 1-year anniversary thereof

      103.000 % 

The 1-year anniversary of the Separation Closing Date until, but excluding, the 2-year anniversary thereof

      102.000 % 

The 2-year anniversary of the Separation Closing Date until, but excluding, the 3-year anniversary thereof

      101.000 % 

The 3-year anniversary of the Separation Closing Date and thereafter

      100.000 % 
  

 

 

  

(d) In connection with any tender offer for the Notes, if Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in such tender offer and the Issuer, or any third party making such tender offer in lieu of the Issuer, purchases all such Notes validly tendered and not withdrawn by such Holders, the Issuer or such third party will have the right upon not less than 10 but not more than 60 days’ notice mailed, or delivered electronically if such Notes are held by any Depositary, by the Issuer to each Holder of such Notes, given not more than 30 days following such purchase date, to redeem or purchase, as applicable, all the Notes that remain outstanding following such purchase at a price equal to the price offered to each other Holder in such tender offer plus, to the extent not included in the tender offer payment, accrued and unpaid interest, if any, thereon, to, but not including, the redemption or purchase date (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date).

 

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(e) Any redemption notice may, at the Issuer’s discretion, be subject to one or more conditions precedent, including completion of an Equity Offering or other corporate transaction. In addition, if such redemption or notice is subject to satisfaction of one or more conditions precedent, such notice may state that, in the Issuer’s discretion, the redemption date may be delayed until such time (including more than 60 days after the date the notice of redemption was delivered (or delivered electronically if the Notes are held by any Depositary)) as any or all such conditions shall be satisfied or waived, or such redemption may not occur and such notice may be rescinded in the event that any or all such conditions shall not have been satisfied or waived by the redemption date, or by the redemption date as so delayed, or such notice may be rescinded at any time in the Issuer’s discretion if in the good faith judgment of the Issuer any or all of such conditions will not be satisfied or waived.

(f) Except as set forth in this Section 3.07, the Notes shall not be redeemable at the Issuer’s option. The Issuer is not required to make mandatory redemption payments or sinking fund payments with respect to the Notes. However, under certain circumstances, the Issuer may be required to offer to purchase the Notes as described in Section 4.14 and Section 4.10.

(g) If the optional redemption date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such Record Date.

Section 3.08 Offers to Repurchase by Application of Excess Proceeds.

(a) In the event that, pursuant to Section 4.10, the Issuer shall be required to commence an Asset Sale Offer, the Issuer shall follow the procedures specified below.

(b) The Asset Sale Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Sale Offer Period”). No later than five Business Days after the termination of the Asset Sale Offer Period (the “Asset Sale Purchase Date”), the Issuer will apply all Excess Proceeds in excess of $60,000,000 (the “Asset Sale Threshold Amount”) to the purchase of the aggregate principal amount of Notes and, if applicable, Pari Passu Indebtedness (on a pro rata basis, or as otherwise provided in Section 4.10(b), as applicable) required to be purchased pursuant to Section 4.10 (the “Asset Sale Offer Amount”), or, if less than the Asset Sale Offer Amount of Notes has been so validly tendered, all Notes and Pari Passu Indebtedness validly tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made.

(c) If the Asset Sale Purchase Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest will be paid to the Person in whose name a Note is registered at the close of business on such Record Date.

 

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(d) Upon the commencement of an Asset Sale Offer, the Issuer will mail (or otherwise communicate in accordance with the procedures of DTC) a notice to each of the Holders, with a copy to the Trustee. The notice shall contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders and, if required, all holders of Pari Passu Indebtedness. The notice, which shall govern the terms of the Asset Sale Offer, shall state:

(1) that the Asset Sale Offer is being made pursuant to this Section 3.08 and Section 4.10 and the length of time the Asset Sale Offer shall remain open;

(2) the Asset Sale Offer Amount, the purchase price, the amount of any accrued and unpaid interest to the Asset Sale Purchase Date, and the Asset Sale Purchase Date;

(3) that any Note not properly tendered or accepted for payment shall continue to accrue interest;

(4) that, unless the Issuer defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest on and after the Asset Sale Purchase Date;

(5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in amounts of $2,000 and larger integral multiples of $1,000 in excess thereof only;

(6) that Holders electing to have a Note purchased pursuant to any Asset Sale Offer shall be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Note completed, or transfer by book-entry transfer, to the Issuer, the Depositary, if appointed by the Issuer, or a Paying Agent at the address specified in the notice at least three Business Days before the Asset Sale Purchase Date;

(7) that Holders shall be entitled to withdraw their election if the Issuer, the Depositary or the Paying Agent, as the case may be, receives at the address specified in the notice, not later than one Business Day prior to the expiration of the Asset Sale Offer Period, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Notes the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

(8) that, if the aggregate principal amount of Notes surrendered by Holders thereof and other Pari Passu Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds in excess of the Asset Sale Threshold Amount, the Issuer shall repurchase the Notes and the Pari Passu Indebtedness on a pro rata basis unless otherwise required by law, and the Trustee shall select the Notes to be purchased on a pro rata basis on the basis of the aggregate accreted value or principal amount of tendered Notes (with such adjustments as may be deemed appropriate by the Trustee so that only Notes in denominations of $2,000 and larger integral multiples of $1,000 in excess thereof, shall be purchased); and

(9) that Holders whose Notes were purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer) representing the same Indebtedness to the extent not repurchased.

 

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(e) On or before the Asset Sale Purchase Date, the Issuer will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Asset Sale Offer Amount of Notes and Pari Passu Indebtedness or portions thereof so validly tendered and not properly withdrawn pursuant to the Asset Sale Offer, or if less than the Asset Sale Offer Amount has been validly tendered and not properly withdrawn, all Notes and Pari Passu Indebtedness so tendered, in each case in denominations of $2,000 and integral multiples of $1,000 in excess thereof; provided that if, following repurchase of a portion of a Note, the remaining principal amount of such Note outstanding immediately after such repurchase would be less than $2,000, then the portion of such Note so repurchased shall be reduced so that the remaining principal amount of such Note outstanding immediately after such repurchase is $2,000.

(f) The Issuer or the Paying Agent, as the case may be, will promptly, but in any case not later than five Business Days after termination of the Asset Sale Offer Period, mail or deliver to each tendering Holder of the Notes, an amount equal to the purchase price of the Notes so validly tendered and not properly withdrawn by such Holder, and accepted by the Issuer for purchase, and the Issuer will promptly issue a new Note, and the Trustee, upon receipt of an Authentication Order from the Issuer, will authenticate and mail or deliver (or cause to be transferred by book-entry) such new Note to such Holder (it being understood that, notwithstanding anything in this Indenture to the contrary, no Opinion of Counsel or Officers’ Certificate is required for the Trustee to authenticate and mail or deliver such new Note) in a principal amount equal to the unpurchased portion of the Note surrendered; provided that each such new Note will be in a principal amount of $2,000 or an integral multiple of $1,000 in excess thereof. Any Note not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof.

The Issuer shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 3.08. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 3.08, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 3.08 by virtue of any conflict.

Other than as specifically provided in this Section 3.08 or Section 4.10, any purchase pursuant to this Section 3.08 shall be made pursuant to the applicable provisions of Sections 3.01 through 3.06.

ARTICLE 4

COVENANTS

Section 4.01 Payment of Notes; Additional Amounts.

(a) The Issuer shall pay or cause to be paid the principal of and premium, if any, and interest on the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest shall be considered paid on the date due if the Paying Agent, if other than one of the Issuer or a Subsidiary of the Issuer, holds as of 11:00 a.m. (New York City time) on the due date money deposited by the Issuer in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest then due.

 

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(b) The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, at the rate equal to the then applicable interest rate on the Notes to the extent lawful; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace period) at the same rate to the extent lawful.

(c) All payments made by the Issuer under the Notes or this Indenture and each Guarantor pursuant to its Notes Guarantee will be made without withholding or deduction for any taxes imposed by any Canadian or other non-U.S. taxing authority (a “Relevant Taxing Authority”), unless required by law or the interpretation or administration thereof by such Relevant Taxing Authority. If any of the Issuer or any Guarantor is obligated to withhold or deduct any amount on account of taxes (including any penalties or interest related thereto) imposed by any Relevant Taxing Authority from any payment made with respect to the Notes, the Issuer or such Guarantor shall:

(1) make such withholding or deduction;

(2) remit the full amount deducted or withheld to the relevant government authority in accordance with the applicable law;

(3) pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each Holder of Notes (including Additional Amounts) after such withholding or deduction will not be less than the amount such Holder would have received if such taxes had not been withheld or deducted;

(4) furnish to the Trustee for the benefit of the Holders of Notes, within 30 days after the date of the payment of any taxes is due, an official receipt of the relevant government authorities for all amounts deducted or withheld, or if such receipts are not obtainable, other evidence of payment by the Issuer or such Guarantor of those taxes; and

(5) at least 15 days prior to each date on which any Additional Amounts are payable, deliver to the Trustee an Officers’ Certificate setting forth the calculation of the Additional Amounts to be paid and such other information as the Trustee may request to enable the Trustee to pay such Additional Amounts to Holders of Notes on the payment date.

Notwithstanding the foregoing, the Issuer and the Guarantors will not pay Additional Amounts to any Holder in respect of a beneficial owner of a Note:

(i) which is subject to such taxes by reason of such Holder or such beneficial owner (or any fiduciary, settlor, beneficiary, partner, member or shareholder of, or possessor of power over, such Holder or beneficial owner, if such Holder or beneficial owner is an estate, nominee, trust, partnership, limited liability company or corporation), presently or formerly, (A) carrying on business in the jurisdiction in respect of which the Relevant Taxing Authority requires the tax to be withheld or deducted (the “Relevant Taxing Jurisdiction”), (B) having a permanent establishment in the Relevant Taxing Jurisdiction, (C) being organized under the laws of the Relevant Taxing Jurisdiction or a subdivision thereof, or (D) being an actual or deemed citizen or resident in the Relevant Taxing Jurisdiction (other than solely as a result of the ownership of the Notes, the receipt of payments in respect of the Notes or a Notes Guarantee or the enforcement thereof);

 

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(ii) for or on account of any taxes imposed or withheld by reason of the failure of the Holder or beneficial owner of the Note to complete, execute and deliver to the Issuer or the applicable Guarantor any form or document to the extent applicable to such Holder or beneficial owner that may be required by law or by reason of administration of such law and which is reasonably requested in writing to be delivered to the Issuer or such Guarantor in order to enable the Issuer or such Guarantor to make payments on the Notes without deduction or withholding for taxes, or with deduction or withholding of a lesser amount, which form or document shall be delivered within 30 days of a written request therefor by the Issuer or such Guarantor;

(iii) for or on account of any taxes that are payable otherwise than by withholding from a payment on the Notes or any Note Guarantee or any estate, inheritance, gift, sales, excise, transfer, personal property or similar taxes;

(iv) for or on account of any taxes if the Holder is a fiduciary or partnership or person other than the sole beneficial owner of such payment and the taxes that would otherwise give rise to such Additional Amounts would not have been imposed on such payment had the Holder been the beneficiary, partner or sole beneficial owner, as the case may be, of such Note; or

(v) any combination of the above.

Any reference in this Indenture or the Notes to the payment of principal, premium, if any, interest, purchase price in connection with a purchase of Notes (including in connection with a Change of Control or Asset Sale), redemption price or any other amount payable under or with respect to any Note, will be deemed to include the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof. The Issuer and each Guarantor’s obligation to make payments of Additional Amounts will survive any termination of this Indenture or the defeasance of any rights hereunder.

Section 4.02 Maintenance of Office or Agency.

(a) The Issuer shall maintain an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Issuer and the Guarantors in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

(b) The Issuer may also from time to time designate additional offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer shall give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

 

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(c) The Initial Issuer hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Issuer in accordance with Section 4.02(a).

Section 4.03 Reports and Other Information.

(a) Notwithstanding that Parent may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, to the extent permitted by the Exchange Act, Parent will file with the SEC, and make available to the Trustee and through its publicly available website, the annual reports and the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) that are specified in Sections 13 and 15(d) of the Exchange Act with respect to U.S. issuers within the time periods specified therein or in the relevant forms. In the event that Parent is not permitted to file such reports, documents and information with the SEC pursuant to the Exchange Act, Parent will nevertheless make available such Exchange Act reports, documents and information to the Trustee and the Holders through its publicly available website as if Parent were subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act within the time periods specified therein or in the relevant forms, which requirement may be satisfied by posting such reports, documents and information on its website within the time periods specified by this Section 4.03. For the avoidance of doubt, the information and reports referred to in this Section 4.03(a) shall not be required to contain separate financial information for Guarantors that would be required under Rule 3-10 of Regulation S-X promulgated by the SEC (or any successor provision).

(b) The Trustee shall have no responsibility to determine if and when any of the reports required by (a) above have been filed or posted on any website. Delivery of the reports required by (a) above to the Trustee is for informational purposes only and the Trustee’s receipt of such reports will not constitute constructive notice of any information contained therein or determinable from information contained therein, including Parent’s or any other parties’ compliance with any of its covenants in this Indenture (as to which the Trustee will be entitled to rely exclusively on Officers’ Certificates that are delivered).

(c) If any of Parent’s Subsidiaries have been designated as Unrestricted Subsidiaries and such Unrestricted Subsidiaries, either individually or collectively, would otherwise have been a Significant Subsidiary, then Parent shall provide, either (in its discretion) (1) on Parent’s investor relations website or (2) in the annual and quarterly reports required by Section 4.03(a), within the applicable period after each fiscal quarter or fiscal year for the delivery of quarterly or annual financial information under Section 4.03(a), a reasonably detailed presentation, as determined in good faith by senior management of Parent, of the financial condition and results of operations of Parent, the other Guarantors, the Issuer and the Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries.

 

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(d) The Issuer and the Guarantors will make available to the Holders and to prospective investors, upon the request of such Holders, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the Notes are not freely transferable under the Securities Act. For purposes of this Section 4.03, the Issuer and the Guarantors will be deemed to have furnished the reports to the Holders as required by this Section 4.03 if Parent has filed such reports with the SEC via the EDGAR or any successor filing system and such reports are publicly available.

(e) In the event that: (1) the rules and regulations of the SEC permit Parent and any direct or indirect parent of Parent to report at such parent entity’s level on a consolidated basis and such parent entity is not engaged in any business in any material respect other than incidental to its ownership, directly or indirectly, of the Capital Stock of Parent, or (2) any direct or indirect parent of Parent is or becomes a Guarantor of the Notes, consolidating reporting at such parent entity’s level in a manner consistent with that described above in this Section 4.03 for Parent will satisfy this Section 4.03, and Parent is permitted to satisfy its obligations in this Section 4.03 with respect to financial information relating to Parent by furnishing financial information relating to such direct or indirect parent; provided that such financial information is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such direct or indirect parent and any of its Subsidiaries other than Parent and its Subsidiaries, on the one hand, and the information relating to Parent and its Subsidiaries on a standalone basis, on the other hand.

Section 4.04 Compliance Certificate.

(a) The Issuer shall deliver to the Trustee, within 120 days after the end of each fiscal year of the Issuer, an Officers’ Certificate indicating whether the signers thereof know of any Default that occurred during the previous year.

(b) The Issuer shall provide to the Trustee, within 30 days after becoming aware of any Default, written notice specifying such Default.

Section 4.05 [reserved].

Section 4.06 Stay, Extension and Usury Laws.

The Issuer and each Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer and each Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenant that it shall not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07 Limitation on Restricted Payments.

(a) Parent will not, and will not permit any of the Restricted Subsidiaries, directly or indirectly, to:

(1) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of Parent’s or any of its Restricted Subsidiaries’ Capital Stock (including any payment in connection with any merger, amalgamation or consolidation involving Parent or any of its Restricted Subsidiaries) other than:

(A) dividends or distributions by Parent payable solely in Capital Stock (other than Disqualified Stock) of Parent;

 

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(B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any Capital Stock issued by a Restricted Subsidiary that is not a Wholly-Owned Subsidiary, Parent or a Restricted Subsidiary holding such Capital Stock receives at least its pro rata share of such dividend or distribution; or

(C) cash payments made to (or on behalf of) current and former officers, directors and employees of Parent and its Subsidiaries to pay tax liabilities incurred by such Persons upon the vesting of equity interests of any kind held thereby, including restricted stock units;

(2) purchase, redeem, retire or otherwise acquire for value any Capital Stock of Parent or any direct or indirect parent of Parent held by Persons other than Parent or a Restricted Subsidiary (other than in exchange for Capital Stock of Parent (other than Disqualified Stock)), including in connection with any merger, amalgamation or consolidation;

(3) make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled repayment, scheduled sinking fund payment or scheduled maturity, any Subordinated Obligations, other than:

(A) Indebtedness permitted under Section 4.09(c)(4); or

(B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement; or

(4) make any Restricted Investment in any Person;

(all such payments and other actions referred to in the foregoing clauses (1) through (4) (other than any exception thereto) shall be collectively referred to as a “Restricted Payment”), unless, at the time of and after giving effect to such Restricted Payment:

(A) no Default shall have occurred and be continuing (or would result therefrom);

(B) in the case of a Restricted Payment of the type referred to in clauses (1) through (3) above, the Net Secured Leverage Ratio after giving effect, on a Pro Forma Basis, to such Restricted Payment would not be greater than 5.25 to 1.00; and

 

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(C) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Assumption Date (excluding Restricted Payments made pursuant to clauses (1), (2), (3), (4), (6), (7), (8), (9), (10), (11), (12), (13) and (14) of Section 4.07(b)) would not exceed the sum of (without duplication):

(i) 100% of Adjusted EBITDA of LGEC and its Restricted Subsidiaries for the period (treated as one accounting period) from the Assumption Date to the end of the most recent fiscal quarter ending prior to earlier of (x) the date of such Restricted Payment for which financial statements have been delivered or were required to be delivered pursuant to Section 4.03 and (y) the Separation Closing Date less 1.4 times the Consolidated Applicable Interest Charge of LGEC and its Restricted Subsidiaries for the same period plus from and after the Separation Closing Date, 100% of Adjusted EBITDA of StudioCo Parent and its Restricted Subsidiaries for the period (treated as one accounting period) from the Separation Closing Date to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which financial statements have been delivered or were required to be delivered pursuant to Section 4.03 less 1.4 times the Consolidated Applicable Interest Charge of StudioCo Parent and its Restricted Subsidiaries for the same period; plus

(ii) 100% of the aggregate Net Cash Proceeds and the Fair Market Value of any property other than cash received by LGEC from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Assumption Date and prior to the Separation Closing Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of LGEC or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by LGEC or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination) plus from and after the Separation Closing Date, 100% of the aggregate Net Cash Proceeds and the Fair Market Value of any property other than cash received by StudioCo Parent from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Separation Closing Date (other than Net Cash Proceeds received from an issuance or sale of such Capital Stock to a Subsidiary of StudioCo Parent or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by StudioCo Parent or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination), excluding in any event Excluded Contributions; plus

(iii) the amount by which Indebtedness of LGEC or its Restricted Subsidiaries is reduced on LGEC’s consolidated balance sheet upon the conversion or exchange (other than by a Subsidiary of LGEC) subsequent to the Assumption Date and prior to the Separation Closing Date of any Indebtedness of LGEC or its Restricted Subsidiaries for Capital Stock (other than Disqualified Stock) of LGEC or any direct or indirect parent of LGEC (less the amount of any cash, or the Fair Market Value of any other property, distributed by LGEC upon

 

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such conversion or exchange) plus from and after the Separation Closing Date, the amount by which Indebtedness of StudioCo Parent or its Restricted Subsidiaries is reduced on StudioCo Parent’s consolidated balance sheet upon the conversion or exchange (other than by a Subsidiary of StudioCo Parent) subsequent to the Separation Closing Date of any Indebtedness of StudioCo Parent or its Restricted Subsidiaries for Capital Stock (other than Disqualified Stock) of StudioCo Parent or any direct or indirect parent of StudioCo Parent (less the amount of any cash, or the Fair Market Value of any other property, distributed by StudioCo Parent upon such conversion or exchange); plus

(iv) (x) prior to the Separation Closing Date, the amount equal to the net reduction in Restricted Investments made by LGEC or any of its Restricted Subsidiaries in any Person resulting from:

(A) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to LGEC or any Restricted Subsidiary; or

(B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries or the merger, amalgamation or consolidation of an Unrestricted Subsidiary with and into LGEC or any of its Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed the amount of Investments previously made by LGEC or any Restricted Subsidiary in such Unrestricted Subsidiary, plus

(y) from and after the Separation Closing Date, the amount set forth in the proceeding clause (iv)(x) plus the amount equal to the net reduction in Restricted Investments made by StudioCo Parent or any of its Restricted Subsidiaries in any Person resulting from:

(A) repurchases or redemptions of such Restricted Investments by such Person, proceeds realized upon the sale of such Restricted Investment to an unaffiliated purchaser, repayments of loans or advances or other transfers of assets (including by way of dividend or distribution) by such Person to StudioCo Parent or any Restricted Subsidiary; or

(B) the redesignation of Unrestricted Subsidiaries as Restricted Subsidiaries or the merger, amalgamation or consolidation of an Unrestricted Subsidiary with and into StudioCo Parent or any of its Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed the amount of Investments previously made by StudioCo Parent or any Restricted Subsidiary in such Unrestricted Subsidiary,

 

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which amount in each case under this clause (iv) was included in the calculation of the amount of Restricted Payments; provided, however, that no amount will be included under this clause (iv) to the extent it is already included in Adjusted EBITDA; plus

(v) $150,000,000.

(b) The foregoing provisions of Section 4.07(a) will not prohibit:

(1) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock or Subordinated Obligations of the Issuer or any Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of Parent or contributions to the equity capital of Parent (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of Parent or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by Parent or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that the Net Cash Proceeds from such sale of Capital Stock will be excluded from clause (C)(ii) of Section 4.07(a);

(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Issuer or any Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Issuer or any Guarantor that, in each case, is permitted to be Incurred pursuant to Section 4.09 and that, in each case, constitutes Refinancing Indebtedness;

(3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of Parent or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of Parent or such Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred pursuant to Section 4.09 and that, in each case, constitutes Refinancing Indebtedness;

(4) any purchase or redemption of Subordinated Obligations from Net Available Cash to the extent the Issuer has complied with its obligations to utilize such Net Available Cash pursuant to Section 4.10;

(5) dividends or distributions paid within 60 days after the date of declaration if at such date of declaration such dividends or distributions would have complied with this provision;

(6) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock, or options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of Parent or any direct or indirect parent of Parent, or cash dividends distributed to any direct or indirect parent of Parent for the purpose of consummating such purchase, redemption or other acquisition, cancellation or retirement for value; provided that such redemptions or repurchases pursuant to this clause (6) will not exceed $75,000,000 in the aggregate during any fiscal year; provided, further, that (x) such amount, if not so expended in the fiscal year for which it is permitted, may be carried forward in the next fiscal year and (y) redemptions or repurchases made pursuant to this clause (6) during any fiscal year shall be deemed made first in respect of amounts carried over from the prior fiscal year and second in respect of amounts permitted for such fiscal year as provided above;

 

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(7) the declaration and payment of dividends to holders of any class or series of Disqualified Stock of Parent permitted to be Incurred pursuant to Section 4.09;

(8) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants, other rights to purchase Capital Stock or other convertible securities if such Capital Stock represents a portion of the exercise price thereof;

(9) the declaration and payment of cash dividends, distributions, loans or other transfers by Parent to any direct or indirect parent of Parent, directly or indirectly, in amounts required for such parent entity to pay, in each case without duplication:

(A) federal, provincial, state, local or foreign income taxes payable to the extent that such income taxes are directly attributable to the income of Parent and its Subsidiaries (rather than the income of such parent entity resulting from distributions of property from Parent or any Subsidiary) and only to the extent such taxes are not offset by applicable tax credits, tax losses or other assets; provided that in each case the amount of such payments in any fiscal year does not exceed the amount that Parent and its Subsidiaries would be required to pay in respect of federal, provincial, state, local and foreign income taxes for such fiscal year were Parent and its Subsidiaries to pay such taxes separately from any such parent entity;

(B) franchise taxes and other fees required to maintain such parent entity’s legal existence; and

(C) corporate overhead expenses Incurred in the ordinary course of business, and salaries or other compensation of employees who perform services for both such parent entity and Parent or its Subsidiaries; provided that the amount available under this clause (C) in any fiscal year shall not exceed the greater of (i) $25,000,000 and (ii) 3.0% of Adjusted EBITDA of Parent for such fiscal year;

(10) purchases of Receivables Financing Assets pursuant to a Receivables Financing Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Financing Fees;

(11) Restricted Payments that are made with the proceeds of Excluded Contributions;

(12) other Restricted Payments made in an aggregate amount (as reduced by the amount of capital returned from any such Restricted Payments that constituted Restricted Investments in the form of cash and Cash Equivalents (exclusive of items reflected in Consolidated Net Income)) from the Assumption Date not to exceed $150,000,000;

 

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(13) Restricted Payments of the type referred to in clauses (1) or (2) of Section 4.07(a); provided, however, that at the time of and after giving pro forma effect to any such Restricted Payment, the Net Total Leverage Ratio is not greater than 4.00 to 1.00 on a Pro Forma Basis;

(14) Restricted Payments of the type referred to in clauses (3) or (4) of Section 4.07(a); provided, however, that at the time of and after giving pro forma effect to any such Restricted Payment, the Net Total Leverage Ratio is not greater than 4.50 to 1.00 on a Pro Forma Basis; and

(15) Restricted Payments made in connection with the Separation Transaction and any fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) related thereto.

provided, however, that at the time of and after giving effect to, any Restricted Payment permitted under clauses (4), (6), (11), (12), (13) and (14) of this Section 4.07(b), no Default shall have occurred and be continuing or would occur as a consequence thereof.

(c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by Parent or such Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.

(d) All of Parent’s Subsidiaries will be Restricted Subsidiaries, except for the Initial Unrestricted Subsidiaries. The Issuer is not permitted to be designated as an Unrestricted Subsidiary. Parent will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except in accordance with the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by Parent and the Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments and/or, in the discretion of Parent, Investments, in an amount determined as set forth in the definition of “Investment.” Such designation will be permitted only if a Restricted Payment (and/or Permitted Investment) in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Indenture.

Section 4.08 Limitation on Restrictions on Distribution from Restricted Subsidiaries.

(a) Parent will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to Parent or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on any other Capital Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); or

 

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(2) make any loans or advances to Parent or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to Parent or any Restricted Subsidiary to other Indebtedness Incurred by Parent or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances).

(b) The restrictions in Section 4.08(a) will not apply to encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions pursuant to an agreement in effect on the Issue Date, including without limitation, the Senior Credit Facility and the LGCH Notes (and any guarantee and security and other documents relating thereto);

(2) this Indenture, the Notes and the Notes Guarantees;

(3) any agreement or other instrument of a Person acquired by Parent or any of its Restricted Subsidiaries in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired (including after acquired property);

(4) any amendment, restatement, modification, renewal, supplement, refunding, replacement or refinancing of an agreement or arrangement referred to in this Section 4.08; provided, however, that any encumbrances or restrictions contained in any such amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are, in the good faith judgment of Parent, no less favorable in any material respect, taken as a whole, to the Holders of the Notes than the encumbrances and restrictions contained in the agreements or arrangement so amended, restated, modified, renewed, supplemented, refunded, replaced or refinanced;

(5) purchase money obligations and Finance Lease Obligations permitted under this Indenture;

(6) customary restrictions on cash or other deposits or net worth imposed by customers or by co-production partners, Joint Venture partners or similar parties under contracts;

(7) any customary provisions in Joint Venture agreements and other similar agreements;

(8) any customary provisions in leases, subleases or licenses and other agreements entered into by Parent or any Restricted Subsidiary;

(9) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation or order;

(10) any restriction with respect to Parent or a Restricted Subsidiary or any asset or line of business thereof imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of Parent or such Restricted Subsidiary or any asset or line of business thereof pending the closing of such sale or disposition;

 

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(11) imposed by any agreement relating to Indebtedness or Investments, as applicable, permitted to be Incurred pursuant to Section 4.07, Section 4.09 or the definition of “Permitted Investment,” in each case, if such restrictions or conditions apply only to the property or assets securing such Indebtedness or Investments and/or only to the Restricted Subsidiary incurring such Indebtedness or in which such Investments are made, or its Subsidiaries;

(12) other Indebtedness, Disqualified Stock or Preferred Stock of Parent or any Restricted Subsidiary so long as such encumbrances and restrictions contained in any agreement or instrument will not materially affect the Issuer’s or any Guarantor’s ability to make anticipated principal or interest payments on the Notes (in each case, as determined in good faith by the Issuer); provided that such Indebtedness, Disqualified Stock or Preferred Stock is permitted to be Incurred pursuant to Section 4.09;

(13) any restrictions or encumbrances imposed on Special Purpose Producers or ProdCos, or otherwise in connection with any Permitted Slate Financing or Permitted Slate Transaction, in each case which are customary for slate or production financing or similar transactions;

(14) any encumbrance or restriction of a Receivables Subsidiary effected in connection with a Qualified Receivables Financing; provided, however, that such restrictions apply only to such Receivables Subsidiary; and

(15) any encumbrance or restriction imposed in connection with the Separation Transaction.

Section 4.09 Limitation on Indebtedness.

(a) Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, Incur any Secured Funded Indebtedness; provided, however, that the Issuer and the Guarantors may Incur Secured Funded Indebtedness if on the date thereof and after giving effect thereto and to the application of the proceeds thereof on a Pro Forma Basis:

(1) the Net Secured Leverage Ratio is not greater than 4.50 to 1.00; and

(2) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence of Incurring such Secured Funded Indebtedness or the application of the proceeds thereof.

(b) Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly Incur any Indebtedness; provided, however, that the Issuer and the Guarantors may Incur Indebtedness if on the date thereof and after giving effect thereto and to the application of the proceeds thereof on a Pro Forma Basis:

(1) the Net Total Leverage Ratio is not greater than 6.00 to 1.00; and

 

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(2) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence of Incurring such Indebtedness or the application of the proceeds thereof.

(c) The provisions of Section 4.09(a) and Section 4.09(b) shall not prohibit the Incurrence of the following Indebtedness:

(1) (A) Indebtedness under the Senior Credit Facility or any other Indebtedness in an aggregate principal outstanding amount not to exceed $4,000,000,000, less the amount of such Indebtedness that is permanently retired (with a corresponding reduction in commitments to the extent such Indebtedness is revolving credit Indebtedness) with the Net Available Cash from any Asset Sale after the Issue Date in accordance with Section 4.10(a)(3)(A);

(B) Indebtedness under the Senior Credit Facility or any other Indebtedness in an aggregate principal outstanding amount not to exceed $500,000,000 (any Indebtedness incurred under this clause (1)(B), “Incremental Equivalent Debt”); and

(C) Indebtedness represented by (i) the Notes (including any Notes Guarantee), other than any Additional Notes, and (ii) the LGCH Notes;

(2) Indebtedness of Parent and the Restricted Subsidiaries in existence on the Issue Date (other than Indebtedness described in clause (1) above and clauses (3), (4) and (6) below);

(3) Guarantees by (A) the Issuer or the Guarantors of Indebtedness permitted to be Incurred by the Issuer or a Guarantor in accordance with the provisions of this Indenture; provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to the Notes or the Notes Guarantee, as the case may be, substantially to the same extent as such Indebtedness is subordinated to the Notes or Notes Guarantee, as applicable, and (B) Non-Guarantor Subsidiaries of Indebtedness Incurred by Non-Guarantor Subsidiaries in accordance with the provisions of this Indenture;

(4) Indebtedness of Parent owing to and held by any Wholly-Owned Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by Parent or any Wholly-Owned Subsidiary; provided, however,

(A) if the Issuer is the obligor on Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes;

(B) if a Guarantor is the obligor on such Indebtedness and the Issuer or a Guarantor is not the obligee, such Indebtedness is subordinated in right of payment to the Notes Guarantee of such Guarantor; and

(C) (i) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being held by a Person other than Parent or a Wholly-Owned Subsidiary of Parent; and

 

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(ii) any sale, assignment, transfer, conveyance, exchange or other disposition of any such Indebtedness to a Person other than Parent or a Wholly-Owned Subsidiary of Parent shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by Parent or such Subsidiary, as the case may be.

(5) Indebtedness (A) of Parent or any Restricted Subsidiary Incurred to finance the acquisition of or a merger, amalgamation or consolidation with another Person (or a line of business of any Person) or (B) of any Person Incurred and outstanding on the date on which such Person became a Restricted Subsidiary or was acquired by, or merged, amalgamated or consolidated into, Parent or any Restricted Subsidiary; provided, however, that at the time such Person or line of business is acquired or merged, amalgamated or consolidated, after giving effect thereto and to the Incurrence of such Indebtedness pursuant to this clause (5) and the use of the proceeds thereof on a Pro Forma Basis, either (x) Parent would have been able to Incur $1.00 of additional Indebtedness pursuant to Section 4.09(b) or (y) the Net Total Leverage Ratio would be no greater than it was immediately prior to such transaction;

(6) Indebtedness under Hedging Obligations that are Incurred (A) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness not prohibited by this Indenture; (B) for the purpose of fixing or hedging currency exchange rate risk; or (C) for the purpose of fixing or hedging commodity price risk;

(7) Indebtedness (including Finance Lease Obligations) of Parent or a Restricted Subsidiary Incurred to finance the purchase, lease, construction or improvement of any property, plant or equipment used or to be used in the business of Parent or such Restricted Subsidiary, whether through the direct purchase of such property, plant or equipment or the purchase of Capital Stock of any Person owning such property, plant or equipment (but no other material assets), in a principal amount outstanding not to exceed, at the time of Incurrence thereof, together with all other outstanding (x) Indebtedness incurred under this clause (7) and (y) Refinancing Indebtedness incurred under clause (11) in respect of Indebtedness previously incurred under this clause (7), the greater of (a) $315,000,000 and (b) 3.0% of Total Assets;

(8) Indebtedness Incurred by Parent or its Restricted Subsidiaries in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self-insurance obligations, performance, bid surety and similar bonds and Completion Guarantees (not for borrowed money) provided by Parent or a Restricted Subsidiary in the ordinary course of business;

(9) Indebtedness arising from agreements of Parent or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets of Parent or any business, assets or Capital Stock of a Restricted Subsidiary, other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds, including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to subsequent changes in value), actually received by Parent and the Restricted Subsidiaries in connection with such disposition;

 

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(10) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

(11) the Incurrence or issuance by Parent or any Restricted Subsidiary of Refinancing Indebtedness that serves to refund, refinance or defease any Indebtedness Incurred as permitted under Section 4.09(a) and Section 4.09(b) and clauses (1)(C), (2), (5), (7), (19) and this clause (11) of this Section 4.09(c) or any Indebtedness issued to so refund, refinance or defease such Indebtedness, including additional Indebtedness Incurred to pay premiums (including reasonable, as determined in good faith by Parent, tender premiums), defeasance costs, accrued interest and fees and expenses in connection therewith prior to its respective maturity;

(12) Indebtedness incurred by Parent or any Restricted Subsidiary that is a Special Purpose Producer which is non-recourse to Parent or any Restricted Subsidiary other than any Special Purpose Producer, except to the extent that a Negative Pick-up Obligation, Program Acquisition Guarantee or short-fall guarantee, or any other guarantee permitted by clause (18) below, would be considered recourse Indebtedness of Parent or any of its Restricted Subsidiaries;

(13) (A) to the extent constituting Indebtedness pursuant to the definition thereof, any Permitted Slate Financing and (B) any Indebtedness incurred by any ProdCo to the extent not prohibited by the definition of “Permitted Slate Transaction”;

(14) Replication Advances not to exceed $100,000,000 outstanding in the aggregate at the time of Incurrence thereof, which are otherwise entered into in the ordinary course of business and on terms and conditions substantially no less favorable in any material respect, taken as a whole, to Parent as similar transactions entered into by Parent or its Subsidiaries prior to the Issue Date;

(15) Indebtedness secured solely by liens on tax credits which is otherwise non-recourse to Parent and any Restricted Subsidiary, other than customary representations and warranties;

(16) liabilities relating to profit participations, revenue participations, talent participations, deferments and guild residuals, and music royalties, collection agencies and tribunals (e.g., ASCAP), arising in the ordinary course of business in connection with the production, acquisition and/or distribution of Product;

(17) unsecured liabilities (including without limitation Guarantees) or liabilities (including without limitation Guarantees) secured solely by the related rights related to the acquisition, production or distribution of Product or acquisitions of rights incurred in the ordinary course of business (including co-productions, co-ventures and other co-financing arrangements), which are not otherwise prohibited hereunder, in an amount no greater than $30,000,000 outstanding in the aggregate at the time of Incurrence thereof;

 

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(18) Negative Pick-up Obligations, Program Acquisition Guarantees and direct or indirect guarantees (including minimum guarantees) related to the acquisition or production of items of Product in the ordinary course of business; and

(19) in addition to the items referred to in clauses (1) through (18) above, Indebtedness of Parent and the Restricted Subsidiaries in an aggregate outstanding principal amount not to exceed, at the time of Incurrence thereof, together with all other outstanding (x) Indebtedness incurred under this clause (19) and (y) Refinancing Indebtedness incurred under clause (11) in respect of Indebtedness previously incurred under this clause (19), the greater of (a) $315,000,000 and (b) 3.0% of Total Assets.

(d) For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 4.09:

(1) subject to clause (2) below, in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in Section 4.09(a), 4.09(b) or Section 4.09(c), Parent, in its sole discretion, may classify such item (or portion) of Indebtedness on the date of Incurrence and may later re-divide or reclassify such item (or portion) of Indebtedness in any manner that complies with this Section 4.09; provided that (x) Indebtedness outstanding under the Senior Credit Facility on the Issue Date shall in any event be deemed to be Incurred solely under clause (1)(A) of Section 4.09(c) and may not be reclassified and (y) Incremental Equivalent Debt shall in any event be deemed to be Incurred solely under clause (1)(B) of Section 4.09(c) and may not be reclassified;

(2) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(3) if obligations in respect of letters of credit are Incurred pursuant to a credit facility and are being treated as Incurred pursuant to Section 4.09(a) or Section 4.09(b) and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

(4) the principal amount of any Disqualified Stock of Parent or a Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Guarantor, will be, subject to the next succeeding paragraph, equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(5) Indebtedness permitted by this Section 4.09 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 4.09 permitting such Indebtedness; and

(6) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

 

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Accrual of interest, accrual of dividends, the accretion of accreted value or the amortization of debt discount, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for purposes of this Section 4.09. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount or the aggregate principal amount outstanding in the case of Indebtedness issued with interest payable in kind and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 4.09, the Issuer shall be on such date in Default of this Section 4.09).

For purposes of determining compliance with any Dollar denominated restriction on the Incurrence of Indebtedness, the Dollar equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that Parent or the Restricted Subsidiaries may Incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Section 4.10 Sales of Assets.

(a) Parent will not, and will not permit any Restricted Subsidiaries to, cause or make any Asset Sale, unless:

(1) Parent or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined on the date of contractually agreeing to such Asset Sale) of the shares and assets subject to such Asset Sale;

(2) at least 75% of the consideration from such Asset Sale received by Parent or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents; and

 

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(3) an amount equal to 100% of the Net Available Cash from such Asset Sale is applied by Parent or such Restricted Subsidiary, as the case may be, within twelve months from the later of the date of such Asset Sale or the receipt of such Net Available Cash, as follows:

(A) to permanently reduce (and, to the extent such Indebtedness is revolving credit Indebtedness, to permanently reduce any commitments with respect thereto): (i) obligations under the Senior Credit Facilities, or (ii) Indebtedness of Parent (other than any Disqualified Stock or Subordinated Obligations) that is secured by a Lien or Indebtedness of a Restricted Subsidiary (other than any Disqualified Stock or a Guarantor’s Subordinated Obligations) that is secured by a Lien (in each case other than Indebtedness owed to Parent or an Affiliate of Parent);

(B) to permanently reduce obligations under other Indebtedness of Parent (other than any Disqualified Stock or Subordinated Obligations) or Indebtedness of a Restricted Subsidiary (other than any Disqualified Stock or a Guarantor’s Subordinated Obligations) (in each case other than Indebtedness owed to Parent or an Affiliate of Parent); provided that the Issuer shall equally and ratably reduce Obligations under the Notes as provided under Section 3.07 through open market purchases or by making an offer (in accordance with the procedures set forth in this Section 4.10 for an Asset Sale Offer) to all Holders to purchase their Notes at 100% of the principal amount thereof, plus the amount of accrued and unpaid interest on the amount of Notes that would otherwise be prepaid; or

(C) to invest in Additional Assets, or make capital expenditures that are used or useful in a Related Business or that replace the businesses, properties and/or assets that are the subject of such Asset Sale;

provided that pending the final application of any such Net Available Cash in accordance with clause (A), (B) or (C) above, Parent or any of its Restricted Subsidiaries may temporarily reduce Indebtedness (including, without limitation, Indebtedness outstanding under a revolving or asset-based credit facility) or otherwise invest such Net Available Cash in any manner not prohibited by this Indenture.

In the case of clause (3)(C) above, a binding commitment entered into within twelve months of receipt by Parent or any Restricted Subsidiary of the Net Available Cash of any Asset Sale shall be treated as a permitted application of such Net Available Cash from the date of such commitment; provided that (x) such investment is consummated within 180 days after expiration of such twelve-month period and (y) if such investment is not consummated within the period set forth in the foregoing subclause (x), such Net Available Cash not so applied will be deemed to be Excess Proceeds.

(4) For the purpose of clause (2) above and for no other purpose, the following will be deemed to be cash:

(A) any liabilities (as shown on Parent’s or such Restricted Subsidiary’s most recent balance sheet) of Parent or any Restricted Subsidiary (other than liabilities that are by their terms subordinated to the Notes or the Notes Guarantees) that are assumed by the transferee of any such assets and from which Parent and all Restricted Subsidiaries have been validly released by all creditors in writing;

 

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(B) any securities, notes or other obligations received by Parent or any Restricted Subsidiary from the transferee that are converted by Parent or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale;

(C) consideration consisting of Indebtedness of Parent (other than Subordinated Obligations) received from Persons who are not Parent or any Restricted Subsidiary; and

(D) any Designated Non-cash Consideration received by Parent or any Restricted Subsidiary in such Asset Sale having an aggregate Fair Market Value (as determined in good faith by Parent), taken together with all other Designated Non-cash Consideration received in connection with Asset Sales that is at that time outstanding, not to exceed the greater of $160,000,000 and 1.5% of Total Assets at the time of the receipt of such Designated Non-cash Consideration (with the Fair Market Value of each item of Designated Non-cash Consideration being measured at the time received and without giving effect to subsequent changes in value).

(b) Any Net Available Cash from Asset Sales that are not applied or invested as provided in Section 4.10(a) shall be deemed to constitute “Excess Proceeds.” If the aggregate amount of Excess Proceeds received by Parent exceeds the Asset Sale Threshold Amount in the aggregate for all Asset Sales in any fiscal year of Parent, the Issuer shall be required to make an offer to all Holders and to the extent required by the terms of outstanding Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum aggregate principal amount of the Notes and any such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds received by the Issuer in such fiscal year in excess of the Asset Sale Threshold Amount, at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but not including, the date of purchase (subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date) in accordance with the procedures set forth in Section 3.08 or the agreements governing the Pari Passu Indebtedness, as applicable, in each case in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The Issuer shall commence an Asset Sale Offer with respect to Excess Proceeds by mailing (or otherwise communicating in accordance with the procedures of DTC) the notice required by Section 3.08, with a copy to the Trustee.

To the extent that the aggregate amount of Notes and Pari Passu Indebtedness validly tendered and not properly withdrawn pursuant to an Asset Sale Offer is less than the Excess Proceeds in excess of the Asset Sale Threshold Amount, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in this Indenture. If the aggregate principal amount of Notes surrendered by Holders thereof and other Pari Passu Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds in excess of the Asset Sale Threshold Amount, the Issuer shall repurchase the Notes and the Pari Passu Indebtedness on a pro rata basis unless otherwise required by law, and the Trustee shall select the Notes to be purchased on a pro rata basis on the basis of the aggregate accreted value or principal amount of tendered Notes. Upon completion of such Asset Sale Offer, the amount of Excess Proceeds shall be reset at $0.

 

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(c) The Issuer shall comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.10, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Indenture by virtue of any conflict.

(d) Notwithstanding any provision under this Section 4.10 to the contrary, (1) any amounts that would otherwise be required to be paid or offered by Parent or a Restricted Subsidiary pursuant to this Section 4.10 shall not be required to be so paid or offered to the extent any such Asset Sale is consummated by a Subsidiary outside of the United States or Canada for so long as the repatriation to the United States, Canada or other relevant jurisdiction of any such amounts would be prohibited under any applicable law (including any such laws with respect to financial assistance, corporate benefit, thin capitalization, capital maintenance, liquidity maintenance and similar legal principles, restrictions on upstreaming of cash intra group and the fiduciary and statutory duties of the directors of the relevant Subsidiaries) and (2) if the Issuer determines in good faith that the repatriating of any amounts required to repay or purchase the Notes or other Indebtedness pursuant to this Section 4.10 would result in a tax liability that is material to the amount of funds otherwise required to be repatriated (including any withholding tax) (such amount in clauses (1) and (2), a “Restricted Asset Sale Amount”), the amount the Issuer shall be required to make in respect of payments or offers pursuant to this Section 4.10 shall be reduced by the Restricted Asset Sale Amount until such time as it may repatriate such Restricted Asset Sale Amount without incurring such tax liability.

Section 4.11 Limitation on Affiliate Transactions.

(a) Parent will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease, exchange or other disposition of any property or asset or the rendering of any service) with any Affiliate of Parent (an “Affiliate Transaction”) involving consideration in excess of $30,000,000 unless:

(1) the terms of such Affiliate Transaction are not materially less favorable to Parent or such Restricted Subsidiary, as the case may be, than those that could have been obtained by Parent or such Restricted Subsidiary in a comparable transaction with a Person that is not an Affiliate; and

(2) in the event such Affiliate Transaction involves an aggregate consideration in excess of $60,000,000 (or with respect to transactions involving any item of Product, $90,000,000), the terms of such transaction have been approved by a majority of the members of the Board of Directors of Parent and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above).

 

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(b) The provisions of Section 4.11(a) will not apply to:

(1) (A) transactions between or among Parent and any of its Restricted Subsidiaries, and (B) any merger, amalgamation or consolidation of Parent and any direct parent of Parent; provided, however, that such parent shall have no Indebtedness other than Indebtedness that would be permitted to be Incurred by Parent at the time of such merger, amalgamation or consolidation and such merger, amalgamation or consolidation is otherwise not prohibited by the terms of this Indenture;

(2) any Restricted Payment permitted to be made pursuant to Section 4.07 or any Permitted Investments;

(3) any loan or issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of Parent, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans and/or indemnity provided on behalf of Officers and employees;

(4) the payment of reasonable and customary fees and reimbursement of expenses paid to and indemnity provided on behalf of, directors of Parent or any Restricted Subsidiary;

(5) any agreement as in effect as of the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time, so long as any such amendment, modification, supplement, extension or renewal is not more disadvantageous to the Holders in any material respect in the good faith judgment of Parent when taken as a whole than the terms of the agreements in effect on the Issue Date;

(6) any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged, amalgamated or consolidated into Parent or a Restricted Subsidiary; provided, that such agreement was not entered into in contemplation of such acquisition, merger, amalgamation or consolidation, or any amendment thereto (so long as any such agreement is not disadvantageous to the Holders in the good faith judgment of Parent when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition, merger, amalgamation or consolidation);

(7) transactions with customers, clients, suppliers, Joint Venture partners or purchasers or sellers of goods or services (including, without limitation, licensing, production, co-production, services (e.g., shared services agreements), advertising, distribution, promotional or delivery agreements), in each case in the ordinary course of the business of Parent and the Restricted Subsidiaries and otherwise in compliance with the terms of this Indenture; provided that, in the reasonable determination of Parent, such transactions are on terms that are no less favorable to Parent or the relevant Restricted Subsidiary than those that could reasonably have been obtained at the time of such transactions in a comparable transaction by Parent or such Restricted Subsidiary with an unrelated Person;

 

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(8) any issuance or sale of Capital Stock (other than Disqualified Stock) to Affiliates of Parent and the granting of registration and other customary rights in connection therewith;

(9) the entering into of any tax sharing agreement or arrangement and the performance thereunder;

(10) any contribution to the capital of Parent, or any sale of Capital Stock of Parent (other than Disqualified Stock);

(11) transactions permitted by, and complying with, the provisions of Section 5.01;

(12) pledges of Capital Stock of Unrestricted Subsidiaries;

(13) any employment agreements entered into by Parent or any of its Restricted Subsidiaries in the ordinary course of business;

(14) any distribution, license, participation, sale, lease, production, reproduction or co-financing agreement, guarantee, negative pick-up or other acquisition agreement, or other similar agreement to any of the foregoing, entered into in the ordinary course of business and on an arm’s length basis;

(15) any Permitted Slate Transaction;

(16) any transaction effected as part of a Qualified Receivables Financing; and

(17) the Separation Transaction and the payment of all fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) related thereto.

Section 4.12 Limitation on Liens.

Parent will not, and will not permit any of the Restricted Subsidiaries to, directly or indirectly, create, Incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Subsidiaries), or income or profits therefrom, whether owned on the Assumption Date or acquired after that date, which Lien secures any Indebtedness unless:

(a) in the case of Liens securing Subordinated Obligations, the Notes and related Guarantees are secured by a Lien on such property or assets (including Capital Stock of Subsidiaries), or income or profits therefrom that is senior in priority to such Liens; or

(b) in all other cases, the Notes or the Guarantees are equally and ratably secured.

Any Lien created for the benefit of the Holders pursuant to this Section 4.12 shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the release and discharge of the Lien(s) that gave rise to the obligation to so secure the Notes.

 

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Section 4.13 Corporate Existence.

Subject to Article 5, the Issuer shall do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence, in accordance with the organizational documents (as the same may be amended from time to time) of the Issuer.

Section 4.14 Offer to Repurchase Upon Change of Control.

(a) If a Change of Control occurs, unless the Issuer has exercised its right to redeem all of the Notes pursuant to Section 3.07, the Issuer will make an offer to purchase all of the Notes (the “Change of Control Offer”) at a purchase price in cash equal to 101% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to, but not including, the date of purchase (the “Change of Control Payment”), subject to the right of Holders of record on the relevant Record Date to receive interest due on the relevant Interest Payment Date. Within 30 days following any Change of Control, unless the Issuer has exercised its right to redeem all of the Notes pursuant to Section 3.07, the Issuer will send notice of such Change of Control Offer by first-class mail, with a copy to the Trustee (or the Issuer will provide such notice to the Trustee, and the Trustee will mail, deliver electronically or otherwise send such notice in accordance with the procedures of DTC on the Issuer’s behalf), to each Holder, with the following information:

(1) that a Change of Control Offer is being made pursuant to this Section 4.14 and that all Notes properly tendered pursuant to such Change of Control Offer will be accepted for purchase by the Issuer at a purchase price in cash equal to the Change of Control Payment (subject to the right of Holders of record on the relevant Record Date to receive interest on the relevant Interest Payment Date);

(2) the purchase date, which shall be no earlier than 30 days nor later than 60 days from the date such notice is sent (the “Change of Control Payment Date”);

(3) that Notes must be tendered in principal amount of $2,000 or an integral multiple of $1,000 in excess thereof, and any Note not properly tendered will remain outstanding and continue to accrue interest;

(4) that, unless the Issuer defaults in the payment of the Change of Control Payment, any Note accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on and after the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender such Notes, with the form entitled “Option of Holder to Elect Purchase” on the reverse of such Notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) that Holders shall be entitled to withdraw their tendered Notes and their election to require the Issuer to purchase such Notes; provided, that the Paying Agent receives at the address specified in the notice, not later than the close of business on the 30th day following the date of the Change of Control notice, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder of the Notes, the principal amount of Notes tendered for purchase, and a statement that such Holder is withdrawing its tendered Notes and its election to have such Notes purchased;

 

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(7) that if a Holder is tendering less than all of its Notes, such Holder will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered; and that the unpurchased portion of the Notes must be equal to $2,000 or an integral multiple of $1,000 in excess thereof; and

(8) the procedures, as determined by the Issuer, consistent with this Section 4.14, that a Holder must follow in order to have its Notes repurchased.

A Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for such Change of Control at the time of making of the Change of Control Offer, and in such case the notice of the Change of Control Offer may state that, in the Issuer’s discretion, the Change of Control Payment Date may be delayed until such time (including more than 60 days after the date the notice of redemption was delivered (or delivered electronically if the Notes are held by any Depositary)) as such Change of Control occurs, or such purchase may not occur and such notice may be rescinded in the event that the Change of Control does not occur by the Change of Control Payment Date, or may be rescinded at any time in the Issuer’s discretion if in the good faith judgment of the Issuer the Change of Control will not occur.

(b) On the Change of Control Payment Date, the Issuer will, to the extent lawful:

(1) accept for payment all Notes or portions of Notes (in integral multiples of $1,000) properly tendered pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent no later than 12:00 Noon, New York time, on such date, an amount equal to the Change of Control Payment in respect of all Notes or portions of the Notes so tendered; and

(3) deliver, or cause to be delivered, to the Trustee for cancellation the Notes so accepted together with an Officers’ Certificate to the Trustee stating the aggregate principal amount of Notes or portions of Notes being purchased by the Issuer in accordance with this Section 4.14.

If the Change of Control Payment Date is on or after a Record Date and on or before the related Interest Payment Date, any accrued and unpaid interest, if any, to, but not including, the Change of Control Payment Date will be paid on the relevant Interest Payment Date to the Person in whose name a Note is registered at the close of business on such Record Date.

(c) Prior to making a Change of Control Payment, and as a condition to such payment (1) the requisite holders of each issue of Material Indebtedness issued under an indenture or other agreement that would, in the determination of the Issuer, be violated by such payment shall have consented to such Change of Control Payment being made and waived the event of default, if any, caused by the Change of Control or (2) the Issuer shall repay all such outstanding Material Indebtedness. The failure of the Issuer to effect such repayment or obtain such consent prior to making a Change of Control Payment shall be a Default under this Section 4.14.

 

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(d) The Issuer will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer.

(e) The Issuer will comply, to the extent applicable, with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to this Section 4.14. To the extent that the provisions of any securities laws or regulations conflict with provisions of this Indenture, the Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in this Indenture by virtue of the conflict.

(f) If Holders of not less than 90% in aggregate principal amount of the outstanding Notes validly tender and do not withdraw such Notes in a Change of Control Offer and the Issuer, or any third party making a Change of Control Offer in lieu of the Issuer as described above, purchases all of the Notes validly tendered and not withdrawn by such Holders, the Issuer or such third party will have the right, upon notice as described in Section 3.03 and not more than 30 days following such purchase pursuant to the Change of Control Offer to redeem all Notes that remain outstanding following such purchase at a price in cash equal to 101% of the aggregate principal amount of such Notes, plus accrued and unpaid interest on the Notes that remain outstanding to, but not including, the redemption date (subject to the right of Holders of record on the relevant Record Date to receive interest due on an Interest Payment Date that is on or prior to the redemption date).

(g) Other than as specifically provided in this Section 4.14, any purchase pursuant to this Section 4.14 shall be made pursuant to the provisions of Sections 3.02, 3.05 and 3.06.

(h) For the avoidance of doubt, the Issuer shall not be required to effect any Change of Control Offer in connection with any Separation Transaction.

Section 4.15 Future Guarantees.

(a) The Issuer and Parent will cause each Restricted Subsidiary (other than Receivables Subsidiaries) that Guarantees, on the Issue Date or at any time thereafter, any Material Indebtedness of the Issuer or any Guarantor (and, without limiting the foregoing, the Issuer may, in its sole discretion, cause any other Restricted Subsidiary if such Restricted Subsidiary is not a Guarantor under this Indenture) to reasonably promptly (but in any event within 60 days) after guaranteeing such Material Indebtedness:

(1) execute and deliver a supplemental indenture to this Indenture, the form of which is attached hereto as Exhibit C, pursuant to which such Restricted Subsidiary will agree to be a Guarantor under this Indenture and be bound by the terms of this Indenture applicable to Guarantors, including, but not limited to, Article 10; provided that if the supplemental indenture is not in the form of Exhibit C, such Guarantor shall deliver to the Trustee an Opinion of Counsel to the effect that:

(A) such Notes Guarantee has been duly executed and authorized; and

 

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(B) such Notes Guarantee constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity.

(b) Notwithstanding anything herein to the contrary, the Guarantee of any Guarantor organized outside of the United States or Canada shall be subject to such other limitations as are customary in such Guarantor’s jurisdiction as reasonably determined by the Issuer.

(c) Notwithstanding anything herein to the contrary, no Subsidiary organized outside of the United States that would otherwise be required to become a Guarantor pursuant to this Section 4.15 shall be required to become a Guarantor until the date which is 30 days following the Issue Date.

(d) Notwithstanding anything herein to the contrary, for the avoidance of doubt from and after the Separation Closing Date neither LGEC nor LGCH nor any other entity that is part of the STARZ Business (as determined by LGEC in its sole discretion) shall be required to become a Guarantor under this Indenture.

Section 4.16 Effectiveness of Covenants.

(a) From and after the first day on which:

(1) the Notes have an Investment Grade Rating from both of the Rating Agencies; and

(2) no Default has occurred and is continuing under this Indenture,

(the occurrence of the events described in the foregoing clauses (1) and (2) being collectively referred to as a “Covenant Suspension Event”) Parent and the Restricted Subsidiaries will not be subject to the provisions of Sections 4.07, 4.08, 4.09, 4.10, 4.11, and Section 5.01(a)(4) (collectively, the “Suspended Covenants”).

(b) If at any time the Notes’ credit rating is downgraded from an Investment Grade Rating by any Rating Agency, then the Suspended Covenants will thereafter be reinstated as if such covenants had never been suspended (the “Reinstatement Date”) and be applicable pursuant to the terms of this Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of this Indenture), unless and until the Notes subsequently attain an Investment Grade Rating and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Notes maintain an Investment Grade Rating from both Rating Agencies and no Default or Event of Default is in existence); provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under this Indenture, the Notes or the Notes Guarantees with respect to the Suspended Covenants based on, and none of Parent or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below), or any actions taken at any time pursuant to any contractual obligation arising prior to the Reinstatement Date, regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period. The period of time between the date of suspension of the covenants and the Reinstatement Date is referred to as the “Suspension Period.”

 

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(c) On the Reinstatement Date, all Indebtedness Incurred during the Suspension Period will be classified to have been Incurred pursuant to Section 4.09(a) or Section 4.09(b) or one of the clauses set forth in Section 4.09(c) (to the extent such Indebtedness would be permitted to be Incurred thereunder as of the Reinstatement Date and after giving effect to Indebtedness Incurred prior to the Suspension Period and outstanding on the Reinstatement Date). To the extent such Indebtedness would not be so permitted to be Incurred pursuant to Section 4.09(a), Section 4.09(b) or Section 4.09(c), such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (2) of Section 4.09(c). Calculations made after the Reinstatement Date of the amount available to be made as Restricted Payments under Section 4.07 will be made as though Section 4.07 had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under Section 4.07(a).

(d) During any period when the Suspended Covenants are suspended, the Board of Directors of Parent may not designate any of Parent’s Subsidiaries as Unrestricted Subsidiaries pursuant to this Indenture.

(e) The Issuer shall give the Trustee written notice of any Covenant Suspension Event within five Business Days after such Covenant Suspension Event has occurred. The Issuer shall give the Trustee written notice of any occurrence of a Reinstatement Date not later than five Business Days after such Reinstatement Date. Absent such written notice the Trustee shall be entitled to assume that no Covenant Suspension Event or the occurrence of any Reinstatement Date has occurred.

Section 4.17 Limitation on Lines of Business.

Parent will not, and will not permit any Restricted Subsidiary to, engage in any material respect in any business other than a Related Business.

Section 4.18 Ratings.

Within 45 days after the Separation Closing Date, the Successor Issuer will use commercially reasonable efforts to procure (x) a public corporate credit rating and a public corporate family rating (but, in each case, no specific rating) in respect of the Successor Issuer from at least two Rating Agencies, respectively, and (y) a public rating (but no specific rating) of the Notes from at least two Rating Agencies.

 

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ARTICLE 5

SUCCESSORS

Section 5.01 Merger, Amalgamation, Consolidation or Sale of All or Substantially All Assets.

(a) Neither Parent nor the Issuer will merge, amalgamate or consolidate with or into (whether or not Parent or the Issuer is the surviving corporation), or convey, transfer or lease all or substantially all of its assets to, any Person, unless:

(1) Parent or the Issuer, as applicable, is the surviving person or the resulting, surviving or transferee Person (the “Successor Person”) is a corporation organized and existing under the laws of Canada, any Province of Canada, the United States of America, any State of the United States or the District of Columbia;

(2) the Successor Person (if not Parent or the Issuer) will expressly assume, by supplemental indenture, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of Parent or the Issuer, as applicable, under the Notes and this Indenture, as applicable;

(3) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Person or any Subsidiary of the Successor Person as a result of such transaction as having been Incurred by the Successor Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(4) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period, either (x) Parent (including any Successor Person) would be able to Incur at least $1.00 of additional Indebtedness pursuant to Section 4.09(b) on a Pro Forma Basis or (y) the Net Total Leverage Ratio, calculated on a Pro Forma Basis, would not be greater than it was immediately prior to such transaction;

(5) each Guarantor (unless it is the other party to the transactions above, in which case Section 5.01(c) shall apply) shall have by supplemental indenture confirmed that its Notes Guarantee shall apply to such Person’s obligations in respect of this Indenture and the Notes; and

(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such merger, amalgamation, consolidation, conveyance or transfer and such supplemental indenture (if any) comply with this Indenture and any other documentation and other information about the Successor Person as shall have been reasonably required by the Trustee that the Trustee shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulation, including the PATRIOT Act.

 

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(b) Notwithstanding clauses (3) and (4) of Section 5.01(a):

(1) any Restricted Subsidiary may merge with, amalgamate with, consolidate with or into or transfer all or part of its properties and assets to Parent or the Issuer so long as no Capital Stock of the Restricted Subsidiary is distributed to any Person other than Parent or the Issuer or another Restricted Subsidiary; and

(2) the Issuer may merge with, amalgamate with or consolidate with an Affiliate of Parent solely for the purpose of reincorporating the Issuer in Canada, a Province of Canada or a State or territory of the United States or the District of Columbia, so long as the amount of Indebtedness of Parent and its Restricted Subsidiaries is not increased thereby; provided that, in the case of a Restricted Subsidiary that merges, amalgamates or consolidates into the Issuer, the Issuer will not be required to comply with Section 5.01(a)(4).

(c) The Issuer and Parent will not, and will not permit any Guarantor to, merge, amalgamate or consolidate with or into (whether or not the Issuer or such Guarantor is the surviving corporation), or convey, transfer or lease all or substantially all of its properties and assets to any Person (other than with or into, or to, the Issuer or a Guarantor) unless:

(1) if such entity remains a Guarantor, the resulting, surviving or transferee Person (the “Successor Guarantor”) will be a corporation, partnership, trust or limited liability company organized and existing under the laws of Luxembourg, any country within the United Kingdom, Canada, a Province of Canada, the United States of America, any State of the United States or the District of Columbia or the jurisdiction of organization of such Guarantor;

(2) the Successor Guarantor, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under the Notes, this Indenture and its Notes Guarantee pursuant to a supplemental indenture or other document or instrument in form and substance reasonably satisfactory to the Trustee;

(3) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing; and

(4) the Issuer will have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such merger, amalgamation, consolidation, winding up or disposition and such supplemental indenture (if any) comply with this Indenture.

(d) Except as otherwise described in this Indenture, the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Indenture and the Notes Guarantee of such Guarantor. Notwithstanding the foregoing, without complying with any of clauses (1) through (4) of Section 5.01(c), any Guarantor (other than Parent) may merge, amalgamate or consolidate with or into or transfer all or part of its properties and assets (1) to another Guarantor or the Issuer or (2) to any other Person in a transaction permitted by Section

 

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4.10 or by the definition of the term “Asset Sale.” Additionally, notwithstanding Section 5.01(c), any Guarantor (other than Parent) may merge, amalgamate or consolidate with a Restricted Subsidiary of Parent solely for the purpose of reincorporating the Guarantor federally, in a Province of Canada or a State of the United States or the District of Columbia, as long as the amount of Indebtedness of such Guarantor and its Restricted Subsidiaries is not increased thereby.

(e) Notwithstanding any other provision of this Section 5.01 or anything else to the contrary, this Section 5.01 shall not apply to the Separation Transactions.

Section 5.02 Successor Entity Substituted.

Upon any consolidation, amalgamation or merger, or conveyance, transfer or lease all or substantially all of the assets of the Issuer or any Guarantor to any Person in accordance with this Article V, the Issuer or a Guarantor (other than Parent), as the case may be, will be released from its obligations under this Indenture and its Notes Guarantee, as the case may be, and the Successor Person or Successor Guarantor, as the case may be, will succeed to, and be substituted for, and may exercise every right and power of, the Issuer or a Guarantor, as the case may be, under this Indenture and such Notes Guarantee; provided that, in the case of a lease of all or substantially all its assets, the Issuer will not be released from the obligation to pay the principal of and interest on the Notes and a Guarantor will not be released from its obligations under its Notes Guarantee.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

(a) An “Event of Default” wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):

(1) default in any payment of interest on any Note when due, for a period of 30 days;

(2) default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

(3) failure by the Issuer or any Guarantor to comply for 60 days after notice as provided below with any of its other agreements contained in this Indenture, the Notes or the Notes Guarantees;

(4) there is a failure by the Issuer, any Guarantor or any Restricted Subsidiary to pay any Indebtedness, other than Indebtedness owed to any Guarantor or the Issuer or a Restricted Subsidiary, and other than Indebtedness incurred by a Special Purpose Producer that is non-recourse to Parent or any Restricted Subsidiary other than such

 

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Special Purpose Producer (for the avoidance of doubt, an outstanding Negative Pick-up Obligation of the Issuer or any Restricted Subsidiary shall be considered recourse Indebtedness of the Issuer or such Restricted Subsidiary), within any applicable grace period after final maturity or the acceleration of any such Indebtedness by the holders thereof because of a default, in each case, if the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or such other default or the maturity of which has been so accelerated, aggregates $75,000,000 or its foreign currency equivalent or more;

(5) Parent, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law:

(A) commences proceedings to be adjudicated bankrupt or insolvent;

(B) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking an arrangement of debt, reorganization, dissolution, winding up or relief under applicable Bankruptcy Law (including, for the avoidance of doubt, the filing of a notice of intention under the Bankruptcy and Insolvency Act (Canada) or of an application under the Companies’ Creditors Arrangement Act (Canada) or any proposal to compromise, arrange or reorganize any of its debts or obligations under Section 192 of the Canada Business Corporations Act or any similar provision of Canadian federal or provincial corporate law);

(C) consents to the appointment of a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property; or

(D) makes a general assignment for the benefit of its creditors;

(6) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A) is for relief against Parent, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary, in a proceeding in which Parent, the Issuer or a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary, is to be adjudicated bankrupt or insolvent;

(B) appoints a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of Parent, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary, or for

 

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all or substantially all of the property of Parent, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the date of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary;

(C) orders the liquidation, dissolution or winding up of Parent, the Issuer or a Significant Subsidiary or group of Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary; or

(D) orders the presentation of any plan or arrangement, compromise or reorganization of Parent, the Issuer or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days;

(7) failure by Parent, the Issuer or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements for Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $75,000,000 or its foreign equivalent (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days; or

(8) any Notes Guarantee of Parent or a Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements for Parent and the Restricted Subsidiaries), would constitute a Significant Subsidiary ceases to be in full force and effect (except as contemplated by the terms of this Indenture and the Notes Guarantees) or is declared null and void in a judicial proceeding or any Guarantor denies or disaffirms its obligations under this Indenture or its Notes Guarantee to which it is a party and the Issuer fails to cause such Guarantor to rescind such denials or disaffirmations within 30 days.

However, a default under clause (3) of this Section 6.01(a) will not constitute an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes notify the Issuer of the default in writing and the Issuer does not cure such default within the time specified in clause (3) of this Section 6.01(a) after receipt of such notice.

(b) In the event of any Event of Default described in clause (4) of Section 6.01(a), such Event of Default and all consequences thereof will be annulled, waived and rescinded, automatically and without any action by the Trustee or the Holders, if the default triggering such Event of Default pursuant to clause (4) of Section 6.01(a) shall be remedied or cured by the Issuer or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 20 days after such Event of Default arose. Upon such annulment, waiver and rescission of such Event of Default, any declaration of acceleration of the Notes because of such Event of Default shall be automatically annulled if:

(1) the annulment of the acceleration of the Notes would not conflict with any judgment or decree of a court of competent jurisdiction,

 

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(2) all existing Events of Default, except nonpayment of principal, premium or interest on the Notes that became due solely because of the acceleration of the Notes, have been cured or waived and

(3) there has been deposited with the Trustee a sum sufficient to pay all sums paid or advanced by the Trustee under this Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel in accordance with the terms of this Indenture.

Section 6.02 Acceleration.

(a) If any Event of Default (other than an Event of Default described in clause (5) or (6) of Section 6.01(a)) occurs and is continuing, the Trustee by written notice to the Issuer, specifying the Event of Default, or the Holders of at least 25% in principal amount of the outstanding Notes by notice to the Issuer and the Trustee, may, and the Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Notes to be due and payable; provided that no such declaration may occur with respect to an Event of Default described in clause (3), (4) or (7) of Section 6.01(a) due to any action taken, and reported publicly pursuant to a press release or a filing with the SEC or to Holders, more than two years prior to the date of such declaration. Upon such a declaration, such principal, premium, if any, and accrued and unpaid interest shall be due and payable immediately.

(b) If an Event of Default described in clause (5) or (6) of Section 6.01(a) occurs and is continuing, the principal of, premium, if any, and interest that is both accrued and unpaid on all the Notes will become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders.

(c) The Holders of a majority in principal amount of the outstanding Notes may waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Notes and its consequences if all existing Events of Default, other than the nonpayment of the principal of, premium, if any, and interest on the Notes that have become due solely by such declaration of acceleration, have been cured or waived.

Section 6.03 Other Remedies.

(a) If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of and premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

(b) The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. All remedies are cumulative to the extent permitted by law.

 

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Section 6.04 Waiver of Past Defaults.

The Holders of a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may on behalf of the Holders of all of the Notes waive any existing Default and its consequences hereunder, except:

(1) a continuing Default in the payment of the principal of, premium, if any, or interest on, any Note held by a non-consenting Holder (including in connection with an Asset Sale Offer or a Change of Control Offer); and

(2) a Default with respect to a provision that under Section 9.02 cannot be amended without the consent of each Holder affected,

provided, subject to Section 6.02, that the Holders of a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05 Control by Majority.

The Holders of a majority in principal amount of the outstanding Notes are given the right to direct, in writing, the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, the Notes or the Notes Guarantees or that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal liability.

Section 6.06 Limitation on Suits.

Subject to Section 6.07, no Holder may pursue any remedy with respect to this Indenture or the Notes unless:

(a) such Holder has previously given the Trustee notice that an Event of Default is continuing;

(b) the Holders of at least 25% in principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy;

(c) such Holders have offered the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

(d) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(e) the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.

 

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A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

Section 6.07 Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the contractual right of any Holder to bring suit for the enforcement of any payment of principal, premium, if any, and interest (including Additional Amounts) on its Note, on or after the respective due dates expressed in this Indenture or such Note shall not be amended without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(a)(1) or (2) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuer for the whole amount of principal of, premium, if any, and accrued and unpaid interest to, but not including, the date of payment on the Notes, together with interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

Section 6.09 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceedings, the Issuer, the Guarantors, the Trustee and the Holders shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding has been instituted.

Section 6.10 Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.07, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy are, to the extent permitted by law, cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

 

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Section 6.12 Trustee May File Proofs of Claim.

The Trustee may file proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Issuer (or any other obligor upon the Notes including the Guarantors), its creditors or its property and is entitled and empowered to participate as a member in any official committee of creditors appointed in such matter and to collect, receive and distribute any money or other property payable or deliverable on any such claims. Any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel, and any other amounts due the Trustee under Section 7.07. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.13 Priorities.

If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money in the following order:

(a) to the Trustee and its agents and attorneys for amounts due under Section 7.07, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

(b) to Holders for amounts due and unpaid on the Notes for principal, premium, if any, and interest ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest respectively; and

(c) to the Issuer or to such party as a court of competent jurisdiction shall direct including a Guarantor, if applicable.

The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.13. Promptly after any record date is set pursuant to this paragraph, the Trustee shall cause notice of such record date and payment date to be given to the Issuer and to each Holder in the manner set forth in Section 12.02.

 

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Section 6.14 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in such suit to file an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.14 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

ARTICLE 7

TRUSTEE

Section 7.01 Duties of Trustee.

(a) If an Event of Default of which the Trustee has notice has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(1) the duties of the Trustee shall be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2) in the absence of gross negligence on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liabilities for its own gross negligent action, its own gross negligent failure to act, or its own willful misconduct, except that:

(1) this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;

(2) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved in a court of competent jurisdiction that the Trustee was negligent in ascertaining the pertinent facts; and

 

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(3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section 7.01.

(e) The Trustee shall be under no obligation to exercise any of its rights or powers under this Indenture, the Notes or the Notes Guarantees at the request or direction of any of the Holders unless the Holders have provided to the Trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense.

(f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both, subject to the other provisions of this Indenture. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel of its selection and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent or attorney appointed with due care.

(d) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer shall be sufficient if signed by an Officer of the Issuer.

(f) None of the provisions of this Indenture shall require the Trustee to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity reasonably satisfactory to it against such risk or liability is not assured to it.

 

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(g) In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

(h) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and each agent, custodian and other Person employed to act hereunder.

(i) The Trustee may request that the Issuer deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any Person specified as so authorized in any such certificate previously delivered and not superseded.

(j) The permissive rights of the Trustee to take the actions permitted by this Indenture will not be construed as an obligation or duty to do so.

(k) The Trustee shall have no duty to inquire as to the performance of the covenants of the Issuer in this Indenture and shall be entitled to assume that the Issuer and the Guarantors are in compliance with the terms of this Indenture.

Section 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or any Affiliate of the Issuer with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Section 7.10.

Section 7.04 Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer’s use of the proceeds from the Notes or any money paid to the Issuer or upon the Issuer’s direction under any provision of this Indenture, it shall not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it shall not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

 

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Section 7.05 Notice of Defaults.

If a Default of which a Responsible Officer of the Trustee has been notified occurs and is continuing, the Trustee shall mail (or otherwise communicate in accordance with the procedures of DTC) to each Holder notice of the Default within 90 days after it occurs and is known to a Responsible Officer of the Trustee. Except in the case of a Default relating to the payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold from the Holders notice of any continuing Default if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders. The Trustee shall not be deemed to have notice of any Default or Event of Default (other than a payment default) unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee, and such notice references the existence of a Default, the Notes and this Indenture.

Section 7.06 [reserved].

Section 7.07 Compensation and Indemnity.

(a) The Issuer and the Guarantors, jointly and severally, shall pay to the Trustee from time to time such compensation for its acceptance of this Indenture and services hereunder as the parties shall agree in writing from time to time. The Trustee’s compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses shall include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel. The Trustee shall provide the Issuer reasonable notice of any expenditure not in the ordinary course of business.

(b) The Issuer and the Guarantors, jointly and severally, shall indemnify the Trustee for, and hold the Trustee harmless against, any and all loss, damage, claims, liability or expense (including attorneys’ fees) incurred by it in connection with the acceptance or administration of this trust and the performance of its duties hereunder (including the costs and expenses of enforcing this Indenture against the Issuer or any Guarantor (including this Section 7.07)) or defending itself against any claim whether asserted by any Holder, the Issuer or any Guarantor, or liability in connection with the acceptance, exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Issuer promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Issuer shall not relieve the Issuer of its obligations hereunder. The Issuer shall defend the claim and the Trustee may have separate counsel and the Issuer shall pay the fees and expenses of such counsel. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee’s own willful misconduct or gross negligence.

(c) The obligations of the Issuer under this Section 7.07 shall survive the satisfaction and discharge of this Indenture or the earlier resignation or removal of the Trustee.

(d) To secure the payment obligations of the Issuer and the Guarantors in this Section 7.07, the Trustee shall have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of and premium, if any, and interest on particular Notes. Such Lien shall survive the satisfaction and discharge of this Indenture.

(e) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 6.01(a)(5) or (6) occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

 

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Section 7.08 Replacement of Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor Trustee shall become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08. The Trustee may resign in writing at any time by giving 30 days’ prior notice of such resignation to the Issuer and be discharged from the trust hereby created by so notifying the Issuer. The Holders of a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing. The Issuer may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10;

(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(3) a receiver or public officer takes charge of the Trustee or its property; or

(4) the Trustee becomes incapable of acting.

(b) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Issuer shall promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Issuer.

(c) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee (at the Issuer’s expense), the Issuer or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(d) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(e) A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall send a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Issuer’s obligations under Section 7.07 shall continue for the benefit of the retiring Trustee.

(f) As used in this Section 7.08, the term “Trustee” shall also include each Agent.

 

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Section 7.09 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation or national banking association, the successor corporation or national banking association without any further act shall be the successor Trustee, subject to Section 7.10.

Section 7.10 Eligibility; Disqualification.

(a) There shall at all times be a Trustee hereunder that is a corporation or national banking association organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition.

Section 7.11 [reserved].

Section 7.12 Quebec Power of Attorney.

For the purposes of holding any guarantees or security granted by or to be granted by the Issuer or any of the Guarantors pursuant to the laws of the Province of Quebec, each of the parties hereto hereby appoints and designates the Trustee as the hypothecary representative (within the meaning of Article 2692 of the CCQ) for all present and future Holders. By becoming a Holder, each Holder shall be deemed to ratify the appointment as hypothecary representative granted to the Trustee hereunder for and on behalf of the all present and future Holders. The Trustee agrees to act in such capacity. The execution prior to the date hereof by the Trustee in its capacity as hypothecary representative of any guarantees or security pursuant to the laws of the Province of Quebec is hereby ratified and confirmed. For greater certainty, the Trustee, acting as hypothecary representative, shall have the same rights, powers, immunities, indemnities and exclusions from liability as prescribed in favor of the Trustee in this Indenture, which shall apply mutatis mutandis. In the event of the resignation or replacement and appointment of a successor Trustee, such successor Trustee shall also act as the hypothecary representative unless a hypothecary representative is otherwise appointed.

ARTICLE 8

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

The Issuer may, at its option and at any time, elect to have either Section 8.02 or Section 8.03 applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

 

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Section 8.02 Legal Defeasance and Discharge.

(a) Upon the Issuer’s exercise under Section 8.01 of the option applicable to this Section 8.02, the Issuer and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04, be deemed to have been discharged from their obligations with respect to all outstanding Notes and Notes Guarantees on the date the conditions set forth below are satisfied, and the Notes Guarantees in effect at such time will terminate (“Legal Defeasance”). For this purpose, Legal Defeasance means that the Issuer shall be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes, which shall thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 and the other Sections of this Indenture referred to in (1) and (2) below, and to have satisfied all of its other obligations under such Notes and this Indenture, including that of the Guarantors (and the Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging the same), except for the following provisions which shall survive until otherwise terminated or discharged hereunder:

(1) the rights of Holders to receive payments in respect of the principal of, premium, if any, and interest on the Notes when such payments are due, solely out of the trust created pursuant to this Indenture referred to in Section 8.04;

(2) the Issuer’s obligations with respect to the Notes concerning issuing temporary Notes, registration of such Notes, mutilated, destroyed, lost or stolen Notes and the maintenance of an office or agency for payment and money for security payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith; and

(4) this Section 8.02.

(b) Upon the Issuer’s exercise of its Legal Defeasance option, the Notes Guarantees in effect at such time will terminate. Following the Issuer’s exercise of its Legal Defeasance option, payment of the Notes may not be accelerated because of an Event of Default.

(c) Subject to compliance with this Article 8, the Issuer may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03.

Section 8.03 Covenant Defeasance.

Upon the Issuer’s exercise under Section 8.01 of the option applicable to this Section 8.03, the Issuer and the Guarantors shall, subject to the satisfaction of the conditions set forth in Section 8.04, be released from their obligations under the covenants contained in Sections 4.03, 4.04, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, 4.17 and Section 5.01(a)(4) with respect to the outstanding Notes, on and after the date the conditions set forth in Section 8.04 are satisfied (“Covenant Defeasance”), and the Notes shall thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but shall continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes shall not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with respect to this Indenture and the outstanding Notes, the Issuer may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply shall not constitute a

 

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Default or an Event of Default under Section 6.01, but, except as specified above, the remainder of this Indenture, and such Notes and the Notes Guarantees shall be unaffected thereby. In addition, upon the Issuer’s exercise under Section 8.01 of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04, the operation of Section 6.01(a)(3), Section 6.01(a)(4), Section 6.01(a)(5) (solely with respect to Restricted Subsidiaries that are Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together as of the date of the most recent audited financial statements of Parent and the Restricted Subsidiaries, would constitute a Significant Subsidiary), Section 6.01(a)(6) (solely with respect to Restricted Subsidiaries that are Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together as of the date of the most recent audited financial statements of Parent and the Restricted Subsidiaries, would constitute a Significant Subsidiary), Section 6.01(a)(7) (solely with respect to Restricted Subsidiaries that are Significant Subsidiaries or a group of Restricted Subsidiaries that, taken together as of the date of the most recent audited financial statements of Parent and the Restricted Subsidiaries, would constitute a Significant Subsidiary) and Section 6.01(a)(8), shall not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

The following shall be the conditions to the exercise of either the Legal Defeasance option under Section 8.02 or the Covenant Defeasance option under Section 8.03 with respect to the Notes:

(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in Dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, as evidenced by an Officers’ Certificate of the Issuer (or, in the case of any deposit of Government Securities, as evidenced by the opinion of a nationally recognized (in Canada or the United States) firm of independent public accountants), to pay the principal of, premium, if any, and interest due on the outstanding Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Issuer must specify whether the Notes are being defeased to maturity or to a particular redemption date;

(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions,

(A) the Issuer has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or

(B) since the Issue Date, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel will confirm that, subject to customary assumptions and exclusions, the beneficial owners of the respective outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

 

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(3) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that, subject to customary assumptions and exclusions, the beneficial owners of the respective outstanding Notes will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Senior Credit Facility or any other material agreement or instrument (other than this Indenture) relating to Material Indebtedness of the Issuer or any Guarantor;

(5) no Event of Default or Default relating to Section 6.01(a)(4), Section 6.01(a)(5), Section 6.01(a)(6) or Section 6.01(a)(7) shall have occurred and be continuing on the date of such deposit (other than that resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith); and

(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions), each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with. In the case of Legal Defeasance only, such Opinion of Counsel must be based on a ruling of the U.S. Internal Revenue Service or other change in applicable U.S. federal income tax law.

Section 8.05 Deposited Money and Government Securities to Be Held in Trust; Other Miscellaneous Provisions.

(a) Subject to Section 8.06, all money and Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “Trustee”) pursuant to Section 8.04 in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer or a Guarantor acting as Paying Agent) as the Trustee may determine, to the Holders of all sums due and to become due thereon in respect of principal, premium, if any, and interest, but such money need not be segregated from other funds except to the extent required by law.

(b) The Issuer shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or Government Securities deposited pursuant to Section 8.04 or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders.

(c) Anything in this Article 8 to the contrary notwithstanding, the Trustee shall deliver or pay to the Issuer from time to time upon the request of the Issuer any money or Government Securities held by it as provided in Section 8.06 which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

 

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Section 8.06 Repayment to the Issuer.

Subject to any applicable abandoned property law, any money deposited with the Trustee or any Paying Agent, or then held by the Issuer, in trust for the payment of the principal of or premium, if any, or interest, on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest, has become due and payable shall be paid to the Issuer on its request or (if then held by the Issuer) shall be discharged from such trust; and the Holder of such Note shall thereafter look only to the Issuer for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Issuer as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Issuer cause to be published once, in The New York Times or The Wall Street Journal (national edition), notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining shall be repaid to the Issuer.

Section 8.07 Reinstatement.

If the Trustee or Paying Agent is unable to apply any Dollars or Government Securities in accordance with Section 8.02 or Section 8.03, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Issuer’s and the Guarantors’ obligations under this Indenture, the Notes and the Notes Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or Section 8.03 until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or Section 8.03, as the case may be; provided that, if the Issuer makes any payment of principal of, premium, if any, or interest on any Note following the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9

AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders.

(a) Notwithstanding Section 9.02, without the consent of any Holder, the Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Notes Guarantees to:

(1) cure any ambiguity, omission, mistake, defect or inconsistency;

(2) provide for the assumption by a successor entity of the obligations of the Issuer or any Guarantor under this Indenture, the Notes or the Notes Guarantees;

 

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(3) provide for or facilitate the issuance of uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code);

(4) comply with the rules of any applicable Depositary;

(5) add Guarantors with respect to the Notes or release a Guarantor from its obligations under its Notes Guarantee or this Indenture in accordance with the applicable provisions of this Indenture or the Notes Guarantees;

(6) add covenants of Parent or its Subsidiaries or Events of Default for the benefit of or to make changes that would provide additional rights to the Holders, or to surrender any right or power conferred upon the Issuer or any Guarantor;

(7) make any change that does not adversely affect the legal rights under this Indenture of any Holder;

(8) comply with any requirement of the SEC in connection with any required qualification of this Indenture under the Trust Indenture Act;

(9) evidence and provide for the acceptance of an appointment under this Indenture of a successor Trustee; provided that the successor Trustee is otherwise qualified and eligible to act as such under the terms of this Indenture;

(10) provide for the issuance of Additional Notes, which shall be treated, together with any outstanding Notes, as a single class of securities, so long as the Incurrence of such Additional Notes is otherwise permitted by this Indenture;

(11) conform the text of this Indenture, the Notes or the Notes Guarantees to any provision of the Exchange Agreement (including the Term Sheet attached thereto); or

(12) make any amendment to the provisions of this Indenture relating to the transfer and legending of Notes as permitted by this Indenture, including, without limitation to facilitate the issuance and administration of the Notes; provided, however, that (A) compliance with this Indenture as so amended would not result in Notes being transferred in violation of applicable Canadian securities laws, the Securities Act or any applicable securities law and (B) such amendment does not materially and adversely affect the rights of Holders to transfer Notes.

(b) Upon the request of the Issuer and upon receipt by the Trustee of the documents described in Section 12.04, the Trustee shall join with the Issuer and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to enter into such amended or supplemental indenture that adversely affects its own rights, duties or immunities under this Indenture or otherwise. Notwithstanding the foregoing, no Opinion of Counsel shall be required in connection with (x) the addition of a Guarantor under this Indenture upon execution and delivery by such Guarantor and the Trustee of a supplemental indenture to this Indenture, the form of which is attached as Exhibit C, and delivery of an Officers’ Certificate, except as provided in Section 4.15 and Section 5.01(c) or (y) the entry into the Successor Issuer Supplemental Indenture.

 

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Section 9.02 With Consent of Holders.

(a) Except as provided below in this Section 9.02, the Issuer and the Trustee may amend or supplement this Indenture, the Notes or the Notes Guarantees with the consent of the Holders of a majority in principal amount of the Notes (including Additional Notes, if any) then outstanding voting as a single class (including, without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and, subject to Sections 6.04 and 6.07, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal, or premium, if any, or interest on the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture, the Notes or the Notes Guarantees may be waived with the consent of the Holders of a majority in principal amount of the then outstanding Notes (including Additional Notes, if any) voting as a single class (including consents obtained in connection with the purchase of, or tender offer or exchange offer for, Notes). Section 2.08 and Section 2.09 shall determine which Notes are considered to be “outstanding” for the purposes of this Section 9.02.

(b) Upon the request and upon the filing with the Trustee of evidence satisfactory to the Trustee of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 and Section 12.04, the Trustee shall join with the Issuer and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such amended or supplemental indenture.

(c) The consent of the Holders is not necessary under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver. It is sufficient if such consent approves the substance of the proposed amendment, supplement or waiver. A consent to any amendment, supplement or waiver under this Section 9.02 by any Holder given in connection with a tender of such Holder’s Notes will not be rendered invalid by such tender.

(d) After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Issuer shall send to the Holders of Notes affected thereby a notice briefly describing such amendment, supplement or waiver. Any failure of the Issuer to give such notice to all the Holders, or any defect therein, shall not, however, in any way impair or affect the validity of the amendment, supplement or waiver.

(e) Without the consent of each affected Holder, an amendment, supplement or waiver under this Section 9.02 may not:

(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the stated rate of interest or extend the time for payment of interest on any Note;

(3) reduce the principal of or extend the Stated Maturity of any Note;

 

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(4) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Note may be redeemed or repurchased as described under Section 3.07 whether through an amendment or waiver of provisions in the covenants, definitions or otherwise;

(5) make any Note payable in money other than that stated therein;

(6) amend the right of any Holder to institute suit for the enforcement of any payment of principal, premium, if any, or interest on or with respect to such Holder’s Notes on or after the respective due dates expressed in this Indenture or such Notes;

(7) make any change in the amendment provisions which require each Holder’s consent or in the waiver provisions;

(8) modify the form of the Notes Guarantee in any manner adverse to the Holders or release the Guarantors constituting all or substantially all of the value of the Notes Guarantees of all Guarantors as a whole; or

(9) expressly subordinate the Notes in right of payment to any other Indebtedness of the Issuer or a Guarantor.

Section 9.03 Successor Issuer Supplemental Indenture.

Notwithstanding anything to the contrary, the Trustee is authorized to and shall enter into the Successor Issuer Supplemental Indenture on the Separation Closing Date.

Section 9.04 Effect of Consents.

(a) Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

(b) The Issuer may, but shall not be obligated to, fix a record date pursuant to Section 1.05 for the purpose of determining the Holders entitled to consent to any amendment, supplement, or waiver.

Section 9.05 Notation on or Exchange of Notes.

(a) The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Issuer in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

(b) Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

 

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Section 9.06 Trustee to Sign Amendments, etc.

The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Issuer may not sign an amendment, supplement or waiver until its Board of Directors approves it. In executing any amendment, supplement or waiver, the Trustee (subject to Section 9.01) shall be entitled to receive and (subject to Section 7.01) shall be fully protected in relying upon, in addition to the documents required by Section 12.04, an Officers’ Certificate and an Opinion of Counsel each stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10

GUARANTEES

Section 10.01 Notes Guarantee.

(a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally, irrevocably and unconditionally guarantees, on an unsecured, unsubordinated basis, to each Holder and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Issuer hereunder or thereunder, that (1) the principal of, premium, if any, and interest on the Notes shall be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of and interest on the Notes, if any, if lawful, and all other obligations of the Issuer to the Holders or the Trustee hereunder or thereunder shall be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and (2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. Failing payment by the Issuer when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors shall be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that their obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder with respect to any provisions hereof or thereof, the recovery of any judgment against the Issuer, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest, notice and all demands whatsoever and covenants that this Notes Guarantee shall not be discharged except by complete performance of the obligations contained in the Notes and this Indenture, or pursuant to Section 10.06.

(c) Each Guarantor also agrees to pay any and all costs and expenses (including reasonable attorneys’ fees and expenses) incurred by the Trustee or any Holder in enforcing any rights under this Section 10.01.

 

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(d) If any Holder or the Trustee is required by any court or otherwise to return to the Issuer, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to the Issuer or the Guarantors, any amount paid either to the Trustee or such Holder, this Notes Guarantee, to the extent theretofore discharged, shall be reinstated in full force and effect.

(e) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of this Notes Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6, such obligations (whether or not due and payable) shall forthwith become due and payable by the Guarantors for the purpose of this Notes Guarantee. The Guarantors shall have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Notes Guarantees.

(f) Each Notes Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Issuer for liquidation or reorganization, should the Issuer become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Issuer’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes are, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee on the Notes or the Notes Guarantees, whether as a “voidable preference,” “fraudulent transfer” or otherwise, all as though such payment or performance had not been made. In the event that any payment or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

(g) In case any provision of any Notes Guarantee shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

(h) Each payment to be made by a Guarantor in respect of its Notes Guarantee shall be made without set-off, counterclaim, reduction or diminution of any kind or nature.

Section 10.02 Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Notes Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S. federal or state law, Canadian federal or provincial law, law of England or law of Luxembourg to the extent applicable to any Notes Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of each Guarantor shall be limited to the maximum amount as will, after giving effect to such maximum amount and all

 

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other contingent and fixed liabilities of such Guarantor that are relevant under such laws and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Notes Guarantee not constituting a fraudulent conveyance or fraudulent transfer under applicable law.

Notwithstanding any other provision of this Indenture, the maximum liability of any Guarantor incorporated under the laws of Luxembourg (a “Luxembourg Guarantor”) pursuant to its Notes Guarantee shall be limited to an amount equal to the sum of:

(a) an amount equal to the aggregate (without double-counting) of (A) all moneys received by the Luxembourg Guarantor or its direct or indirect present or future Subsidiaries under this Indenture and (B) the aggregate amount directly or indirectly made available to the Luxembourg Guarantor or its direct or indirect present or future Subsidiaries by other members of the group that has been financed by a borrowing under this Indenture;

plus

(b) an amount equal to 95% of the greater of (a) the Luxembourg Guarantor’s own funds (capitaux propres), as referred to in annex I to the grand ducal regulation dated December 18, 2015 defining the form and content of the presentation of balance sheet and profit and loss account implementing Articles 34, 35, 46 and 47 of the Luxembourg law dated December 19, 2002 concerning the trade and companies register and the accounting and annual accounts of undertakings as amended (the “Regulation”) as increased by the amount of any Intra-Group Liabilities, each as reflected in the Luxembourg Guarantor’s latest duly approved annual accounts and other relevant documents available to the Trustee or (b) the Luxembourg Guarantor’s own funds (capitaux propres), as referred to in the Regulation as increased by the amount of any Intra-Group Liabilities, each as reflected in the Luxembourg Guarantor’s latest duly approved annual accounts and other relevant documents available to the Trustee at the time the applicable Notes Guarantee is called.

For the purposes of this Section 10.02, “Intra-Group Liabilities” means all existing liabilities owed by the Luxembourg Guarantor to the Issuer or any Guarantor that have not been financed, directly or indirectly, by the proceeds of the Notes.

Where for the purpose of the determination of the Luxembourg Guarantor’s own funds as under clause (b) above, no duly established and approved annual accounts are available for the relevant reference period (which, for the avoidance of doubt, includes a situation where, in respect of the determination to be made under clause (b) above, no final annual accounts have been established in due time in respect of the then most recently ended financial year) the relevant Luxembourg Guarantor shall, promptly, establish unaudited interim accounts (as of the date of the end of the then most recent financial quarter) or annual accounts (as applicable) duly established in accordance with applicable accounting rules, pursuant to which the relevant Luxembourg Guarantor’s own funds and Intra-Group Liabilities will be determined. If the relevant Luxembourg Guarantor fails to provide such unaudited interim accounts or annual accounts (as applicable) within 30 Business Days as from the request of the Trustee, the Trustee may appoint an independent auditor (réviseur d’entreprises agréé) or an independent reputable investment bank which shall undertake the determination of the relevant Guarantor’s own funds and Intra-Group Liabilities. In order to prepare such determination, the independent auditor

 

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(réviseur d’entreprises agréé) or the independent reputable investment bank shall take into consideration such available elements and facts at such time, including without limitation, the latest annual accounts of its Subsidiaries, any recent valuation of the assets of such Luxembourg Guarantor and its subsidiaries (if available), the market value of the assets of such Luxembourg Guarantor and its subsidiaries as if sold between a willing buyer and a willing seller as a going concern using a standard market multi criteria approach combining market multiples, book value, discounted cash flow or comparable public transaction of which price is known (taking into account circumstances at the time of the valuation and making all necessary adjustments to the assumption being used) and acting in a reasonable manner.

Section 10.03 Execution and Delivery.

(a) [reserved]

(b) Each Guarantor hereby agrees that its Notes Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding the absence of the endorsement of any notation of such Notes Guarantee on the Notes.

(c) If an Officer whose signature is on a supplemental indenture to this Indenture no longer holds that office at the time the Trustee executes such supplemental indenture, the Notes Guarantees shall be valid nevertheless.

(d) If required by Section 4.15, the Issuer shall cause any Restricted Subsidiary to comply with the provisions of Section 4.15 and this Article 10, to the extent applicable.

Section 10.04 Subrogation.

Each Guarantor shall be subrogated to all rights of Holders against the Issuer in respect of any amounts paid by any Guarantor pursuant to the provisions of Section 10.01; provided that, if an Event of Default has occurred and is continuing, no Guarantor shall be entitled to enforce or receive any payments arising out of, or based upon, such right of subrogation until all amounts then due and payable by the Issuer under this Indenture or the Notes shall have been paid in full.

Section 10.05 Benefits Acknowledged.

Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the guarantee and waivers made by it pursuant to its Notes Guarantee are knowingly made in contemplation of such benefits.

Section 10.06 Release of Notes Guarantees.

(a) A Guarantor (other than, with respect to clauses (1), (2), (3) and (5) below, Parent) shall be automatically and unconditionally released and discharged from its obligations under its Notes Guarantee and this Indenture, and no further action by such Guarantor, the Issuer or the Trustee shall be required for the release of such Guarantor’s Notes Guarantee, upon:

(1) any sale, assignment, transfer, conveyance, exchange or other disposition (by merger, amalgamation, consolidation or otherwise) of the Capital Stock of such

 

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Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary, or any sale, assignment, transfer, conveyance, exchange or other disposition of all or substantially all the assets of such Guarantor (other than by lease); provided that, in each of the foregoing cases, such sale, assignment, transfer, conveyance, exchange or other disposition is made in compliance with this Indenture, including, if applicable, Section 4.10 (it being understood that only such portion of the Net Available Cash as is required to be applied on or before the date of such release in accordance with Section 4.10 needs to be applied in accordance therewith at such time) and Article 5;

(2) the release or discharge of such Guarantor from its Guarantee of Indebtedness under the Senior Credit Facility (including by reason of the termination of the Senior Credit Facility) and all other Material Indebtedness of the Issuer and the Guarantors;

(3) the proper designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary;

(4) the Issuer exercising its Legal Defeasance option in accordance with Article 8 or the Issuer’s obligations under this Indenture being discharged in accordance with the terms of this Indenture;

(5) in the case of any Guarantor which has provided a Notes Guarantee in the Issuer’s discretion and which does not or, substantially contemporaneously with the release, will not Guarantee any Material Indebtedness of the Issuer, the Issuer’s delivering notice to the Trustee of its election to release such Guarantor from its Notes Guarantee; or

(6) in the case of LGEC and any Guarantor that is part of the STARZ Business (including, for the avoidance of doubt, LGCH) (as determined by LGEC in its sole discretion), upon the consummation of the Separation Transaction.

(b) The Issuer shall, from time to time upon the written request of the Trustee, provide the Trustee with a current list of the Guarantors.

(c) At the request of the Issuer, the Trustee shall execute and deliver an appropriate instrument evidencing the termination of the applicable Notes Guarantee.

Section 10.07 Indemnity and Subrogation.

In addition to all such rights of indemnity and subrogation as the Guarantors may have under applicable law (but subject to Section 10.09), the Issuer agrees that in the event a payment shall be made by any Guarantor hereunder or under the Notes or the Notes Guarantee, the Issuer shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment.

 

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Section 10.08 Contribution and Subrogation.

Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 10.09) that, in the event a payment shall be made by any other Guarantor hereunder or under the Notes or the Notes Guarantee in respect of any amount owed thereunder to satisfy any obligation owed to the Trustee, or any Holder and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by the Issuer as provided in Section 10.07, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to the amount of such payment multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator of which shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto after the date hereof, the date such Guarantor becomes a party). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 10.08 shall be subrogated to the rights of such Claiming Guarantor under Section 10.07 to the extent of such payment.

Section 10.09 Subordination.

Notwithstanding any provision of this Indenture to the contrary, all rights of the Guarantors under Sections 10.07 and 10.08 and all other rights of indemnity, contribution or subrogation under applicable law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations hereunder and under the Notes. No failure on the part of the Issuer or any Guarantor to make the payments required by Sections 10.07 and 10.08 (or any other payments required under applicable law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of its obligations hereunder. The Issuer and each Guarantor hereby agree that all Indebtedness and other monetary obligations owed by it to the Issuer or any Restricted Subsidiary shall be fully subordinated to the indefeasible payment in full in cash of the Obligations hereunder and under the Notes.

ARTICLE 11

SATISFACTION AND DISCHARGE

Section 11.01 Satisfaction and Discharge.

(a) This Indenture will be discharged and will cease to be of further effect as to all Notes when either:

(1) all Notes theretofore authenticated and delivered (except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been theretofore deposited in trust) have been delivered to the Trustee for cancellation; or

(2) (A) all Notes not theretofore delivered to the Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise, will become due and payable within one year or may be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer, and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee, as trust funds in trust solely for the benefit of the Holders, cash in Dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire Indebtedness on the Notes not theretofore delivered to the Trustee for cancellation for principal,

 

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premium, if any, and accrued interest to the date of maturity or redemption, as the case may be, as evidenced by an Officers’ Certificate of the Issuer (or, in the case of any deposit of Government Securities, as evidenced by the opinion of a nationally recognized (in Canada or the United States) firm of independent public accountants);

(B) no Event of Default set forth in, or Default relating to, Sections 6.01(a)(4), 6.01(a)(5), 6.01(a)(6) or 6.01(a)(7) shall have occurred and be continuing on the date of such deposit (other than an Event of Default or a Default resulting from borrowing funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith); and such deposit shall not result in a breach or violation of, or constitute a default under, the Senior Credit Facility or any other material agreement or instrument (other than this Indenture) relating to Material Indebtedness of the Issuer or any Guarantor;

(C) the Issuer has paid or caused to be paid all other sums payable by it under this Indenture; and

(D) the Issuer has delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes at maturity or the redemption date, as the case may be.

(b) In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied. Notwithstanding the satisfaction and discharge of this Indenture, if money shall have been deposited with the Trustee pursuant to subclause (A) of clause (2) of Section 11.01(a), the provisions of Section 11.02 and Section 8.06 shall survive.

Section 11.02 Application of Trust Money.

(a) Subject to the provisions of Section 8.06, all money deposited with the Trustee pursuant to Section 11.01 shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Issuer acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

(b) If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuer’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01; provided that if the Issuer has made any payment of principal of or premium, if any, or interest on any Notes because of the reinstatement of its obligations, the Issuer shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

 

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ARTICLE 12

MISCELLANEOUS

Section 12.01 Trust Indenture Act.

The provisions of the Trust Indenture Act do not apply to this Indenture or the Notes.

Section 12.02 Notices.

(a) Any notice or communication by the Issuer, any Guarantor or the Trustee to the others is duly given if in writing and (1) delivered in person, (2) mailed by first-class mail (certified or registered, return receipt requested) or overnight air courier guaranteeing next day delivery or (3) sent by facsimile or electronic transmission, to the others’ addresses:

If to the Issuer and/or any Guarantor:

c/o Lions Gate Entertainment Inc.

2700 Colorado Avenue

Santa Monica, California 90404

Fax No.: [Intentionally Omitted]

Attention: James W. Barge, Chief Financial Officer

With a copy to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019

Fax No: (212) 403-2000

Attention: John R. Sobolewski

If to the Trustee:

U.S. Bank Trust Company, National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107

Attention: Global Corporate Trust Services

The Issuer, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

(b) All notices and communications (other than those sent to Holders) shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; on the first date on which publication is made if by publication; five calendar days after being deposited in the mail, postage prepaid, if mailed by first-class mail; the next Business Day after timely delivery to the courier, if mailed by overnight air courier guaranteeing next day delivery; when receipt acknowledged, if sent by facsimile or electronic transmission; on the date sent to DTC, if given in accordance with the procedures of DTC; provided that any notice or communication delivered to the Trustee shall be deemed effective upon actual receipt thereof.

 

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(c) Any notice or communication to a Holder shall be mailed by first-class mail (certified or registered, return receipt requested) or by overnight air courier guaranteeing next day delivery to its address shown on the Note Register or by such other delivery system as the Trustee agrees to accept. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders.

(d) Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.

(e) Where this Indenture provides for notice of any event to a Holder of a Global Note, such notice shall be sufficiently given if given to the Depositary for such Note (or its designee), pursuant to the applicable procedures of such Depositary, if any, prescribed for the giving of such notice.

(f) The Trustee agrees to accept and act upon notice, instructions or directions pursuant to this Indenture sent by unsecured facsimile or electronic transmission; provided, however, that (1) the party providing such written notice, instructions or directions, subsequent to such transmission of written instructions, shall provide the originally executed instructions or directions to the Trustee in a timely manner, and (2) such originally executed notice, instructions or directions shall be signed by an authorized representative of the party providing such notice, instructions or directions. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reasonable reliance upon and compliance with such notice, instructions or directions notwithstanding such notice, instructions or directions conflict or are inconsistent with a subsequent notice, instructions or directions.

(g) If a notice or communication is sent in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

(h) If the Issuer sends a notice or communication to Holders, it shall send a copy to the Trustee and each Agent at the same time.

(i) Facsimile, documents executed, scanned and transmitted electronically and electronic signatures, including those created or transmitted through a software platform or application, shall be deemed original signatures for purposes of this Indenture and all matters and agreements related thereto, with such facsimile, scanned and electronic signatures having the same legal effect as original signatures. The parties agree that this Indenture or any instrument, agreement or document necessary for the consummation of the transactions contemplated by this Indenture or related hereto or thereto (including, without limitation, addendums, amendments, notices, instructions, communications with respect to the delivery of securities or the wire transfer of funds or other communications) (“Executed Documentation”) may be accepted, executed or agreed to through the use of an electronic signature in accordance with applicable laws, rules and regulations in effect from time to time applicable to the effectiveness and enforceability of electronic signatures. Any Executed Documentation accepted, executed or agreed to in conformity with such laws, rules and regulations will be binding on all parties hereto to the same extent as if it were physically executed and each party hereby consents to the use of any third party electronic signature capture service providers as may be reasonably chosen by a

 

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signatory hereto or thereto. When the Trustee acts on any Executed Documentation sent by electronic transmission, the Trustee will not be responsible or liable for any losses, costs or expenses arising directly or indirectly from its reliance upon and compliance with such Executed Documentation (other than any such losses, costs or expenses arising directly or indirectly from the Trustee’s own gross negligent action, gross negligent failure to act, or willful misconduct), notwithstanding that such Executed Documentation (a) may not be an authorized or authentic communication of the party involved or in the form such party sent or intended to send (whether due to fraud, distortion or otherwise) or (b) may conflict with, or be inconsistent with, a subsequent written instruction or communication; it being understood and agreed that the Trustee shall conclusively presume that Executed Documentation that purports to have been sent by an authorized officer of a Person has been sent by an authorized officer of such Person. Subject to the foregoing provisions of this Section 12.02, the Issuer agrees to assume all risks arising out of such electronic methods to submit instructions and directions to the Trustee, including, without limitation, the risk of the Trustee acting on unauthorized instructions and the risk of interception and misuse by third parties.

Section 12.03 Communication by Holders with Other Holders.

Holders may communicate with other Holders with respect to their rights under this Indenture or the Notes in the manner contemplated by the provisions of Section 312(b) of the Trust Indenture Act (it being understood that, for the avoidance of doubt, the provisions of the Trust Indenture Act do not apply to this Indenture or the Notes). The disclosure by the Trustee of any such information as to the names and addresses of the Holders in accordance with the provisions of this Section 12.03, regardless of the source from which such information was derived, shall not be deemed to be a violation of any existing law, or of any law hereafter enacted, nor shall such Trustee be held accountable by reason of mailing any material pursuant to a request made under this Section 12.03.

Section 12.04 Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuer or any Guarantor to the Trustee to take any action under this Indenture, the Issuer or such Guarantor, as the case may be, shall, at the request of the Trustee, furnish to the Trustee:

(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05) stating that, in the opinion of the signer(s), all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.05) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been complied with; provided that (A) subject to Section 4.15 and Section 5.01(c), no Opinion of Counsel shall be required in connection with the addition of a Guarantor under this Indenture upon execution and delivery by such Guarantor and the Trustee of a supplemental indenture to this Indenture, the form of which is attached as Exhibit C and (B) no Opinion of Counsel shall be required in connection with the issuance of Notes on the Issue Date.

 

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Section 12.05 Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to Section 4.04) shall include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with (and, in the case of an Opinion of Counsel, may be limited to reliance on an Officers’ Certificate as to matters of fact); and

(4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with.

Section 12.06 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

No director, Officer, employee, incorporator or stockholder of the Issuer or the Guarantors, as such, shall have any liability for any obligations of the Issuer under the Notes, this Indenture or the Notes Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation.

Each Holder by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

Section 12.08 Governing Law.

THIS INDENTURE, THE NOTES AND ANY NOTES GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 12.09 Waiver of Jury Trial.

EACH OF THE ISSUER, THE GUARANTORS AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES, THE NOTES GUARANTEES OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

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Section 12.10 Force Majeure.

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused by, directly or indirectly, forces beyond its reasonable control, including without limitation strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software or hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 12.11 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret any other indenture, loan or debt agreement of Parent or its Restricted Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.12 Successors.

All agreements of the Issuer in this Indenture and the Notes shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. All agreements of each Guarantor in this Indenture shall bind its successors, except as otherwise provided in Section 10.06.

Section 12.13 Severability.

In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.14 Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. Notwithstanding the foregoing, the exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture and signature pages for all purposes.

Section 12.15 Table of Contents, Headings, etc.

The Table of Contents, Section 1.02 and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

Section 12.16 U.S.A. PATRIOT Act.

In order to comply with the laws, rules, regulations and executive orders in effect from time to time applicable to banking institutions, including, without limitation, those relating to the funding of terrorist activities and money laundering, including Section 326 of the USA PATRIOT Act of the United States (“Applicable AML Law”), the Trustee and Agents are

 

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required to obtain, verify, record and update certain information relating to individuals and entities which maintain a business relationship with the Trustee and Agents. Accordingly, each of the parties agree to provide to the Trustee and Agents, upon their request from time to time such identifying information and documentation as may be available for such party in order to enable the Trustee and Agents to comply with Applicable AML Law.

Section 12.17 Consent to Jurisdiction; Appointment of Agent for Service of Process.

(a) The Issuer and each Guarantor, jointly and severally, agrees that any suit, action or proceeding against the Issuer or any Guarantor arising out of or relating to this Indenture, the Notes and the Notes Guarantees may be instituted in any state or U.S. Federal court in the Borough of Manhattan in the City of New York, County and State of New York, United States of America, and any appellate court from any thereof, and the Issuer and each Guarantor irrevocably submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. The Issuer and each Guarantor irrevocably waives, to the fullest extent permitted by law, any objection to any suit, action or proceeding that may be brought in connection with this Indenture, the Notes and the Notes Guarantees, including such actions, suits or proceedings relating to the securities laws of the U.S. or any state thereof, in such courts whether on the grounds of venue, residence or domicile or on the ground that any such suit, action or proceeding has been brought in an inconvenient forum. The final judgment in any such suit, action or proceeding brought in such court shall be conclusive and binding upon the Issuer or relevant Guarantor and may be enforced in any court to the jurisdiction of which the Issuer or relevant Guarantor is subject by a suit upon such judgment; provided that service of process is effected upon the Issuer or relevant Guarantor in the manner provided by this Section 12.17.

(b) The Issuer and each Guarantor hereby consents to service of process by mail at the address to which notices are to be given to it pursuant to Section 12.02.

Section 12.18 Judgment Currency

If for the purposes of obtaining judgment in any court it is necessary to convert a sum due under the Notes or this Indenture into any currency other than Dollars, the Issuer and each Guarantor agree, to the fullest extent permitted by law, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Trustee could purchase Dollars with such other currency in The City of New York on the Business Day preceding that on which final judgment is given. The obligation of the Issuer and each Guarantor with respect to any sum due from it to the Trustee and the Holders shall, notwithstanding any judgment in a currency other than Dollars, not be discharged until the first Business Day following receipt by the Trustee or the Holders of any sum in such other currency, and only to the extent that the Trustee may in accordance with normal banking procedures purchase Dollars with such other currency. If the Dollars so purchased are less than the sum originally due to the Trustee or the Holders, the Issuer and each of the Guarantors, jointly and severally, to the extent permitted by law, agree as a separate obligation and notwithstanding any such judgment, to indemnify the Trustee and such Holders against such loss. If the Dollars so purchased are greater than the sum originally due to the Trustee or the Holders, the Trustee and the Holders agree to pay to the Issuer an amount equal to the excess of the Dollars so purchased over the sum originally due to such person.

 

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Section 12.19 Separation Transaction.

For the avoidance of doubt, from and after the Separation Closing Date, the covenants, Events of Default and other provisions of this Indenture and the Notes shall no longer apply to LGEC and its Restricted Subsidiaries (including the Initial Issuer), as applicable, and shall apply only to StudioCo Parent and its Restricted Subsidiaries (including the Successor Issuer), as applicable. Upon consummation of the Separation Transaction and entry into the Successor Issuer Supplemental Indenture, the Initial Issuer shall be automatically and unconditionally released and discharged from all obligations under the Indenture and the Notes without any further action by any Holder or any other person.

Furthermore, any Person who becomes a beneficial owner of the Notes, on behalf of itself and its predecessors, successors, assigns, agents, subsidiaries, controlled Affiliates and representatives, automatically and irrevocably and forever agrees to be bound by the terms of Sections 4 and 13 of that certain Supplemental Indenture No. 10, dated as of May 8, 2024 to the LGCH Indenture (the “LGCH Supplemental Indenture”) to the same extent as if such person were a Consenting Noteholder (as defined therein).

[Signatures on following pages]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the date first above written.

 

LIONS GATE CAPITAL HOLDINGS 1, INC.
/s/ James W. Barge
Name: James W. Barge
Title: Chief Financial Officer and Treasurer

 

[Signature Page to Indenture]

GUARANTORS:
LIONS GATE ENTERTAINMENT CORP.
/s/ James W. Barge
Name: James W. Barge
Title: Chief Financial Officer

 

[Signature Page to Indenture]

3A23 ACQUISITION COMPANY LLC
3F PRODUCTIONS, INC. (F/K/A CATX TIME
AFTER TIME 12 PRODUCTIONS, INC.)
A LOT PRODUCTIONS, INC.
ALTERNATE UNIVERSE, LLC
AMERICAN LION PRODUCTIONS, INC.
ANGEL PRODUCTIONS, INC.
ARIES PICTURES LLC
ARTISAN ENTERTAINMENT INC.
ARTISAN HOME ENTERTAINMENT INC.
ARTISAN PICTURES LLC
ARTISAN RECEIVABLES HOLDINGS, LLC
AYD PRODUCTIONS, INC. (F/K/A CATX CERTAIN SLANT 12 PRODUCTIONS, INC.)
BALANCED POST, INC.
BEEN THERE DONE THAT PRODUCTIONS, INC.
BLACKFIN INC.
BOTTOM DOLLAR PRODUCTIONS, INC.
CANDY CANE LANE PRODUCTIONS, INC.
CASUAL PRODUCTIONS, INC.
CATX EXORCISM 12 PRODUCTIONS, INC.
CATX TWO EYES 12 PRODUCTIONS, INC.
CATX WEE 12 PRODUCTIONS, INC.
CB DEVELOPMENT, LLC
CB DIRECT, LLC
CBLG PRODUCTIONS, LLC (D/B/A CODEBLACK FILMS)
CBNU PRODUCTIONS, LLC
CHAINS PRODUCTIONS, INC.
CHAIRMAN OF THE BOARD PRODUCTIONS, INC.
CONDEMNED PRODUCTIONS, INC.
CONFIDENTIAL PRODUCTIONS, INC.
CRUSHED PRODUCTIONS, INC.
D30 PRODUCTIONS, INC.
DB2 PRODUCTIONS, LLC
DD1 PRODUCTIONS, LLC
DD2 ACQUISITION CORP.

 

[Signature Page to Indenture]

DEBMAR STUDIOS, INC.
DEBMAR/MERCURY, LLC
DELUXE PICTURES LLC
DESPERADO UNIVERSE PRODUCTIONS, LLC
DESPERADOS, LLC
DIGITAL MURDER, INC.
EARL STREET CAPITAL LLC
EMPIRE PRODUCTIONS, INC.
ENTERTAINMENT ONE FILM USA LLC
ENTERTAINMENT ONE HOLDINGS USA, INC.
ENTERTAINMENT ONE REALITY PRODUCTIONS LLC
ENTERTAINMENT ONE TELEVISION USA LLC
EONE FEATURES (DEVELOPMENT) LLC
EONE FEATURES LLC
FILM HOLDINGS CO.
FOXBURG FINANCING 2 LLC
FOXBURG FINANCING 3, LLC
FOXBURG FINANCING 4, LLC
FOXBURG FINANCING, LLC
FRIENDS FINANCING, INC.
GC FILMS, INC.
GOOD BOYS PRODUCTIONS, LLC
GOOD EVEL PRODUCTIONS, INC.
GRINDSTONE ENTERTAINMENT GROUP, LLC
GUILT PRODUCTIONS, INC.
HIGHER POST LLC
HOME EC PRODUCTIONS, INC.
HONORED PRODUCTIONS, INC.
HOUDINI PRODUCTIONS, INC.
HSKL PRODUCTIONS, INC.
INFLUENCE PRODUCTIONS, INC.
INVISIBLE CASTING INC.
JACKAL AND LION PRODUCTIONS, INC.
JERRY O TALK, LLC
JUST REWARDS PRODUCTIONS, INC.
LANDSCAPE ENTERTAINMENT CORP.
LAYOVER PRODUCTIONS, INC.

 

[Signature Page to Indenture]

LEP REBOOT, LLC
LG CAPITAL HOLDINGS, INC.
LG HORROR CHANNEL HOLDINGS, LLC
LG JV SERVICING COMPANY, LLC
LG RIGHTS HOLDINGS, LLC
LGAC 1, LLC
LGAC 3, LLC
LGAC INTERNATIONAL LLC
LGDG FILMS, INC.
LGDS DEVELOPMENT, INC.
LGDS DIRECT, INC.
LGDS PRODUCTIONS, INC.
LG-MAX LLC
LGTV ANIMATION, INC.
LGTV C103 PRODUCTIONS, INC.
LGTV PRODUCTIONS, INC.
LIONS GATE ANCILLARY LLC
LIONS GATE CAPITAL HOLDINGS LLC
LIONS GATE DIGITAL PROJECTS, INC.
LIONS GATE DIGITAL STUDIOS, INC.
LIONS GATE ENTERTAINMENT INC.
LIONS GATE EXHIBITION, INC.
LIONS GATE FILMS HOLDINGS COMPANY #2, INC.
LIONS GATE FILMS INC.
LIONS GATE INDIA INC.
LIONS GATE INTERACTIVE, INC.
LIONS GATE INTERNATIONAL SALES, LLC
LIONS GATE MUSIC PUBLISHING LLC
LIONS GATE MUSIC, INC.
LIONS GATE ONLINE SHOP INC.
LIONS GATE PENNSYLVANIA, INC.
LIONS GATE PRODUCTIONS, LLC
LIONS GATE RECORDS, INC.
LIONS GATE RELEASING LLC (F/K/A ARTISAN RELEASING LLC)
LIONS GATE SPIRIT HOLDINGS, LLC
LIONS GATE TELEVISION DEVELOPMENT LLC

 

[Signature Page to Indenture]

LIONS GATE TELEVISION INC.
LIONS GATE TELEVISION INTERNATIONAL—LATIN AMERICA, INC.
LIONS GATE TRUE NORTH CORP.
LIONS GATE TRUE NORTH MEDIA, LLC
LIONS GATE X PRODUCTIONS, LLC
LIONSGATE LBE, INC.
LOVE LESSONS PRODUCTIONS, INC.
LOVE LIFE PRODUCTIONS, INC.
MACARTHUR PARK PRODUCTIONS, INC.
MANDATE FILMS, LLC
MANDATE PICTURES, LLC
MANHUNT PRODUCTIONS, INC.
MARRY ME? PRODUCTIONS, INC. (F/K/A GOOSED PRODUCTIONS, INC.)
MERE MORTALS PRODUCTIONS, INC.
MIDDLE WEST PRODUCTIONS, INC.
MILLERS GIRL PRODUCTIONS, LLC
MONOGAMISH PRODUCTIONS, INC.
MOTHERHOOD PRODUCTIONS, INC.
MQP, LLC
MSP PRODUCTIONS, LLC
NGC FILMS, INC.
NTF PRODUCTIONS, INC.
OLD HICKORY PRODUCTIONS, INC.
ONE RESILIENCE PRODUCTIONS, INC.
OVERTURE FILMS, LLC
PARADISE PRODUCTIONS, INC.
PIPELINE CASTING, INC.
PLAYLIST PRODUCTIONS, INC.
POWER MONGERING DESPOT, INC.
P-VALLEY PRODUCTIONS, INC.
QUEST PRODUCTIONS, INC. (F/K/A LGTV SET UP 1 PRODUCTIONS, INC.)
RENEGADE 83, LLC
RENEGADE ENTERTAINMENT, LLC
ROAD TO TINUE PRODUCTIONS, INC. (F/K/A LGTV SET UP 3 PRODUCTIONS, INC.)
ROYALS PRODUCTIONS, INC.

 

[Signature Page to Indenture]

RRR PRODUCTIONS, LLC
SCREENING ROOM, INC.
SEE ME LOUISIANA, L.L.C.
SELP, LLC
SERPENT QUEEN PRODUCTIONS, INC.
SF1 PRODUCTIONS, INC. (F/K/A CATX RICKY 12 PRODUCTIONS, INC.)
SF2 PRODUCTIONS, INC.
SILENT DEVELOPMENT CORP.
SOUTH SHORE PRODUCTIONS, INC.
SPACE CAMP PRODUCTIONS, LLC
STARZ ACQUISITION LLC
STARZ AVOCADO PRODUCTIONS, LLC
STARZ BALLET PRODUCTIONS, LLC
STARZ BLACK SAMURAI PRODUCTIONS, LLC
STARZ BSJ PRODUCTIONS, LLC
STARZ DOCU-SERIES PRODUCTIONS, LLC
STARZ ENTERTAINMENT, LLC
STARZ ENTITY HOLDING COMPANY, LLC
STARZ EVIL PRODUCTIONS, LLC
STARZ FAMILY CRIMES PRODUCTIONS, LLC
STARZ FASHION PRODUCTIONS, LLC
STARZ FINANCE CORP.
STARZ INDEPENDENT, LLC
STARZ LEAVENWORTH PRODUCTIONS, LLC
STARZ LIBERTY CITY PRODUCTIONS, LLC
STARZ MEDIA, LLC
STARZ NU DOCUMENTARY PRODUCTIONS, LLC
STARZ PIRATES PRODUCTIONS, LLC
STARZ POUR VIDA PRODUCTIONS, LLC
STARZ REMORSE PRODUCTIONS, LLC
STARZ RODEO PRODUCTIONS, LLC (F/K/A STARZ AFTER SHOW PRODUCTIONS, LLC)
STARZ RUNAWAY PRODUCTIONS, LLC
STARZ SAFARI PRODUCTIONS, LLC
STARZ SECRET KEEPERS PRODUCTIONS, LLC
STARZ THE FIELD PRODUCTIONS, LLC
STARZ VENERY PRODUCTIONS, INC.

 

[Signature Page to Indenture]

STARZ, LLC
STUDIO PRODUCTIONS, INC. (F/K/A OH YEAH! PRODUCTIONS, INC.)
SUMMIT DISTRIBUTION, LLC
SUMMIT ENTERTAINMENT DEVELOPMENT SERVICES
SUMMIT ENTERTAINMENT, LLC
SUMMIT GUARANTY SERVICES, LLC
SUMMIT INTERNATIONAL DISTRIBUTION, INC.
SUMMIT PRODUCTIONS, LLC
SUMMIT SIGNATURE, LLC
SWS PRODUCTIONS, INC.
TOUCHDOWN PRODUCTIONS, INC.
TRUE NORTH MEDIA, LLC
TWEED PRODUCTIONS, LLC (F/K/A WGP PRODUCTIONS, LLC)
TWILIGHT DOMESTIC RIGHTS, LLC
TWILIGHT PRODUCTIONS, LLC
UC PRODUCTIONS, LLC
UNITED FANDOM, LLC
VESTRON INC.
WHITE FAMOUS PRODUCTIONS, INC.
WOMEN IN COMEDY DOCUMENTARY, LLC
YKM PRODUCTIONS, INC.

 

By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Authorized Officer

 

[Signature Page to Indenture]

NICK TALK PRODUCTIONS, INC.
PLLG LEGAL, INC.
PSGM, INC.
By:   /s/ Adrian Kuzycz
  Name: Adrian Kuzycz
  Title: Authorized Officer

 

[Signature Page to Indenture]

BLIND MAN PRODUCTIONS, LLC
CHERRIES PRODUCTIONS, LLC
DISASTER ARTIST, LLC
DJ LOVE PRODUCTIONS, LLC
EXTINCT SHADOW PRODUCTIONS, LLC
FOUR FELLAS PRODUCTIONS, LLC
GOOD UNIVERSE DEVELOPMENT, LLC
GOOD UNIVERSE FILMS, LLC
GOOD UNIVERSE INTERNATIONAL, LLC
GOOD UNIVERSE MEDIA, LLC
OB PRODUCTIONS, INC. (F/K/A OLDBOY PRODUCTIONS)
TOWNIES PRODUCTIONS, LLC
TOWNIES 2 PRODUCTIONS, LLC
XMAS PRODUCTIONS, LLC
By:   /s/ Daniel Freedman
  Name: Daniel Freedman
  Title: Authorized Officer

 

[Signature Page to Indenture]

ANCHOR BAY ENTERTAINMENT, LLC
DEBMAR/MERCURY (WW) PRODUCTIONS, LLC
J&C ENTERTAINMENT, INC.
By:   /s/ Michael Hainkel
  Name: Michael Hainkel
  Title: Authorized Officer

 

[Signature Page to Indenture]

UK GUARANTORS
LIONS GATE CHINA (UK) LIMITED
By:   /s/ Sandra Benoit
  Name: Sandra Benoit
  Title: Director
LIONS GATE INTERNATIONAL MEDIA LIMITED
By:   /s/ Sandra Benoit
  Name: Sandra Benoit
  Title: Director
LIONS GATE INTERNATIONAL (UK) LIMITED
By:   /s/ Sandra Benoit
  Name: Sandra Benoit
  Title: Director
LIONS GATE INTERNATIONAL (UK) FILM DEVELOPMENT LIMITED
By:   /s/ Sandra Benoit
  Name: Sandra Benoit
  Title: Director

 

[Signature Page to Indenture]

LUX GUARANTORS

 

LIONS GATE INTERNATIONAL MOTION PICTURES S.À R.L.
société à responsabilité limitée

3, boulevard Royal

L-2449 Luxembourg
RCS number B 185480
By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Class A Manager

LIONS GATE INTERNATIONAL SLATE
INVESTMENT S.A.

société anonyme

3, boulevard Royal

L-2449 Luxembourg
RCS number B 193789
By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Class A Director

ENTERTAINMENT CAPITAL HOLDINGS
INTERNATIONAL S.À R.L.

société à responsabilité limitée

3, boulevard Royal

L-2449 Luxembourg
RCS number B 225278
By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Class A Manager

 

[Signature Page to Indenture]

LIONS GATE INDIA S.À R.L.

société à responsabilité limitée

3, boulevard Royal

L-2449 Luxembourg

RCS number B 217487

By:   /s/ James W. Barge
  Name: James W. Barge
  Title: Class A Manager

 

[Signature Page to Indenture]

CANADIAN GUARANTORS:
CENTBOMB PRODUCTIONS CORP.
LG VISUAL PRODUCTIONS ULC
LIONS GATE MUSIC CORP.
LIONS GATE X PRODUCTIONS CORP.
LG SIRIUS HOLDINGS ULC
LG ORION HOLDINGS ULC (F/K/A LG ORION HOLDING, INC.)
LIONSGATE PLAYCO HOLDINGS ULC
By:   /s/ Adrian Kuzycz
  Name: Adrian Kuzycz
  Title: Authorized Signatory

 

[Signature Page to Indenture]

TRUSTEE:
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:   /s/ Brandon Bonfig
  Name: Brandon Bonfig
  Title: Vice President

 

[Signature Page to Indenture]

APPENDIX A

PROVISIONS RELATING TO INITIAL NOTES

AND ADDITIONAL NOTES

Section 1.1 Definitions.

(a) Capitalized Terms.

Capitalized terms used but not defined in this Appendix A have the meanings given to them in this Indenture. The following capitalized terms have the following meanings:

“Applicable Procedures” means, with respect to any transfer or transaction involving a Regulation S Global Note or beneficial interest therein, the rules and procedures of the Depositary for such Global Note, Euroclear and Clearstream, in each case to the extent applicable to such transaction and as in effect from time to time.

“Clearstream” means Clearstream Banking, Société Anonyme, or any successor securities clearing agency.

“Distribution Compliance Period,” with respect to any Note, means the 40-day “distribution compliance period” as defined in Regulation S.

“Euroclear” means Euroclear Bank SA/NV, as operator of the Euroclear System, or any successor securities clearing agency.

“IAI” means an institutional “accredited investor” as described in Rule 501.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Notes” means any notes offered and sold in reliance on Regulation S.

“Regulation S Permanent Global Notes” means any Regulation S Notes issued in the form of one or more global Notes that are no longer subject to the Distribution Compliance Period.

“Regulation S Temporary Global Notes” means any Regulation S Notes issued in the form of one or more global Notes that are subject to the Distribution Compliance Period.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 144A Notes” means any notes offered and sold in reliance on Rule 144A.

“Rule 501” means Rule 501(a)(1), (2), (3) or (7) under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

 

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“Unrestricted Global Note” means any Global Note that does not bear or is not required to bear the Restricted Notes Legend.

(b) Other Definitions.

 

Term:

    Defined in Section:
“Agent Members”    2.1(d)
“Automatic Exchange”    2.3(e)
“Automatic Exchange Date”    2.3(e)
“Automatic Exchange Notice”    2.3(e)
“Automatic Exchange Notice Date”    2.3(e)
“Global Note”    2.1(b)
“Global Notes Legend”    2.3(f)(i)
“IAI Global Note”    2.1(b)
“Initial Global Note”    2.1(b)
“OID Notes Legend”    2.3(f)(i)
“Regulation S Global Note”    2.1(b)
“Regulation S Temporary Global Notes Legend”    2.3(f)(i)
“Restricted Notes Legend”    2.3(f)(i)
“Rule 144A Global Note”    2.1(b)

Section 2.1 Form and Dating.

(a) The Initial Notes issued on the date hereof shall be issued in a transaction exempt from registration under the Securities Act. Additional Notes may include (1) Rule 144A Notes and (2) Regulation S Notes, and any such Additional Notes may thereafter be transferred outside of Canada to, among others, QIBs, purchasers in reliance on Regulation S and, except as set forth below, IAIs in accordance with Rule 501.

(b) Global Notes. The Initial Notes shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the “Initial Global Note”), any Additional Notes constituting Rule 144A Notes shall be issued initially in the form of one or more permanent global Notes in definitive, fully registered form (collectively, the “Rule 144A Global Note”) and any Additional Notes constituting Regulation S Notes shall be issued initially in the form of Regulation S Temporary Global Notes (collectively with the Regulation S Permanent Global Notes, the “Regulation S Global Note”), in each case without interest coupons and bearing the Global Notes Legend and Restricted Notes Legend, which shall be deposited on behalf of the purchasers of the Notes represented thereby with the Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as provided in this Indenture. One or more global Notes in definitive, fully registered form without interest coupons and bearing the Global Notes Legend and the Restricted Notes Legend (collectively, the “IAI Global Note”) shall also be issued on any issue date in respect of Additional Notes constituting Rule 144A Notes or Regulation S Notes, deposited with the Custodian, and registered in the name of the Depositary or a nominee of the Depositary, duly executed by the Issuer and authenticated by the Trustee as provided in this Indenture to accommodate transfers of beneficial interests in the Notes to IAIs subsequent to the initial distribution. Beneficial ownership interests in any Regulation S Global Note shall not be exchangeable for interests in the Rule 144A Global Note, the IAI Global Note or any other Note without a Restricted Notes Legend until the expiration of the Distribution

 

2

Compliance Period. The Initial Global Note, Rule 144A Global Note, the IAI Global Note and the Regulation S Global Note are each referred to herein as a “Global Note” and are collectively referred to herein as “Global Notes”; provided that the term “Global Note” when used in Sections 2.1(d), 2.3(b), 2.3(g), 2.3(h)(i), 2.3(h)(ii) and 2.4 of this Appendix A and Section 2.06 of this Indenture shall also include the Unrestricted Global Note. Each Global Note shall represent such of the outstanding Notes as shall be specified in the “Schedule of Exchanges of Interests in the Global Note” attached thereto and each shall provide that it shall represent up to the aggregate principal amount of Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as applicable, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 of this Indenture and Section 2.3(c) below.

(c) Temporary Global Notes. Any Initial Notes and any Additional Notes offered and sold in reliance on Regulation S shall be issued initially in the form of the Regulation S Temporary Global Note, which shall be deposited on behalf of the purchasers of the Notes with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Issuer and authenticated by the Trustee as hereinafter provided.

Following the termination of the Distribution Compliance Period, beneficial interests in the Regulation S Temporary Global Note shall be exchanged for beneficial interests in the Regulation S Permanent Global Note. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Book-Entry Provisions. This Section 2.1(d) shall apply only to a Global Note deposited with or on behalf of the Depositary.

The Issuer shall execute and the Trustee shall, in accordance with this Section 2.1(d) and Section 2.2 and pursuant to an order of the Issuer signed by one Officer of the Issuer, authenticate and deliver initially one or more Global Notes that (i) shall be registered in the name of the Depositary for such Global Note or Global Notes or the nominee of such Depositary and (ii) shall be delivered by the Trustee to such Depositary or pursuant to such Depositary’s instructions or held by the Trustee as Custodian.

Members of, or participants in, the Depositary (“Agent Members”) shall have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary or by the Trustee as Custodian or under such Global Note, and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Issuer, the Trustee or any agent of the Issuer or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of such Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Note.

 

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(e) Definitive Notes. Except as provided in Section 2.3 or 2.4, owners of beneficial interests in Global Notes shall not be entitled to receive physical delivery of certificated Notes.

Section 2.2 Authentication. The Trustee shall authenticate and make available for delivery upon a written order of the Issuer signed by one Officer of the Issuer (a) Initial Notes for original issue on the date hereof in an aggregate principal amount of $389,861,000, (b) subject to the terms of this Indenture, Additional Notes and (c) the Unrestricted Global Notes for issue only in accordance with Section 2.3(e). Such order shall specify the amount of the Notes to be authenticated, the date on which the original issue of Notes is to be authenticated and whether the Notes are to be Initial Notes, Additional Notes or Unrestricted Global Notes.

Section 2.3 Transfer and Exchange.

(a) Transfer and Exchange of Definitive Notes for Definitive Notes. When Definitive Notes are presented to the Registrar with a request:

(i) to register the transfer of such Definitive Notes; or

(ii) to exchange such Definitive Notes for an equal principal amount of Definitive Notes of other authorized denominations,

the Registrar shall register the transfer or make the exchange as requested if its reasonable requirements for such transaction are met; provided, however, that the Definitive Notes surrendered for transfer or exchange:

(1) shall be duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer and the Registrar, duly executed by the Holder thereof or his attorney duly authorized in writing; and

(2) in the case of Transfer Restricted Notes, are accompanied by the following additional information and documents, as applicable:

(A) if such Definitive Notes are being delivered to the Registrar by a Holder for registration in the name of such Holder, without transfer, a certification from such Holder to that effect (in the form set forth on the reverse side of the Initial Note); or

(B) if such Definitive Notes are being transferred to the Issuer, a certification to that effect (in the form set forth on the reverse side of the Initial Note); or

 

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(C) if such Definitive Notes are being transferred pursuant to an exemption from registration in accordance with Rule 144 under the Securities Act or in reliance upon another exemption from the registration requirements of the Securities Act, (x) a certification to that effect (in the form set forth on the reverse side of the Initial Note) and (y) if the Issuer so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with the restrictions set forth in the applicable legends set forth in Section 2.3(f)(i); and

(D) in respect of a transfer of Definitive Notes outside of the United States, (x) a certification that such Definitive Notes are being transferred in accordance with applicable securities laws and (y) if the Issuer so requests, an opinion of counsel or other evidence reasonably satisfactory to it as to the compliance with applicable securities laws.

(b) Restrictions on Transfer of a Definitive Note for a Beneficial Interest in a Global Note. A Definitive Note may not be exchanged for a beneficial interest in a Global Note except upon satisfaction of the requirements set forth below. Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied by a written instrument of transfer in form reasonably satisfactory to the Issuer and the Registrar, together with:

(i) (A) certification (in the form set forth on the reverse side of the Initial Note) that such Definitive Note is being transferred (1) to a QIB in accordance with Rule 144A, (2) to an IAI that has furnished to the Trustee a signed letter substantially in the form of Exhibit B or (3) outside the United States of America in an offshore transaction within the meaning of Regulation S and in compliance with Rule 904 under the Securities Act and the securities laws of the outside jurisdiction; or (B) such other certification and Opinion of Counsel as the Trustee shall require; and

(ii) written instructions directing the Trustee to make, or to direct the Custodian to make, an adjustment on its books and records with respect to such Global Note to reflect an increase in the aggregate principal amount of the Notes represented by the Global Note, such instructions to contain information regarding the Depositary account to be credited with such increase, then the Trustee shall cancel such Definitive Note and cause, or direct the Custodian to cause, in accordance with the standing instructions and procedures existing between the Depositary and the Custodian, the aggregate principal amount of Notes represented by the Global Note to be increased by the aggregate principal amount of the Definitive Note to be exchanged and shall credit or cause to be credited to the account of the Person specified in such instructions a beneficial interest in the Global Note equal to the principal amount of the Definitive Note so canceled. If no Global Notes are then outstanding and the Global Note has not been previously exchanged for certificated securities pursuant to Section 2.4, the Issuer shall issue and the Trustee shall authenticate, upon written order of the Issuer in the form of an Officers’ Certificate, a new Global Note in the appropriate principal amount.

(c) Transfer and Exchange of Global Notes. (i) The transfer and exchange of Global Notes or beneficial interests therein shall be effected through the Depositary, in accordance with this Indenture (including applicable restrictions on transfer set forth herein, if any) and the procedures of the Depositary therefor. A transferor of a beneficial interest in a Global Note shall deliver a written order given in accordance with the Depositary’s procedures containing information regarding the participant account of the Depositary to be credited with a

 

5

beneficial interest in such Global Note or another Global Note and such account shall be credited in accordance with such order with a beneficial interest in the applicable Global Note and the account of the Person making the transfer shall be debited by an amount equal to the beneficial interest in the Global Note being transferred. Transfers by an owner of a beneficial interest in the Rule 144A Global Note or the IAI Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, whether before or after the expiration of the Distribution Compliance Period, shall be made only upon receipt by the Trustee of a certification in the form provided on the reverse of the Initial Notes from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the Distribution Compliance Period, the interest transferred shall be held immediately thereafter through Euroclear or Clearstream. In the case of a transfer of a beneficial interest in either the Regulation S Global Note or the Rule 144A Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit B to the Trustee.

(ii) If the proposed transfer is a transfer of a beneficial interest in one Global Note to a beneficial interest in another Global Note, the Registrar shall reflect on its books and records the date and an increase in the principal amount of the Global Note to which such interest is being transferred in an amount equal to the principal amount of the interest to be so transferred, and the Registrar shall reflect on its books and records the date and a corresponding decrease in the principal amount of the Global Note from which such interest is being transferred.

(iii) Notwithstanding any other provisions of this Appendix A (other than the provisions set forth in Section 2.4), a Global Note may not be transferred as a whole except by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary.

(d) Restrictions on Transfer of Regulation S Global Note. (i) Prior to the expiration of the Distribution Compliance Period, interests in the Regulation S Global Note may only be held through Euroclear or Clearstream. During the Distribution Compliance Period, beneficial ownership interests in the Regulation S Global Note may only be sold, pledged or transferred through Euroclear or Clearstream in accordance with the Applicable Procedures and only (1) to the Issuer, (2) so long as such security is eligible for resale pursuant to Rule 144A, to a person whom the selling holder reasonably believes is a QIB that purchases for its own account or for the account of a QIB to whom notice is given that the resale, pledge or transfer is being made in reliance on Rule 144A, (3) in an offshore transaction in accordance with Regulation S and the applicable offshore securities laws, (4) pursuant to an exemption from registration under the Securities Act provided by Rule 144 (if applicable) under the Securities Act or another available exemption, (5) to an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of Notes of $250,000 or (6) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state of the United States of America and, if the transferee is resident in Canada, the securities laws of Canada. Prior to the expiration of the Distribution Compliance Period, transfers by an owner of a beneficial interest in the Regulation S Global Note to a

 

6

transferee who takes delivery of such interest through the Rule 144A Global Note or the IAI Global Note shall be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided on the reverse of the Initial Note to the effect that such transfer is being made to (1) a QIB within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A or (2) an IAI purchasing for its own account, or for the account of such an IAI, in a minimum principal amount of the Notes of $250,000. Such written certification shall no longer be required after the expiration of the Distribution Compliance Period. In the case of a transfer of a beneficial interest in the Regulation S Global Note for an interest in the IAI Global Note, the transferee must furnish a signed letter substantially in the form of Exhibit B to the Trustee.

(ii) Upon the expiration of the Distribution Compliance Period, beneficial ownership interests in the Regulation S Global Note shall be transferable in accordance with applicable law and the other terms of this Indenture.

(e) Automatic Exchange of Beneficial Interests in a Global Note that is a Transfer Restricted Note for Beneficial Interests in an Unrestricted Global Note. Upon the Issuer’s satisfaction that the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act, beneficial interests in a Global Note that is a Transfer Restricted Note may be automatically exchanged into beneficial interests in an Unrestricted Global Note without any action required by or on behalf of the Holder (the “Automatic Exchange”) at any time on or after the date that is the six months after (1) with respect to any Note issued on the Issue Date, the later of (x) the Issue Date and (y) the last date on which the Issuer or any Affiliate of the Issuer was the owner of such Note or (2) with respect to any Additional Note, if any, the later of (x) the issue date of such Additional Note and (y) the last date on which the Issuer or any Affiliate of the Issuer was the owner such Note, or, in each case, if such day is not a Business Day, on the next succeeding Business Day (the “Automatic Exchange Date”). Upon the Issuer’s satisfaction that the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act, the Issuer may (A) provide written notice to the Trustee at least 10 calendar days prior to the Automatic Exchange, instructing the Trustee to direct the Depositary to exchange all of the outstanding beneficial interests in a particular Global Note that is a Transfer Restricted Note to the Unrestricted Global Note, which the Issuer shall have previously otherwise made eligible for exchange with the DTC, (B) provide prior written notice (the “Automatic Exchange Notice”) to each Holder at such Holder’s address appearing in the register of Holders at least 10 calendar days prior to the Automatic Exchange (the “Automatic Exchange Notice Date”), which notice must include (I) the Automatic Exchange Date, (II) the section of this Indenture pursuant to which the Automatic Exchange shall occur, (III) the “CUSIP” number of the Global Note that is a Transfer Restricted Note from which such Holder’s beneficial interests will be transferred and the (IV) “CUSIP” number of the Unrestricted Global Note into which such Holder’s beneficial interests will be transferred, and (C) on or prior to the date of the Automatic Exchange, deliver to the Trustee for authentication one or more Unrestricted Global Notes, duly executed by the Issuer, in an aggregate principal amount equal to the aggregate principal amount of Global Notes that are Transfer Restricted Notes to be exchanged. At the Issuer’s request on no less than 5 calendar days’ notice, the Trustee shall deliver, in the Issuer’s name and at its expense, the Automatic Exchange Notice to each Holder at such Holder’s address appearing in the register of Holders. Notwithstanding anything to the contrary in this Section 2.3, during the 10 day period between

 

7

the Automatic Exchange Notice Date and the Automatic Exchange Date, no transfers or exchanges other than pursuant to this Section 2.3(e) shall be permitted without the prior written consent of the Issuer. As a condition to any Automatic Exchange, the Issuer shall provide, and the Trustee shall be entitled to rely upon, an Officers’ Certificate in form reasonably acceptable to the Trustee to the effect that the Automatic Exchange shall be effected in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend shall no longer be required in order to maintain compliance with the Securities Act and that the aggregate principal amount of the particular Global Note that is a Transfer Restricted Note is to be transferred to the particular Unrestricted Global Note by adjustment made on the records of the Trustee, as custodian for the Depositary to reflect the Automatic Exchange. Upon such exchange of beneficial interests pursuant to this Section 2.3(e), the aggregate principal amount of the Global Notes shall be increased or decreased by adjustments made on the records of the Trustee, as custodian for the Depositary, to reflect the relevant increase or decrease in the principal amount of such Global Note resulting from the applicable exchange. The Global Note that is a Transfer Restricted Note from which beneficial interests are transferred pursuant to an Automatic Exchange shall be canceled following the Automatic Exchange.

(f) Legends.

(i) Except as permitted by the following paragraphs (ii), (iii) or (iv), each Note certificate evidencing the Global Notes (other than an Unrestricted Global Note) and the Definitive Notes (and all Notes issued in exchange therefor or in substitution thereof) shall bear a legend in substantially the following form (each defined term in the legend being defined as such for purposes of the legend only) (“Restricted Notes Legend”):

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER:

(1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A “QIB”)[,][ OR] (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS SECURITY FOR THE ACCOUNT OR FOR THE BENEFIT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFF-SHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT[ OR (C) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” WITHIN THE MEANING OF RULE 501 UNDER THE SECURITIES ACT THAT IS NOT A QIB],

(2) AGREES THAT IT WILL NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(d)(1) OR 144(i)(2) (AS APPLICABLE) UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF THE TRANSFER OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY

 

8

BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB, IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT INCLUDING PROVIDED BY RULE 144 (IF AVAILABLE), (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE AND PROVIDED THAT PRIOR TO SUCH TRANSFER, THE COMPANY AND THE TRUSTEE ARE FURNISHED WITH AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT) OR (E) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, AND

(3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY OR AN INTEREST HEREIN IS TRANSFERRED (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(D) OR (2)(E) ABOVE) A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY OR ANY INTEREST HEREIN WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CERTIFY TO THE TRUSTEE THE MANNER OF SUCH TRANSFER. AS USED HEREIN THE TERMS “OFFSHORE TRANSACTION,” “UNITED STATES” AND “U.S. PERSON” HAVE THE MEANING GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES ACT.”

Each Note issued with original issue discount will also bear the following additional legend (“OID Notes Legend”):

“THIS NOTE HAS BEEN ISSUED WITH “ORIGINAL ISSUE DISCOUNT” (WITHIN THE MEANING OF SECTION 1272 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED). UPON WRITTEN REQUEST, THE ISSUER WILL PROMPTLY MAKE AVAILABLE TO ANY HOLDER OF THIS NOTE THE FOLLOWING INFORMATION: (1) THE ISSUE PRICE AND DATE OF THE NOTE, (2) THE AMOUNT OF ORIGINAL ISSUE DISCOUNT ON THE NOTE AND (3) THE YIELD TO MATURITY OF THE NOTE. HOLDERS SHOULD CONTACT THE TREASURER OF THE ISSUER AT 2700 COLORADO AVENUE, SANTA MONICA, CALIFORNIA 90404.”

Each Global Note shall bear the following additional legend (“Global Notes Legend”):

“THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), NEW YORK, NEW YORK, TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,

 

9

EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO DTC, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR’S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.”

Each Regulation S Temporary Global Note shall bear the following additional legend (“Regulation S Temporary Global Notes Legend”):

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR REGULATION S PERMANENT GLOBAL NOTES, ARE AS SPECIFIED IN THE INDENTURE. UPON THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE DEEMED TO BE A REGULATION S PERMANENT GLOBAL NOTE.”

(ii) Upon any sale or transfer of a Transfer Restricted Note that is a Definitive Note, the Registrar shall permit the Holder thereof to exchange such Transfer Restricted Note for a Definitive Note that does not bear the legends set forth above and rescind any restriction on the transfer of such Transfer Restricted Note if the Holder certifies in writing to the Registrar that its request for such exchange was made in reliance on Rule 144 (such certification to be in the form set forth on the reverse of the Initial Note).

(iii) Upon a sale or transfer after the expiration of the Distribution Compliance Period of any Initial Note or Additional Note acquired pursuant to Regulation S, all requirements that such Initial Note or Additional Note bear the Restricted Notes Legend shall cease to apply and the requirements requiring any such Initial Note or Additional Note be issued in global form shall continue to apply.

(iv) Any Additional Notes sold in a registered offering shall not be required to bear the Restricted Notes Legend.

(g) Cancellation or Adjustment of Global Note. At such time as all beneficial interests in a Global Note have either been exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, such Global Note shall be returned by the Depositary to the Trustee for cancellation or retained and canceled by the Trustee. At any time prior to such cancellation, if any beneficial interest in a Global Note

 

10

is exchanged for Definitive Notes, transferred in exchange for an interest in another Global Note, redeemed, repurchased or canceled, the principal amount of Notes represented by such Global Note shall be reduced and an adjustment shall be made on the books and records of the Trustee (if it is then the Custodian for such Global Note) with respect to such Global Note, by the Trustee or the Custodian, to reflect such reduction.

(h) No Obligation of the Trustee.

(i) The Trustee shall have no responsibility or obligation to any beneficial owner of a Global Note, a member of, or a participant in the Depositary or any other Person with respect to the accuracy of the records of the Depositary or its nominee or of any participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any participant, member, beneficial owner or other Person (other than the Depositary) of any notice (including any notice of redemption or repurchase) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Holders and all payments to be made to Holders under the Notes shall be given or made only to the registered Holders (which shall be the Depositary or its nominee in the case of a Global Note). The rights of beneficial owners in any Global Note shall be exercised only through the Depositary subject to the applicable rules and procedures of the Depositary. The Trustee may rely and shall be fully protected in relying upon information furnished by the Depositary with respect to its members, participants and any beneficial owners.

(ii) The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Depositary participants, members or beneficial owners in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by, the terms of this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

Section 2.4 Definitive Notes.

(a) A Global Note deposited with the Depositary or with the Trustee as Custodian pursuant to Section 2.1 shall be transferred to the beneficial owners thereof in the form of Definitive Notes in an aggregate principal amount equal to the principal amount of such Global Note, in exchange for such Global Note, only if such transfer complies with Section 2.3 and (i) the Depositary notifies the Issuer that it is unwilling or unable to continue as a Depositary for such Global Note or if at any time the Depositary ceases to be a “clearing agency” registered under the Exchange Act and, in each case, a successor depositary is not appointed by the Issuer within 90 days of such notice or after the Issuer becomes aware of such cessation, or (ii) the Depositary requests such an exchange at any time that an Event of Default has occurred and is continuing or (iii) the Issuer, in its sole discretion, notifies the Trustee in writing that it elects to cause the issuance of certificated Notes under this Indenture. In addition, any Affiliate of the Issuer or any Guarantor that is a beneficial owner of all or part of a Global Note may have such Affiliate’s beneficial interest transferred to such Affiliate in the form of a Definitive Note by providing a written request to the Issuer and the Trustee and such Opinions of Counsel, certificates or other information as may be required by this Indenture or the Issuer or Trustee.

 

11

(b) Any Global Note that is transferable to the beneficial owners thereof pursuant to this Section 2.4 shall be surrendered by the Depositary to the Trustee, to be so transferred, in whole or from time to time in part, without charge, and the Trustee shall authenticate and deliver, upon such transfer of each portion of such Global Note, an equal aggregate principal amount of Definitive Notes of authorized denominations. Any portion of a Global Note transferred pursuant to this Section 2.4 shall be executed, authenticated and delivered only in denominations of $2,000 and integral multiples of $1,000 in excess thereof and registered in such names as the Depositary shall direct. Any certificated Initial Note or Additional Note in the form of a Definitive Note delivered in exchange for an interest in the Global Note shall, except as otherwise provided by Section 2.3(f), bear the Restricted Notes Legend.

(c) Subject to the provisions of Section 2.4(b), the registered Holder of a Global Note may grant proxies and otherwise authorize any Person, including Agent Members and Persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Notes.

(d) In the event of the occurrence of any of the events specified in Section 2.4(a)(i), (ii) or (iii), the Issuer shall, upon the Trustee’s request, promptly make available to the Trustee a reasonable supply of Definitive Notes in fully registered form without interest coupons.

 

12

SCHEDULE 1

INITIAL UNRESTRICTED SUBSIDIARIES

Ambitions Productions, Inc.

AMF Productions, Inc.

Annex Productions, Inc.

B4T Productions, Inc.

Balanced Productions, Inc.

Barb and Star Productions, Inc. (fka ANX Productions, Inc.)

Blindspotting Productions, Inc.

BMF Productions, Inc.

Bon Appetit Productions, Inc.

Borderlands Productions, LLC

Central Ave Productions, Inc.

Christie Love Productions, Inc.

Continental Productions, Inc.

Coupon Productions, Inc. (fka CATX Action1 12 Productions, Inc.)

Dare Productions, Inc. (fka SPNBK Productions, Inc. (fka CATX Dmail 12 Productions, Inc.))

DWP Productions, Inc.

Entertainment One EM Financing LLC

Eternal Acquisitions Corp.

First Lady Productions ULC

Flatch Productions, Inc. (fka LGTV Set Up 5 Productions, Inc.)

Flotus Productions, Inc.

Foxburg Financing 5, LLC

GG Productions, Inc.

Ghost Productions, Inc.

GLC New Enterprise Licensing, LLC

Hightown Productions, Inc.

HT Louisiana Productions, Inc.

Hunting Productions, Inc.

IFE Finance GP Inc.

IPF Library Holdings, LLC

IPF Library LLC

JFC Productions, Inc.

Journal Productions, Inc.

JW2 Productions NY, LLC

JW4 Productions, Inc.

K1 Productions, Inc.

Kanan Productions, Inc.

Killer’s Game Productions, Inc.

Lady Prison Productions, Inc.

Landscape Interactive Web Design Inc.

Landscape Television Inc.

LE Film Distribution, LLC

 

Sch. 1-1

LG Film Finance I, LLC

LG Global Receivables Funding LLC

LG IPL, LLC

LG Nextpoint Merger Corp.

LG Play India Holdco, LLC

LG Productions Canada, ULC

LG Receivables Funding, LLC

LG TCM Holdings, LLC

LG TCM LLC

LG UK Film Ventures LLC

Lions Gate Films Licensing LLC

Lions Gate Finance, LP

Lions Gate Play LLP

Lions Gate X-US Productions, LLC

Lionsgate Channels 2, Inc.

Lionsgate Channels, Inc.

Long Night Productions, LLC (fka DWH2 Productions, LLC)

Love It NY Productions, Inc.

Mandate Development II, LLC

Mandate Development, LLC

Mandate Holdings, LLC

Mandate Music Publishing, LLC

Margaret Productions ULC

Margaret Productions, Inc. (fka CATX Reawakening 12 Productions, Inc.)

Massive Talent Productions, Inc.

Miser’s Dream Productions, Inc.

MITM Film Financing, Inc.

Moviesphere, LLC (fka Tribeca Short List, LLC)

Party Down Productions, Inc.

PD2 Productions, Inc.

Portfolio Funding Company LLC 1

Power Force Productions, Inc.

Preach Productions, Inc.

Quickening Productions, Inc.

Seashore GER 3, Inc.

Shadow Force Productions, Inc.

Shotgun Production Services, Inc.

Shotgun Wedding Productions, LLC

Spartacus Productions, Inc.

Spoken Productions, Inc. (fka CATX Tape4 12 Productions, Inc.)

Starz Family Productions, LLC

Starz Heels Productions, LLC

Starz P Town Productions, LLC

Starz Power Productions, LLC

Starz Sweetbitter Productions, LLC

Starz Valley Productions, LLC

 

Sch. 1-2

StarzPlay Direct UK, Limited

StarzPlay Direct US, LLC

StarzPlay Management US, LLC

StarzPlay UK, Limited

StarzPlay US, LLC

Step-up Productions, Inc.

Summit Entertainment Limited

Summit Entertainment N.V.

Sword and Shield Productions, Inc.

Talk WW Production, Inc.

Tether Productions, Inc.

TGM Productions, Inc.

Venery Productions, Inc.

VT1 Productions, Inc.

White Bird Productions, Inc.

World Productions, Inc.

Zoey Holdco, LLC

Zoey Productions ULC (fka Zoey Productions Corp.)

 

Sch. 1-3

EXHIBIT A

[FORM OF FACE OF NOTE]

[Insert the Restricted Notes Legend, if applicable, pursuant to the provisions of the Indenture]

[Insert the Global Notes Legend, if applicable, pursuant to the provisions of the Indenture]

[Insert the OID Notes Legend, if applicable, pursuant to the provisions of the Indenture]

[Insert the Regulation S Temporary Global Notes Legend, if applicable, pursuant to the provisions of the Indenture]

 

A-1

CUSIP [    ]

ISIN [    ]1

[RULE 144A][REGULATION S][IAI] NOTE

5.500% Exchange Notes due 2029

 

No. ___            Up to [$______________]

LIONS GATE CAPITAL HOLDINGS 1, INC.

promises to pay to CEDE & CO. or registered assigns, the principal sum [set forth on the Schedule of Exchanges of Interests in the Global Note attached hereto] [of ________________________ U.S. Dollars] on April 15, 2029 or, following the consummation of the Separation Transaction, April 15, 2030.

Interest Payment Dates: April 15 and October 15 of each year, commencing October 15, 2024

Record Dates: April 1 and October 1

 
1 

Rule 144A Note CUSIP: 535939 AA0

Rule 144A Note ISIN: US535939AA09

Regulation S Note CUSIP: U53642 AA9

Regulation S Note ISIN: USU53642AA95

IAI Note CUSIP: 535939 AB8

IAI Note ISIN: US535939AB81

 

A-2

IN WITNESS HEREOF, the Issuer has caused this instrument to be duly executed.

Dated: [__________] [__], 20[__]

 

LIONS GATE CAPITAL HOLDINGS 1, INC.
By:  

 

  Name:
  Title:

 

A-3

This is one of the Notes referred to in the within-mentioned Indenture:

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:  

 

  Name:
  Title:

 

A-4

[Back of Note]

5.500% Exchange Notes due 2029

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1. INTEREST. The Issuer promises to pay interest on the principal amount of this Note at 5.500% per annum from and including April 15, 2024 to, but not including, maturity; provided that, on the Separation Closing Date, this Note will bear interest at 6.000% per annum from and after the Separation Closing Date to, but not including, maturity. The Issuer shall pay interest semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes shall accrue from and including the most recent date to which interest has been paid or, if no interest has been paid, from and including April 15, 2024; provided that the first Interest Payment Date shall be October 15, 2024. The Issuer shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at the interest rate on the Notes; it shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest (without regard to any applicable grace periods) from time to time on demand at the interest rate on the Notes. Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months. For purposes of the Interest Act (Canada), the rate of interest payable under the Notes, when expressed as an annual rate of interest, is equivalent to (x) the applicable rate payable based on a year of 360 days, (y) multiplied by the actual number of days in the calendar year in which the period for which such interest is payable (or compounded) ends, and (z) divided by 360.

2. METHOD OF PAYMENT. The Issuer shall pay interest on the Notes to the Persons who are registered holders of Notes at the close of business on April 1 or October 1 (whether or not a Business Day), as the case may be, next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. Principal of and premium, if any, and interest on the Notes shall be payable at the office or agency of the Issuer maintained for such purpose or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders at their respective addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds shall be required with respect to principal of and interest and premium on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Issuer or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

3. PAYING AGENT AND REGISTRAR. Initially, U.S. Bank Trust Company, National Association, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Issuer may change any Paying Agent or Registrar without notice to the Holders. Parent or any of the Restricted Subsidiaries may act in any such capacity.

 

A-5

4. INDENTURE. The Issuer issued the Notes under an Indenture, dated as of May 8, 2024 (the “Indenture”), among Lions Gate Capital Holdings 1, Inc., a Delaware corporation, as Initial Issuer, the Guarantors named therein and the Trustee. This Note is one of a duly authorized issue of notes of the Issuer designated as its 5.500% Exchange Notes due 2029. The Issuer shall be entitled to issue Additional Notes pursuant to Sections 2.01 and 4.09 of the Indenture. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling.

5. REDEMPTION AND REPURCHASE.

The Notes are subject to optional redemption, and may be the subject of an Offer to Purchase, as further described in the Indenture. The Issuer shall not be required to make mandatory redemption payments or sinking fund payments with respect to the Notes.

6. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in registered form without coupons in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder to, among other things, furnish appropriate endorsements and transfer documents, and Holders shall be required to pay any transfer tax or other governmental taxes and fees required by law or permitted by the Indenture. The Issuer need not exchange or register the transfer or exchange of any Note selected for redemption in whole or in part except for the unredeemed portion of any Note being redeemed in part. Also, the Issuer need not exchange or register the transfer of any Notes for a period beginning at the opening of business 15 days before the day of any selection of Notes to be redeemed.

7. PERSONS DEEMED OWNERS. The registered Holder of a Note may be treated as its owner for all purposes.

8. AMENDMENT, SUPPLEMENT AND WAIVER. The Indenture, the Notes Guarantees or the Notes may be amended or supplemented as provided in the Indenture.

9. DEFAULTS AND REMEDIES. The Events of Default relating to the Notes are defined in Section 6.01 of the Indenture. Upon the occurrence of an Event of Default, the rights and obligations of the Issuer, the Guarantors, the Trustee and the Holders shall be as set forth in the Indenture.

10. AUTHENTICATION. This Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose until authenticated by the electronic or manual signature of the Trustee.

11. GOVERNING LAW. THE INDENTURE, THE NOTES AND ANY NOTES GUARANTEE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

12. CUSIP NUMBERS AND ISINs. Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Issuer has caused CUSIP numbers and ISINs to be printed on the Notes, and the Trustee may use CUSIP numbers and ISINs in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

 

A-6

The Issuer shall furnish to any Holder upon written request and without charge a copy of the Indenture. Requests may be made to the Issuer at the following address:

c/o Lions Gate Entertainment Inc.

2700 Colorado Avenue

Santa Monica, California 90404

Fax No.: (310) 255-3801

Attention: James W. Barge, Chief Financial Officer

 

A-7

ASSIGNMENT FORM

To assign this Note, fill in the form below:

 

(I) or (we) assign and transfer this Note to:                                                                                                                                                                                  
(Insert assignee’s legal name)

 

(Insert assignee’s soc. sec. or tax I.D. no.)

 

 

 

 

(Print or type assignee’s name, address and zip code)
and irrevocably appoint                                                to transfer this Note on the books of the Issuer. The agent may substitute another to act for him.

Date: _____________________

 

Your Signature:  

 

  (Sign exactly as your name appears on the face of this Note)

 

Signature Guarantee*: __________________________________

 

*

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-8

CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR

REGISTRATION OF TRANSFER RESTRICTED NOTES

This certificate relates to $_________ principal amount of Notes held in (check applicable space) ____ book-entry or _____ definitive form by the undersigned.

The undersigned (check one box below):

 

☐

has requested the Trustee by written order to deliver in exchange for its beneficial interest in the Global Note held by the Depositary a Note or Notes in definitive, registered form of authorized denominations and an aggregate principal amount equal to its beneficial interest in such Global Note (or the portion thereof indicated above) in accordance with the Indenture; or

 

☐

has requested the Trustee by written order to exchange or register the transfer of a Note or Notes.

In connection with any transfer of any of the Notes evidenced by this certificate occurring prior to the expiration of the holding period referred to in Rule 144 under the Securities Act, the undersigned confirms that such Notes are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

 

  (1) ☐

to the Issuer or subsidiary thereof; or

 

  (2) ☐

to the Registrar for registration in the name of the Holder, without transfer; or

 

  (3) ☐

pursuant to an effective registration statement under the Securities Act of 1933; or

 

  (4) ☐

inside the United States of America to a “qualified institutional buyer” (as defined in Rule 144A under the Securities Act of 1933) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case pursuant to and in compliance with Rule 144A under the Securities Act of 1933; or

 

  (5) ☐

outside the United States of America in an offshore transaction within the meaning of Regulation S under the Securities Act in compliance with Rule 904 under the Securities Act of 1933 and, if in Canada, in compliance with applicable Canadian securities laws; or

 

  (6) ☐

outside of Canada to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933) that has furnished to the Trustee a signed letter containing certain representations and agreements; or

 

  (7) ☐

outside of Canada pursuant to another available exemption from registration under the Securities Act of 1933.

 

A-9

Unless one of the boxes is checked, the Trustee will refuse to register any of the Notes evidenced by this certificate in the name of any Person other than the registered Holder thereof; provided, however, that if box (5), (6) or (7) is checked, the Trustee may require, prior to registering any such transfer of the Notes, such legal opinions, certifications and other information as the Issuer has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933 and other applicable securities laws.

 

   

 

    Your Signature
Signature Guarantee:    
Date: ___________________    

 

Signature must be guaranteed

by a participant in a

recognized signature guaranty

medallion program or other

signature guarantor acceptable

to the Trustee

    

Signature of Signature

Guarantor

TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED.

The undersigned represents and warrants that it is purchasing this Note for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act of 1933, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A.

 

Dated: ___________________    

 

   

NOTICE: To be executed by

an executive officer

 

A-10

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Issuer pursuant to Section 4.10 or 4.14 of the Indenture, check the appropriate box below:

[ ] Section 4.10   [ ] Section 4.14

If you want to elect to have only part of this Note purchased by the Issuer pursuant to Section 4.10 or Section 4.14 of the Indenture, state the amount you elect to have purchased:

$_______________

 

Date: _____________________      
    Your Signature:  

 

      (Sign exactly as your name appears on the face of this Note)
    Tax Identification No.:  

 

Signature Guarantee*: __________________________________

 

*

Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

 

A-11

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE*

The initial outstanding principal amount of this Global Note is $__________. The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global or Definitive Note for an interest in this Global Note, have been made:

 

Date of
Exchange

  

Amount of
decrease

in Principal
Amount

  

Amount of increase

in Principal

Amount of this

Global Note

  

Principal Amount
of

this Global Note

following such

decrease or
increase

  

Signature of

authorized
officer

of Trustee or

Custodian

 

 
*

This schedule should be included only if the Note is issued in global form.

 

A-12

EXHIBIT B

FORM OF

TRANSFEREE LETTER OF REPRESENTATION

Lions Gate Capital Holdings 1, Inc.

c/o Lions Gate Entertainment Inc.

2700 Colorado Avenue

Santa Monica, California 90404

Fax No.: (310) 255-3801

Attention: James W. Barge, Chief Financial Officer and Treasurer

U.S. Bank Trust Company, National Association

60 Livingston Avenue

EP-MN-WS3C

St. Paul, MN 55107

Attention: Global Corporate Trust Services

Ladies and Gentlemen:

This certificate is delivered to request a transfer of $[    ] principal amount of the 5.500% Exchange Notes due 2029 (the “Notes”) issued pursuant to that certain Indenture, dated as of May 8, 2024, by and among Lions Gate Capital Holdings 1, Inc., as Initial Issuer, the Guarantors named therein and U.S. Bank Trust Company, National Association, as trustee (as amended, supplemented or otherwise modified, the “Indenture”).

Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows:

Name:            

Address:            

Taxpayer ID Number:      

The undersigned represents and warrants to you that:

1. We are (I) an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the “Securities Act”)), or (II) an “accredited investor” (within the meaning of National Instrument 45-106 Prospectus Exemptions), purchasing for our own account or for the account of such an institutional “accredited investor” at least $250,000 principal amount of the Notes, and we are acquiring the Notes not with a view to, or for offer or sale in connection with, any distribution in violation of the Securities Act. We have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we invest in or purchase securities similar to the Notes in the normal course of our business. We, and any accounts for which we are acting, are each able to bear the economic risk of our or its investment.

 

B-1

2. We understand that the Notes have not been registered under the Securities Act and, unless so registered, may not be sold except as permitted in the following sentence. We agree on our own behalf and on behalf of any investor account for which we are purchasing Notes (I) to offer, sell or otherwise transfer such Notes prior to the date that is one year after the later of the date of original issue and the last date on which the Issuer (as defined in the Indenture) or any affiliate of the Issuer was the owner of such Notes (or any predecessor thereto) (the “Resale Restriction Termination Date”) only (a) to the Issuer, (b) pursuant to a registration statement that has been declared effective under the Securities Act, (c) in a transaction complying with the requirements of Rule 144A under the Securities Act (“Rule 144A”), to a person we reasonably believe is a qualified institutional buyer under Rule 144A (a “QIB”) that is purchasing for its own account or for the account of a QIB and to whom notice is given that the transfer is being made in reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the United States of America within the meaning of Regulation S under the Securities Act, (e) to an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act that is purchasing for its own account or for the account of such an institutional “accredited investor,” in each case in a minimum principal amount of Notes of $250,000, or (f) pursuant to any other available exemption from the registration requirements of the Securities Act, subject in each of the foregoing cases to any requirement of law that the disposition of our property or the property of such investor account or accounts be at all times within our or their control and in compliance with any applicable state securities laws. The foregoing restrictions on resale will not apply subsequent to the Resale Restriction Termination Date. If any resale or other transfer of the Notes is proposed to be made pursuant to clause (e) above prior to the Resale Restriction Termination Date, the transferor shall deliver a letter from the transferee substantially in the form of this letter to the Issuer and the Trustee, which shall provide, among other things, that the transferee is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and that it is acquiring such Notes for investment purposes and not for distribution in violation of the Securities Act, and (II) if we are resident in Canada, to offer, sell or otherwise transfer such Notes (i) if we are resident in the Province of Ontario, only to persons that meet one or more of the criteria to be classified as an “accredited investor” as defined in section 73.3(1) of the Securities Act (Ontario), or (i) if we are resident in a jurisdiction of Canada other than the Province of Ontario, only to persons that meet one or more of the criteria to be classified as an “accredited investor” as defined in National Instrument 45-106, and in each of (i) and (ii) only in compliance with Canadian securities laws. Each purchaser acknowledges that the Issuer and the Trustee reserve the right prior to the offer, sale or other transfer prior to the Resale Restriction Termination Date of the Notes pursuant to clause (c), (d), (e) or (f) above to require the delivery of an opinion of counsel, certifications or other information satisfactory to the Issuer and the Trustee.

 

TRANSFEREE:          ,

 

by:              

 

B-2

EXHIBIT C

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

Supplemental Indenture (this “Supplemental Indenture”), dated as of [     ] [  ], 20[  ], among           (the “Guaranteeing Subsidiary”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”), initially in the aggregate principal amount of $389,861,000;

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. The Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

 

C-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

[NAME OF GUARANTEEING SUBSIDIARY]
By:    
  Name:
  Title:

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:    
  Name:
  Title:

 

C-3

EXHIBIT D

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUCCESSOR ISSUER

Supplemental Indenture (this “Supplemental Indenture”), dated as of [     ] [  ], 20[  ], among         , a    (the “Successor Issuer”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. (the “Initial Issuer”) and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Initial Indenture” and together with this Supplemental Indenture and as further amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”), initially in the aggregate principal amount of $389,861,000;

WHEREAS, the Indenture provides that upon consummation of the Separation Transaction, the Successor Issuer shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Successor Issuer shall unconditionally assume all of the Initial Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of Holders of the Notes.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Assumption of Obligations. The Successor Issuer hereby agrees, as of the date hereof, to assume, to be bound by, to perform and to be jointly and severally liable, as a primary obligor and not as a guarantor or surety, with respect to, any and all payment obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in the Indenture and the Notes and all other obligations and agreements of the Initial Issuer under the Indenture and the Notes and to become the “Issuer” under and as defined in the Indenture and the Notes.

3. Release of Obligations. The Initial Issuer is hereby automatically and unconditionally released and discharged from all obligations under the Indenture and the Notes without any further action by any Holder or any other person. The Trustee is hereby authorized to, and upon request of the Successor Issuer shall, execute and deliver an appropriate instrument evidencing the release of the Initial Issuer.

4. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

6. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

7. Benefits Acknowledged. The Successor Issuer’s assumption of all of the payment obligations under the Notes and the Indenture is subject to the terms and conditions set forth in the Indenture. The Successor Issuer acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its assumption of all of the payment obligations under the Notes and the Indenture and the waivers made by it pursuant to this Supplemental Indenture are knowingly made in contemplation of such benefits.

8. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

9. Notice Provisions. Section 12.02(a) of the Initial Indenture is hereby amended to provide for the following notice information for the Successor Issuer:

[ ]

[Remainder of Page Intentionally Left Blank]

 

D-2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

[NAME OF SUCCESSOR ISSUER]
By:    
  Name:
  Title:

 

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:    
  Name:
  Title:

 

D-3

Exhibit 4.1.1x

SUPPLEMENTAL INDENTURE NO. 1

Supplemental Indenture No. 1 (this “Supplemental Indenture”), dated as of May 13, 2024, among Lionsgate Studios Corp. (the “Guaranteeing Subsidiary”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings I, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”) providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. The Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

-2-

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

LIONSGATE STUDIOS CORP.
By:  

/s/ Bruce Tobey

Name:   Bruce Tobey
Title:   Executive Vice President and General Counsel

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

By:  

/s/ Brandon Bonfig

Name:   Brandon Bonfig
Title:   Vice President

[Signature Page to Supplemental Indenture No. 1 (LGCH 2024 Notes)]

 

-3-

Exhibit 4.1.2x

SUPPLEMENTAL INDENTURE NO. 2

Supplemental Indenture No. 2 (this “Supplemental Indenture”), dated as of September 25, 2024, among:

Lionsgate Limited, LLC, a California limited liability company;

Grindstone Development, LLC, a California limited liability company;

WM LG Productions, Inc., a California corporation; and

Nottingham Productions, Inc., a California corporation

(each a “Guaranteeing Subsidiary”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”) providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. Each Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

-2-

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

LIONSGATE LIMITED, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   President and Secretary
GRINDSTONE DEVELOPMENT, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   President and Secretary
WM LG PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   President and Secretary
NOTTINGHAM PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Executive Vice President and Secretary

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

By:  

/s/ Brandon Bonfig

Name:   Brandon Bonfig
Title:   Vice President

[Signature Page to Supplemental Indenture No. 2 (LGCH1 2024 Notes)]

 

-3-

Exhibit 4.1.3x

SUPPLEMENTAL INDENTURE NO. 3

Supplemental Indenture No. 3 (this “Supplemental Indenture”), dated as of December 31, 2024, among:

Rookie Productions, Inc., a California corporation;

Devil’s Mouth Productions, Inc., a California corporation;

Shark in a Cave Productions, Inc., a California corporation;

The Score Productions, Inc., a California corporation;

Midnight Sun Productions, Inc., a California corporation;

1620 Media, LLC, a California limited liability company;

Extreme Logging, LLC, a California limited liability company;

Fibby, LLC, a California limited liability company;

Ghost Hunters Productions, LLC, a California limited liability company;

Laurel Chandler, LLC, a California limited liability company;

MusicX Publishing, LLC, a California limited liability company;

Pilgrim Entertainment, LLC, a California limited liability company;

Pilgrim Films and Television, LLC, a California limited liability company;

Pilgrim Media Group, LLC, a Delaware limited liability company;

Pilgrim Pictures, LLC, a California limited liability company;

Pilgrim Production, LLC, a California limited liability company;

Pilgrim Publishing, LLC, a California limited liability company;

Pilgrim Taps, LLC, a California limited liability company;

Project X Productions, LLC, a California limited liability company;

Rockhouse Images, LLC, a California limited liability company;

Six Mile Products & Licensing, LLC, a California limited liability company;

Tufguy Productions, LLC, a California limited liability company;

Vandalay Entertainment, LLC, a California limited liability company;

Whirlwind Entertainment Group, LLC, a Delaware limited liability company; and

LG Studios Film Finance LLC, a Delaware limited liability company

(each a “Guaranteeing Subsidiary”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”) providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. Each Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

-2-

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

ROOKIE PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
DEVIL’S MOUTH PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
SHARK IN A CAVE PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
THE SCORE PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
MIDNIGHT SUN PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-3-

1620 MEDIA, LLC
By:   Pilgrim Media Group, LLC, its sole member
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
EXTREME LOGGING, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
FIBBY, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
GHOST HUNTERS PRODUCTIONS, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
LAUREL CHANDLER, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-4-

MUSICX PUBLISHING, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM ENTERTAINMENT, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM FILMS AND TELEVISION, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM MEDIA GROUP, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM PICTURES, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM PRODUCTION, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-5-

PILGRIM PUBLISHING, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PILGRIM TAPS, LLC
By:   Pilgrim Films and Television LLC, its sole member
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
PROJECT X PRODUCTIONS, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
ROCKHOUSE IMAGES, LLC
By:   Pilgrim Media Group LLC, its sole member
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
SIX MILE PRODUCTS & LICENSING, LLC
By:   Pilgrim Media Group LLC, its sole member
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-6-

TUFGUY PRODUCTIONS, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
VANDALAY ENTERTAINMENT, LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
WHIRLWIND ENTERTAINMENT GROUP, LLC
By:   Pilgrim Media Group LLC, its sole member
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory
LG STUDIOS FILM FINANCE LLC
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Authorized Signatory

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-7-

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee

By:  

/s/ Brandon Bonfig

Name:   Brandon Bonfig
Title:   Vice President

[Signature Page to Supplemental Indenture No. 13 (LGCH 2021 Notes)]

 

-8-

Exhibit 4.1.4x

SUPPLEMENTAL INDENTURE NO. 4

Supplemental Indenture No. 4 (this “Supplemental Indenture”), dated as of February 3, 2025 with effect as of May 8, 2024, among LGAC IPF, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. Each Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written with effect as of May 8, 2024.

 

LGAC IPF, LLC

By:

  

/s/ Adrian Kuzycz

 

Name: Adrian Kuzycz

 

Title: Authorized Signatory

 

 

 

[Signature Page to Supplemental Indenture No.4 (LGCH1 2024 Notes)]

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:  

/s/ Brandon Bonfig

  Name: Brandon Bonfig
  Title: Vice President

 

 

[Signature Page to Supplemental Indenture No.4 (LGCH1 2024 Notes)]

Exhibit 4.1.5x

SUPPLEMENTAL INDENTURE NO. 5

Supplemental Indenture No. 5 (this “Supplemental Indenture”), dated as of February 3, 2025 among:

Lionsgate Studios Holding Corp., a British Columbia corporation

Rainmaker Productions, Inc., a California corporation; and

Lionsgate Studios Holding, Inc., a Delaware corporation

(each a “Guaranteeing Subsidiary”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Guarantor. Each Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of

signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

LIONSGATE STUDIOS HOLDING CORP

By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Authorized Signatory

RAINMAKER PRODUCTIONS, INC.

By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Authorized Signatory

LIONSGATE STUDIOS HOLDING, INC.

By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Authorized Signatory

 

[Signature Page to Supplemental Indenture No. 5 (LGCH1 2024 Notes)]

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:  

/s/ Brandon Bonfig

  Name: Brandon Bonfig
  Title:  Vice President

 

[Signature Page to Supplemental Indenture No. 5 (LGCH1 2024 Notes)]

Exhibit 4.1.6x

SUPPLEMENTAL INDENTURE NO. 6

Supplemental Indenture No. 6 (this “Supplemental Indenture”), dated as of April 23, 2025 among Antler Queen Productions, Inc., a California corporation (the “Guaranteeing Subsidiary”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Lions Gate Capital Holdings 1, Inc. and the Guarantors (as defined in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1.  Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2.  Guarantor. The Guaranteeing Subsidiary hereby agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof.

3.  Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

4.  Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

5.  Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

6. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

[signature page follows]

 

2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

ANTLER QUEEN PRODUCTIONS, INC.
By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Authorized Signatory

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:  

/s/ Brandon Bonfig

 

Name:

Title:

  

Brandon Bonfig

Vice President

 

 

 

 

 

 

 

[Signature Page to Supplemental Indenture No. 6 (LGCH1 2024 Notes)]

Exhibit 4.1.7x

Execution Version

SUPPLEMENTAL INDENTURE NO. 7

Supplemental Indenture No. 7 (this “Supplemental Indenture”), dated as of May 6, 2025, among Lions Gate Television Inc., a Delaware corporation (the “Successor Issuer”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).

W I T N E S S E T H

WHEREAS, each of Starz Capital Holdings 1, Inc (f/k/a Lions Gate Capital Holdings 1, Inc.) (the “Initial Issuer”) and the Guarantors (as named in the Indenture referred to below) has heretofore executed and delivered to the Trustee an indenture, dated as of May 8, 2024 (the “Initial Indenture” and together with this Supplemental Indenture and as further amended or supplemented from time to time in accordance with the terms thereof, the “Indenture”), providing for the issuance of 5.500% Exchange Notes due 2029 (the “Notes”), initially in the aggregate principal amount of $389,861,000;

WHEREAS, the Indenture provides that upon consummation of the Separation Transaction, the Successor Issuer shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Successor Issuer shall unconditionally assume all of the Initial Issuer’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture; and

WHEREAS, pursuant to Section 9.03 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture without the consent of Holders of the Notes.

NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Supplemental Indenture refer to this Supplemental Indenture as a whole and not to any particular Section hereof.

2. Assumption of Obligations. The Successor Issuer hereby agrees, as of the date hereof, to assume, to be bound by, to perform and to be jointly and severally liable, as a primary obligor and not as a guarantor or surety, with respect to, any and all payment obligations under the Indenture and the Notes on the terms and subject to the conditions set forth in the Indenture and the Notes and all other obligations and agreements of the Initial Issuer under the Indenture and the Notes and to become the “Issuer” under and as defined in the Indenture and the Notes.

3. Release of Obligations. The Initial Issuer is hereby automatically and unconditionally released and discharged from all obligations under the Indenture and the Notes without any further action by any Holder or any other person. The Trustee is hereby authorized to, and upon request of the Successor Issuer shall, execute and deliver an appropriate instrument evidencing the release of the Initial Issuer.

4. Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

5. Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Supplemental Indenture. Notwithstanding the foregoing, the exchange of copies of this Supplemental Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture and signature pages for all purposes.

6. Headings. The headings of the Sections of this Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

7. Benefits Acknowledged. The Successor Issuer’s assumption of all of the payment obligations under the Notes and the Indenture is subject to the terms and conditions set forth in the Indenture. The Successor Issuer acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its assumption of all of the payment obligations under the Notes and the Indenture are knowingly made in contemplation of such benefits.

8. Trustee Makes No Representation. The Trustee accepts the amendments of the Indenture effected by this Supplemental Indenture on the terms and conditions set forth in the Indenture, including the terms and provisions defining and limiting the liabilities and responsibilities of the Trustee. Without limiting the generality of the foregoing, the Trustee shall not be responsible in any manner whatsoever for or with respect to any of the recitals or statements contained herein, all of which recitals or statements are made solely by the Issuer and the Guarantors, or for or with respect to (i) the validity or sufficiency of this Supplemental Indenture or any of the terms or provisions hereof, (ii) the proper authorization hereof by the Issuer and the each Guarantor, in each case, by action or otherwise, (iii) the due execution hereof by the Issuer and the Guarantors or (iv) the consequences of any amendment herein provided for, and the Trustee makes no representation with respect to any such matters.

9. Notice Provisions. Section 12.02(a) of the Initial Indenture is hereby amended to provide for the following notice information for the Successor Issuer:

c/o Lions Gate Television Inc.

2700 Colorado Avenue

Santa Monica, California 90404

Fax No.: (310) 255-3801

Attention: James W. Barge, Chief Financial Officer & Treasurer

 

-2-

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.

 

LIONS GATE TELEVISION INC.
By:  

/s/ James W. Barge

  Name: James W. Barge
  Title: Chief Financial Officer & Treasurer

[Signature Page – Supplemental Indenture]

U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee
By:  

/s/ Brandon Bonfig

  Name: Brandon Bonfig
  Title: Vice President

[Signature Page – Supplemental Indenture]

Exhibit 5.1

 

LOGO   

Dentons Canada LLP

20th Floor, 250 Howe Street

Vancouver, BC, Canada V6C 3R8

 

dentons.com

July 24, 2025

Lionsgate Studios Corp.

2700 Colorado Avenue

Santa Monica, California 90404

USA

Ladies and Gentlemen:

 

Re:

Registration Statement on Form S-1

We have acted as Canadian legal counsel to Lionsgate Studios Corp. formerly named Lionsgate Studios Holding Corp. (“New Lionsgate” or the “Company”), a company formed under the Business Corporations Act (British Columbia), in connection with the preparation and filing by the Company of a Registration Statement on Form S-1 (the “Initial Registration Statement”) with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”) on March 24, 2025, the preparation and filing of Amendment No. 1 to the Initial Registration Statement with the Commission on March 26, 2025 (“Amendment No. 1”) and the preparation and filing of Amendment No. 2 to the Initial Registration Statement with the Commission on July 24, 2025 (“Amendment No. 2”, and together with the Initial Registration Statement and Amendment No. 1, the “Registration Statement”). As of the date of this opinion letter, the Company is a public company listed on the New York Stock Exchange.

On May 6, 2025, Lions Gate Entertainment Corp. (“LGEC”) through a series of transactions contemplated by an arrangement agreement dated January 29, 2025, as amended by an amending agreement dated March 12, 2025 (together, the “Arrangement Agreement”) and a plan of arrangement, which is defined in the Registration Statement (“Plan of Arrangement”), completed the separation of its Motion Picture and Television Production segments (the “Studios Business”) held by former Lionsgate Studios Corp. listed on the NASDAQ (now named Lionsgate Studios Holding Corp.) (“Legacy Lionsgate Studios”) from its STARZ-branded premium subscription platform business comprising its Media Networks segment (the “Starz Business”). As a result of completion of the Arrangement Agreement, the pre-transaction shareholders of LGEC own shares in two separately traded public companies: (1) the Company which holds, directly and through subsidiaries, the Studios Business previously held by LGEC, and is owned by LGEC shareholders and Legacy Lionsgate Studios shareholders; and (2) LGEC, which was renamed Starz Entertainment Corp. (“Starz”) and holds, directly and through subsidiaries, the Starz Business previously held by LGEC. Prior to completion of the Arrangement Agreement, the Company was a wholly-owned subsidiary of LGEC. References herein to “LGEC” refer to the entity as it existed prior to the completion of the Arrangement Agreement.

The Registration Statement covers common shares, without par value, of the Company (the “Shares”) issuable after the Separation Effective Time (as defined in the Plan of Arrangement) pursuant to options (the “New Lionsgate Options”) and stock appreciation rights (the “New Lionsgate SARs”) outstanding under the Lionsgate Studios Corp. 2025 Performance Incentive Plan, a copy of which is

 

 

Puyat Jacinto & Santos u Link Legal u Zaanouni Law Firm & Associates u LuatViet u For more information on the firms that have come together to form Dentons, go to dentons.com/legacyfirms

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attached as Exhibit 10.5 to the Registration Statement (the “New Lionsgate 2025 Plan”), which are held by former employees of LGEC and its subsidiaries who are not employees or consultants of New Lionsgate or Starz, and any such individuals’ donees, pledgees, permitted transferees, assignees, successors, and others who come to hold any such New Lionsgate Options or New Lionsgate SARs (collectively, the “Former Employees”).

Pursuant to the employee matters agreement dated May 6, 2025 between the Company, LGEC, Lionsgate Studios Holding Corp. (formerly named Lionsgate Studios Corp.), and LG Sirius Holdings ULC attached as Exhibit 10.4 to the Registration Statement (the “Employee Matters Agreement”), and as permitted by the Prior Plans (as defined below), options and stock appreciation rights granted by LGEC pursuant to the Prior Plans and which are held by Former Employees (collectively, the “LGEC Awards”) have been, as of the Separation Effective Time (as defined in the Plan of Arrangement), assumed by New Lionsgate and converted, through an adjustment thereto on the terms set out in the Employee Matters Agreement (or as otherwise determined by the Compensation Committee of LGEC), into New Lionsgate Options and New Lionsgate SARs, respectively, under the New Lionsgate 2025 Plan (collectively, the “New Lionsgate Awards”).

This opinion letter is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

 

(a)

Documents Reviewed

As Canadian counsel to the Company, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, and other instruments and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the Company and others, and such other documents as we have deemed necessary or appropriate including, without limitation:

 

  (i)

the Registration Statement;

 

  (ii)

the New Lionsgate 2025 Plan;

 

  (iii)

the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan (the “LGEC 2023 Plan”), the Lions Gate Entertainment Corp. 2019 Performance Incentive Plan, the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan, and the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan (collectively, the “Prior Plans”);

 

  (iv)

the Plan of Arrangement;

 

  (v)

the Employee Matters Agreement;

 

  (vi)

certified copies of (A) unanimous written consent resolutions executed by each of the directors comprising the board of directors of New Lionsgate or (B) minutes of meetings of the board of directors of New Lionsgate, in each case approving, among other things, the adoption of Plan of Arrangement, the Employee Matters Agreement, and, subject to approval thereof by the holders of the Class A shares of LGEC, the New Lionsgate 2025 Plan;

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  (vii)

certified copies of (A) unanimous written consent resolutions executed by each of the directors comprising the board of directors of LGEC or (B) minutes of meetings of the board of directors of LGEC, in each case approving the adoption of each of the Prior Plans and related matters;

 

  (viii)

a certified copy of written consent resolutions of the sole shareholder of New Lionsgate approving the assumption of the LGEC 2023 Plan amended and restated as the New Lionsgate 2025 Plan, subject to the approval of the holders of the Class A shares of LGEC, and related matters;

 

  (ix)

a certified copy of minutes of the annual general and special meeting of the holders of the Class A shares of LGEC held on April 23, 2025, approving the New Lionsgate 2025 Plan and the Plan of Arrangement;

 

  (x)

a certified copy of minutes of the special meeting of the holders of the shares of Legacy Lionsgate Studios held on April 23, 2025, approving the Plan of Arrangement;

 

  (xi)

certified copies of minutes of meetings of the holders of the Class A shares of LGEC approving, among other things, certain of the Prior Plans and related matters; and

 

  (xii)

the articles of the Company (the “Company Articles”), as amended, and notice of articles of the Company, as amended.

We have also made such investigations and examined (A) a certificate signed by the Chief Financial Officer of the Company addressed to our firm, certifying certain additional corporate information of a factual nature and attaching certain documents and (B) a certificate signed by the Chief Financial Officer of Lionsgate Studios Holding Corp. addressed to our firm, certifying certain additional corporate information of a factual nature and attaching certain documents (together, the “Officer’s Certificates”).

 

(b)

Laws Addressed

We are qualified to practice law in the Province of British Columbia and our opinion herein is restricted to the laws of the Province of British Columbia and the federal laws of Canada applicable therein. We express no opinion to the extent that any other laws are applicable to the subject matter hereof and express no opinion and provide no assurance as to compliance with any federal, provincial, or state securities laws, rules, or regulations.

 

(c)

Assumptions

For the purposes of the opinions expressed herein, we have assumed, without independent investigation, the following:

 

  (i)

with respect to all documents examined by us, the genuineness of all signatures, the authenticity, completeness, and accuracy of all documents submitted to us as original documents, the conformity to original documents of all documents submitted to us as certified, conformed, telecopied, PDF or photocopied copies of originals, the legal capacity of natural persons who are signatories to the documents examined by us, and the legal power and authority of all persons signing on behalf of parties to all documents;

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  (ii)

the Officer’s Certificates are accurate and continue to be accurate on the date hereof;

 

  (iii)

that the LGEC Awards were duly authorized and granted by LGEC in accordance with the terms of the applicable Prior Plans, the articles of LGEC, and applicable laws;

 

  (iv)

that the Plan of Arrangement continues to be effective in accordance with its terms;

 

  (v)

that the Employee Matters Agreement continues to be effective in accordance with its terms;

 

  (vi)

that the Registration Statement, and any amendments thereto will continue to be effective under the Securities Act at the time of issuance of Shares pursuant to the New Lionsgate Awards; and

 

  (vii)

that (A) the resolutions of the holders of Class A shares of LGEC approving and adopting the New Lionsgate 2025 Plan, (B) the resolutions of the directors of New Lionsgate authorizing the Company to issue Shares pursuant to the New Lionsgate Awards, (C) the resolutions of the sole shareholder of New Lionsgate approving the assumption of the LGEC 2023 Plan amended and restated as the New Lionsgate 2025 Plan, subject to the approval of the holders of the Class A shares of LGEC, (D) the provisions of the New Lionsgate 2025 Plan, (E) the Company Articles, and (F) applicable law, will remain in effect and unchanged at the time of issuance of Shares pursuant to the New Lionsgate Awards.

 

(d)

Opinions

Based upon and relying on the foregoing and the qualifications hereinafter expressed, we are of the opinion that, if and when Shares are issued to Former Employees pursuant to the New Lionsgate Awards in compliance with the provisions of the New Lionsgate 2025 Plan and any relevant agreements thereunder, provided that the Company has received the consideration required to be paid for such Shares, which shall be at least equal to the price fixed by the directors of the Company for the issuance thereof, the Shares will be validly issued, fully paid, and non-assessable common shares in the capital of the Company.

 

(e)

Qualifications

Whenever our opinion refers to securities of the Company, whether issued or to be issued, as being “fully-paid, and non-assessable”, such phrase means that the holders of such securities will not, after the issuance to them of such securities, be liable to pay further amounts to the Company in respect of the issue price payable for such securities, and no opinion is expressed as to the adequacy of any consideration received by the Company therefor.

For greater certainty, a specific assumption, limitation, or qualification in this opinion is not to be interpreted to restrict the generality of any other assumption, limitation, or qualification expressed in general terms in this opinion that includes the subject matter of the specific assumption, limitation, or qualification.

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We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm wherever appearing in the Registration Statement. We also hereby consent to the reference to our firm under the heading “Legal Matters” in the Registration Statement. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.

This opinion is given as at the date hereof and we disclaim any obligation or undertaking to advise any person of any changes in law or fact that may come to our attention after the date hereof. Our opinions do not take into account any proposed rules, policies, or legislative changes that may come into force following the date hereof. This opinion letter has been prepared for your use solely in connection with the Registration Statement and may not be relied upon by any other person or for any other purpose without our express prior written consent. Furthermore, this opinion is expressly limited to the matters set forth above, and we render no opinion, whether by implication or otherwise, as to any other matters relating to the Company, the Registration Statement, or the Shares.

Yours very truly,

/s/ Dentons Canada LLP

Exhibit 10.2

AMENDMENT TO

TAX MATTERS AGREEMENT

dated as of

May 6, 2025

among

LIONS GATE ENTERTAINMENT CORP.,

LIONSGATE STUDIOS HOLDING CORP.,

and

LIONSGATE STUDIOS CORP.

AMENDMENT TO TAX MATTERS AGREEMENT

This AMENDMENT TO TAX MATTERS AGREEMENT (this “Amendment”) dated as of May 6, 2025 is made by and among Lions Gate Entertainment Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“LG Parent”), Lionsgate Studios Holding Corp., a corporation organized under the laws of the Province of British Columbia, Canada (the “New Lionsgate”), and Lionsgate Studios Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“LG Studios”) (collectively the “Parties”).

WITNESSETH:

WHEREAS, on May 9, 2024, LG Parent consummated a business combination (the “Business Combination”) resulting in LG Studios becoming a publicly-traded company and majority-owned subsidiary of LG Parent and, in connection therewith, LG Parent and LG Studios entered into a Tax Matters Agreement dated as of May 9, 2024 (the “Agreement”), to allocate among themselves liabilities for Taxes arising prior to and subsequent to the Separation and to provide for and agree upon other matters relating to Taxes (capitalized terms used but not defined herein shall have the meanings set forth in the Agreement);

WHEREAS, following the Business Combination, the board of directors of LG Parent (the “LG Parent Board”) determined that it is advisable and in the best interests of LG Parent and its stakeholders, including its shareholders and creditors, to create two publicly traded companies to separately operate the Starz Business (as defined in the Separation Agreement (as defined below)) and the LG Studios Business (as defined in the Separation Agreement (as defined below)), respectively;

WHEREAS, the LG Parent Board, together with the board of directors of LG Studios (the “LG Studios Board”), with respect to the shareholders of LG Studios, have further determined that it is appropriate and desirable to have (i) shareholders of LG Parent exchange all of their LGEC Shares (as defined in the Separation Agreement (as defined below)) for New Lionsgate New Common Shares (as defined in the Separation Agreement (as defined below)) and Starz Common Shares (as defined in the Separation Agreement (as defined below)), and (ii) shareholders of the LG Studios exchange all of their LG Studios Shares (as defined in the Separation Agreement) for New Lionsgate New Common Shares (as defined in the Separation Agreement (as defined below)), in each case, by way of a plan of arrangement under applicable corporate law, on a pro rata basis and as more fully described in the Separation Agreement dated as of the date hereof, by and between the LG Studios, New Lionsgate, LG Parent and LG Sirius Holdings ULC (the “Separation Agreement”); and

WHEREAS, in connection with the Separation Agreement and the consummation of the Transactions (as defined in the Separation Agreement) and pursuant to Section 15.12 of the Agreement, the Parties desire to amend the Agreement, effective as of the Separation Effective Time (as defined in the Separation Agreement).

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the Parties hereto agree as follows:

1. Addition of New Lionsgate. New Lionsgate hereby agrees to the provisions of, and hereby joins as a party to, the Agreement, mutatis mutandis, and all references to “LG Studios” and “Pubco” in the Agreement shall hereby be deemed to refer to New Lionsgate, as applicable. By executing below, New Lionsgate is hereby deemed to have executed the Agreement with the same force and effect as if originally named a party thereto and hereby assumes all of the obligations of “LG Studios” and “Pubco” under the Agreement.

2. Other Amendments. The Agreement is hereby amended in its entirety as follows:

All references to “Studio Group” are removed and replaced with “LG Studios Group.”

3. No Other Changes. All terms, covenants, agreements, conditions and other provisions of the Agreement, except as amended by this Amendment, remain in full force and effect.

[Signature Pages Follow]

 

1

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.

 

LIONS GATE ENTERTAINMENT CORP.

By:

  

James W. Barge

 

Name: James W. Barge

 

Title: Chief Financial Officer

LIONSGATE STUDIOS CORP.

By:

  

/s/ Bruce Tobey

 

Name: Bruce Tobey

 

Title: General Counsel

LIONSGATE STUDIOS HOLDING CORP.

By:

  

/s/ Adrian Kuzycz

 

Name: Adrian Kuzycz

 

Title: Chief Executive Officer, Principal Executive Officer, President and Secretary

[Signature Page to Amendment to Tax Matters Agreement]

Exhibit 10.3

TRANSITION SERVICES AGREEMENT

This Transition Services Agreement (this “Agreement”), dated as of May 6, 2025 (the “Effective Date”), is by and between Starz Entertainment, LLC, a Colorado limited liability company (“Starz”), and Lions Gate Entertainment Inc., a Delaware corporation (“LG”). Starz and LG may be referred to individually herein as a “Party” and collectively as the “Parties”.

RECITALS

WHEREAS, Lionsgate Studios Corp. and Lions Gate Entertainment Corp. (to be renamed Starz Entertainment Corp.), inter alia, contemplate entering into a Separation Agreement (“Separation Agreement”) pursuant to which Lionsgate Studios Corp. and Starz Entertainment Corp. will each become an independent, separately traded public company (the “Spin-Off”) as of the Effective Date (as defined in the Separation Agreement) (the “Spin-Off Date”); and

WHEREAS, in connection with the Spin-Off, and in order to provide for an orderly transition under the separation agreement and the arrangement agreement, it will be necessary for each of the Parties to provide to the other the Services described herein for a transitional period.

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual agreements contained herein and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties hereto, intending to be bound legally, agree as follows:

ARTICLE I

ENGAGEMENT AND SERVICES

1.01 LG-Provided Services. Beginning on the Spin-Off Date and continuing for the duration as set forth in Schedule 1, LG shall provide to Starz, or shall cause its Performing Personnel (as defined below), subject to Section 1.04(d), to provide to Starz (a) the services set forth on Schedule 1 attached hereto (the “Initial LG Services”), (b) upon request by Starz, in the event that Starz determines after the Effective Date that there are services that are not listed on Schedule 1 that were provided to Starz for at least four months during the twelve (12) month period prior to the Effective Date by LG or its Affiliates (each, an “Historical LG Service”), such Historical LG Services in accordance with the standards set forth in Section 1.04(a) of this Agreement as soon as reasonably practicable for a period to be mutually agreed to by the Parties, negotiating in good faith, and otherwise in accordance with this Agreement, and at a cost to be mutually negotiated in good faith, and (c) upon request by Starz, any additional services mutually agreed to by the Parties (each, an “Additional LG Service”, and together with the Initial LG Services and the Historical LG Services, the “LG-Provided Services”) at a cost and on such other terms and conditions as may be mutually agreed to by the Parties. Schedule 1 will be amended by the Parties to reflect the provision of any such Additional LG Services and/or Historical LG Services in accordance with this Section 1.01.

1.02 Starz-Provided Services. Beginning on the Spin-Off Date and continuing for the duration as set forth in Schedule 2, Starz shall provide to LG, or shall cause its Performing Personnel, subject to Section 1.04(d), to provide to LG (a) the services set forth on Schedule 2 attached hereto (the “Initial Starz Services”), (b) upon request by LG, in the event that LG determines after the Effective Date that there are services that are not listed on Schedule 2 that were provided to LG for at least four months during the twelve (12) month period prior to the Effective Date by Starz or its Affiliates (each, an “Historical Starz Service”), such Historical Starz Services in accordance with the standards set forth in Section 1.04(a) of this Agreement as soon as reasonably practicable for

 

1

a period to be mutually agreed to by the Parties, negotiating in good faith, and otherwise in accordance with this Agreement, and at a cost to be mutually negotiated in good faith, and (c) upon request by LG, any additional services mutually agreed to by the Parties (each, an “Additional Starz Service”, and together with the Initial LG Services and the Historical LG Services, the “Starz-Provided Services”) at a cost and on such other terms and conditions as may be mutually agreed to by the Parties. Schedule 2 will be amended by the Parties to reflect the provision of any such Additional Starz Services and/or Historical Services in accordance with this Section 1.02.

1.03 Affiliates, Services, Performing Party and Receiving Party. For purposes of this Agreement,

 

  (a)

“Affiliate” means, with respect to any Party, any other person, corporation, limited liability company, partnership, trust, unincorporated organization, association or other entity controlled by such first Person, with “control” for such purpose meaning the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Party, whether through the ownership of voting securities or voting interests, by contract, or otherwise.

 

  (b)

“Receiving Party” means the Party receiving the Services, as the context requires.

 

  (c)

“Performing Party” means the Party performing the Services, as the context requires.

 

  (d)

“Services” means, with respect to LG, the LG-Provided Services and, with respect to Starz, the Starz-Provided Services, as the context requires.

1.04 Performance, Responsibilities, Privilege.

 

  (a)

Each Performing Party shall perform, or cause to be performed, its Services in good faith in substantially the same manner (including degree of care, skill and diligence) as the historical provision of such Services by such Performing Party or any of its Affiliates (to the extent such Services were performed by such Performing Party or any of its Affiliates prior to the Spin-Off Date) and otherwise in a commercially reasonable manner. Without limiting and in addition to the foregoing, the Performing Party shall perform its Services promptly and in an accurate, complete, professional and workmanlike manner.

 

  (b)

Each Performing Party shall promptly notify the Receiving Party of any material problems that have occurred or are reasonably anticipated to occur that would reasonably be expected to materially adversely affect such Performing Party’s ability to provide its corresponding Services and in such case the Parties shall work together in good faith (including, on the part of such Performing Party, using commercially reasonable efforts) to remedy any such problems. The Parties will use good faith, commercially reasonable efforts to cooperate with each other in all matters relating to the provision and receipt of the Services.

 

  (c)

Except as expressly provided in Article II, each Performing Party shall be solely responsible for all expenses incurred in connection with performing its respective Services or otherwise performing its obligations under this Agreement. Except as otherwise provided in this Agreement (including Article II and Section 4.04), each Party shall be solely responsible for all costs, expenses and liabilities of any nature whatsoever suffered or incurred in connection with its business operations.

 

  (d)

All personnel employed, engaged or otherwise furnished by each Performing Party in connection with performing its Services will be the employees, agents, or subcontractors of the Performing Party or its Affiliates, as the case may be (the “Performing Personnel”). To the extent that the Performing Party uses subcontractors, the Performing Party shall generally use (as necessary) the subcontractors utilized by the Performing Party at any time in the 12 months prior to the Spin-Off Date in connection with its own business or in connection with providing services to the Receiving Party. However, the Performing Party may add, remove, or change subcontractors, or specific technology or configurations if such changes are necessary to provide consistent high-quality service to itself and the Receiving Party, provided that (i) prior to any such changes, the Performing Party shall use reasonable efforts to provide written notice to the Receiving Party, (ii) if the Out-of-Pocket Costs associated with such

 

2

  changes are anticipated to exceed the historical costs of such subcontracted Services to the recipient thereof in the twelve (12) months prior to the Spin-Off Date, then the Performing Party will discuss such situation with the Receiving Party in good faith, (iii) such changes will not materially affect the nature, quality, frequency and standard of care at which the Services are provided and (iv) the Receiving Party may, for legitimate business purposes (e.g., confidentiality concerns, a pending or past commercial dispute, etc.), object to the use of a particular subcontractor by Performing Party if such subcontractor was not engaged in providing services to the Receiving Party prior to the Spin-Off Date, and if Receiving Party does so object then the Parties will work together to identity a different suitable subcontractor. As between the Parties, the Performing Party will be responsible for the performance, compensation and supervision of its Performing Personnel and for any breach by the Performing Personnel of the terms of this Agreement. None of the Performing Personnel is entitled to or eligible for, and the Receiving Party shall not provide, any benefits that the Receiving Party may make available to its employees, including without limitation health insurance benefits, workers’ compensation, paid vacation, profit-sharing, retirement, or any other fringe benefits. Because the Performing Party is an independent contractor, the Receiving Party shall not withhold or make payments for social security, make unemployment insurance or disability insurance contributions, or obtain workers’ compensation insurance on behalf of any of the Performing Personnel.

 

  (e)

Each Receiving Party hereby acknowledges and agrees that the obligations of the Performing Party hereunder are exclusively the Performing Party’s obligations and are not guaranteed directly or indirectly by the Performing Party’s stockholders, members, directors, managers, officers, Affiliates, managers, agents or any other person. Subject to the terms of this Agreement, the Receiving Party agrees to look solely to the Performing Party for the enforcement of performance of any obligations hereunder and covenants not to sue or otherwise seek to enforce this Agreement against any party other than (i) the Performing Party, (ii) the Performing Personnel, but solely to the extent of damages caused by willful misconduct, property damage or bodily injury or (iii) the Performing Party’s successors or assigns.

 

  (f)

With respect to any Services that Performing Personnel who are attorneys render to the Receiving Party pursuant to this Agreement, the Parties agree it is their mutual intention that (i) each such attorney who renders such Services shall be acting as counsel to the Receiving Party with respect to such Services, (ii) any communications between any such attorney and the Receiving Party in connection with such Services shall, to the fullest extent permitted by applicable law, be confidential and privileged communications and (iii) the Receiving Party shall be entitled, in perpetuity, to control the assertion or waiver of all privileges and immunities in connection with any confidential and privileged communications in connection with such Services.

1.05 Books and Records. Through the five (5) years following the expiration or earlier termination of this Agreement, each Performing Party will maintain books and records, in reasonable detail in accordance with its standard business practices, with respect to the provision of its Services pursuant to this Agreement, including records supporting Out-of-Pocket Costs as set forth in Section 2.01(a) below (collectively, “Supporting Records”). Each Party will provide to the other and its respective duly authorized representatives, agents, and attorneys, reasonable access to all of their respective Supporting Records during business hours upon request after reasonable advance notice in connection with such Services.

1.06 Ownership of IP. Each Party shall retain exclusive ownership of, and all right, title, and interest in and to any Intellectual Property (as defined below), information technology or other technology and any and all data or content that such Party supplies to any other Party or such other Party’s Affiliates in connection with this Agreement, and each Party shall hold such information of the other Party in confidence and only use such information as necessary to fulfill its obligations or exploit its rights hereunder. Other than as set forth in Section 1.07, nothing in this Agreement shall be deemed to convey to a Party any rights in or to the Intellectual Property of the other Party or its Affiliates. “Intellectual Property” means all intellectual property and proprietary rights arising from any of the following, as they exist anywhere in the world, whether registered or

 

3

unregistered: (a) all patents, patentable inventions and other patent rights, including all reissues, divisions, divisionals, provisionals, continuations and continuations-in-part, renewals, extensions, reexaminations, utility models, design patents, certificates of invention and all documents and filings claiming priority to or serving as a basis for priority thereof, (b) all trademarks, service marks, trade names, service names, brand names, trade dress rights, logos, designs, corporate names, trade styles and other source or business identifiers, together with the goodwill associated with any of the foregoing, (c) all copyrights, copyrightable works, works of authorship and all other rights corresponding thereto, (d) all computer programs and other software, firmware and middleware, including software implementations of algorithms, models, and methodologies, whether in source code, object code or other form, including libraries, subroutines and other components thereof, together with input and output formats, (e) all trade secrets, know-how, industrial designs, business methods, technical and business data, improvements, processes, techniques, manuals, blueprints, plans, procedures, subscriber lists, distributor lists, supplier lists, confidential information and proprietary information and rights (whether or not patentable, reduced to practice or subject to copyright or trade secret protection), (f) all Internet domain names, (g) all other intellectual property and proprietary rights of any kind, nature or description, and (h) all issuances, registrations, applications, extensions and renewals of any of the foregoing

1.07 Third Party Support and Warranty. The Performing Party hereby passes through to the Receiving Party, and Receiving Party will have the benefit of, all rights the Performing Party obtains under representations, warranties, service agreements and indemnities given by its third party service providers in connection with any Services provided by the Performing Party pursuant to this Agreement to the extent permitted by the applicable third party service providers. To the extent that such representations, warranties, service agreements and indemnities are not capable of being passed through by the Performing Party, upon written request by the Receiving Party, the Performing Party will take commercially reasonable actions requested by the Receiving Party to enforce such warranties, representations, service agreements, and indemnities on behalf of the Receiving Party.

1.08 IP License. Each Party hereby grants, and shall cause its Affiliates to grant, to the other Party and its Affiliates a worldwide, non-exclusive, non-transferable (except as provided in Section 5.03), non-sublicensable (except to service providers in connection with the provision or receipt of the Services, as applicable), royalty-free license (or sublicense, as applicable) under (a) the Intellectual Property owned by such Party or its Affiliates, and (b) any Intellectual Property owned by any third party and licensed to such Party or any of its Affiliates (subject to the receipt of any required consents from such third parties), in each case, solely to the extent required or useful to provide, receive or use the Services, as applicable, during the Term.

1.09 IT Systems. Each Party shall (and shall cause its respective agents, subcontractors, employees or representatives to): (a) not attempt to obtain access to, use, copy or interfere with any information technology systems of the other Party, or any data owned, used or processed by the other Party (including any personally identifiable information collected or in the possession of the other Party), except to the extent required to do so to provide or receive the Services; (b) maintain at least industry standard security measures in accordance with their written policies to protect the systems of the other Party to which it has access pursuant to this Agreement from access by unauthorized third parties, and from any “back door”, “time bomb”, “Trojan Horse”, “worm”, “drop dead device”, “virus” or other computer software routine intended or designed to disrupt, disable, harm or otherwise impede in any manner the operation of such systems; (c) not permit access or use of information technology systems of the other Party by a third party (other than the Performing Personnel) except as otherwise authorized by such other Party; (d) not disable, damage or erase or disrupt or impair the normal operation of the information technology systems of the other Party and (e) comply with the reasonable written security policies and procedures of the other Party (as may be updated from time to time in the ordinary course of business) that are provided to such Party and that such other Party considers reasonably necessary to protect their information technology systems, in each case, to the extent such policies are generally applicable and do not preclude or materially adversely impact the availability of Services agreed to be provided hereunder. Each Party shall reasonably cooperate with the other Party to investigate any possible data breaches or other incidents and to

 

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provide reasonable access, as necessary, to its information technology systems to the other Parties’ personnel, experts or consultants as needed for the investigation of any such incidents.

1.10 Data Transfer Compliance. The Performing Party agrees to implement appropriate controls and security measures to protect the security of the Receiving Party’s data, and the Parties hereby incorporate the Global Data Transfer Agreement attached hereto as Schedule 3.

ARTICLE II

COMPENSATION

2.01 Fees, Invoices and Payments. In consideration of each Performing Party’s respective provision of the Services, on a calendar quarter basis (pro-rated for any partial quarter), each Performing Party shall invoice the Receiving Party for such Services and the Receiving Party shall pay (or cause to be paid) to the Performing Party an amount equal to (a) all reasonable and documented out-of-pocket costs and expenses not contemplated by the corresponding Schedule (which, for the avoidance of doubt, shall not include any mark-up, administrative costs or overhead expenses such as salaries, rent and other general or administrative overhead expenses or fee of any kind imposed by the Performing Party) to the extent incurred by the Performing Party (and its Affiliates) and paid to any third party on the Receiving Party’s behalf in connection with the provision of the Services (“Out-of-Pocket Costs”), including reasonable and documented third-party costs and expenses such as professional fees and insurance premiums (and which may also include an allocation consistent with past practice to the Receiving Party of a portion of such reasonable and documented third party costs and expenses, fees and premiums that the Performing Party incurs on behalf of its own business and of which a portion of such are incurred on behalf of (and/or allocated to) the Receiving Party and/or related to Services provided), provided that any Out-of-Pocket Costs during any calendar quarter in excess of $37,500, individually, must be approved in advance by the Receiving Party; and (b) the fees for the Services as set forth on the corresponding Schedule (i.e., Schedule 1 for LG-Provided Services and Schedule 2 for Starz-Provided Services) (for each Party, respectively, the “Services Fee” and together with the Out-of-Pocket Costs for the benefit of a Party, the “Fee”).

2.02 Payment Procedures. All invoices for a calendar quarter shall be delivered in arrears within thirty (30) days following the end of such calendar quarter, and all Fees due by each Receiving Party shall be payable within thirty (30) calendar days after the receipt of the invoice relating thereto. The Parties shall use commercially reasonable efforts to resolve any disputes as to amounts due on an invoice as soon as reasonably practical following the Receiving Party notifying the Performing Party of such dispute. All payments will be by wire payment in accordance with instructions from the Performing Party.

2.03 Taxes. Based on the originally contracting Parties and the Services contemplated by this Agreement, the Parties do not anticipate that any sales, use, excise, value-added, business, services, consumption, or other similar taxes (collectively, “Sales Taxes”) or withholding tax will be imposed with respect to the receipt of the Services provided or payment of the Fees hereunder. In the event that any Sales Tax or any withholding tax would be imposed in connection with the Services provided or payment of the Out-of-Pocket Costs and/or Fees hereunder, the Parties shall discuss whether any means are reasonably available to eliminate or reduce the amount of such tax and shall take any such steps that can reasonably be taken to eliminate or reduce the amount of such tax. Each Party (or their applicable Affiliates) shall provide to the other any sales tax exemption, treaty certification or other information reasonably requested by such other Party in connection herewith, or in connection with any tax information reporting requirements to which a Party may be subject. Except as may otherwise be specifically provided herein, in the event that the Parties jointly determine that Sales Taxes are properly imposed with respect to the receipt of the Services provided or payment of the Out-of-Pocket Costs and/or Fees hereunder, such Sales Taxes shall be collected by the Performing Party and be borne by the party on which the tax is imposed pursuant to applicable law, and shall not be deducted from, or an offset against, the Fees due under this Agreement. In the event that the Performing Party has the sole or primary liability to collect and remit the applicable Sales Taxes under applicable law, such Performing Party (i) shall be responsible for filing all tax returns and submitting all

 

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payments to any federal, state, local, or foreign tax authority arising from the payment of fees to such Performing Party under this Agreement, and (ii) agrees to do so in a timely manner. The Receiving Party (or its applicable subsidiary) shall not be responsible for any (a) employment taxes or property taxes of the Performing Party, (b) income taxes imposed on (or measured by) the net income or gross receipts of the Performing Party (or any Affiliate, agent or subcontractor of the Performing Party), or (c) capital taxes and franchise (or similar) taxes imposed on the Performing Party (or any Affiliate, agent or subcontractor of the Performing Party) in lieu of income taxes pursuant to the laws of the jurisdiction in which such person is organized or pursuant to the laws of a jurisdiction in which it maintains an office. If any payment made under this Agreement is subject to a withholding tax under applicable law, the Receiving Party (or its applicable subsidiary) shall (x) withhold and remit to the appropriate governmental authorities all such amounts, (y) comply with applicable laws and otherwise reasonably cooperate to obtain and furnish to the Performing Party on a timely basis official receipts or other government certificates in the Performing Party’s name evidencing all such amounts, and (z) reasonably cooperate with the Performing Party to enable the Performing Party to claim any allowable reduced tax rates. If applicable, the Receiving Party will report the Fees paid to the Performing Party under this Agreement by filing Form 1099-MISC or other appropriate form with the Internal Revenue Service as required by law.

2.04 Survival. The terms and conditions of this Article II will survive the expiration or earlier termination of this Agreement.

ARTICLE III

TERM

3.01 Term. This Agreement will commence on the Effective Date and will continue until the end of the Services provided hereunder (the “Term”). This Agreement is subject to termination prior to the end of the Term in accordance with Section 3.03.

3.02 Discontinuance of Services. At any time during the Term, on not less than 30 days’ prior written notice to the Performing Party, the Receiving Party may elect to discontinue obtaining any of the Services from the Performing Party either service-by-service or collectively; provided however, if it would reasonably take the Performing Party longer to wind down the provision of such Services to the Receiving Party (as reasonably determined by the Performing Party), then the notice period shall be such longer period. In such event, the Performing Party’s obligation to provide Services that have been discontinued pursuant to this Section 3.02, and the obligation of Receiving Party to compensate the Performing Party for such discontinued Service(s) (other than as described below), will cease as of the end of the applicable notice period (or such date as may be agreed by the Parties), and this Agreement will remain in effect for the remainder of the Term with respect to those Services that have not been so discontinued. To the extent the discontinued Services relate to only a portion of a line item set forth in Schedule 1 or Schedule 2, the Parties will promptly evaluate the Services Fee allocated to such line item for reasonableness following the discontinuance and will negotiate in good faith to reach agreement on any appropriate adjustment thereto. The Receiving Party will remain liable for any required payment or performance in respect of any discontinued Services accrued prior to (regardless of whether first invoiced prior to or after) the effective date of the termination of such Services under this Section 3.02. Prior to the termination of any Service pursuant to this Section 3.02, the Parties shall work together in good faith to ensure a smooth transition of Services to the Receiving Party and/or to the successor services provider selected by the Receiving Party.

3.03 Termination. This Agreement will be terminated prior to the expiration of the Term in the following events:

 

  (a)

immediately by a Party upon written notice if the other Party defaults in the performance of any of its material obligations under this Agreement, and such default continues and has not been remedied for a period of 30 days after a Party has given written notice specifying such default and requiring it to be remedied;

 

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  (b)

immediately by a Party upon written notice if the other Party experiences a Bankruptcy Event. For purposes of this Agreement, a “Bankruptcy Event” will be deemed to have occurred with respect to a Party upon such Party’s insolvency, general assignment for the benefit of creditors, such Party’s voluntary commencement of any case, proceeding, or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution, or consolidation of such Party’s debts under any law relating to bankruptcy, insolvency, or reorganization, or relief of debtors, or seeking appointment of a receiver, trustee, custodian, or other similar official for such Party or for all or any substantial part of such Party’s assets (each, a “Bankruptcy Proceeding”), or the involuntary filing against such Party of any Bankruptcy Proceeding that is not stayed within 60 days after such filing; or

 

  (c)

such other date as agreed to in writing by the Parties.

3.04 Effect of Termination. Expiration or other termination of this Agreement shall not: (i) relieve the Parties of any liability or obligation which accrued hereunder prior to the effective date of such termination; (ii) preclude either Party from pursuing any rights and remedies it may have hereunder or at law or in equity with respect to any breach of this Agreement prior to the effective date of such termination; or (iii) prejudice either Party’s right to obtain performance of any obligation that accrued hereunder prior to the effective date of such termination or that, by the terms of this Agreement, survives such termination.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

4.01 Representations and Warranties. Each Party represents and warrants to the other Party that:

 

  (a)

It is a company validly existing and in good standing under the laws of the state of incorporation or formation. It has the power and the authority necessary for it to own, lease or otherwise hold its properties and assets and conduct its businesses as presently conducted, except where the failure to be so qualified and in good standing would not reasonably be expected to have a material adverse effect on (i) the ability of such Party to perform its obligations under this Agreement; (ii) the enforceability of this Agreement; or (iii) the rights and remedies against such Party, if any, of the other Party hereto.

 

  (b)

It has the full right, power, and authority to enter into this Agreement and to carry out the transactions contemplated hereby. No waiver or consent of any person is required in connection with the execution, delivery, and performance by such Party of this Agreement.

 

  (c)

This Agreement, when executed and delivered by such Party, will constitute a valid and binding obligation of such Party, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, and (ii) subject to Section 5.02 below, if and to the extent such enforcement is limited, restricted or prohibited by applicable law.

4.02 No Other Representation or Warranty. EXCEPT AS SET FORTH IN THIS AGREEMENT, THE PERFORMING PARTY MAKES NO REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE SERVICES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE, OR AS TO THE QUALITY, SUITABILITY OR ADEQUACY OF THE SERVICES FOR ANY PURPOSE OR USE, AND THE PERFORMING PARTY HEREBY DISCLAIMS THE SAME.

4.03 Limitation on Damages. NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE CONTRARY, OTHER THAN INDEMNIFICATION LIABILITY ARISING UNDER SECTION 4.04, AND OTHER THAN TO THE EXTENT THAT THE LIABILITY IS CAUSED BY THE OTHER PARTY’S WILLFUL MISCONDUCT OR FRAUD, NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, INCIDENTAL, INDIRECT, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE

 

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DAMAGES, ANY LOST BUSINESS OR LOST PROFITS, OR ANY INTERRUPTION OF BUSINESS, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY, IN CONNECTION WITH OR RELATING TO THIS AGREEMENT, ANY SERVICES, OR ANY CLAIM OR DAMAGES ARISING HEREUNDER.

4.04 Indemnification.

 

  (a)

The Performing Party shall defend, indemnify, save and hold harmless the Receiving Party and its Affiliates and its and their respective directors, officers, members, employees, and successors and assigns from and against any and all liabilities, losses, claims, damages, assessments, fines, penalties, costs and expenses (including reasonable and documented outside attorneys’, accountants’, investigators’ and experts’ fees and expenses) arising from Third Party Claims (as defined below) (collectively, “Losses”) incurred or suffered by any of them resulting from or based upon or arising out of: (i) fraud, reckless or willful misconduct or negligence of the Performing Party or any Performing Personnel in rendering the Services hereunder, (ii) any material breach by the Performing Party or any Performing Personnel of its obligations or covenants contained in this Agreement, or (iii) any claim that any Services or materials provided by the Performing Party to the Receiving Party hereunder or any elements thereof infringe or misappropriate any Intellectual Property or other proprietary right of any other person or entity; provided, however, that the Performing Party’s indemnification obligations under this Section 4.04 shall not apply to the extent that the applicable Loss is subject to the Receiving Party’s indemnification obligations under this Section 4.04.

 

  (b)

The Receiving Party shall defend, indemnify, save and hold harmless the Performing Party and its Affiliates and its and their respective directors, officers, members, employees, and successors and assigns and the Performing Personnel from and against any and all Losses incurred or suffered by any of them resulting from or based upon or arising out of: (i) any inaccuracy in any materials or information provided to the Performing Party or any Performing Personnel by or on behalf of the Receiving Party or its Affiliates in connection with this Agreement, (ii) any material breach by the Receiving Party of its obligations or covenants contained in this Agreement, or (iii) any claim that any materials provided by or on behalf of the Receiving Party or its Affiliates to the Performing Party or any Performing Personnel in connection with this Agreement or any elements thereof infringe or misappropriate any Intellectual Property or other proprietary right of any other person or entity.

4.05 Indemnification Procedures.

 

  (a)

In connection with any indemnification provided for in Section 4.04, the Party seeking indemnification (the “Indemnitee”) will give the Party from which indemnification is sought (the “Indemnitor”) (i) prompt notice whenever it comes to the attention of the Indemnitee that the Indemnitee has suffered or incurred, or may suffer or incur, any Losses for which it is entitled to indemnification under Section 4.04 and, (ii) if and when known, the facts constituting the basis for such claim, in each case in reasonable detail. Without limiting the generality of the foregoing, in the case of any Action commenced by a third party for which indemnification is being sought (a “Third-Party Claim”), such notice will be given no later than ten business days following receipt by the Indemnitee of written notice of such Third-Party Claim. Failure by any Indemnitee to so notify the Indemnitor will not affect the rights of such Indemnitee hereunder except to the extent that such failure has a material prejudicial effect on the defenses or other rights available to the Indemnitor with respect to such Third-Party Claim. The Indemnitee will deliver to the Indemnitor as promptly as practicable, and in any event within five business days after Indemnitee’s receipt, copies of all notices, court papers and other documents received by the Indemnitee relating to any Third-Party Claim. “Action” means any demand, action, claim, suit, countersuit, litigation, arbitration, prosecution, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing, inquiry, audit, examination or investigation commenced, brought, conducted or heard by or before, or otherwise involving, any court, grand jury or other governmental authority or any arbitrator or arbitration panel.

 

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  (b)

After receipt of a notice pursuant to Section 4.05(a) with respect to any Third-Party Claim, the Indemnitor will be entitled, if it so elects, to take control of the defense and investigation with respect to such Third-Party Claim and to employ and engage attorneys to handle and defend such claim, at the Indemnitor’s cost, risk and expense, upon written notice to the Indemnitee of such election, which notice acknowledges the Indemnitor’s obligation to provide indemnification under this Agreement with respect to any Losses arising out of or relating to such Third-Party Claim. The Indemnitor will not settle any Third-Party Claim that is the subject of indemnification without the written consent of the Indemnitee, which consent will not be unreasonably withheld, conditioned or delayed; provided, however, that, after reasonable notice, the Indemnitor may settle a claim without the Indemnitee’s consent if such settlement (i) makes no admission or acknowledgment of Liability or culpability with respect to the Indemnitee, (ii) includes a complete release of the Indemnitee and (iii) does not seek any relief against the Indemnitee other than the payment of money damages to be borne by the Indemnitor. The Indemnitee will cooperate in all reasonable respects with the Indemnitor and its attorneys in the investigation, trial and defense of any lawsuit or action with respect to such claim and any appeal arising therefrom (including the filing in the Indemnitee’s name of appropriate cross-claims and counterclaims). The Indemnitee may, at its own cost, participate in any investigation, trial and defense of any Third-Party Claim controlled by the Indemnitor and any appeal arising therefrom, including participating in the process with respect to the potential settlement or compromise thereof. If the Indemnitee has been advised by its counsel that there may be one or more legal defenses available to the Indemnitee that conflict with those available to the Indemnitor (“Separate Legal Defenses”), or that there may be actual or potential differing or conflicting interests between the Indemnitor and the Indemnitee in the conduct of the defense of such Third-Party Claim, the Indemnitee will have the right, at the expense of the Indemnitor, to engage separate counsel reasonably acceptable to the Indemnitor to handle and defend such Third-Party Claim, provided, that, if such Third-Party Claim can be reasonably separated between those portion(s) for which Separate Legal Defenses are available (“Separable Claims”) and those for which no Separate Legal Defenses are available, the Indemnitee will instead have the right, at the expense of the Indemnitor, to engage separate counsel reasonably acceptable to the Indemnitor to handle and defend the Separable Claims, and the Indemnitor will not have the right to control the defense or investigation of such Third-Party Claim or such Separable Claims, as the case may be (and, in which latter case, the Indemnitor will have the right to control the defense or investigation of the remaining portion(s) of such Third-Party Claim). “Liability” means any and all debts, liabilities, commitments and obligations, whether or not fixed, contingent or absolute, matured or unmatured, direct or indirect, liquidated or unliquidated, accrued or unaccrued, known or unknown, and whether or not required by generally accepted accounting principles to be reflected in financial statements or disclosed in the notes thereto (other than taxes).

 

  (c)

If, after receipt of a notice pursuant to Section 4.05(a) with respect to any Third-Party Claim as to which indemnification is available hereunder, the Indemnitor does not undertake to defend the Indemnitee against such Third-Party Claim, whether by not giving the Indemnitee timely notice of its election to so defend or otherwise, the Indemnitee may, but will have no obligation to, assume its own defense, at the expense of the Indemnitor (including reasonable outside attorneys’ fees and costs), it being understood that the Indemnitee’s right to indemnification for such Third-Party Claim shall not be adversely affected by its assuming the defense of such Third-Party Claim. The Indemnitor will be bound by the result obtained with respect thereto by the Indemnitee; provided, that the Indemnitee may not settle any lawsuit or action with respect to which the Indemnitee is entitled to indemnification hereunder without the consent of the Indemnitor, which consent will not be unreasonably withheld, conditioned or delayed; provided further, that such consent shall not be required if (i) the Indemnitor had the right under this Section 4.05 to undertake control of the defense of such Third-Party Claim and, after notice, failed to do so within thirty (30) days of receipt of such notice (or such lesser period as may be required by court proceedings in the event of a litigated matter), or (ii) (x) the Indemnitor does not have the right to control the defense of the entirety of such Third-Party Claim pursuant to Section 4.05(b) or (y) the Indemnitor does not have the right to control the defense of any Separable

 

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  Claim pursuant to Section 4.05(b) (in which case such settlement may only apply to such Separable Claims), the Indemnitee provides reasonable notice to Indemnitor of the settlement, and such settlement (A) makes no admission or acknowledgment of Liability or culpability with respect to the Indemnitor, (B) does not seek any relief against the Indemnitor and (C) does not seek any relief against the Indemnitee for which the Indemnitor is responsible other than the payment of money damages.

 

  (d)

The Indemnitor and the Indemnitee shall use commercially reasonable efforts to avoid production of confidential information, and to cause all communications among employees, counsel and others representing any party with respect to a Third-Party Claim to be made so as to preserve any applicable attorney-client or work-product privilege.

 

  (e)

The Indemnitor shall pay all amounts payable pursuant to this Section 4.05 by wire transfer of immediately available funds, reasonably promptly following receipt from an Indemnitee of a bill, together with all accompanying reasonably detailed backup documentation, for any Losses that are the subject of indemnification hereunder, unless the Indemnitor in good faith disputes the amount of such Losses or whether such Losses are covered by the Indemnitor’s indemnification obligation in which event the Indemnitor shall promptly so notify the Indemnitee. In any event, the Indemnitor shall pay to the Indemnitee, by wire transfer of immediately available funds, the amount of any Losses for which it is liable hereunder no later than thirty (30) days following any final determination of the amount of such Losses and the Indemnitor’s liability therefor or such earlier date (following such final determination) for which payment to the third party is due pursuant to such final determination. A “final determination” shall exist when (i) the parties to the dispute have reached an agreement in writing or (ii) a court of competent jurisdiction shall have entered a final order or judgment for the underlying third-party claim that becomes non-appealable or, if later and to the extent that the Indemnitor has disputed whether Losses are covered by Indemnitor’s indemnification obligation hereunder, a final order or judgment finding that such Losses are covered by Indemnitor’s indemnification obligation hereunder.

 

  (f)

If the indemnification provided for in this Section 4.05 shall, for any reason, be unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses for which it is entitled to indemnification hereunder, then the Indemnitor shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses, in such proportion as shall be appropriate to reflect the relative benefits received by and the relative fault of the Indemnitor on the one hand and the Indemnitee on the other hand with respect to the matter giving rise to such Losses.

 

  (g)

To the fullest extent permitted by applicable law, the Indemnitor will indemnify the Indemnitee against any and all reasonable fees, costs and expenses (including outside attorneys’ fees), incurred in connection with asserting, preserving or enforcing his, her or its rights under this Article IV.

 

  (h)

The remedies provided in this Section 4.05 shall be cumulative and shall not preclude assertion by any Indemnitee of any other rights or the seeking of any and all other remedies against an Indemnitor, subject to Section 4.05(b).

 

  (i)

The terms and conditions of this Section 4.05 will survive the expiration or termination of this Agreement.

ARTICLE V

MISCELLANEOUS

5.01 Notices. Except as otherwise specified in this Agreement, all notices (including other communications required or permitted) under this Agreement must be in writing and must be delivered: (a) in person; (b) by a generally recognized courier (including Federal Express or UPS) or messenger service that provides written acknowledgement of receipt by the addressee; or (c) by email with a verification of delivery and receipt (if receipt is not confirmed via return email, the effective date of notice is the date of the original email; provided

 

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that notice is provided by alternative means on the next day);, in each case, to the Party for whom it is intended at the address set forth below. Notices are deemed delivered when delivered in accordance with the terms in the preceding sentence. Except as provided in the following sentence, notices to each Party must be given at the address set forth below. The address of a Party to which notices or demands are to be given may be changed from time to time by that Party by notice served as provided above. Delivery of notice to the copied Parties below (if any) is not notice to any Party.

If to LG:

Lions Gate Entertainment Inc.

2700 Colorado Avenue

Santa Monica, CA 90404

Attention: General Counsel

If to Starz:

Starz Entertainment, LLC

1647 Stewart Street

Santa Monica, CA 90404

Attention: General Counsel

5.02 Severability. If any provision of this Agreement is determined to be invalid, illegal or unenforceable, the remaining provisions of this Agreement, to the extent permitted by applicable law, will remain in full force and effect; provided that the intent and purpose of the Parties are not frustrated thereby. In the event of any such determination, the Parties agree to negotiate in good faith to modify this Agreement to fulfill as closely as possible the original intents and purposes hereof. To the extent permitted by applicable law, the Parties hereby to the same extent waive any provision of law that renders any provision hereof prohibited or unenforceable in any respect.

5.03 Assignment. No Party may assign its respective rights or delegate its respective obligations under this Agreement without the express prior written consent of the other Party and any purported assignment or other transfer without such consent shall be void and unenforceable; provided, that, subject to Section 1.04(d), the Performing Party may delegate its obligations under this Agreement to any Affiliate thereof or to a subcontractor so long as the Performing Party remains fully responsible for the performance of its obligations under this Agreement.

5.04 Successors and Assigns; No Third Party Beneficiaries. This Agreement is binding upon and will inure to the benefit of each Party and its successors or assigns, and nothing in this Agreement, express or implied, is intended to confer upon any other person any rights or remedies of any nature whatsoever under or by reason of this Agreement.

5.05 Amendment and Waiver. This Agreement may be amended only by an agreement in writing signed by the Parties. Any Party hereto may, only by an instrument in writing, waive compliance by any other Party hereto with any term or provision hereof on the part of such other Party hereto to be performed or complied with. Subject to any limitation period imposed by law, no failure or delay of any Party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right or power, or any abandonment, or discontinuance of steps to enforce such right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The waiver by any Party hereto of a breach of any term or provision hereof shall not be construed as a waiver of any subsequent breach. Except as expressly provided herein, the rights and remedies of the Parties hereunder are cumulative and are not exclusive of any rights or remedies of that they would otherwise have hereunder.

 

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5.06 Governing Law; Waiver of Jury. Each of the Parties hereto hereby agrees this Agreement shall be governed by and shall be construed in accordance with the laws of the State of California, excluding any conflict-of-laws rule or principle that might refer the governance or the construction of this Agreement to the law of another jurisdiction. EACH PARTY HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 5.06. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO FURTHER REPRESENTS AND WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.

5.07 Dispute Resolution. The Parties agree that any and all disputes or controversies of any nature between them arising, regarding or relating to any aspect of this Agreement’s formation, meaning, performance or breach, or arising from or relating to, in any way, this Agreement, shall be determined in accordance with the mediation and arbitration rules of JAMS (or, with the agreement of the Parties, ADR Services) before a single neutral mediator (for the mediation) (“Mediator”) and a single neutral arbitrator (for the arbitration) with such proceedings to be conducted in Los Angeles, California. The Parties hereto shall endeavor first to resolve the controversy or claim through mediation administered by JAMS and conducted before a mutually agreeable Mediator before commencing any arbitration. All arbitration proceedings shall be closed to the public and confidential and all records relating thereto shall be permanently sealed, except as necessary to obtain court confirmation of the arbitration award. The Parties intend that the provisions to arbitrate set forth herein be valid, enforceable and irrevocable, and any award rendered by the arbitrator shall be final and binding on the Parties. The Parties hereby waive any right to trial de novo or appeal, other than for the purpose of confirming the arbitration award. The terms of this provision shall supersede any inconsistent terms of any prior agreement between the Parties.

5.08 Equitable Relief. Each of the Parties hereto agrees that irreparable damage may occur in the event that the provisions of this Agreement were not performed in accordance with their specific terms. Accordingly, it is hereby agreed that the Parties shall be entitled to seek an injunction or injunctions to enforce specifically the terms and provisions hereof, this being in addition to any other remedy to which they are entitled at law or equity, and for such purpose, each of the Parties hereby submits to the exclusive jurisdiction of the state and federal courts located in the County of Los Angeles, State of California. However, it is agreed that in no event shall either Party seek to enjoin or otherwise restrain the development, production, advertising, promotion, distribution, exhibition, or other exploitation of any motion picture or other content of the other Party or its Affiliates in connection with the exercise of remedies under this Agreement except to the extent such claim is based on a breach of Intellectual Property rights.

5.09 Counterparts. This Agreement and any amendment hereto or any other agreement (or document) delivered pursuant hereto may be executed in one or more counterparts and by different Parties in separate counterparts, including by DocuSign e-signature. All of such counterparts will constitute one and the same agreement (or other document) and will become effective (unless otherwise provided therein) when one or more counterparts have been signed by each Party and delivered to the other Party. This Agreement may be executed and delivered by electronic means, including “.pdf” or “.tiff” files, and any electronic signature shall constitute an original for all purposes.

 

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5.10 Headings. The descriptive headings of the articles, sections and subsections of this Agreement are for convenience only and do not constitute a part of this Agreement.

5.11 Relationship. Nothing contained in this Agreement will constitute or be construed to be or create a partnership or joint venture between the Parties or any of their respective Affiliates, successors or assigns. The Parties understand and agree that this Agreement does not make either of them an agent or legal representative of the other for any purpose whatsoever. No Party is granted by this Agreement any right or authority to assume or create any obligation or responsibilities, express or implied, on behalf of or in the name of any other Party, or to bind any other Party in any manner whatsoever except in the context of providing the Services. The Parties expressly acknowledge that the Performing Party is an independent contractor with respect to the Receiving Party with respect to this Agreement, including with respect to the provision of the Services.

5.12 Exhibits; Integration. Each schedule and exhibit delivered pursuant to the terms of this Agreement will be in writing and will constitute a part of this Agreement. This Agreement, together with such schedules and exhibits, constitute the entire agreement among the Parties pertaining to the subject matter hereof and supersede all prior agreements and understandings of the Parties in connection therewith.

5.13 Further Assurances. Each Party will execute and deliver such further certificates, agreements and other documents and take such other actions as the other Party may reasonably request to evidence and reflect the provision or receipt of Services set forth herein, to ensure compliance with applicable laws and to carry into effect the intents and purposes of this Agreement.

5.14 Representation by Counsel. Each of the Parties acknowledges that it has been represented by counsel in connection with this Agreement. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the Party that drafted it has no application and is expressly waived. The provisions of this Agreement will be interpreted in a reasonable manner to effect the intent of the Parties.

5.15 Interpretation. For all purposes of this Agreement and the schedules delivered pursuant to this Agreement: (a) all references in this Agreement to designated “Sections”, “Articles” and other subdivisions are to the designated Sections, Articles, and other subdivisions of the body of this Agreement; (b) pronouns of either gender or neuter will include, as appropriate, the other pronoun forms; (c) the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision; (d) the word “will” shall be construed to have the same meaning and effect as the word “shall”; (e) “or” is not exclusive; (f) “including” and “includes” will be deemed to be followed by “but not limited to” and “but is not limited to,” respectively; and (g) “may not” is prohibitive and not permissive. This Agreement does not amend or supplant any other contract, nor shall it be used to interpret any other agreement between the Parties.

5.16 Confidentiality. Neither Party hereto shall issue any press release or statement with regard to the terms and provisions of this Agreement without the consent of the other Party, nor shall either Party disclose to any third party, any Information (as defined below), except: (a) to the extent necessary to comply with the law, a governmental entity or a valid court order of a court with competent jurisdiction, in which event the Party making such disclosure shall so notify the other Party as promptly as is practicable (if possible, prior to making such disclosure) and shall not oppose any efforts of the other Party to seek confidential treatment of such information; (b) to the extent necessary to comply with the disclosure requirements of the Securities and Exchange Commission or similar entities; (c) (i) to its employees, directors and officers, in their capacity as such, on a reasonable need-to-know basis, and (ii) to its respective parent, subsidiary or other Affiliates, and its or their investors, financiers, banks, auditors, attorneys, employees, directors and officers, in each case, on a reasonable need-to-know basis in connection with this Agreement (collectively, its “Permitted Recipients”) (provided, that the disclosing Party shall be liable in the event that any of its Permitted Recipients disclose any information that the disclosing Party would be prohibited from disclosing pursuant to this provision); (d) in order to enforce its

 

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rights pursuant to this Agreement; and (e) to a bona fide prospective or an actual buyer or financier as well as the Permitted Recipients thereof (provided, that any such buyer or financier first executes a written confidentiality agreement with the disclosing Party pursuant to which such buyer or financier agree(s) to be bound by the provisions of this Section 5.16 or a similar undertaking of confidentiality at least as restrictive as the provisions of this Section 5.16). “Information” means the terms of this Agreement and all information received from or on behalf of either of the Parties or any Performing Personnel relating to such Party or its business, as applicable, other than any such information that (a) is publicly available or publicly known other than through a breach of this Section 5.16, (b) was known to the applicable Party from a source other than the disclosing Party, as applicable, that is not subject to a confidentiality obligation, or (c) is independently developed after the Effective Date by or on behalf of the Party or any Performing Personnel, as applicable, without use or reference to the Information of the other Party. With respect to the Information of a Party hereto, the other Party shall use the same degree of care in safeguarding such Information as it uses to safeguard its own confidential Information and otherwise, in a commercially reasonable manner. Each Party acknowledges and agrees that in the event of a breach by it of any of the provisions of this Section 5.16, monetary damages may not constitute a sufficient remedy. Consequently, in the event of any such breach, the disclosing Party and/or its successors or assigns may, in addition to any other rights and remedies existing in its favor, apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive or other relief in order to enforce or prevent any violations of the provisions hereof, in each case without the requirement of proving actual damages. However, it is agreed that in no event shall either Party seek to enjoin or otherwise restrain the development, production, advertising, promotion, distribution, exhibition, or other exploitation of any motion picture or other content of the other Party or its Affiliates in connection with the exercise of remedies under this Agreement except to the extent such claim is based on a breach of Intellectual Property rights. For the avoidance of doubt, each Party shall be required to inform its members, managers, officers, employees, contractors and agents of the obligations hereunder and cause them to comply therewith.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be duly executed on its behalf by its duly authorized individual as of the date first written above.

 

LIONS GATE ENTERTAINMENT INC.

By

  

/s/ James W. Barge

  Name: James W. Barge
  Title: Chief Financial Officer

 

STARZ ENTERTAINMENT, LLC

By

  

/s/ Audrey Lee

  Name: Audrey Lee
  Title: Executive Vice President and General Counsel

 

15

Exhibit 10.4

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN

LIONSGATE STUDIOS HOLDING CORP.,

LIONSGATE STUDIOS CORP.,

LG SIRIUS HOLDINGS ULC,

AND

LIONS GATE ENTERTAINMENT CORP.

 

 

Dated as of May 6, 2025

TABLE OF CONTENTS

 

         Page  
ARTICLE I

 

DEFINITIONS

 

Section 1.01

   Certain Definitions      4  
ARTICLE II

 

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

 

Section 2.01

   Allocation of Employee-Related Liabilities      9  

Section 2.02

   Service Credit      11  

Section 2.03

   Adoption and Transfer and Assumption of Benefit Plans      11  
ARTICLE III

 

EMPLOYEES; EMPLOYMENT AND

 

COLLECTIVE BARGAINING AGREEMENTS

 

Section 3.01

   Assignment and Transfer of Employees      12  

Section 3.02

   At-Will Status      13  

Section 3.03

   Individual Agreements      13  

Section 3.04

   Assignment of Specified Rights      14  

Section 3.05

   Consultation with Labor Representatives; Labor Agreements      14  

Section 3.06

   Sponsored Employees      14  

Section 3.07

   Transfer-Related Termination Liabilities      15  
ARTICLE IV

 

TREATMENT OF OUTSTANDING EQUITY AWARDS

 

Section 4.01

   Generally      15  

Section 4.02

   Equity Incentive Awards      15  

Section 4.03

   Non-Equity Incentive Practices and Plans      19  

Section 4.04

   Director Compensation      19  
ARTICLE V

 

RETIREMENT PLANS

 

Section 5.01

   Starz 401(k) Plan      20  

Section 5.02

   Starz Deferred Compensation Plan      21  

Section 5.03

   Non-U.S. Retirement or Deferred Compensation Plans      21  
ARTICLE VI

 

US WELFARE BENEFIT PLANS

 

Section 6.01

   Welfare Plans      21  

Section 6.02

   Vacation, Holidays and Leaves of Absence      22  

Section 6.03

   Workers’ Compensation      22  

Section 6.04

   U.S. Employees and Non-U.S. Employees      22  
ARTICLE VII

 

GENERAL AND ADMINISTRATIVE

 

Section 7.01

   Sharing of Information      22  

Section 7.02

   Transfer of Personnel Records and Authorization      22  

Section 7.03

   Access to Records      22  

Section 7.04

   Maintenance of Records      22  

Section 7.05

   Cooperation      23  

Section 7.06

   Confidentiality      23  

Section 7.07

   Preservation of Rights to Amend      23  

 

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Section 7.08

   Fiduciary Matters      23  

Section 7.09

   Further Assurances      23  

Section 7.10

   Reimbursement of Costs and Expenses      23  

Section 7.11

   No Third-Party Beneficiaries      24  

Section 7.12

   Dispute Resolution      24  

Section 7.13

   Miscellaneous      24  

 

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EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT, dated as of May 6, 2025 (this “Agreement”), is by and between Lionsgate Studios Holding Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“New Lionsgate”), Lionsgate Studios Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“LG Studios”), LG Sirius Holdings ULC, an unlimited liability company organized under the laws of the Province of British Columbia, Canada, (“LG Sirius”) and Lions Gate Entertainment Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“Lionsgate” prior to the Separation Effective Time and “Starz” at and from the Separation Effective Time). In this Agreement the legal entity currently named Lions Gate Entertainment Corp. may be referred to as ‘Lionsgate’ prior to the Separation Effective Time and as ‘Starz’ at and from the Separation Effective Time, with covenants, obligations, representations, and warranties of that entity, and other terms of this Agreement applicable to the entity, having the same force and effect regardless of the entity’s legal name at any point in time, or the name used in any part of this Agreement.

R E C I T A L S

WHEREAS, the board of directors of Lionsgate (the “Lionsgate Board”) has determined that it is advisable and in the best interests of Lionsgate and its stakeholders, including its shareholders and creditors, to create two publicly traded companies to separately operate the Starz Business and the LG Studios Business, respectively; and

WHEREAS, in furtherance of the foregoing, the Parties have entered into this Agreement, which is an Ancillary Agreement to the Separation Agreement by and between the Parties, dated as of May 6, 2025 (the “Separation Agreement”) to govern the rights and obligations of the Parties with respect to employment, compensation, employee benefits and related matters in connection with the Transactions, as set forth herein.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and covenants contained in this Agreement, the Parties, intending to be legally bound, hereby agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Certain Definitions. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Separation Agreement. For purposes of this Agreement, the following terms shall have the following meanings:

“Agreement” shall mean this Employee Matters Agreement, including all of the schedules and exhibits hereto, as may be amended from time to time in accordance with its terms.

“Applicable New Lionsgate Ratio” shall mean the New Lionsgate Ratio for Class A with respect to the adjustment of Lionsgate Awards that relate to LGEC Class A Shares and the New Lionsgate Ratio for Class B with respect to the adjustment of Lionsgate Awards that relate to LGEC Class B Shares.

“Applicable Starz Ratio” shall mean the Starz Ratio for Class A with respect to the adjustment of Lionsgate Awards that relate to LGEC Class A Shares and the Starz Ratio for Class B with respect to the adjustment of Lionsgate Awards that relate to LGEC Class B Shares.

“Arrangement Agreement” shall have the meaning set forth in the Separation Agreement.

 

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“Benefit Plan” shall mean any contract, agreement, policy, practice, program, plan, trust, commitment or arrangement providing for benefits, perquisites or compensation of any nature from an employer to any Employee or Former Employee, or to any family member, dependent, or beneficiary of any such Employee or Former Employee, including cash or deferred arrangement plans, profit-sharing plans, post-employment programs, pension plans, supplemental pension plans, welfare plans, stock purchase, stock option, stock appreciation rights, restricted stock, restricted stock units, performance stock units, other equity-based compensation and contracts, agreements, policies, practices, programs, plans, trusts, commitments and arrangements providing for terms of employment, fringe benefits, severance benefits, change in control protections or benefits, life, accidental death and dismemberment, disability and accident insurance, tuition reimbursement, adoption assistance, travel reimbursement, vacation, sick, paid time off, personal or bereavement days, leaves of absences and holidays; provided, however, that the term “Benefit Plan” does not include any government-sponsored benefits, such as workers’ compensation, unemployment or any similar plans, programs or policies or Individual Agreements. When immediately preceded by Starz, Benefit Plan means any Benefit Plan sponsored, maintained, or contributed to by a member of the Starz Group or any Benefit Plan to which a member of a Starz Group is a party. When immediately preceded by New Lionsgate, Benefit Plan means any Benefit Plan sponsored, maintained, or contributed to by a member of the New Lionsgate Group or any Benefit Plan to which a member of a New Lionsgate Group is a party. No Benefit Plan can be both a New Lionsgate Benefit Plan and a Starz Benefit Plan, and to the extent that a Benefit Plan could reasonably fall within the definition of New Lionsgate Benefit Plan or Starz Benefit Plan, the context shall determine the applicable classification.

“Canadian Lionsgate RSU Award” shall have the meaning set forth in Section 4.02(c).

“Dual Director” shall mean each individual who served on the Lionsgate Board immediately prior to the Separation Effective Time who is serving as both a New Lionsgate nonemployee director and as a Starz nonemployee director as of immediately after the Separation Effective Time.

“Employee” shall mean any New Lionsgate Group Employee or Starz Group Employee.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, together with the rules and regulations promulgated thereunder.

“Former Employees” shall mean former employees of the New Lionsgate Group or the Starz Group.

“Former New Lionsgate Group Employee” shall mean any Former Employee whose final employment with either the New Lionsgate Group or the Starz Group was with a member of the New Lionsgate Group.

“Former Starz Group Employee” shall mean any Former Employee who is not a Former New Lionsgate Group Employee.

“Group” shall mean either the Starz Group or the New Lionsgate Group, as the context requires.

“HIPAA” shall mean the health insurance portability and accountability requirements for “group health plans” under the Health Insurance Portability and Accountability Act of 1996, as amended, together with the rules and regulations promulgated thereunder.

“Income Tax Act (Canada)” shall have the meaning set forth in Section 4.02(c).

“Individual Agreement” shall mean any individual (a) employment contract or offer letter, (b) retention, severance or change in control agreement (including any ongoing commitment to provide severance pay or benefits to a Former Employee), (c) expatriate (including any international assignee) contract or agreement (including agreements and obligations regarding repatriation, relocation, equalization of Taxes and living standards in the host country), or (d) other agreement containing restrictive covenants (including confidentiality, noncompetition and non-solicitation provisions), as in effect immediately prior to the Separation Effective Time.

 

5

“Labor Agreement” shall have the meaning set forth in Section 2.01(a).

“LGEC Class A Shares” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Class B Shares” shall have the meaning set forth in the Arrangement Agreement.

“LGEC Shares” shall mean LGEC Class A Shares and/or LGEC Class B Shares.

“Lions Gate 401(k) Plan” shall mean the Lions Gate Entertainment, Inc. 401(k) Plan.

“Lions Gate Deferred Compensation Plan” shall mean the Lions Gate Entertainment Inc. Deferred Compensation Plan.

“Lionsgate Board” shall have the meaning set forth in the Recitals.

“Lionsgate Compensation Committee” shall mean the Compensation Committee of the Lionsgate Board.

“Lionsgate Equity Plan” shall mean any equity compensation plan sponsored or maintained by Lionsgate immediately prior to the Separation Effective Time, including the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan (as amended and restated July 7, 2023), Lions Gate Entertainment Corp. 2019 Performance Incentive Plan (as amended and restated July 19, 2021), the Lions Gate Entertainment Corp. 2017 Performance Incentive Plan(as amended), the Lions Gate Entertainment Corp. 2012 Performance Incentive Plan (as amended) (or, in all cases, any predecessor plan thereto).

“Lionsgate Option Award” shall mean an award of options to purchase LGEC Shares granted pursuant to a Lionsgate Equity Plan that is outstanding as of immediately prior to the Separation Effective Time.

“Lionsgate PSU Award” shall mean an award of restricted share units with respect to LGEC Shares granted pursuant to a Lionsgate Equity Plan subject to performance-based vesting conditions that is outstanding immediately prior to the Separation Effective Time.

“Lionsgate RSU Award” shall mean an award of restricted share units with respect to LGEC Shares granted pursuant to a Lionsgate Equity Plan that is not subject to performance conditions that is outstanding immediately prior to the Separation Effective Time.

“Lionsgate SAR Award” shall mean an award of stock appreciation rights with respect to LGEC Shares granted under a Lionsgate Equity Plan that is outstanding immediately prior to the Separation Effective Time.

“NASDAQ” shall mean the Nasdaq Global Market.

“New Lionsgate” shall have the meaning set forth in the Preamble hereto.

“New Lionsgate Awards” shall mean, collectively, the New Lionsgate Option Awards, the New Lionsgate PSU Awards, the New Lionsgate RSU Awards and the New Lionsgate SAR Awards.

“New Lionsgate Benefit Plan” shall have the definition set forth in the definition of Benefit Plan.

“New Lionsgate Director” shall mean each New Lionsgate nonemployee director as of immediately after the Separation Effective Time who served on the Lionsgate Board immediately prior to the Separation Effective Time, other than a Dual Director.

“New Lionsgate Equity Plan” shall mean the Lionsgate Studios Holding Corp. 2025 Performance Incentive Plan as established by New Lionsgate no later than the Separation Effective Time pursuant to Section 4.01.

 

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“New Lionsgate Group Employees” shall have the meaning set forth in Section 3.01(a).

“New Lionsgate New Common Shares” shall mean Post-Separation shares of common stock of New Lionsgate.

“New Lionsgate Option Award” shall mean an award of options to purchase New Lionsgate New Common Shares that is granted in accordance with Section 4.02(a).

“New Lionsgate PSU Award” shall mean an award of restricted share units with respect to New Lionsgate New Common Shares that is subject to performance conditions and granted in accordance with Section 4.02(d).

“New Lionsgate Ratio for Class A” shall mean the quotient, rounded to four decimal places, obtained by dividing (a) the Pre-Separation Lionsgate Stock Value (with respect to LGEC Class A Shares) by (b) the Post-Separation New Lionsgate Stock Value.

“New Lionsgate Ratio for Class B” shall mean the quotient, rounded to four decimal places, obtained by dividing (a) the Pre-Separation Lionsgate Stock Value (with respect to LGEC Class B Shares) by (b) the Post-Separation New Lionsgate Stock Value.

“New Lionsgate RSU Award” shall mean an award of restricted share units with respect to shares of New Lionsgate New Common Shares that is not subject to performance conditions and is granted in accordance with Section 4.02(c).

“New Lionsgate SAR Award” shall mean an award of stock appreciation rights with respect to shares of New Lionsgate New Common Shares that is granted in accordance with Section 4.02(b).

“New Lionsgate Specified Rights” shall mean any and all rights to enjoy, benefit from or enforce any and all restrictive covenants, including covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or Intellectual Property, pursuant to any Benefit Plan covering or with any New Lionsgate Group Employee and to which any member of the Starz Group or New Lionsgate Group is a party (other than Starz Specified Rights).

“New Lionsgate Welfare Plan” shall mean any New Lionsgate Benefit Plan that is a Welfare Plan.

“NYSE” shall mean the New York Stock Exchange.

“Parties” shall mean the Parties to this Agreement.

“Plan of Arrangement” shall have the meaning set forth in the Separation Agreement.

“Post-Separation New Lionsgate Stock Value” shall mean the simple average of the volume-weighted average per share price of New Lionsgate New Common Shares trading on the NYSE during each of the three consecutive full regular trading sessions occurring immediately after the Separation Effective Time.

“Pre-Separation Lionsgate Stock Value” shall mean the the volume-weighted average per share price of the applicable class of LGEC Shares trading on the NYSE during the last full regular trading session immediately prior to the Separation Effective Time.

“Requesting Party” shall have the meaning set forth in Section 7.10.

“Separation Agreement” shall have the meaning set forth in the Recitals.

 

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“Sponsored New Lionsgate Group Employee” means any New Lionsgate Group Employee working on a visa or work permit sponsored by a member of the Starz Group as of immediately prior to the Separation Effective Time.

“Sponsored Starz Group Employee” means any Starz Group Employee working on a visa or work permit sponsored by a member of the New Lionsgate Group as of immediately prior to the Separation Effective Time.

“Starz” shall have the meaning set forth in the Preamble.

“Starz 401(k) Plan” shall mean any Starz Benefit Plan that is a defined contribution plan intended to qualify under Section 401(a) of the Code and related trust intended to be exempt under Section 501(a) of the Code.

“Starz 401(k) Trust” shall have the meaning set forth in Section 5.01(a).

“Starz Awards” shall mean the Starz Option Awards, the Starz PSU Awards, the Starz RSU Awards and Starz SAR Awards.

“Starz Benefit Plan” shall have the definition set forth in the definition of Benefit Plan.

“Starz Board” shall have the meaning set forth in the Recitals.

“Starz Deferred Compensation Plan” shall mean the Starz Deferred Compensation Plan to be adopted by Starz prior to or on the Arrangement Effective Date, as described in Section 5.02.

“Starz Director” shall mean each Starz nonemployee director as of immediately after the Separation Effective Time who served on the Lionsgate Board immediately prior to the Separation Effective Time, other than a Dual Director.

“Starz Equity Plan” shall mean the Starz Entertainment Corp. 2025 Performance Incentive Plan as established by Starz no later than the Separation Effective Time pursuant to Section 4.01.

“Starz Group Employees” shall have the meaning set forth in Section 3.01(a).

“Starz Option Award” shall mean an award of stock options granted in accordance with Section 4.02(a).

“Starz PSU Award” shall mean an award of restricted stock units that is subject to performance-based vesting conditions and granted in accordance with Section 4.02(d).

“Starz Ratio for Class A” shall mean the quotient, rounded to four decimal places, obtained by dividing (a) the Pre-Separation Lionsgate Stock Value (with respect to LGEC Class A Shares) by (b) the Starz Stock Value.

“Starz Ratio for Class B” shall mean the quotient, rounded to four decimal places, obtained by dividing (a) the Pre-Separation Lionsgate Stock Value (with respect to LGEC Class B Shares) by (b) the Starz Stock Value.

“Starz RSU Award” shall mean an award of restricted stock units that is not subject to performance-based vesting conditions and is granted in accordance with Section 4.02(c).

“Starz SAR Award” shall mean an award of stock appreciation rights granted in accordance with Section 4.02(b).

 

8

“Starz Specified Rights” shall mean any and all rights to enjoy, benefit from or enforce any and all restrictive covenants, including covenants relating to non-disclosure, non-solicitation, non-competition, confidentiality or Intellectual Property, pursuant to any Benefit Plan covering or with any Starz Group Employee and to which any member of the Starz Group or New Lionsgate Group is a party.

“Starz Stock Value” shall mean the simple average of the volume-weighted average per share price of Starz Common Shares trading on the NASDAQ during each of the three consecutive full regular trading sessions occurring immediately after the Separation Effective Time.

“Starz Welfare Plan” shall mean any Starz Benefit Plan that is a Welfare Plan.

“Transactions” shall have the meaning set forth in the Separation Agreement.

“U.S.” shall mean the United States of America.

“Welfare Plan” shall mean any “welfare plan” (as defined in Section 3(1) of ERISA) or a “cafeteria plan” under Section 125 of the Code, and any benefits offered thereunder, and any other plan offering health benefits (including medical, prescription drug, dental, vision, mental health, substance abuse and retiree health), disability benefits, or life, accidental death and dismemberment, and business travel insurance, pre-Tax premium conversion benefits, dependent care assistance programs, employee assistance programs, paid time off programs, contribution funding toward a health savings account, flexible spending accounts or severance.

ARTICLE II

GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES

Section 2.01 Allocation of Employee-Related Liabilities.

(a) All provisions herein shall be subject to the requirements of all applicable Law and any collective bargaining, works council or similar agreement or arrangement with any labor union, works council or other labor representative (each, a “Labor Agreement”). Notwithstanding anything in this Agreement to the contrary, if the terms of a Labor Agreement or applicable Law require that any Assets or Liabilities be retained or assumed by, or transferred to, a Party in a manner that is different than what is set forth in this Agreement, such retention, assumption or transfer shall be made in accordance with the terms of such Labor Agreement and applicable Law and shall not be made as otherwise set forth in this Agreement; provided that, in such case, the Parties shall take all necessary action to preserve the economic terms of the allocation of Assets and Liabilities contemplated by this Agreement. The provisions of this Agreement shall apply in respect of all jurisdictions.

(b) Acceptance and Assumption of Starz Liabilities. Except as otherwise provided by this Agreement, on or prior to the Separation Effective Time, Starz and certain members of the Starz Group designated by Starz shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a Starz Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or subsequent to the Separation Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by New Lionsgate’s or Starz’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the New Lionsgate Group or the Starz Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the New Lionsgate Group or the Starz Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any Starz Group Employees

 

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and Former Starz Group Employees, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims under a Starz Benefit Plan, taking into account any corresponding New Lionsgate Benefit Plan’s assumption of Liabilities with respect to New Lionsgate Group Employees and Former New Lionsgate Group Employees that were originally the Liabilities of such Starz Benefit Plan with respect to periods prior to the Separation Effective Time;

(iii) any and all Liabilities arising out of, relating to or resulting from the employment, or termination of employment of all Starz Group Employees and Former Starz Group Employees; and

(iv) any and all Liabilities expressly assumed or retained by any member of the Starz Group pursuant to this Agreement.

(c) Acceptance and Assumption of New Lionsgate Liabilities. Except as otherwise provided by this Agreement, on or prior to the Separation Effective Time, New Lionsgate and certain members of the New Lionsgate Group designated by New Lionsgate shall accept, assume and agree faithfully to perform, discharge and fulfill all of the following Liabilities in accordance with their respective terms (each of which shall be considered a New Lionsgate Liability), regardless of when or where such Liabilities arose or arise, or whether the facts on which they are based occurred prior to, at or subsequent to the Separation Effective Time, regardless of where or against whom such Liabilities are asserted or determined (including any Liabilities arising out of claims made by New Lionsgate’s or Starz’s respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates against any member of the New Lionsgate Group or the Starz Group) or whether asserted or determined prior to the date hereof, and regardless of whether arising from or alleged to arise from negligence, recklessness, violation of Law, fraud or misrepresentation by any member of the New Lionsgate Group or the Starz Group, or any of their respective directors, officers, Employees, Former Employees, agents, Subsidiaries or Affiliates:

(i) any and all wages, salaries, incentive compensation, equity compensation, commissions, bonuses and any other employee compensation or benefits payable to or on behalf of any New Lionsgate Group Employees and Former New Lionsgate Group Employees, without regard to when such wages, salaries, incentive compensation, equity compensation, commissions, bonuses or other employee compensation or benefits are or may have been awarded or earned;

(ii) any and all Liabilities whatsoever with respect to claims under a New Lionsgate Benefit Plan, taking into account any corresponding Starz Benefit Plan’s assumption of Liabilities with respect to Starz Group Employees and Former Starz Group Employees that were originally the Liabilities of such New Lionsgate Benefit Plan with respect to periods prior to the Separation Effective Time;

(iii) any and all Liabilities arising out of, relating to or resulting from the employment, or termination of employment of all New Lionsgate Group Employees and Former New Lionsgate Group Employees; and

(iv) any and all Liabilities expressly assumed or retained by any member of the New Lionsgate Group pursuant to this Agreement.

(d) Unaddressed Liabilities. To the extent that this Agreement does not address particular Liabilities and the Parties later determine that they should be allocated in connection with the Transactions, the Parties shall agree in good faith on the allocation, taking into account the handling of comparable Liabilities under this Agreement.

 

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(e) Non-U.S. Employees. Starz Group Employees and Former Starz Group Employees who are residents outside of the U.S. or otherwise are subject to non-U.S. Law and their related benefits and Liabilities shall be treated in the same manner as the Starz Group Employees and Former Starz Group Employees, respectively, who are residents of the U.S. and are not subject to non-U.S. Law. New Lionsgate Group Employees and Former New Lionsgate Group Employees who are residents outside of the U.S. or otherwise are subject to non-U.S. Law and their related benefits and Liabilities shall be treated in the same manner as the New Lionsgate Group Employees and Former New Lionsgate Group Employees, respectively, who are residents of the U.S. and are not subject to non-U.S. Law. Notwithstanding anything in this Agreement to the contrary, all actions taken with respect to non-U.S. Employees or U.S. Employees working in non-U.S. jurisdictions, including any action under a Benefit Plan, shall be subject to and accomplished in accordance with applicable Law in the custom of the applicable jurisdictions and New Lionsgate and Starz may make such changes, modifications or amendments to the New Lionsgate Benefit Plans and Starz Benefit Plans, respectively, as may be required by applicable Law, vendor limitations or as are necessary to reflect the Transactions.

Section 2.02 Service Credit. As of the Separation Effective Time, the Starz Benefit Plans shall, and Starz shall cause each member of the Starz Group to, recognize each Starz Group Employee’s and each Former Starz Group Employee’s full service with Lionsgate or any of its Subsidiaries or predecessor entities at or before the Separation Effective Time, to the same extent that such service was recognized by Lionsgate or any of its Subsidiaries for similar purposes prior to the Separation Effective Time as if such full service had been performed for a member of the Starz Group, for purposes of eligibility, vesting and determination of level of benefits under any Starz Benefit Plans. As of the Separation Effective Time, the New Lionsgate Benefit Plans shall, and New Lionsgate shall cause each member of the New Lionsgate Group to, recognize each New Lionsgate Group Employee’s and each Former New Lionsgate Group Employee’s full service with the Starz Group or predecessor entities at or before the Separation Effective Time, to the same extent that such service was recognized by a member of the Starz Group for similar purposes prior to the Separation Effective Time as if such full service had been performed for a member of New Lionsgate Group, for purposes of eligibility, vesting and determination of level of benefits under any New Lionsgate Benefit Plans.

Section 2.03 Adoption and Transfer and Assumption of Benefit Plans.

(a) Adoption of Benefit Plans.

(i) New Lionsgate Benefit Plans. As of no later than the Separation Effective Time, New Lionsgate shall, or shall cause the members of the New Lionsgate Group to, adopt or retain Benefit Plans (and related trusts, if applicable) as contemplated and in accordance with the terms of this Agreement, which Benefit Plans are generally intended to contain terms substantially similar in all material respects to those of the corresponding New Lionsgate Benefit Plans as in effect immediately prior to the Separation Effective Time, with such changes, modifications or amendments to the New Lionsgate Benefit Plans as may be required by applicable Law or to reflect the Transactions, including limiting participation in any such New Lionsgate Benefit Plan to New Lionsgate Group Employees and Former New Lionsgate Group Employees who participated in the corresponding Benefit Plan immediately prior to the Separation Effective Time.

(ii) Starz Benefit Plans. As of no later than the Separation Effective Time, Starz shall, or shall cause the members of the Starz Group to, adopt or retain Benefit Plans (and related trusts, if applicable) as contemplated and in accordance with the terms of this Agreement, which Benefit Plans are generally intended to contain terms substantially similar in all material respects to those of the corresponding New Lionsgate Benefit Plans as in effect immediately prior to the Separation Effective Time, with such changes, modifications or amendments to the Starz Benefit Plans as may be required by applicable Law or to reflect the Transaction, including limiting participation in any such Starz Benefit Plan to Starz Group Employees and Former Starz Group Employees who participated in the corresponding Benefit Plan immediately prior to the Separation Effective Time.

 

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(b) Plans Not Required to Be Adopted. With respect to any Benefit Plan not otherwise addressed in this Agreement, the Parties shall agree in good faith on the treatment of such plan and the Liabilities thereunder, taking into account the handling of any comparable plan under this Agreement and, notwithstanding that neither Starz nor New Lionsgate shall have an obligation to continue to maintain any such plan with respect to the provision of future benefits from and after the Separation Effective Time, Starz shall remain obligated to pay or provide any previously accrued or incurred benefits to the Starz Group Employees and Former Starz Group Employees consistent with Section 2.01(b) of this Agreement and New Lionsgate shall remain obligated to pay or provide any previously accrued or incurred benefits to the New Lionsgate Group Employees and Former New Lionsgate Group Employees consistent with Section 2.01(c) of this Agreement.

(c) Information, Elections and Beneficiary Designations. Each Party shall use its commercially reasonable efforts to provide the other Party with information describing each Benefit Plan election made by an Employee or Former Employee that may have application to such Party’s Benefit Plans from and after the Separation Effective Time, and each Party shall use its commercially reasonable efforts to administer its Benefit Plans using those elections, including any beneficiary designations. Each Party shall, upon reasonable request, use its commercially reasonable efforts to provide the other Party and the other Party’s respective Affiliates, agents, and vendors all information reasonably necessary to the other Party’s operation or administration of its Benefit Plans.

(d) No Duplication or Acceleration of Benefits. Notwithstanding anything to the contrary in this Agreement, the Separation Agreement or any Ancillary Agreement, no participant in any Benefit Plan shall receive service credit or benefits or recognition of compensation or other factors to the extent that receipt of such service credit or benefits or recognition of compensation or other factors would result in duplication of benefits provided to such participant by the corresponding Benefit Plan or any other plan, program or arrangement sponsored or maintained by a member of the Group that sponsors the corresponding Benefit Plan. Furthermore, unless expressly provided for in this Agreement, the Separation Agreement or in any Ancillary Agreement or required by applicable Law, no provision in this Agreement shall be construed to (i) create any right to accelerate vesting, distributions or entitlements under any Benefit Plan sponsored or maintained by a member of the New Lionsgate Group or member of the Starz Group on the part of any Employee or Former Employee, or (ii) limit the ability of a member of the New Lionsgate Group or Starz Group to amend, merge, modify, eliminate, reduce or otherwise alter in any respect any benefit under any Benefit Plan sponsored or maintained by a member of the New Lionsgate Group or Starz Group, respectively, or any trust, insurance policy or funding vehicle related thereto.

(e) Transition Services. The Parties acknowledge that the New Lionsgate Group or the Starz Group may provide administrative services for certain of the other Party’s compensation and benefit programs for a transitional period under the terms of a Transition Services Agreement. The Parties agree to enter into a business associate agreement (if required by HIPAA or other applicable health information privacy Laws) in connection with such Transition Services Agreement.

(f) Beneficiaries. References to New Lionsgate Group Employees, Former New Lionsgate Group Employees, Starz Group Employees, Former Starz Group Employees, and current and former nonemployee directors of either New Lionsgate or Starz shall be deemed to refer to their beneficiaries, dependents, survivors and alternate payees, as applicable.

ARTICLE III

EMPLOYEES; EMPLOYMENT AND

COLLECTIVE BARGAINING AGREEMENTS

Section 3.01 Assignment and Transfer of Employees.

(a) Effective as of no later than the Separation Effective Time and except as otherwise agreed to by the Parties, the Parties shall have taken such actions as are necessary to ensure that (i) each individual who is

 

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intended to be an employee of the Starz Group as of the Separation Effective Time (including any such individual who is not actively working as of the Separation Effective Time as a result of an illness, injury or an approved leave of absence) (collectively, the “Starz Group Employees”) is employed by a member of the Starz Group as of the Separation Effective Time, and (ii) each individual who is intended to be an employee of the New Lionsgate Group as of the Separation Effective Time (including any such individual who is not actively working as of the Separation Effective Time as a result of an illness, injury or an approved leave of absence) (collectively, the “New Lionsgate Group Employees”) is employed by a member of the New Lionsgate Group as of the Separation Effective Time. Each of the Parties agrees to execute, and to seek to have the applicable Employees execute, such documentation, if any, as may be necessary to reflect such assignment and/or transfer.

(b) In the event that the Parties reasonably determine following the Separation Effective Time that (i) any individual employed outside of the U.S. who is not a Starz Group Employee has inadvertently become employed by a member of the Starz Group or continues to be employed by a member of the Starz Group (due to the operation of transfer of undertakings or similar applicable Law), the Parties shall cooperate and take such actions as may be reasonably necessary in order to cause the employment of such individual to be promptly transferred to a member of the New Lionsgate Group, and New Lionsgate shall reimburse the applicable members of the Starz Group for all compensation, benefits, severance and other employment-related costs incurred by the Starz Group members in employing and transferring such individuals or (ii) any individual employed outside the U.S. who is not a New Lionsgate Group Employee has inadvertently become employed by, a member of the New Lionsgate Group or continued to be employed by a member of the New Lionsgate Group (due to the operation of transfer of undertakings or similar applicable Law), the Parties shall cooperate and take such actions as may be reasonably necessary in order to cause the employment of such individual to be promptly transferred to a member of the Starz Group, and Starz shall reimburse the applicable members of the New Lionsgate Group for all compensation, benefits, severance and other employment-related costs incurred by New Lionsgate Group members in employing and transferring such individuals.

Section 3.02 At-Will Status. Nothing in this Agreement shall create any obligation on the part of any member of the New Lionsgate Group or any member of the Starz Group to (a) change the employment status of any Employee from “at-will,” to the extent that such Employee is an “at-will” employee under applicable Law or (b) continue the employment of any Employee or permit the return from a leave of absence for any period after the date of this Agreement (except as required by applicable Law) . Except as provided in this Agreement, this Agreement shall not limit the ability of the New Lionsgate Group or the Starz Group to change the position, compensation or benefits of any Employees for performance-related, business or any other reason.

Section 3.03 Individual Agreements.

(a) Except as agreed between New Lionsgate and Starz, with respect to any Individual Agreement with any Starz Group Employees or Former Starz Group Employees to which a member of the Starz Group is not a party, or which do not otherwise transfer to a Starz Group member by operation of applicable Law (including pursuant to any applicable automatic transfer regulations), the Parties shall use reasonable best efforts to assign, effective as of the Separation Effective Time, the applicable agreement, as applicable, to a member of the Starz Group, and Starz shall, or shall cause a member of the Starz Group to assume responsibility for, and perform and honor, such agreement in accordance with its terms, in each case as if originally entered into by such applicable member of the Starz Group, and the New Lionsgate Group shall cease to have any Liabilities or responsibilities with respect thereto; provided, however, that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Separation Effective Time, each member of the Starz Group shall be considered to be a successor to each member of the New Lionsgate Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the Starz Group shall enjoy all the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary); provided, further, that in no event shall New Lionsgate be permitted to enforce an Individual Agreement (including any agreement containing non-competition or non-solicitation covenants) against a Starz Employee for actions taken in such individual’s capacity as a Starz Employee other than on behalf of Starz as requested by the Starz Group in its capacity as third-party beneficiary.

 

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(b) Except as agreed between New Lionsgate and Starz, with respect to any Individual Agreement with New Lionsgate Group Employees or Former New Lionsgate Group Employees to which a member of the New Lionsgate Group is not a party, or which do not otherwise transfer to a New Lionsgate Group member by operation of applicable Law (including pursuant to any applicable automatic transfer regulations), the Parties shall use reasonable best efforts to assign, effective on or before the Separation Effective Time, the applicable agreement to a member of the New Lionsgate Group, and New Lionsgate shall, or shall cause a member of the New Lionsgate Group to assume responsibility for, and perform and honor, such agreement in accordance with its terms, in each case as if originally entered into by such applicable member of the New Lionsgate Group, and the Starz Group shall cease to have any Liabilities or responsibilities with respect thereto; provided, however, that to the extent that assignment of any such Individual Agreement is not permitted by the terms of such agreement or by applicable Law, effective as of the Separation Effective Time, each member of the New Lionsgate Group shall be considered to be a successor to each member of the Starz Group for purposes of, and a third-party beneficiary with respect to, such Individual Agreement, such that each member of the New Lionsgate Group shall enjoy all the rights and benefits under such agreement (including rights and benefits as a third-party beneficiary); provided, further, that in no event shall Starz be permitted to enforce an Individual Agreement (including any agreement containing non-competition or non-solicitation covenants) against a New Lionsgate Employee for actions taken in such individual’s capacity as a New Lionsgate Employee other than on behalf of New Lionsgate as requested by the New Lionsgate Group in its capacity as third-party beneficiary.

Section 3.04 Assignment of Specified Rights. To the extent permitted by applicable Law and the applicable agreement, if any, effective as of the Separation Effective Time, (a) New Lionsgate hereby assigns, to the maximum extent possible, on behalf of itself and the New Lionsgate Group, the Starz Specified Rights, to Starz (and Starz shall be a third-party beneficiary with respect thereto), and (b) Starz hereby assigns, to the maximum extent possible, on behalf of itself and the Starz Group, the New Lionsgate Specified Rights, to New Lionsgate (and New Lionsgate shall be a third-party beneficiary with respect thereto).

Section 3.05 Consultation with Labor Representatives; Labor Agreements. The Parties shall cooperate to notify, inform and/or consult with any labor union, works council or other labor representative regarding the Transactions to the extent required by Law or a Labor Agreement. No later than as of immediately before the Separation Effective Time, Starz shall have taken, or caused another member of the Starz Group to take, all actions that are necessary (if any) for Starz or another member of the Starz Group to (a) assume any Labor Agreements in effect with respect to Starz Group Employees and Former Starz Group Employees (excluding obligations thereunder with respect to any New Lionsgate Group Employees or Former New Lionsgate Group Employees, to the extent applicable), and (b) unless otherwise provided in this Agreement, assume and honor any obligations of the New Lionsgate Group under any Labor Agreements as such obligations relate to Starz Group Employees and Former Starz Group Employees. No later than as of immediately before the Separation Effective Time, New Lionsgate shall have taken, or caused another member of the New Lionsgate Group to take, all actions that are necessary (if any) for New Lionsgate or another member of the New Lionsgate Group to (i) assume any Labor Agreements in effect with respect to New Lionsgate Group Employees and Former New Lionsgate Group Employees (excluding obligations thereunder with respect to any Starz Group Employees, or Former Starz Group Employees, to the extent applicable), and (ii) assume and honor any obligations of the Starz Group under any Labor Agreements as such obligations relate to New Lionsgate Group Employees and Former New Lionsgate Group Employees. For the avoidance of doubt, any withdrawal liability that is imposed on any member of the New Lionsgate Group at or after the Separation Effective Time by a multiemployer pension plan and that relates to the obligation, or cessation of the obligation, of a member of the Starz Group to contribute to such plan, shall be a Liability of Starz and any withdrawal liability that is imposed on any member of the Starz Group at or after the Separation Effective Time by a multiemployer pension plan and that relates to the obligation, or cessation of the obligation, of a member of the New Lionsgate Group to contribute to such plan, shall be a Liability of New Lionsgate.

Section 3.06 Sponsored Employees. Each of Starz and New Lionsgate shall, and shall cause the members of the Starz Group and the New Lionsgate Group, respectively, to, cooperate in good faith with each other and the

 

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applicable Governmental Authorities with respect to the process of obtaining work authorization for each Sponsored Starz Group Employee to work with a member of the Starz Group and for each Sponsored New Lionsgate Group Employee to work with a member of the New Lionsgate Group, including, but not limited to, petitioning the applicable Governmental Authorities for the transfer of the applicable employee’s (as well as any spouse or dependent thereof, as applicable) visa or work permit, or the grant of a new visa or work permit, to the Starz Group or New Lionsgate Group, as applicable. In the event that it is not legally permissible for a Sponsored Starz Group Employee to continue work with the Starz Group from and after the Arrangement Effective Date, or for a Sponsored New Lionsgate Group Employee to continue work with the New Lionsgate Group from and after the Arrangement Effective Date, the Parties shall reasonably cooperate to provide for the services of the applicable employee to be made available exclusively to the Starz Group or New Lionsgate Group, whichever was the intended employer, under an employee secondment or similar arrangement, with costs incurred (including those relating to compensation and benefits in respect of such employee) to be borne by such intended employer.

Section 3.07 Transfer-Related Termination Liabilities.

(a) None of the Transactions, or any assignment, transfer or continuation of the employment of any employees as contemplated by this Article III (or any other Ancillary Agreement) shall be deemed a termination of employment or service of any New Lionsgate Group Employee or Starz Group Employee for purposes of this Agreement, any New Lionsgate Benefit Plan, any Starz Benefit Plan or any employment, severance, retention, change in control, consulting or similar agreements, plans, policies or arrangements.

(b) Without limiting the generality of Section 3.07(a), in the event that any severance or other termination-related payments become payable as a result of the Transactions or the transfer of the employment of (i) a Starz Group Employee contemplated by this Article III, the Starz Group shall be solely responsible for all such severance and termination-related payments, and such amounts shall constitute Starz Liabilities, or (ii) a New Lionsgate Group Employee contemplated by this Article III, the New Lionsgate Group shall be solely responsible for all such severance and termination-related payments and such amounts shall constitute New Lionsgate Liabilities.

ARTICLE IV

TREATMENT OF OUTSTANDING EQUITY AWARDS

Section 4.01 Generally. Except as specified below, each Lionsgate Award that is outstanding as of immediately prior to the Separation Effective Time shall be adjusted as described below; provided, however, that, prior to the Separation Effective Time, the Lionsgate Compensation Committee may provide for different adjustments with respect to some or all Lionsgate Awards to the extent that the Lionsgate Compensation Committee deems such adjustments necessary and appropriate. Any adjustments made by the Lionsgate Compensation Committee pursuant to the foregoing sentence shall be deemed incorporated by reference herein as if fully set forth below and shall be binding on the Parties and their respective Affiliates. No later than the Separation Effective Time, the Starz Equity Plan and New Lionsgate Equity Plan shall be established, with such terms as are necessary to permit the implementation of the provisions of Section  4.02.

Section 4.02 Equity Incentive Awards. In adjusting each Lionsgate Award under the formulas set forth in this Section 4.02, to the extent such award relates to either LGEC Class A Shares or LGEC Class B Shares, such Award shall be converted into a New Lionsgate Award or a Starz Award, as provided below and such adjustment shall be made using the Applicable New Lionsgate Ratio (New Lionsgate Ratio for Class A or New Lionsgate Ratio for Class B) or Applicable Starz Ratio (Starz Ratio for Class A or Starz Ratio for Class B) for such share class. Notwithstanding anything to the contrary herein, in respect of each Lionsgate Award subject to any performance-based vesting conditions, such vesting conditions may be modified in a manner determined by the Lionsgate Compensation Committee (or, following the Separation Effective Time, in the case of a Starz Award,

 

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the compensation committee of the Board of Directors of Starz or in the case of a New Lionsgate Award, the compensation committee of the Board of Directors of New Lionsgate, as applicable).

(a) Option Awards. Each Lionsgate Option Award that is outstanding immediately prior to the Separation Effective Time shall be converted as of the Separation Effective Time into either a New Lionsgate Option Award or a Starz Option Award as described below:

(i) Each Lionsgate Option Award held by a New Lionsgate Group Employee or by a Former Employee shall be converted as of the Separation Effective Time, through an adjustment thereto, into a New Lionsgate Option Award and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Separation Effective Time as applicable to such Lionsgate Option Award immediately prior to the Separation Effective Time. From and after the Separation Effective Time:

(A) the number of New Lionsgate New Common Shares subject to such New Lionsgate Option Award, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (1) the number of LGEC Shares subject to the corresponding Lionsgate Option Award immediately prior to the Separation Effective Time, by (2) the Applicable New Lionsgate Ratio; and

(B) the per share exercise price of such New Lionsgate Option Award, rounded up to the nearest cent, shall be equal to the quotient obtained by dividing (1) the per share exercise price of the corresponding Lionsgate Option Award as of immediately prior to the Separation Effective Time, by (2) the Applicable New Lionsgate Ratio.

(ii) Each Lionsgate Option Award held by a Starz Group Employee shall be converted as of the Separation Effective Time into a Starz Option Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Separation Effective Time as applicable to such Lionsgate Option Award immediately prior to the Separation Effective Time. From and after the Separation Effective Time:

(A) the number of Starz Common Shares subject to such Starz Option Award, rounded down to the nearest whole number of shares, shall be equal to the product obtained by multiplying (1) the number of LGEC Shares subject to the corresponding Lionsgate Option Award immediately prior to the Separation Effective Time, by (2) the Applicable Starz Ratio; and

(B) the per share exercise price of such Starz Option Award, rounded up to the nearest cent, shall be equal to the quotient obtained by dividing (1) the per share exercise price of the corresponding Lionsgate Option Award as of immediately prior to the Separation Effective Time, by (2) the Applicable Starz Ratio.

Notwithstanding anything to the contrary in this Section 4.02(a), the exercise price, the number of shares of New Lionsgate New Common Shares and Starz Common Shares subject to each New Lionsgate Option Award and Starz Option Award, respectively, and the terms and conditions of exercise of such options, shall be determined in a manner consistent with the requirements of Section 409A of the Code.

(b) SAR Awards. Each Lionsgate SAR Award that is outstanding as of immediately prior to the Separation Effective Time shall be converted as of the Separation Effective Time into either a New Lionsgate SAR Award or a Starz SAR Award as described below:

(i) If the holder is a New Lionsgate Group Employee or a Former Employee, such award shall be converted, as of the Separation Effective Time, into a New Lionsgate SAR Award and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and

 

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expiration) after the Separation Effective Time as were applicable to such Lionsgate SAR Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time:

(A) the number of New Lionsgate New Common Shares underlying such New Lionsgate SAR Award shall be equal to the product, rounded down to the nearest whole share, of (1) the number of LGEC Shares underlying the corresponding Lionsgate SAR Award immediately prior to the Separation Effective Time, multiplied by (2) the Applicable New Lionsgate Ratio; and

(B) the per-share exercise price of such New Lionsgate SAR Award shall be equal to the quotient, rounded up to the nearest cent, of (1) the per-share exercise price of the corresponding Lionsgate SAR Award immediately prior to the Separation Effective Time, divided by (2) the Applicable New Lionsgate Ratio.

(ii) If the holder is a Starz Group Employee, such award shall be converted, as of the Separation Effective Time, into a Starz SAR Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting and expiration) after the Separation Effective Time as were applicable to such Lionsgate SAR Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time:

(A) the number of Starz Common Shares underlying such Starz SAR Award shall be equal to the product, rounded down to the nearest whole share, of (1) the number of LGEC Shares subject to the corresponding Lionsgate SAR Award immediately prior to the Separation Effective Time, multiplied by (2) the Applicable Starz Ratio; and

(B) the per-share exercise price of such Starz SAR Award shall be equal to the quotient, rounded up to the nearest cent, of (1) the per-share exercise price of the corresponding Lionsgate SAR Award immediately prior to the Separation Effective Time, divided by (2) the Applicable Starz Ratio.

Notwithstanding anything to the contrary in this Section 4.02(b), the exercise price, the number of shares of New Lionsgate New Common Shares and New Starz Common Shares subject to each New Lionsgate SAR Award and Starz SAR Award, respectively, and the terms and conditions of exercise of such awards shall be determined in a manner consistent with the requirements of Section 409A of the Code.

(c) RSU Awards. Each Lionsgate RSU Award that is outstanding as of immediately prior to the Separation Effective Time (including each Canadian Lionsgate RSU Award (as defined below)) shall be treated as follows:

(i) If the holder is a New Lionsgate Group Employee, Former Employee or New Lionsgate Director, such award shall be converted, as of the Separation Effective Time, into a New Lionsgate RSU Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting) after the Separation Effective Time as were applicable to such Lionsgate RSU Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time, the number of New Lionsgate New Common Shares subject to such New Lionsgate RSU Award shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (A) the number of LGEC Shares subject to the corresponding Lionsgate RSU Award immediately prior to the Separation Effective Time, by (B) the Applicable New Lionsgate Ratio; provided further, however, that the conversion of any Lionsgate RSU Award by a holder thereof who for the purposes of the Income Tax Act (Canada) (the “Tax Act”) is a resident of Canada (a “Canadian Lionsgate RSU Award”) for a New Lionsgate RSU Award shall be adjusted as necessary in order to comply with the requirements of paragraph 7(1.4)(c) of the Tax Act and shall occur immediately before the time that is immediately before the Separation Effective Time provided that, for all other purposes of this Agreement, each such Canadian Lionsgate RSU Award shall be considered as if it were outstanding as of immediately prior to the Separation Effective Time.

 

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(ii) If the holder is a Starz Group Employee, or a Starz Director, such award shall be converted, as of the Separation Effective Time, into a Starz RSU Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting) after the Separation Effective Time as were applicable to such Lionsgate RSU Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time, the number of Starz Common Shares subject to such Starz RSU Award shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (A) the number of LGEC Shares subject to the corresponding Lionsgate RSU Award immediately prior to the Separation Effective Time, by (B) the Applicable Starz Ratio.

(iii) If the holder is a Dual Director, such award shall be converted, as of the Separation Effective Time, into an New Lionsgate RSU Award and a Starz RSU Award, each of which shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to vesting) after the Separation Effective Time as were applicable to such Lionsgate RSU Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time, the number of Starz Common Shares and the number of shares of New Lionsgate New Common Shares that shall be subject to each such New Lionsgate RSU Award and each Starz RSU Award shall be the number of Starz Common Shares and the number of New Lionsgate Common Shares, respectively, that would have been received as of the Separation Effective Time pursuant to the Plan of Arrangement had such Dual Director held the number of LGEC Shares subject to such Lionsgate RSU Award immediately prior to the Separation Effective Time.

(d) PSU Awards. Each Lionsgate PSU Award that is outstanding as of immediately prior to the Separation Effective Time shall be treated as follows:

(i) If the holder is a New Lionsgate Group Employee, such award shall be converted, as of the Separation Effective Time, into an New Lionsgate PSU Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to time-based vesting) after the Separation Effective Time as were applicable to such PSU Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time, the number of New Lionsgate New Common Shares subject to such New Lionsgate PSU Award shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (A) the number of LGEC Shares subject to the corresponding Lionsgate PSU Award immediately prior to the Separation Effective Time, by (B) the Applicable New Lionsgate Ratio.

(ii) If the holder is a Starz Group Employee, such award shall be converted, as of the Separation Effective Time, into a Starz PSU Award, and shall, except as otherwise provided in this Section 4.02, be subject to the same terms and conditions (including with respect to time-based vesting) after the Separation Effective Time as were applicable to such Lionsgate PSU Award immediately prior to the Separation Effective Time; provided, however, that from and after the Separation Effective Time, the number of Starz Common Shares subject to such Starz PSU Award shall be equal to the product, rounded to the nearest whole number of shares, obtained by multiplying (A) the number of LGEC Shares subject to the corresponding Lionsgate PSU Award immediately prior to the Separation Effective Time, by (B) the Applicable Starz Ratio.

(e) Miscellaneous Award Terms. None of the Transactions or any employment transfer described in Section 3.01 shall constitute a termination of employment for any Employee or termination of service for any non-employee director for purposes of any New Lionsgate Award or any Starz Award. After the Separation Effective Time, for any award adjusted under this Section 4.02, any reference to a “change in control,” “change of control” or similar definition in an award agreement, employment agreement or New Lionsgate Equity Plan applicable to such award (x) with respect to Adjusted New Lionsgate Awards, shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the applicable award agreement, employment agreement or New Lionsgate Equity Plan, and (y) with respect to Starz Awards, shall be deemed to refer to a “Change in Control” as defined in the Starz Equity Plan.

 

18

(f) Registration and Other Regulatory Requirements. Starz agrees to file the appropriate registration statements with respect to, and to cause to be registered pursuant to the Securities Act, shares authorized for issuance under the Starz Equity Plan, as required pursuant to the Securities Act, as soon as practicable following the Separation Effective Time and in any event before the date of issuance of any shares pursuant to the Starz Equity Plan. New Lionsgate agrees to file the appropriate registration statements with respect to, and to cause to be registered pursuant to the Securities Act, shares authorized for issuance under the New Lionsgate Equity Plan, as required pursuant to the Securities Act, as soon as practicable following the Separation Effective Time and in any event before the date of issuance of any shares pursuant to the New Lionsgate Equity Plan. The Parties shall take such additional actions as are deemed necessary or advisable to effectuate the foregoing provisions of this Section 4.02(f), including, to the extent applicable, compliance with securities Laws and other legal requirements associated with equity compensation awards in affected non-U.S. jurisdictions.

Section 4.03 Non-Equity Incentive Practices and Plans.

(a) Allocation of Liabilities.

(i) The Starz Group shall be responsible for determining all bonus awards that would otherwise be payable under non-equity cash incentive to Starz Group Employees or Former Starz Group Employees for any performance periods that are open when the Separation Effective Time occurs. The Starz Group shall also determine for Starz Group Employees or Former Starz Group Employees (A) the extent to which established performance criteria (as interpreted by the Starz Group, in its sole discretion) have been met, and (B) the payment level for each Starz Group Employee or Former Starz Group Employee. The Starz Group shall retain (or assume as necessary) all Liabilities with respect to any such bonus awards payable to Starz Group Employees or Former Starz Group Employees for any performance periods that are open when the Separation Effective Time occurs and thereafter, and no member of the New Lionsgate Group shall have any obligations with respect thereto.

(ii) The New Lionsgate Group shall be responsible for determining all bonus awards that would otherwise be payable under non-equity cash incentive plans to New Lionsgate Group Employees or Former New Lionsgate Group Employees for any performance periods that are open when the Separation Effective Time occurs. The New Lionsgate Group shall also determine for New Lionsgate Group Employees or Former New Lionsgate Group Employees (A) the extent to which established performance criteria (as interpreted by the New Lionsgate Group, in its sole discretion) have been met, and (B) the payment level for each New Lionsgate Group Employee or Former New Lionsgate Group Employee. The New Lionsgate Group shall retain (or assume as necessary) all Liabilities with respect to any such bonus awards payable to New Lionsgate Group Employees or Former New Lionsgate Group Employees for any performance periods that are open when the Separation Effective Time occurs and thereafter, and no member of the Starz Group shall have any obligations with respect thereto.

(b) Non-Equity Incentive Plans. Without limiting the generality of Section 4.03(a):

(i) No later than the Separation Effective Time, the New Lionsgate Group shall continue to retain (or assume as necessary) any cash incentive plan for the exclusive benefit of New Lionsgate Group Employees and Former New Lionsgate Group Employees, whether or not sponsored by the New Lionsgate Group, and, from and after the Separation Effective Time, shall be solely responsible for all Liabilities thereunder.

(ii) No later than the Separation Effective Time, the Starz Group shall continue to retain (or assume as necessary) any cash incentive plan for the exclusive benefit of Starz Group Employees and Former Starz Group Employees, whether or not sponsored by the Starz Group, and, from and after the Separation Effective Time, shall be solely responsible for all Liabilities thereunder.

Section 4.04 Director Compensation. New Lionsgate shall be responsible for the payment of any fees for service on the New Lionsgate Board that are earned at, before, or after the Separation Effective Time, and Starz

 

19

shall not have any responsibility for any such payments. With respect to any Starz nonemployee director, Starz shall be responsible for the payment of any fees for service on the Starz Board that are earned at any time on or after the Separation Effective Time, and New Lionsgate shall not have any responsibility for any such payments . For the avoidance of doubt, with respect to the compensation for any period prior to the Separation Effective Time, for any non-employee director of Lionsgate, Lionsgate shall be responsible for the payment of director’s fees for the period up to the Separation Effective Time (with New Lionsgate assuming responsibility for any such payment(s), if and to the extent any then remain outstanding, immediately after the Separation Effective Time). For Dual Directors, each of New Lionsgate and Starz shall be responsible for the payment of director’s fees for the period on or after the Separation Effective Time with respect to service on the applicable board of directors.

ARTICLE V

RETIREMENT PLANS

Section 5.01 Starz 401(k) Plan.

(a) Establishment of Plan. Effective on or before the Arrangement Effective Date, Starz shall or shall cause the members of the Starz Group to, adopt and establish a Starz 401(k) Plan and a related trust (the “Starz 401(k) Trust”), which shall be intended to meet the tax qualification requirements of Section 401(a) of the Code, the tax exemption requirement of Section 501(a) of the Code, and the requirements described in Sections 401(k) and (m) of the Code and which shall have substantially the similar terms in all material respects as of immediately prior to the Arrangement Effective Date as the Lions Gate 401(k) Plan. Notwithstanding the foregoing, Starz or another member of the Starz Group may make such changes, modifications or amendments to the Starz 401(k) Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Transactions or which result from vendor limitations or as the members of the Starz Group otherwise determine to be advisable. A member of the Starz Group will be solely responsible for taking all necessary, reasonable, and appropriate actions to establish, maintain and administer the Starz 401(k) Plan so that it is qualified under Section 401(a) of the Code and that the related trust thereunder is exempt under Section 501(a) of the Code.

(b) Transfer of Account Balances. No later than thirty (30) days following the Separation Effective Time (or such other times as mutually agreed to by the Parties), New Lionsgate shall cause the trustee of the Lions Gate 401(k) Plan to transfer from the trust which forms a part of the Lions Gate 401(k) Plan to the corresponding Starz 401(k) Trust, the account balances of Starz Group Employees and Former Starz Group Employees under the New Lionsgate 401(k) Plan, determined as of the date of the transfer. Unless otherwise agreed by the Parties, such transfers shall be made in kind, including promissory notes evidencing the transfer of outstanding loans. Any Asset and Liability transfers pursuant to this Section 5.01 shall comply in all respects with Sections 414(l) and 411(d)(6) of the Code and, if required, shall be made not less than thirty (30) days after New Lionsgate shall have filed the notice under Section 6058(b) of the Code with respect to the applicable Lions Gate 401(k) Plan. The Parties agree that to the extent that the Parties agree that any Assets are not to be transferred in kind, the assets transferred will be mapped into an appropriate investment vehicle.

(c) Transfer of Liabilities. Effective as of the Separation Effective Time but subject to the Asset transfer specified in Section 5.01(b) above, the Starz 401(k) Plan shall assume and be solely responsible for all the Liabilities for or relating to Starz Group Employees and Former Starz Group Employees under the Lions Gate 401(k) Plan. Starz shall be responsible for all ongoing rights of or relating to Starz Group Employees for future participation (including the right to make payroll deductions) in the Starz 401(k) Plan.

(d) Plan Fiduciaries. For all periods at and after the Separation Effective Time, the Parties agree that the applicable fiduciaries of the Starz 401(k) Plan and the Lions Gate 401(k) Plan, respectively, shall have the authority with respect to the Starz 401(k) Plan and the Lions Gate 401(k) Plans, respectively, to determine the investment alternatives, the terms and conditions with respect to those investment alternatives and such other matters as are within the scope of their duties under ERISA and the terms of the applicable plan documents.

 

20

Section 5.02 Starz Deferred Compensation Plan

(a) Establishment of Starz Deferred Compensation Plan. Effective as of no later than the Separation Effective Time, (i) the Starz Group shall establish the Starz Deferred Compensation Plan, which shall have substantially the same terms as of immediately prior to the Separation Effective Time as the Lions Gate Deferred Compensation Plan; and (ii) Starz shall and shall cause the Starz Deferred Compensation Plan to assume, as of no later than the Separation Effective Time, all Liabilities under the Lions Gate Deferred Compensation Plan related to the Starz Group Employees and Former Starz Group Employees and the Lions Gate Deferred Compensation Plan shall have no further obligations related to the Starz Group Employees and Former Starz Group Employees from and following the Separation Effective Time. Notwithstanding the foregoing, Starz or another member of the Starz Group may make such changes, modifications or amendments to the Starz Deferred Compensation Plan as may be required by applicable Law or as are necessary and appropriate to reflect the Transactions or as a member of the Starz Group otherwise determines to be advisable, including freezing benefits and participation.

(b) Distributions. The parties acknowledge that none of the Transactions contemplated by this Agreement or the Separation Agreement will trigger a payment or distribution of compensation under the Starz Deferred Compensation Plan or the Lions Gate Deferred Compensation Plan.

Section 5.03 Non-U.S. Retirement or Deferred Compensation Plans. The Parties shall reasonably cooperate in good faith to effect the provisions of this Agreement with respect to any Benefit Plans that are deferred compensation, defined contribution retirement plans and any defined benefit pension plans (including any statutory plans or arrangements), in each case the primary purposes of which is to provide benefits for Employees or Former Employees who are or were employed by a non-U.S. entity of either the New Lionsgate Group or Starz Group as of immediately prior to the Separation Effective Time consistent with the general approach and philosophy regarding the allocation of Assets and Liabilities as set forth in this Agreement (including with respect to the creation of any “mirror” plans and the transfer of any accounts, Liabilities and related Assets).

ARTICLE VI

US WELFARE BENEFIT PLANS

Section 6.01 Welfare Plans.

(a) Long-Term Disability. New Lionsgate Group shall assume and retain all Liabilities for providing long-term disability benefits under a New Lionsgate Welfare Plan with respect to any Starz LTD Recipient (as defined below) and with respect to any Starz Group Employee (who is on short-term disability at the Separation Effective Time) or Former Starz Group Employee who subsequently becomes eligible to receive long-term disability benefits under a New Lionsgate Welfare Plan that provides long-term disability benefits but only with respect to benefits arising from long-term disability claims incurred by any Starz Group Employee or Former Starz Group Employee prior to the Separation Effective Time and only to the extent such individual is entitled to such benefit. For this purpose, a disability claim shall be considered incurred on the date of the occurrence of the event or condition giving rise to disability under the applicable New Lionsgate Welfare Plan. For the avoidance of doubt, if at the Separation Effective Time, a Starz Group Employee is on short-term disability due to an event or condition that occurred prior to the Separation Effective Time, such Employee shall remain a Starz Group Employee and to the extent such Starz Group Employee becomes entitled to long-term disability benefits under a New Lionsgate Welfare Plan, New Lionsgate shall be liable to provide long-term disability benefits under the New Lionsgate Welfare Plan but only to the extent such individual is entitled to such benefit. Except as provided in this Section 6.01(a), the Starz Group shall assume and retain all Liabilities for long-term disability benefits with respect to any Starz Group Employee or Former Starz Group Employee. Starz LTD Recipient shall mean any individual who is otherwise a Starz Group Employee or Former Starz Group Employee but is receiving long-term disability benefits under a New Lionsgate Welfare Plan at the Separation Effective Time. For the avoidance of doubt, in the case of any Starz LTD Recipient who is able to return to employment following the

 

21

commencement of long-term disability benefits under a New Lionsgate Welfare Plan, Starz shall comply with any requirements relating to such employment rights of such Starz LTD Recipient and such obligations and any related Liabilities shall be obligations and related Liabilities of the Starz Group.

Section 6.02 Vacation, Holidays and Leaves of Absence. Effective as of no later than the Separation Effective Time, the Starz Group shall assume all Liabilities of the Starz Group with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each Starz Group Employee and Former Starz Group Employees, unless otherwise required by applicable Law. The New Lionsgate Group shall retain all Liabilities with respect to vacation, holiday, annual leave or other leave of absence, and required payments related thereto, for each New Lionsgate Group Employee and Former New Lionsgate Group Employee.

Section 6.03 Workers’ Compensation. The treatment of workers’ compensation claims shall be governed by Section  4.3 of the Separation Agreement.

Section 6.04 U.S. Employees and Non-U.S. Employees. Notwithstanding anything to the contrary herein, the preceding provisions of this Article VI shall apply only to U.S. Employees and U.S. Former Employees. For the avoidance of doubt, the treatment of welfare benefits for any non-U.S. Employees or non-U.S. Former Employee, including any action under a Benefit Plan, shall be subject to the provisions of Section 2.01(e).

ARTICLE VII

GENERAL AND ADMINISTRATIVE

Section 7.01 Sharing of Information. Subject to any limitations imposed by applicable Law, each of New Lionsgate and Starz (acting directly or through members of the New Lionsgate Group or the Starz Group, respectively) shall provide to the other Party and its authorized agents and vendors all information necessary (including information for purposes of determining benefit eligibility, participation, vesting, calculation of benefits) on a timely basis under the circumstances for the Party to perform its duties under this Agreement. To the extent that such information is maintained by a third-party vendor, each Party shall use its commercially reasonable efforts to require the third-party vendor to provide the necessary information and assist in resolving discrepancies or obtaining missing data.

Section 7.02 Transfer of Personnel Records and Authorization. Subject to any limitation imposed by applicable Law and to the extent that it has not done so before the Separation Effective Time, New Lionsgate shall transfer to Starz any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to Starz Group Employees and Former Starz Group Employees and other records reasonably required by Starz to enable Starz properly to carry out its obligations under this Agreement, and Starz shall transfer to New Lionsgate any and all employment records (including any Form I-9, Form W-2 or other IRS forms) with respect to New Lionsgate Group Employees and Former Lionsgate Group Employees and other records reasonably required by New Lionsgate to enable New Lionsgate properly to carry out its obligations under this Agreement. Such transfer of records generally shall occur as soon as administratively practicable at or after the Separation Effective Time. Each Party shall permit the other Party reasonable access to its Employee records, to the extent reasonably necessary for such accessing Party to carry out its obligations hereunder.

Section 7.03 Access to Records. To the extent not inconsistent with this Agreement, the Separation Agreement or any applicable privacy protection Laws or regulations, reasonable access to Employee-related and Benefit Plan related records after the Separation Effective Time shall be provided to members of the New Lionsgate Group and members of the Starz Group pursuant to the terms and conditions of Article V of the Separation Agreement.

Section 7.04 Maintenance of Records. With respect to retaining, destroying, transferring, sharing, copying and permitting access to all Employee-related information, New Lionsgate and Starz shall comply with all

 

22

applicable Laws, regulations and internal policies, and shall indemnify and hold harmless each other from and against any and all Liability, Actions, and damages that arise from a failure (by the indemnifying Party or its Subsidiaries or their respective agents) to so comply with all applicable Laws, regulations and internal policies applicable to such information.

Section 7.05 Cooperation. Each Party shall use commercially reasonable efforts to cooperate and work together to unify, consolidate and share (to the extent permissible under applicable privacy/data protection Laws) all relevant documents, resolutions, government filings, data, payroll, employment and Benefit Plan information on regular timetables and cooperate as needed with respect to (a) any claims under or audit of or litigation with respect to any employee Benefit Plan, policy or arrangement contemplated by this Agreement, (b) efforts to seek a determination letter, private letter ruling or advisory opinion from the IRS or U.S. Department of Labor on behalf of any employee Benefit Plan, policy or arrangement contemplated by this Agreement, (c) any filings that are required to be made or supplemented to the IRS, U.S. Pension Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental Authority, and (d) any audits by a Governmental Authority or corrective actions, relating to any Benefit Plan, labor or payroll practices; provided, however, that requests for cooperation must be reasonable and not interfere with daily business operations.

Section 7.06 Confidentiality. Notwithstanding anything in this Agreement to the contrary, all confidential records and data relating to Employees to be shared or transferred pursuant to this Agreement shall be subject to Section 5.9 of the Separation Agreement and the requirements of applicable Law.

Section 7.07 Preservation of Rights to Amend. Except as specifically set forth in this Agreement, the rights of each member of the New Lionsgate Group and each member of the Starz Group to amend, waive, or terminate any plan, arrangement, agreement, program, or policy referred to herein shall not be limited in any way by this Agreement.

Section 7.08 Fiduciary Matters. New Lionsgate and Starz each acknowledges that actions required to be taken pursuant to this Agreement may be subject to fiduciary duties or standards of conduct under ERISA or other applicable Law, and no Party shall be deemed to be in violation of this Agreement if it fails to comply with any provisions hereof based upon its good faith determination (as supported by advice from counsel experienced in such matters) that to do so would violate such a fiduciary duty or standard. Each Party shall be responsible for taking such actions as are deemed necessary and appropriate to comply with its own fiduciary responsibilities and shall fully release and indemnify the other Party for any Liabilities caused by the failure to satisfy any such responsibility.

Section 7.09 Further Assurances. Each Party hereto shall take, or cause to be taken, any and all reasonable actions, including the execution, acknowledgment, filing and delivery of any and all documents and instruments that any other Party hereto may reasonably request in order to effect the intent and purpose of this Agreement and the transactions contemplated hereby.

Section 7.10 Reimbursement of Costs and Expenses. The Parties shall promptly reimburse one another, upon reasonable request of the Party requesting reimbursement (the “Requesting Party”) as soon as practicable, but in any event within 30 days of receipt of an invoice detailing all costs, expenses and other Liabilities paid or incurred by the Requesting Party (or any of its Affiliates), and any other substantiating documentation as the other Party shall reasonably request, that are, or have been made pursuant to this Agreement, the responsibility of the other Party (or any of its Affiliates).. Each Party shall provide 30 days’ notice if it anticipates sending an invoice hereunder. For the avoidance of doubt, and notwithstanding anything to the contrary in this Agreement or any other Ancillary Agreement, neither New Lionsgate nor Starz shall be required to reimburse the other party for any amounts under this Agreement if and to the extent that such party (or an applicable member of its Group) has otherwise previously reimbursed the other party (or an applicable member of its Group) for such amounts pursuant to any other Ancillary Agreement (including, for the avoidance of doubt, the Transition Services Agreement), as applicable.

 

23

Section 7.11 No Third-Party Beneficiaries. Notwithstanding anything to the contrary herein, nothing in this Agreement shall: (a) create any obligation on the part of any member of the Starz Group or any member of the New Lionsgate Group to retain the employment or services of any current or former employee, director, independent contractor or other service provider; (b) be construed to create any right, or accelerate entitlement, to any compensation or benefit whatsoever on the part of any future, present, or former employee or service provider of any member of the New Lionsgate Group or the Starz Group (or any beneficiary or dependent thereof) under this Agreement, the Separation Agreement, any New Lionsgate Benefit Plan or Starz Benefit Plan or otherwise; (c) preclude any Starz Group member (or, in each case, any successor thereto), at any time after the Separation Effective Time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any Starz Benefit Plan, any benefit under any Starz Benefit Plan or any trust, insurance policy, or funding vehicle related to any Starz Benefit Plan (in each case in accordance with the terms of the applicable arrangement); (d) preclude New Lionsgate or any New Lionsgate Group member (or, in each case, any successor thereto), at any time after the Separation Effective Time, from amending, merging, modifying, terminating, eliminating, reducing, or otherwise altering in any respect any New Lionsgate Benefit Plan, any benefit under any New Lionsgate Benefit Plan or any trust, insurance policy, or funding vehicle related to any New Lionsgate Benefit Plan (in each case in accordance with the terms of the applicable arrangement); or (e) confer any rights or remedies (including any third-party beneficiary rights) on any Employee or Former Employee or service provider of any member of the New Lionsgate Group or the Starz Group or any other Person.

Section 7.12 Dispute Resolution. The provisions of Article VI of the Separation Agreement shall apply, mutatis mutandis, to all disputes, controversies, or claims (whether arising in contract, tort, or otherwise) that may arise out of or relate to, or arise under or in connection with, this Agreement or the transactions contemplated hereby.

Section 7.13 Miscellaneous. The provisions of Article IX of the Separation Agreement (other than Section 9.4 (Third Party Beneficiaries) of the Separation Agreement) are hereby incorporated by reference into and deemed part of this Agreement and shall apply, mutatis mutandis, as if fully set forth in this Agreement.

[Signature Page Follows]

 

24

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

 

LIONSGATE STUDIOS HOLDING CORP.

By:

  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Chief Executive Officer, Principal Executive Officer, President and Secretary
LIONSGATE STUDIOS CORP.

By:

  

/s/ Bruce Tobey

  Name: Bruce Tobey
  Title: General Counsel
LG SIRIUS HOLDINGS ULC

By:

  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: President
LIONS GATE ENTERTAINMENT CORP.

By:

  

/s/ James W. Barge

  Name: James W. Barge
  Title: Chief Financial Officer

 

 

[Signature Page to Employee Matters Agreement]

Exhibit 10.5

LIONSGATE STUDIOS CORP.

2025 PERFORMANCE INCENTIVE PLAN

 

1.

PURPOSE OF PLAN

The purpose of this Lionsgate Studios Corp. 2025 Performance Incentive Plan (this “Plan”) is to promote the success of Lionsgate Studios Holding Corp., a company incorporated under the laws of the Province of British Columbia (the “Corporation”), through the grant of awards to attract, motivate, retain and reward selected employees and other eligible persons and to enhance the alignment of the interests of the selected participants with the interests of the Corporation’s shareholders. The Corporation entered into an arrangement agreement dated as of January 29, 2025 with Lionsgate Studios Corp. (“LG Studios”), LG Sirius Holdings ULC, (“Sirius”) and Lions Gate Entertainment Corp. (“LGEC”), that provided for the implementation of a plan of arrangement (the “Plan of Arrangement”) that resulted in the Corporation becoming a separately traded public company in 2025 from Starz Entertainment Corp. (“Starz”). As of the date during which the Separation Effective Time occurred (as defined in the Plan of Arrangement) (the “Effective Date”), the Corporation assumed the Lions Gate Entertainment Corp. 2023 Performance Incentive Plan which is hereby amended and restated as this Plan, as approved by the Board of Directors of the Corporation and by LGEC, as the sole shareholder of the Corporation, subject to the approval of the holders of Class A common stock of LGEC.

 

2.

ELIGIBILITY

The Administrator (as such term is defined in Section 3.1) may grant awards under this Plan only to those persons that the Administrator determines to be Eligible Persons. An “Eligible Person” is any person who is either: (a) an officer (whether or not a director) or employee of the Corporation or one of its Subsidiaries; (b) a director of the Corporation or one of its Subsidiaries; (c) an individual consultant or advisor who renders or has rendered bona fide services (other than services in connection with the offering or sale of securities of the Corporation or one of its Subsidiaries in a capital-raising transaction or as a market maker or promoter of securities of the Corporation or one of its Subsidiaries) to the Corporation or one of its Subsidiaries and who is selected to participate in this Plan by the Administrator or (d) any other individual who is entitled to receive an Adjusted Award; provided, however, that a person who is otherwise an Eligible Person under clause (c) above may participate in this Plan only if such participation would not adversely affect either the Corporation’s eligibility to use Form S-8 to register under the United States Securities Act of 1933, as amended (the “Securities Act”), the offering and sale of shares issuable under this Plan by the Corporation or the Corporation’s compliance with any other applicable laws. An Eligible Person who has been granted an award (a “participant”) may, if otherwise eligible, be granted additional awards if the Administrator shall so determine. As used herein, “Subsidiary” means any corporation or other entity a majority of whose outstanding voting stock or voting power is beneficially owned directly or indirectly by the Corporation; “Board” means the Board of Directors of the Corporation; “Adjusted Award” means an award granted to certain current and former employees and service providers of the Corporation, Starz and their respective subsidiaries under equity compensation plans maintained by the Corporation or Starz which awards have been assumed by the Corporation under this Plan in connection with the Plan of Arrangement pursuant to the terms of the Employee Matters Agreement; and “Employee Matters Agreement” means the Employee Matters Agreement entered into in connection with the Plan of Arrangement. For the avoidance of doubt, the “awards” or “award” referred to in this Plan shall include the Adjusted Awards (which shall be deemed granted hereunder for all purposes hereof) and the “participants” or “participant” referred to in this Plan shall include the holders of the Adjusted Awards, in each case unless otherwise expressly provided in this Plan.

 

2025 Performance Incentive Plan 1

3.

PLAN ADMINISTRATION

 

  3.1

The Administrator. This Plan shall be administered by and all awards under this Plan shall be authorized by the Administrator. The “Administrator” means the Board or one or more committees (or subcommittees, as the case may be) appointed by the Board or another committee (within its delegated authority) to administer all or certain aspects of this Plan. Any such committee shall be comprised solely of one or more directors or such number of directors as may be required under applicable law. A committee may delegate some or all of its authority to another committee so constituted. The Board or a committee comprised solely of directors may also delegate, to the extent permitted by applicable law, to one or more officers of the Corporation, its authority under this Plan. The Board or another committee (within its delegated authority) may delegate different levels of authority to different committees or persons with administrative and grant authority under this Plan. Unless otherwise provided in the Articles of the Corporation or the applicable charter of any Administrator: (a) a majority of the members of the acting Administrator shall constitute a quorum, and (b) the vote of a majority of the members present assuming the presence of a quorum or the unanimous written consent of the members of the Administrator shall constitute action by the acting Administrator.

 

  3.2

Powers of the Administrator. Subject to the express provisions of this Plan, the Administrator is authorized and empowered to do all things necessary or desirable in connection with the authorization of awards and the administration of this Plan (in the case of a committee or delegation to one or more officers, within any express limits on the authority delegated to that committee or person(s)), including, without limitation, the authority to:

 

  (a)

determine eligibility and, from among those persons determined to be eligible, determine the particular Eligible Persons who will receive an award under this Plan;

 

  (b)

grant awards to Eligible Persons, determine the price (if any) at which securities will be offered or awarded and the number of securities to be offered or awarded to any of such persons (in the case of securities-based awards), determine the other specific terms and conditions of awards consistent with the express limits of this Plan, establish the installment(s) (if any) in which such awards shall become exercisable or shall vest (which may include, without limitation, performance and/or time-based schedules), or determine that no delayed exercisability or vesting is required, establish any applicable performance-based exercisability or vesting requirements, determine the circumstances in which any performance-based goals (or the applicable measure of performance) will be adjusted and the nature and impact of any such adjustment, determine the extent (if any) to which any applicable exercise and vesting requirements have been satisfied, establish the events (if any) on which exercisability or vesting may accelerate (which may include, without limitation, retirement and other specified terminations of employment or services, or other circumstances), and establish the events (if any) of termination, expiration or reversion of such awards;

 

  (c)

approve the forms of any award agreements (which need not be identical either as to type of award or among participants);

 

  (d)

construe and interpret this Plan and any agreements defining the rights and obligations of the Corporation, its Subsidiaries, and participants under this Plan, make any and all determinations under this Plan and any such agreements, further define the terms used in this Plan, and prescribe, amend and rescind rules and regulations relating to the administration of this Plan or the awards granted under this Plan;

 

  (e)

cancel, modify, or waive the Corporation’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding awards, subject to any required consent under Section 8.6.5;

 

  (f)

accelerate, waive or extend the vesting or exercisability, or modify or extend the term of, any or all such outstanding awards (in the case of options or share appreciation rights, within the

 

2025 Performance Incentive Plan 2

  maximum term of such awards) in such circumstances as the Administrator may deem appropriate (including, without limitation, in connection with a retirement or other termination of employment or services or other circumstances) subject to any required consent under Section 8.6.5;

 

  (g)

adjust the number of Common Shares subject to any award, adjust the price of any or all outstanding awards or otherwise waive or change previously imposed terms and conditions, in such circumstances as the Administrator may deem appropriate, in each case subject to Sections 4 and 8.6 (and subject to the no repricing provision below);

 

  (h)

determine the date of grant of an award, which may be a designated date after but not before the date of the Administrator’s action to approve the award (unless otherwise designated by the Administrator, the date of grant of an award shall be the date upon which the Administrator took the action approving the award);

 

  (i)

determine whether, and the extent to which, adjustments are required pursuant to Section 7.1 hereof and take any other actions contemplated by Section 7 in connection with the occurrence of an event of the type described in Section 7;

 

  (j)

acquire or settle (subject to Sections 7 and 8.6) rights under awards in cash, stock of equivalent value, or other consideration (subject to the no repricing provision below); and

 

  (k)

determine the fair market value of the Common Shares or awards under this Plan from time to time and/or the manner in which such value will be determined.

 

  3.3

Prohibition on Repricing. Notwithstanding anything to the contrary in Section 3.2 and except for an adjustment pursuant to Section 7.1 or a repricing approved by shareholders, in no case may the Administrator (1) amend an outstanding stock option or SAR to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or SAR in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or SAR in exchange for an option or SAR with an exercise or base price that is less than the exercise or base price of the original award.

 

  3.4

Binding Determinations. Any determination or other action taken by, or inaction of, the Corporation, any Subsidiary, or the Administrator relating or pursuant to this Plan (or any award made under this Plan) and within its authority hereunder or under applicable law shall be within the absolute discretion of that entity or body and shall be conclusive and binding upon all persons. Neither the Board nor any other Administrator, nor any member thereof or person acting at the direction thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this Plan (or any award made under this Plan), and all such persons shall be entitled to indemnification and reimbursement by the Corporation in respect of any claim, loss, damage or expense (including, without limitation, attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under any directors and officers liability insurance coverage that may be in effect from time to time. Neither the Board nor any other Administrator, nor any member thereof or person acting at the direction thereof, nor the Corporation or any of its Subsidiaries, shall be liable for any damages of a participant should an option intended as an ISO (as defined below) fail to meet the requirements of the Internal Revenue Code of 1986, as amended (the “Code”), applicable to ISOs, should any other award(s) fail to qualify for any intended tax treatment, should any award grant or other action with respect thereto not satisfy Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended, or otherwise for any tax or other liability imposed on a participant with respect to an award.

 

  3.5

Reliance on Experts. In making any determination or in taking or not taking any action under this Plan, the Administrator may obtain and may rely upon the advice of experts, including employees and professional advisors to the Corporation. No director, officer or agent of the Corporation or any of its Subsidiaries shall be liable for any such action or determination taken or made or omitted in good faith.

 

2025 Performance Incentive Plan 3

  3.6

Delegation. The Administrator may delegate ministerial, non-discretionary functions to individuals who are officers or employees of the Corporation or any of its Subsidiaries or to third parties.

 

4.

COMMON SHARES SUBJECT TO THE PLAN; SHARE LIMITS

 

  4.1

Shares Available. Subject to the provisions of Section 7.1, the capital stock that may be delivered under this Plan shall be shares of the Corporation’s authorized but unissued Common Shares and any Common Shares held as treasury shares. For purposes of this Plan, “Common Shares” shall mean Common Shares of the Corporation. “Common Shares” as used herein shall also mean such other securities or property as may become the subject of awards under this Plan, or may become subject to such awards, pursuant to an adjustment made under Section 7.

 

  4.2

Aggregate Share Limit. The maximum number of Common Shares that may be delivered pursuant to awards (including Adjusted Awards) under this Plan (the “Share Limit”) is equal to 58,000,000 Common Shares.

 

  4.3

Additional Share Limits. The following limits also apply with respect to awards granted under this Plan, other than Adjusted Awards. These limits are in addition to, not in lieu of, the aggregate Share Limit in Section 4.2.

 

  (a)

The maximum number of Common Shares that may be delivered pursuant to options qualified as incentive stock options granted under this Plan is 10,000,000 shares.

 

  (b)

Awards that are granted under this Plan during any one calendar year to any person who, on the grant date of the award, is a non-employee director are subject to the limits of this Section 4.3(b). The maximum number of Common Shares subject to those awards that are granted under this Plan during any one calendar year to an individual who, on the grant date of the award, is a non-employee director is the number of shares that produce a grant date fair value for the award that, when combined with the grant date fair value of any other awards granted under this Plan during that same calendar year to that individual in his or her capacity as a non-employee director, is $400,000; provided that this limit is $600,000 as to (1) a non-employee director who is serving as the independent Chair of the Board or as a lead independent director at the time the applicable grant is made or (2) any new non-employee director for the calendar year in which the non-employee director is first elected or appointed to the Board; and provided, further, that the limits set forth in this Section 4.3(b) shall not apply to retainer and meeting fees that the non-employee director may elect to receive in the form of either cash or shares. For purposes of this Section 4.3(b), a “non-employee director” is an individual who, on the grant date of the award, is a member of the Board who is not then an officer or employee of the Corporation or one of its Subsidiaries. For purposes of this Section 4.3(b), “grant date fair value” means the value of the award as of the date of grant of the award and as determined using the equity award valuation principles applied in the Corporation’s financial reporting. The limits of this Section 4.3(b) do not apply to, and shall be determined without taking into account, any award granted to an individual who, on the grant date of the award, is an officer or employee of the Corporation or one of its Subsidiaries. The limits of this Section 4.3(b) apply on an individual basis and not on an aggregate basis to all non-employee directors as a group.

 

  4.4

Share-Limit Counting Rules. The Share Limit shall be subject to the following provisions of this Section 4.4:

 

  (a)

Shares that are subject to or underlie awards granted under this Plan (including Adjusted Awards) which expire or for any reason are cancelled or terminated, are forfeited, fail to vest, or for any other reason are not paid or delivered under this Plan shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

  (b)

To the extent that Common Shares are delivered pursuant to the exercise of a SAR or stock option (including Adjusted Awards that are SARs or stock options) granted under this Plan, the number of underlying shares which are actually issued in payment of the award shall be counted

 

2025 Performance Incentive Plan 4

  against the Share Limit. (For purposes of clarity, if a SAR relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 15,000 shares shall be counted against the Share Limit with respect to such exercise.)

 

  (c)

Shares that are exchanged by a participant or withheld by the Corporation as full or partial payment in connection with any award granted under this Plan (including Adjusted Awards), as well as any shares exchanged by a participant or withheld by the Corporation or one of its Subsidiaries to satisfy the tax withholding obligations related to any award granted under this Plan (including any Adjusted Awards), shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

 

  (d)

To the extent that an award granted under this Plan (including any Adjusted Awards) is settled in cash or a form other than Common Shares, the shares that would have been delivered had there been no such cash or other settlement shall not be counted against the Share Limit and shall be available for subsequent awards under this Plan.

 

  (e)

In the event that Common Shares are delivered in respect of a dividend equivalent right granted under this Plan (including any Adjusted Awards), the number of shares delivered with respect to the award shall be counted against the Share Limit. (For purposes of clarity, if 1,000 dividend equivalent rights are granted and outstanding when the Corporation pays a dividend, and 50 shares are delivered in payment of those rights with respect to that dividend, 50 shares shall be counted against the Share Limit). Except as otherwise provided by the Administrator, shares delivered in respect of dividend equivalent rights shall not count against any individual award limit under this Plan other than the aggregate Share Limit.

 

  (f)

The Corporation may not increase the Share Limit by repurchasing Common Shares on the market (by using cash received through the exercise of stock options or otherwise).

Refer to Section 8.10 for application of the share limits of this Plan, including the limits in Sections 4.2 and 4.3, with respect to certain assumed awards. Each of the numerical limits and references in Sections 4.2 and 4.3, and in this Section 4.4, is subject to adjustment as contemplated by Section 7 and Section 8.10.

 

  4.5

No Fractional Shares; Minimum Issue. Unless otherwise expressly provided by the Administrator, no fractional shares shall be delivered under this Plan. The Administrator may pay cash in lieu of any fractional shares in settlements of awards under this Plan. The Administrator may from time to time impose a limit (of not greater than 100 shares) on the minimum number of shares that may be purchased or exercised as to awards (or any particular award) granted under this Plan unless (as to any particular award) the total number purchased or exercised is the total number at the time available for purchase or exercise under the award.

 

5.

AWARDS

 

  5.1

Type and Form of Awards. The Administrator shall determine the type or types of award(s) to be made to each selected Eligible Person. Awards may be granted singly, in combination or in tandem. Awards also may be made in combination or in tandem with, in replacement of, as alternatives to, or as the payment form for grants or rights under any other employee or compensation plan of the Corporation or one of its Subsidiaries. The types of awards that may be granted under this Plan are:

 

  5.1.1

Stock Options. A stock option is the grant of a right to purchase a specified number of Common Shares during a specified period as determined by the Administrator. An option may be intended as an incentive stock option within the meaning of Section 422 of the Code (an “ISO”) or a nonqualified stock option (an option not intended to be an ISO). The agreement evidencing the grant of an option will indicate if the option is intended as an ISO; otherwise it will be deemed to be a nonqualified stock option. The maximum term of each option (ISO or nonqualified) shall be ten (10) years. The per share exercise price for each option shall be not less than 100% of the fair

 

2025 Performance Incentive Plan 5

  market value of a Common Share on the date of grant of the option, except in the case of Adjusted Awards. When an option is exercised, the exercise price for the shares to be purchased shall be paid in full in cash or such other method permitted by the Administrator consistent with Section 5.4.

 

  5.1.2

Additional Rules Applicable to ISOs. To the extent that the aggregate fair market value (determined at the time of grant of the applicable option) of shares with respect to which ISOs first become exercisable by a participant in any calendar year exceeds $100,000, taking into account both Common Shares subject to ISOs under this Plan and shares subject to ISOs under all other plans of the Corporation or one of its Subsidiaries (or any parent or predecessor corporation to the extent required by and within the meaning of Section 422 of the Code and the regulations promulgated thereunder), such options shall be treated as nonqualified stock options. In reducing the number of options treated as ISOs to meet the $100,000 limit, the most recently granted options shall be reduced first. To the extent a reduction of simultaneously granted options is necessary to meet the $100,000 limit, the Administrator may, in the manner and to the extent permitted by law, designate which Common Shares are to be treated as shares acquired pursuant to the exercise of an ISO. ISOs may only be granted to employees of the Corporation or one of its subsidiaries (for this purpose, the term “subsidiary” is used as defined in Section 424(f) of the Code, which generally requires an unbroken chain of ownership of at least 50% of the total combined voting power of all classes of stock of each subsidiary in the chain beginning with the Corporation and ending with the subsidiary in question). No ISO may be granted to any person who, at the time the option is granted, owns (or is deemed to own under Section 424(d) of the Code) outstanding Common Shares possessing more than 10% of the total combined voting power of all classes of stock of the Corporation, unless the exercise price of such option is at least 110% of the fair market value of the stock subject to the option and such option by its terms is not exercisable after the expiration of five years from the date such option is granted. If an otherwise-intended ISO fails to meet the applicable requirements of Section 422 of the Code, the option shall be a nonqualified stock option.

 

  5.1.3

Share Appreciation Rights. A share appreciation right or “SAR” is a right to receive a payment, in cash and/or Common Shares, equal to the excess of the fair market value of a specified number of Common Shares on the date the SAR is exercised over the “base price” of the award, which base price shall be set forth in the applicable award agreement and shall be not less than 100% of the fair market value of a Common Share on the date of grant of the SAR, except in the case of Adjusted Awards. The maximum term of a SAR shall be ten (10) years.

 

  5.1.4

Adjusted Awards. Notwithstanding anything in this Plan to the contrary, each Adjusted Award shall be subject to the terms and conditions of the equity compensation plan and award agreement to which such award was subject immediately prior to the Separation Effective Time (as defined in the Plan of Arrangement) subject to the adjustment of such award by the compensation committee of LGEC and the terms of the Employee Matters Agreement; provided that following the Separation Effective Time, each such Adjusted Award shall relate solely to Common Shares and shall be administered by the Administrator in accordance with the administrative procedures in effect under this Plan.

 

  5.1.5

Other Awards; Dividend Equivalent Rights. The other types of awards that may be granted under this Plan include: (a) stock bonuses, performance stock, stock units, phantom stock or similar rights to purchase or acquire shares, whether at a fixed or variable price (or no price) or fixed or variable ratio related to the Common Shares, and any of which may (but need not) be fully vested at grant or vest upon the passage of time, the occurrence of one or more events, the satisfaction of performance criteria or other conditions, or any combination thereof; or (b) cash awards. The types of cash awards that may be granted under this Plan include the opportunity to receive a payment for the achievement of one or more goals established by the Administrator, on such terms as the Administrator may provide, as well as discretionary cash awards. Dividend

 

2025 Performance Incentive Plan 6

  equivalent rights may be granted as a separate award or in connection with another award under this Plan; provided, however, that dividend equivalent rights may not be granted as to a stock option or SAR granted under this Plan. In addition, any dividends and/or dividend equivalents as to the portion of an award that is subject to unsatisfied vesting requirements will be subject to termination and forfeiture to the same extent as the corresponding portion of the award to which they relate in the event the applicable vesting requirements are not satisfied.

 

  5.2

Award Agreements. Each award (other than Adjusted Awards) shall be evidenced by a written or electronic award agreement or notice in a form approved by the Administrator (an “award agreement”), and, in each case and if required by the Administrator, executed or otherwise electronically accepted by the recipient of the award in such form and manner as the Administrator may require.

 

  5.3

Deferrals and Settlements. Payment of awards may be in the form of cash, Common Shares, other awards or combinations thereof as the Administrator shall determine, and with such restrictions (if any) as it may impose. The Administrator may also require or permit participants to elect to defer the issuance of shares or the settlement of awards in cash under such rules and procedures as it may establish under this Plan. The Administrator may also provide that deferred settlements include the payment or crediting of interest or other earnings on the deferral amounts, or the payment or crediting of dividend equivalents where the deferred amounts are denominated in shares.

 

  5.4

Consideration for Common Shares or Awards. The purchase price (if any) for any award granted under this Plan or the Common Shares to be delivered pursuant to an award, as applicable, may be paid by means of any lawful consideration as determined by the Administrator, including, without limitation, one or a combination of the following methods:

 

  •  

services rendered by the recipient of such award;

 

  •  

cash, check payable to the order of the Corporation, or electronic funds transfer;

 

  •  

notice and third party payment in such manner as may be authorized by the Administrator;

 

  •  

the delivery of previously owned Common Shares;

 

  •  

by a reduction in the number of shares otherwise deliverable pursuant to the award; or

 

  •  

subject to such procedures as the Administrator may adopt, pursuant to a “cashless exercise” with a third party who provides financing for the purposes of (or who otherwise facilitates) the purchase or exercise of awards.

In no event shall any shares newly-issued by the Corporation be issued for less than the minimum lawful consideration for such shares or for consideration other than consideration permitted by applicable law. Common Shares used to satisfy the exercise price of an option shall be valued at their fair market value. The Corporation will not be obligated to deliver any shares unless and until it receives full payment of the exercise or purchase price therefor and any related withholding obligations under Section 8.5 and any other conditions to exercise or purchase have been satisfied. Unless otherwise expressly provided in the applicable award agreement, the Administrator may at any time eliminate or limit a participant’s ability to pay any purchase or exercise price of any award or shares by any method other than cash payment to the Corporation.

 

  5.5

Definition of Fair Market Value. For purposes of this Plan, “fair market value” shall mean, unless otherwise determined or provided by the Administrator in the circumstances, the closing price (in regular trading) of a Common Share as reported on the composite tape for securities listed on the New York Stock Exchange (the “Exchange”) for the date in question or, if no sales of Common Shares were made on the Exchange on that date, the closing price (in regular trading) of a Common Share as reported on said composite tape for the next preceding day on which sales of Common Shares were made on the Exchange. The Administrator may, however, provide with respect to one or more awards that the fair market value shall equal the closing price (in regular trading) of a Common Share as reported on the composite tape for securities listed on the Exchange on the last trading day preceding

 

2025 Performance Incentive Plan 7

  the date in question or the average of the high and low trading prices of a Common Share as reported on the composite tape for securities listed on the Exchange for the date in question or the most recent trading day. If the Common Shares are no longer listed or are no longer actively traded on the Exchange as of the applicable date, the fair market value of the Common Shares shall be the value as reasonably determined by the Administrator for purposes of the award in the circumstances. The Administrator also may adopt a different methodology for determining fair market value with respect to one or more awards if a different methodology is necessary or advisable to secure any intended favorable tax, legal or other treatment for the particular award(s) (for example, and without limitation, the Administrator may provide that fair market value for purposes of one or more awards will be based on an average of closing prices (or the average of high and low daily trading prices) for a specified period preceding the relevant date).

 

  5.6

Transfer Restrictions.

 

  5.6.1

Limitations on Exercise and Transfer. Unless otherwise expressly provided in (or pursuant to) this Section 5.6 or required by applicable law: (a) all awards are non-transferable and shall not be subject in any manner to sale, transfer, anticipation, alienation, assignment, pledge, encumbrance or charge; (b) awards shall be exercised only by the participant; and (c) amounts payable or shares issuable pursuant to any award shall be delivered only to (or for the account of) the participant.

 

  5.6.2

Exceptions. The Administrator may permit awards to be exercised by and paid to, or otherwise transferred to, other persons or entities pursuant to such conditions and procedures, including limitations on subsequent transfers, as the Administrator may, in its sole discretion, establish in writing. Any permitted transfer shall be subject to compliance with applicable federal and state securities laws and shall not be for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting interests are held by the Eligible Person or by the Eligible Person’s family members).

 

  5.6.3

Further Exceptions to Limits on Transfer. The exercise and transfer restrictions in Section 5.6.1 shall not apply to:

 

  (a)

transfers to the Corporation (for example, in connection with the expiration or termination of the award),

 

  (b)

the designation of a beneficiary to receive benefits in the event of the participant’s death or, if the participant has died, transfers to or exercise by the participant’s beneficiary, or, in the absence of a validly designated beneficiary, transfers by will or the laws of descent and distribution,

 

  (c)

subject to any applicable limitations on ISOs, transfers to a family member (or former family member) pursuant to a domestic relations order if received by the Administrator,

 

  (d)

if the participant has suffered a disability, permitted transfers or exercises on behalf of the participant by his or her legal representative, or

 

  (e)

the authorization by the Administrator of “cashless exercise” procedures with third parties who provide financing for the purpose of (or who otherwise facilitate) the exercise of awards consistent with applicable laws and any limitations imposed by the Administrator.

 

  5.7

International Awards. One or more awards may be granted to Eligible Persons who provide services to the Corporation or one of its Subsidiaries outside of the United States. Any awards granted to such persons may be granted pursuant to the terms and conditions of any applicable sub-plans, if any, appended to this Plan and approved by the Administrator from time to time. The awards so granted need not comply with other specific terms of this Plan, provided that shareholder approval of any deviation from the specific terms of this Plan is not required by applicable law or any applicable listing agency.

 

2025 Performance Incentive Plan 8

6.

EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE ON AWARDS

 

  6.1

General. The Administrator shall establish the effect (if any) of a termination of employment or service on the rights and benefits under each award under this Plan and in so doing may make distinctions based upon, inter alia, the cause of termination and type of award. If the participant is not an employee of the Corporation or one of its Subsidiaries, is not a member of the Board, and provides other services to the Corporation or one of its Subsidiaries, the Administrator shall be the sole judge for purposes of this Plan (unless a contract or the award otherwise provides) of whether the participant continues to render services to the Corporation or one of its Subsidiaries and the date, if any, upon which such services shall be deemed to have terminated.

 

  6.2

Events Not Deemed Terminations of Employment. Unless the express policy of the Corporation or one of its Subsidiaries, or the Administrator, otherwise provides, or except as otherwise required by applicable law, the employment relationship shall not be considered terminated in the case of (a) sick leave, (b) military leave, or (c) any other leave of absence authorized by the Corporation or one of its Subsidiaries, or the Administrator; provided that, unless reemployment upon the expiration of such leave is guaranteed by contract or law or the Administrator otherwise provides, such leave is for a period of not more than three months. In the case of any employee of the Corporation or one of its Subsidiaries on an approved leave of absence, continued vesting of the award while on leave from the employ of the Corporation or one of its Subsidiaries may be suspended until the employee returns to service, unless the Administrator otherwise provides or applicable law otherwise requires. In no event shall an award be exercised after the expiration of any applicable maximum term of the award.

 

  6.3

Effect of Change of Subsidiary Status. For purposes of this Plan and any award, if an entity ceases to be a Subsidiary of the Corporation a termination of employment or service shall be deemed to have occurred with respect to each Eligible Person in respect of such Subsidiary who does not continue as an Eligible Person in respect of the Corporation or another Subsidiary that continues as such after giving effect to the transaction or other event giving rise to the change in status unless the Subsidiary that is sold, spun-off or otherwise divested (or its successor or a direct or indirect parent of such Subsidiary or successor) assumes the Eligible Person’s award(s) in connection with such transaction.

 

7.

ADJUSTMENTS; ACCELERATION

 

  7.1

Adjustments.

 

  (a)

Subject to Section 7.2, upon (or, as may be necessary to effect the adjustment, immediately prior to): any reclassification, recapitalization, stock split (including a stock split in the form of a stock dividend) or reverse stock split; any merger, combination, consolidation, conversion or other reorganization; any spin-off, split-up, or similar extraordinary dividend distribution in respect of the Common Shares; or any exchange of Common Shares or other securities of the Corporation, or any similar, unusual or extraordinary corporate transaction in respect of the Common Shares; then the Administrator shall equitably and proportionately adjust (1) the number and type of Common Shares (or other securities) that thereafter may be made the subject of awards (including the specific share limits, maximums and numbers of shares set forth elsewhere in this Plan), (2) the number, amount and type of Common Shares (or other securities or property) subject to any outstanding awards, (3) the grant, purchase, or exercise price (which term includes the base price of any SAR or similar right) of any outstanding awards, and/or (4) the securities, cash or other property deliverable upon exercise or payment of any outstanding awards, in each case to the extent necessary to preserve (but not increase) the level of incentives intended by this Plan and the then-outstanding awards.

 

  (b)

Without limiting the generality of Section 3.4, any good faith determination by the Administrator as to whether an adjustment is required in the circumstances pursuant to this Section 7.1, and the extent and nature of any such adjustment, shall be conclusive and binding on all persons.

 

2025 Performance Incentive Plan 9

  7.2

Corporate Transactions - Assumption and Termination of Awards.

 

  (a)

Upon any event in which the Corporation does not survive, or does not survive as a public company in respect of its Common Shares (including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Corporation, in any case in connection with which the Corporation does not survive or does not survive as a public company in respect of its Common Shares), then the Administrator may make provision for a cash payment in settlement of, or for the termination, assumption, substitution or exchange of any or all outstanding awards or the cash, securities or property deliverable to the holder of any or all outstanding awards, based upon, to the extent relevant under the circumstances, the distribution or consideration payable to holders of the Common Shares upon or in respect of such event. Upon the occurrence of any event described in the preceding sentence in connection with which the Administrator has made provision for the award to be terminated (and the Administrator has not made a provision for the substitution, assumption, exchange or other continuation or settlement of the award): (1) unless otherwise provided in the applicable award agreement, each then-outstanding option and SAR shall become fully vested, and each other award granted under this Plan that is then outstanding shall become payable to the holder of such award (with any performance goals applicable to the award in each case being deemed met, unless otherwise provided in the award agreement, at the “target” performance level); and (2) each award (including any award or portion thereof that, by its terms, does not accelerate and vest in the circumstances) shall terminate upon the related event; provided that the holder of an option or SAR shall be given reasonable advance notice of the impending termination and a reasonable opportunity to exercise his or her outstanding vested options and SARs (after giving effect to any accelerated vesting required in the circumstances) in accordance with their terms before the termination of such awards (except that in no case shall more than ten days’ notice of the impending termination be required and any acceleration of vesting and any exercise of any portion of an award that is so accelerated may be made contingent upon the actual occurrence of the event).

 

  (b)

Without limiting the preceding paragraph, in connection with any event referred to in the preceding paragraph or any change in control event defined in any applicable award agreement, the Administrator may, in its discretion, provide for the accelerated vesting of any award or awards as and to the extent determined by the Administrator in the circumstances.

 

  (c)

For purposes of this Section 7.2, an award shall be deemed to have been “assumed” if (without limiting other circumstances in which an award is assumed) the award continues after an event referred to above in this Section 7.2, and/or is assumed and continued by the surviving entity following such event (including, without limitation, an entity that, as a result of such event, owns the Corporation or all or substantially all of the Corporation’s assets directly or through one or more subsidiaries (an “Acquiror”)), and confers the right to purchase or receive, as applicable and subject to vesting and the other terms and conditions of the award, for each Common Share subject to the award immediately prior to the event, the consideration (whether cash, shares, or other securities or property) received in the event by the shareholders of the Corporation for each Common Share sold or exchanged in such event (or the consideration received by a majority of the shareholders participating in such event if the shareholders were offered a choice of consideration); provided, however, that if the consideration offered for a Common Share in the event is not solely the ordinary common stock of a successor corporation or an Acquiror, the Administrator may provide for the consideration to be received upon exercise or payment of the award, for each share subject to the award, to be solely ordinary common stock of the successor corporation or an Acquiror equal in fair market value to the per share consideration received by the shareholders participating in the event.

 

2025 Performance Incentive Plan 10

  (d)

The Administrator may adopt such valuation methodologies for outstanding awards as it deems reasonable in the event of a cash or property settlement and, in the case of options, SARs or similar rights, but without limitation on other methodologies, may base such settlement solely upon the excess if any of the per share amount payable upon or in respect of such event over the exercise or base price of the award. In the case of an option, SAR or similar right as to which the per share amount payable upon or in respect of such event is less than or equal to the exercise or base price of the award, the Administrator may terminate such award in connection with an event referred to in this Section 7.2 without any payment in respect of such award.

 

  (e)

In any of the events referred to in this Section 7.2, the Administrator may take such action contemplated by this Section 7.2 prior to such event (as opposed to on the occurrence of such event) to the extent that the Administrator deems the action necessary to permit the participant to realize the benefits intended to be conveyed with respect to the underlying shares. Without limiting the generality of the foregoing, the Administrator may deem an acceleration and/or termination to occur immediately prior to the applicable event and, in such circumstances, will reinstate the original terms of the award if an event giving rise to an acceleration and/or termination does not occur.

 

  (f)

Without limiting the generality of Section 3.4, any good faith determination by the Administrator pursuant to its authority under this Section 7.2 shall be conclusive and binding on all persons.

 

  (g)

The Administrator may override the provisions of this Section 7.2 by express provision in the award agreement and may accord any Eligible Person a right to refuse any acceleration, whether pursuant to the award agreement or otherwise, in such circumstances as the Administrator may approve. The portion of any ISO accelerated in connection with an event referred to in this Section 7.2 (or such other circumstances as may trigger accelerated vesting of the award) shall remain exercisable as an ISO only to the extent the applicable $100,000 limitation on ISOs is not exceeded. To the extent exceeded, the accelerated portion of the option shall be exercisable as a nonqualified stock option under the Code.

 

  7.3

Definition of Change in Control. With respect to a particular award granted under this Plan, a “Change in Control” shall be deemed to have occurred as of the first day, after the date of grant of the particular award, that any one or more of the following conditions shall have been satisfied:

 

  (a)

The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a “Person”)) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of either (1) the then-outstanding Common Shares of the Corporation (the “Outstanding Corporation Common Shares”) or (2) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that, for purposes of this definition, the following acquisitions shall not constitute a Change in Control Event; (A) any acquisition directly from the Corporation, (B) any acquisition by the Corporation, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any affiliate of the Corporation or a successor, or (D) any acquisition by any entity pursuant to a transaction that complies with Sections (c)(1), (2) and (3) below;

 

  (b)

Individuals who, as of the Effective Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least two-thirds of the directors then comprising the Incumbent Board (including for these purposes, the new members whose election or nomination was so approved, without counting the member and his predecessor twice) shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption

 

2025 Performance Incentive Plan 11

  of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

 

  (c)

Consummation of a reorganization, merger, statutory share exchange or consolidation or similar corporate transaction involving the Corporation or any of its Subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity by the Corporation or any of its Subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Corporation Common Shares and the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an Acquiror, as defined above) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Corporation Common Shares and the Outstanding Corporation Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or an Acquiror or any employee benefit plan (or related trust) of the Corporation or such entity resulting from such Business Combination or Acquiror) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that the ownership in excess of 30% existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors or trustees of the entity resulting from such Business Combination or an Acquiror were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

 

  (d)

Approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation other than in the context of a transaction that does not constitute a Change in Control Event under clause (c) above.

 

  7.4

Section 409A. Notwithstanding any other provision of this Plan or any award agreement, with respect to any award that constitutes “nonqualified deferred compensation” within the meaning of Section 409A of the Code, a Change in Control or any other event shall not constitute a settlement or distribution event with respect to such award, or a situation that otherwise changes the timing of settlement or distribution of such award, unless such effect (and the existence of the provision resulting in such effect) would not result in taxation under Section 409A of the Code to the holder of the applicable award. For the avoidance of doubt, this paragraph shall have no bearing on whether an award vests pursuant to the terms of this Plan or the applicable award agreement.

 

8.

OTHER PROVISIONS

 

  8.1

Compliance with Laws. This Plan, the granting and vesting of awards under this Plan, the offer, issuance and delivery of Common Shares, and/or the payment of money under this Plan or under awards are subject to compliance with all applicable federal, state, local and foreign laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Corporation, be necessary or advisable in connection therewith. The person acquiring any securities under this Plan will, if requested by the Corporation or one of its Subsidiaries, provide such assurances and representations to the Corporation or one of its Subsidiaries as the Administrator may deem necessary or desirable to assure compliance with all applicable legal and accounting requirements.

 

2025 Performance Incentive Plan 12

  8.2

No Rights to Award. No person shall have any claim or rights to be granted an award (or additional awards, as the case may be) under this Plan, subject to any express contractual rights (set forth in a document other than this Plan) to the contrary.

 

  8.3

No Employment/Service Contract. Nothing contained in this Plan (or in any other documents under this Plan or in any award) shall confer upon any Eligible Person or other participant any right to continue in the employ or other service of the Corporation or one of its Subsidiaries, constitute any contract or agreement of employment or other service or affect an employee’s status as an employee at will, nor shall interfere in any way with the right of the Corporation or one of its Subsidiaries to change a person’s compensation or other benefits, or to terminate his or her employment or other service, with or without cause. Nothing in this Section 8.3, however, is intended to adversely affect any express independent right of such person under a separate employment or service contract other than an award agreement.

 

  8.4

Plan Not Funded. Awards payable under this Plan shall be payable in shares or from the general assets of the Corporation, and no special or separate reserve, fund or deposit shall be made to assure payment of such awards. No participant, beneficiary or other person shall have any right, title or interest in any fund or in any specific asset (including Common Shares, except as expressly otherwise provided) of the Corporation or one of its Subsidiaries by reason of any award hereunder. Neither the provisions of this Plan (or of any related documents), nor the creation or adoption of this Plan, nor any action taken pursuant to the provisions of this Plan shall create, or be construed to create, a trust of any kind or a fiduciary relationship between the Corporation or one of its Subsidiaries and any participant, beneficiary or other person. To the extent that a participant, beneficiary or other person acquires a right to receive payment pursuant to any award hereunder, such right shall be no greater than the right of any unsecured general creditor of the Corporation.

 

  8.5

Tax Withholding. Upon any exercise, vesting, or payment of any award, or upon the disposition of Common Shares acquired pursuant to the exercise of an ISO prior to satisfaction of the holding period requirements of Section 422 of the Code, or upon any other tax withholding event with respect to any award, arrangements satisfactory to the Corporation shall be made to provide for any taxes the Corporation or any of its Subsidiaries may be required or permitted to withhold with respect to such award event or payment. Such arrangements may include (but are not limited to) any one of (or a combination of) the following:

 

  (a)

The Corporation or one of its Subsidiaries shall have the right to require the participant (or the participant’s personal representative or beneficiary, as the case may be) to pay or provide for payment of the amount of any taxes which the Corporation or one of its Subsidiaries may be required or permitted to withhold with respect to such award event or payment.

 

  (b)

The Corporation or one of its Subsidiaries shall have the right to deduct from any amount otherwise payable in cash (whether related to the award or otherwise) to the participant (or the participant’s personal representative or beneficiary, as the case may be) the amount of any taxes which the Corporation or one of its Subsidiaries may be required or permitted to withhold with respect to such award event or payment.

 

  (c)

In any case where a tax is required to be withheld in connection with the delivery of Common Shares under this Plan, the Administrator may in its sole discretion (subject to Section 8.1) require or grant (either at the time of the award or thereafter) to the participant the right to elect, pursuant to such rules and subject to such conditions as the Administrator may establish, that the Corporation reduce the number of shares to be delivered by (or otherwise reacquire) the appropriate number of shares, valued in a consistent manner at their fair market value or at the sales price in accordance with authorized procedures for cashless exercises, necessary to satisfy the applicable withholding obligation on exercise, vesting or payment.

 

2025 Performance Incentive Plan 13

  8.6

Effective Date, Termination and Suspension, Amendments.

 

  8.6.1

Effective Date. This Plan is effective as of the Effective Date. Prior to the Effective Date, this Plan was approved by the Board, subject to the approval of LGEC, as the sole shareholder of the Corporation and by the holders of Class A common stock of LGEC. Unless earlier terminated by the Board and subject to any extension that may be approved by shareholders, this Plan shall terminate at the close of business on the day before the tenth anniversary of the Effective Date. After the termination of this Plan either upon such stated termination date or its earlier termination by the Board, no additional awards may be granted under this Plan, but previously granted awards (and the authority of the Administrator with respect thereto, including the authority to amend such awards) shall remain outstanding in accordance with their applicable terms and conditions and the terms and conditions of this Plan.

 

  8.6.2

Board Authorization. The Board may, at any time, terminate or, from time to time, amend, modify or suspend this Plan, in whole or in part. No awards may be granted during any period that the Board suspends this Plan.

 

  8.6.3

Shareholder Approval. To the extent then required by applicable law or deemed necessary or advisable by the Board, any amendment to this Plan shall be subject to shareholder approval.

 

  8.6.4

Amendments to Awards. Without limiting any other express authority of the Administrator under (but subject to) the express limits of this Plan, the Administrator by agreement or resolution may waive conditions of or limitations on awards to participants that the Administrator in the prior exercise of its discretion has imposed, without the consent of a participant, and (subject to the requirements of Sections 3.2 and 8.6.5) may make other changes to the terms and conditions of awards. Any amendment or other action that would constitute a repricing of an award is subject to the no-repricing provision of Section 3.3.

 

  8.6.5

Limitations on Amendments to Plan and Awards. No amendment, suspension or termination of this Plan or amendment of any outstanding award agreement shall, without written consent of the participant, affect in any manner materially adverse to the participant any rights or benefits of the participant or obligations of the Corporation under any award granted under this Plan prior to the effective date of such change. Changes, settlements and other actions contemplated by Section 7 shall not be deemed to constitute changes or amendments for purposes of this Section 8.6.

 

  8.7

Privileges of Share Ownership. Except as otherwise expressly authorized by the Administrator, a participant shall not be entitled to any privilege of share ownership as to any Common Shares not actually delivered to and held of record by the participant. Except as expressly required by Section 7.1 or otherwise expressly provided by the Administrator, no adjustment will be made for dividends or other rights as a shareholder for which a record date is prior to such date of delivery.

 

  8.8

Governing Law; Severability.

 

  8.8.1

Choice of Law. This Plan, the awards, all documents evidencing awards and all other related documents shall be governed by, and construed in accordance with the laws of the State of California, except to the extent that the laws of British Columbia are applicable as the jurisdiction of incorporation of the Corporation, in each case notwithstanding any conflict of law provision of such jurisdiction to the contrary.

 

  8.8.2

Severability. If a court of competent jurisdiction holds any provision invalid and unenforceable, the remaining provisions of this Plan shall continue in effect.

 

  8.9

Captions. Captions and headings are given to the sections and subsections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of this Plan or any provision thereof.

 

  8.10

Stock-Based Awards in Substitution for Stock Options or Awards Granted by Other Corporation. Awards may be granted to Eligible Persons in substitution for or in connection with an assumption of

 

2025 Performance Incentive Plan 14

  employee stock options, SARs or other stock-based awards granted by other entities to persons who are or who will become Eligible Persons in respect of the Corporation or one of its Subsidiaries, in connection with a distribution, merger or other reorganization by or with the granting entity or an affiliated entity, or the acquisition by the Corporation or one of its Subsidiaries, directly or indirectly, of all or a substantial part of the stock or assets of the employing entity. The awards so granted need not comply with other specific terms of this Plan, provided the awards reflect adjustments giving effect to the assumption or substitution consistent with any conversion applicable to the Common Shares (or the securities otherwise subject to the award) in the transaction and any change in the issuer of the security. Any shares that are delivered and any awards that are granted by, or become obligations of, the Corporation, as a result of the assumption by the Corporation of, or in substitution for, outstanding awards previously granted or assumed by an acquired company (or previously granted or assumed by a predecessor employer (or direct or indirect parent thereof) in the case of persons that become employed by the Corporation or one of its Subsidiaries in connection with a business or asset acquisition or similar transaction) shall not be counted against the Share Limit or other limits on the number of shares available for issuance under this Plan.

 

  8.11

Non-Exclusivity of Plan. Nothing in this Plan shall limit or be deemed to limit the authority of the Board or the Administrator to grant awards or authorize any other compensation, with or without reference to the Common Shares, under any other plan or authority.

 

  8.12

No Corporate Action Restriction. The existence of this Plan, the award agreements and the awards granted hereunder shall not limit, affect, or restrict in any way the right or power of the Corporation or any Subsidiary (or any of their respective shareholders, boards of directors or committees thereof (or any subcommittees), as the case may be) to make or authorize: (a) any adjustment, recapitalization, reorganization or other change in the capital structure or business of the Corporation or any Subsidiary, (b) any merger, amalgamation, consolidation or change in the ownership of the Corporation or any Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior preference stock ahead of or affecting the capital stock (or the rights thereof) of the Corporation or any Subsidiary, (d) any dissolution or liquidation of the Corporation or any Subsidiary, (e) any sale or transfer of all or any part of the assets or business of the Corporation or any Subsidiary, (f) any other award, grant, or payment of incentives or other compensation under any other plan or authority (or any other action with respect to any benefit, incentive or compensation), or (g) any other corporate act or proceeding by the Corporation or any Subsidiary. No participant, beneficiary or any other person shall have any claim under any award or award agreement against any member of the Board or the Administrator, or the Corporation or any employees, officers or agents of the Corporation or any Subsidiary, as a result of any such action. Awards need not be structured so as to be deductible for tax purposes.

 

  8.13

Other Company Benefit and Compensation Programs. Payments and other benefits received by a participant under an award made pursuant to this Plan shall not be deemed a part of a participant’s compensation for purposes of the determination of benefits under any other employee welfare or benefit plans or arrangements, if any, provided by the Corporation or any Subsidiary, except where the Administrator expressly otherwise provides or authorizes in writing. Awards under this Plan may be made in addition to, in combination with, as alternatives to or in payment of grants, awards or commitments under any other plans, arrangements or authority of the Corporation or its Subsidiaries.

 

  8.14

Clawback Policy. The awards granted under this Plan are subject to the terms of the Corporation’s recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of awards or any Common Shares or other cash or property received with respect to the awards (including any value received from a disposition of the shares acquired upon payment of the awards).

 

  8.15

Section 409A. This Plan and the awards hereunder are intended to comply with the requirements of Section 409A of the Code or an exemption or exclusion therefrom and, with respect to amounts that are subject to Section 409A of the Code, it is intended that this Plan be administered in all respects in

 

2025 Performance Incentive Plan 15

  accordance with Section 409A of the Code. Each payment under any award shall be treated as a separate payment for purposes of Section 409A of the Code. In no event may a participant, directly or indirectly, designate the calendar year of any payment to be made under any award that constitutes nonqualified deferred compensation subject to Section 409A of the Code. Notwithstanding any other provision of this Plan or any award agreement to the contrary, if a participant is a “specified employee” within the meaning of Section 409A of the Code (as determined in accordance with the methodology established by the Corporation), amounts that constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code that otherwise would be payable by reason of such participant’s “separation from service” within the meaning of Section 409A of the Code during the six-month period immediately following such separation from service shall instead be paid or provided on the first business day following the date that is six months following the participant’s separation from service or any earlier date permitted by Section 409A of the Code.

 

2025 Performance Incentive Plan 16

Exhibit 10.7

EMPLOYMENT AGREEMENT

This employment agreement (this “Agreement”) by and between Lions Gate Entertainment Corp. (“Lions Gate”) and Michael Burns (“Burns”) is entered into as of December 18, 2020. Lions Gate and Burns agree that as of the Effective Date (as defined below), the terms of this Agreement shall replace and supersede the amended and restated employment agreement entered into as of October 30, 2012 and subsequently amended as of November 3, 2016, between Burns and Lions Gate (the “Prior Agreement”).

This Agreement relates to the terms and conditions of Burns’ employment with Lions Gate for the term specified herein.

The parties hereby agree as follows:

1. Employment. Lions Gate hereby employs Burns to continue to serve in the capacity of Vice Chairman of Lions Gate on the terms and conditions set forth herein. Burns shall have such powers and authority with respect to the management of Lions Gate consistent with his position hereunder as shall be determined by the Chief Executive Officer of Lions Gate, currently Jon Feltheimer.

2. Term. Burns’ employment term under this Agreement shall commence on December 18, 2020 (the “Effective Date”) and continue through and including October 30, 2023 (the “Expiration Date”), subject to early termination as provided in this Agreement (the “Term”). If the Term has not previously terminated, Lions Gate shall have the right, in its sole discretion, to extend the Term by one (1) additional year (so that the new Expiration Date would be October 30, 2024) by providing written notice to Burns of its decision to extend the Term no later than four (4) months before the Expiration Date.

Moreover, so long as this Agreement shall continue in effect, Employee shall devote Employee’s full business time, energy and ability exclusively to the business, affairs and interests of the Company and matters related thereto, shall use Employee’s best efforts and abilities to promote the Company’s interests, and shall perform the services contemplated by this Agreement in accordance with policies established by the Company. As long as Employee’s meaningful business time is devoted to the Company, Employee may devote a reasonable amount of time to management of personal investments and charitable, political and civic activities, so long as these activities do not conflict with the Company’s interests or otherwise interfere with Employee’s performance under this Agreement (including devotion of time to those entities listed in Exhibit A-2, attached hereto).

3. Base Salary. Lions Gate shall pay Burns an annual fixed salary of US$1,000,000 from the Effective Date through the end of the Term (“Base Salary”) payable in equal installments in accordance with Lions Gate’s standard payroll practices.

4. Discretionary Annual Bonus.

(a) Bonus Opportunity. During the Term, Burns shall be eligible to receive a discretionary annual bonus (the “Discretionary Bonus”) based on Lions Gate’s fiscal year. The Discretionary Bonus shall have a target of seventy-five percent (75%) of Burns’ Base Salary. The Compensation Committee (“Compensation Committee”) of Lions Gate’s Board of Directors (the “Board”) shall establish performance criteria upon which the determination of the Discretionary Bonus amount, if any, shall be made, such criteria to be established at the beginning of the applicable fiscal year. The Discretionary Bonus (or portion thereof if either Section 4(b) or 4(c) below applies), if any, that is payable in cash shall be payable in a timely manner, but in any event when bonuses, if any, are generally given to Lions Gate’s other senior-level employees and in all events within the “short-term deferral” period provided under Treasury Regulation Section 1.409A-1(a)(4).

(b) Equity Payment of Bonus Above $1.5 Million. In the event that the total Discretionary Bonus awarded to Burns for a given fiscal year is greater than one million five hundred thousand dollars (US$1,500,000), the Compensation Committee may provide that all or a portion of the total amount of such Discretionary Bonus that is greater than one million five hundred thousand dollars (US$1,500,000) will be paid in the form of an award of Lions Gate common shares (with the number of shares subject to any such award to be determined as provided in Section 4(c) below). Any such shares awarded to Burns pursuant to this Section 4(b) shall be fully vested on the date on which the Compensation Committee determines whether any such Discretionary Bonus will be paid to Burns for such fiscal year (the date of any such determination by the Compensation Committee, the “Bonus Determination Date”).

(c) Determination of Equity Awarded for Bonus. If any portion of a Discretionary Bonus is to be paid to Burns in the form of an award of fully vested Lions Gate common shares pursuant to this Section 4, the number of shares subject to such award shall be determined by the Compensation Committee on the applicable Bonus Determination Date based on the per-share closing price (in regular trading) of Lions Gate’s common shares on that date, and such shares shall be paid to Burns at the same time cash bonuses for such fiscal year are paid as provided in Section 4(a).

5. Equity Award.

(a) Grants of SARs. Burns shall be granted an award of 1,500,000 share appreciation rights (the “SAR Award”) with respect to Lions Gate’s Class B non-voting common shares (the “Class B Shares”), with the per-share base price of the SAR Award to equal to the closing price (in regular trading) of a Class B Share on the New York Stock Exchange (“NYSE”) on the grant date of the award (the “Grant Date”) and the maximum term of the award to be 10 years. The SAR Award shall be evidenced by and subject to the terms of a share appreciation rights award agreement in the form generally then used by Lions Gate to evidence grants of share appreciation rights under Lions Gate’s stock incentive plan.

 

2

(b) Date of Vesting; Date Exercisable. The SAR Award is subject to both time-based and performance-based vesting requirements. Subject to Burns’ continued employment with Lions Gate (except as expressly provided in Section 10(b) or 10(c) below), the SAR Award shall vest and become exercisable in three equal annual installments on each of the first three anniversaries of the Grant Date; provided, however, that no portion of the SAR Award shall be vested or exercisable prior to the date on which the volume-weighted average of the closing prices of the Class B Shares over a period of thirty (30) consecutive trading days ending on or before the third (3rd) anniversary of the Grant Date is greater than or equal to two hundred percent (200%) of the closing price of a Class B Share on the Grant Date (the “VWAP Performance Goal”), in each case in regular trading on the NYSE; and provided, further, that if the VWAP Performance Goal is not achieved on or before the third (3rd) anniversary of the Grant Date, the SAR Award, to the extent then outstanding and whether or not the employment-based vesting requirement set forth above has been met, will terminate and be cancelled on that third anniversary date. Notwithstanding the foregoing, if Lions Gate does not extend the Term by an additional year pursuant to Section 2 of this Agreement, and the Agreement terminates on October 30, 2023, if the VWAP Performance Goal has been achieved prior to that date, then the third tranche of the SAR award shall automatically vest on October 29, 2023. The number of common shares subject to, and the base price of, the SAR Award is subject to customary adjustments upon the occurrence of stock splits, extraordinary dividends, spins and similar events.

(c) Payment of SARs. Each right subject to the SAR Award shall be payable upon exercise of the right, as determined by the Compensation Committee in its sole discretion, in the form of either Class B Shares, Lions Gate’s Class A voting common shares, cash or any combination of the foregoing, with such payment in any case to have an aggregate value (for each right so exercised) equal to the amount by which the fair market value (as determined under Lions Gate’s stock incentive plan) of a Class B Share on the date of such exercise of the SAR Award exceeds the per-share base price of the SAR Award. The SAR Award may be exercised only if and to the extent vested.

(d) Pre-Existing and Other Equity. The foregoing SAR Award shall be in addition to any equity awards granted to Burns by Lions Gate prior to the Effective Date (the “Pre-Existing Equity”). The Pre-Existing Equity will continue to be governed by its existing terms (subject to any express provision for acceleration of the Pre-Existing Equity provided herein).

6. Change of Control. In the event of a “Change of Control” as defined below, the following shall apply:

(a) Change of Control definition. For purposes of this Agreement, the term “Change of Control” shall mean:

 

  (i)

if any person, other than (a) any person who holds or controls entities that, in the aggregate (including the holdings of such person), hold or control twenty-five percent (25%) or more of the outstanding shares of Lions Gate on the date of execution of this Agreement by each party hereto (collectively, a “Twenty-Five Percent Holder”) or (b) a trustee or other fiduciary holding securities of Lions Gate under an employee benefit plan of Lions Gate, becomes the beneficial owner, directly or indirectly, of

 

3

  securities of Lions Gate representing thirty-three percent (33%) or more of the outstanding shares as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, excluding any transactions or series of transactions involving a sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder;

 

  (ii)

if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there is a sale or disposition of thirty-three percent (33%) or more of Lions Gate’s assets (or consummation of any transaction, or series of related transactions, having similar effect) with the exceptions of a sale of Starz, LLC or a sale of a portion thereof;

 

  (iii)

if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, there occurs a change or series of changes in the composition of the Board as a result of which half or less than half of the directors are incumbent directors;

 

  (iv)

if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate (excluding any sale or other disposition of securities of Lions Gate by a Twenty-Five Percent Holder in a single transaction or a series of transactions), a shareholder or group of shareholders acting in concert, other than a Twenty-Five Percent Holder in a single transaction or a series of transactions, obtain control of thirty-three percent (33%) or more of the outstanding shares of Lions Gate;

 

  (v)

if, as a result of one or more related transactions in the context of a merger, consolidation, sale or other disposition of equity interests or assets of Lions Gate, a shareholder or group of shareholders acting in concert obtain control of at least half of the Board;

 

  (vi)

if there is a dissolution or liquidation of Lions Gate; or

 

  (vii)

if there is any transaction or series of related transactions that has the substantial effect of any one or more of the foregoing, excluding, if applicable, any transaction or series of transactions involving a Twenty-Five Percent Holder as and to the extent so excluded above.

 

4

(b) Change in Control Severance.

(i) If, upon or within twelve (12) months following a Change of Control, Lions Gate terminates Burns’ employment without Cause pursuant to Section 9(f) or Burns terminates his employment for Good Reason pursuant to Section 9(e)(iv), then, subject to Sections 10(d) and 11(b), Burns shall be entitled, in addition to the Accrued Obligations (as defined below), to receive the Severance Benefits (as identified in Section 10(c) below and subject to the terms and conditions set forth therein); provided, however, that the amount of the cash severance payable to Burns in connection with such a termination of his employment as provided in Section 10(c)(i) shall be equal to the greater of (1) the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Burns’ Base Salary through the Expiration Date, or (2) US$3,500,000, such payment to be made as provided in Section 10(c)(i).

(ii) As used herein, a “Separation from Service” occurs when Burns dies, retires, or otherwise has a termination of employment with Lions Gate that constitutes a “separation from service” within the meaning of Treasury Regulation Section 1.409A-1(h)(1), without regard to the optional alternative definitions available thereunder.

(c) Definition of Accrued Obligations. As used in this Agreement, “Accrued Obligations” means accrued but unpaid (i) Base Salary, (ii) expense reimbursement, (iii) vacation pay, if any, and (iv) vested equity awards.

7. Benefits/Expenses.

(a) During the Term, Burns shall be eligible for all employee benefits (including health insurance and 401(k) or other retirement plans) per Lions Gate’s standard benefit program on terms not less favorable than those provided generally to other senior executives of Lions Gate. Burns shall be entitled to take paid time off without a reduction in salary, subject to the demands and requirements of Burns’ duties and responsibilities under this Agreement. Burns shall not accrue any vacation.

(b) During the Term, Lions Gate shall, consistent with its normal practice, promptly reimburse Burns for all travel, entertainment and other reasonable business expenses incurred by him in promoting the business of Lions Gate. In addition to the benefits provided in Section 7(a), Burns shall be entitled to: (i) business class travel for flights in excess of four (4) hours, (ii) all customary perquisites provided to senior executives of Lions Gate generally, (iii) a cell phone, which may be expensed, and, (iv) a reserved parking space. Without limiting the foregoing, Burns shall be permitted to use Lions Gate’s private plane for twenty (20) hours per year at the same rate as negotiated by Lions Gate’s Chief Executive Officer, reimbursing Lions Gate for the total number of hours used in the same manner as Lions Gate’s Chief Executive Officer. In addition, Burns shall be entitled to a car allowance of US$1,111 per month.

(c) During the Term, Lions Gate shall provide Burns with life and disability insurance policies providing Burns (or his estate, as applicable) with US$2,000,000 in benefits. Burns shall reasonably cooperate with Lions Gate in fulfilling its obligations to provide such policies.

 

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(d) Notwithstanding the foregoing, nothing contained in this Agreement shall obligate Lions Gate to adopt or implement any benefits, or prevent or limit Lions Gate from making any blanket amendments, changes, or modifications of the eligibility requirements or any other provisions of, or terminating, in its entirety, any benefit at any time, and Burns’ participation in or entitlement under any such benefit shall at all times be subject in all respects thereto; provided, however, that Burns shall be treated no less favorably than other senior executives of Lions Gate generally.

8. Devotion of Time/Services. Burns recognizes that consistent with his position as Vice Chairman he is required to devote substantially all of his business time and services to the business and interests of Lions Gate and, due to Burns’ high level position, failure to do so would cause a material and substantial disruption to Lions Gate’s operations. Consistent with the foregoing, Burns agrees that he shall not undertake any activity that is in direct conflict with the essential enterprise related interests of Lions Gate. As long as Burns’ meaningful business time is devoted to Lions Gate, Burns may devote a reasonable amount of time to both minimal outside consulting activities, management of personal investments and charitable, political and civic activities, as well to service on the board of directors/advisors of the companies/organizations listed in Exhibit A-2, attached hereto, so long as these activities do not directly conflict with Lions Gate’s interests or otherwise materially interfere with Burns’ performance under this Agreement.

9. Termination. Burns’ employment and the Term shall terminate upon the happening of any one or more of the following events:

(a) upon mutual written agreement between Lions Gate and Burns;

(b) upon the death of Burns;

(c) by Lions Gate giving written notice of termination to Burns during the continuance of any Disability (as defined below) at any time after he has been unable to perform the material services or material duties required of him in connection with his employment by Lions Gate as a result of physical or mental Disability (or disabilities) which has (or have) continued for a period of twelve (12) consecutive weeks, or for a period of sixteen (16) weeks in the aggregate, during any twelve (12) consecutive month period. Notwithstanding any other provision herein, during any period of Disability hereunder which lasts for more than two (2) consecutive weeks, in its exercise of good faith business judgment, and in consultation with Burns (if practical), the Board may appoint an interim Vice Chairman to fulfill the duties and responsibilities of Burns and such appointment shall not be deemed a breach of this Agreement; provided, however, that upon the termination of Burns’ Disability, Burns shall immediately resume the position of sole Vice Chairman and his duties and responsibilities in accordance with the terms of this Agreement and the interim Vice Chairman shall cease serving in such capacity. For purposes of this Agreement, “Disability” shall mean a physical or mental impairment which renders Burns unable to perform the essential functions of his position, with even reasonable accommodation, which does not impose an undue hardship on Lions Gate. Lions Gate reserves the right, acting reasonably and in good faith, to make the determination of Disability under this Agreement based upon information supplied by Burns and/or his medical personnel, as well as information from medical personnel (or others) selected by Lions Gate or its insurers. Burns shall have ten (10) business days following written notice by Lions Gate to cure the Disability, if such Disability is capable of cure;

 

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(d) by Lions Gate giving written notice of termination for Cause. “Cause,” as used herein, means that Burns has engaged in or committed any of the following: (i) conviction of a felony, except a felony relating to a traffic accident or traffic violation; (ii) gross negligence or willful misconduct with respect to Lions Gate, which shall include, but is not limited to theft, fraud or other illegal conduct, refusal or unwillingness to perform employment duties, sexual harassment, any willful (and not legally protected act) that is likely to and which does in fact have the effect of injuring the reputation, business or a business relationship of Lions Gate, violation of any fiduciary duty, and violation of any duty of loyalty; (iii) any material breach of this Agreement by Burns; or (iv) conduct in violation of Section 11 of this Agreement; provided, however, Lions Gate shall not terminate Burns’ employment hereunder pursuant to this Section 9(d) unless it shall first give Burns written notice of the alleged defect and the same is not cured within fifteen (15) business days of such written notice;

(e) by Burns giving notice of his intention to terminate for one of the following reasons:

 

  (i)

Burns accepts a full time position with the federal or state government,

 

  (ii)

Burns accepts a full time position with a philanthropic or non-profit organization,

 

  (iii)

Burns moves his permanent residence from the U.S. to another country, or

 

  (iv)

Burns terminates his employment with Lions Gate for Good Reason. For purposes of this Agreement, “Good Reason” shall mean (in each case without the written consent of Burns):

 

  (A)

a material diminution in Burns’ position, authorities, duties or responsibilities from the level in effect on the Effective Date;

 

  (B)

a material reduction of Burns’ Base Salary or target Discretionary Bonus as in effect on the commencement of the Term or as the same may be increased from time to time;

 

  (C)

a requirement by Lions Gate that Burns report to anyone other than the Chief Executive Officer, currently Jon Feltheimer;

 

  (D)

any material breach by Lions Gate of this Agreement or any other compensatory arrangement between Lions Gate and Burns.

 

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Good Reason shall not include death or Disability. Burns’ continued employment shall not constitute consent to, or a waiver of rights with respect to, any circumstance constituting Good Reason hereunder; provided, however, that a termination of employment by Burns shall not be considered a termination for Good Reason unless it occurs within eighteen (18) months following the event claimed to constitute Good Reason. Burns shall provide Lions Gate written notice of any event claimed to constitute Good Reason within ninety (90) days after the occurrence of the event (or, if later, the date on which Burns knows or reasonably should know of such occurrence), and Lions Gate shall have an opportunity to cure any claimed event of Good Reason within thirty (30) days after its receipt of such notice from Burns. Lions Gate shall notify Burns of the timely cure of any claimed event of Good Reason and the manner in which such cure was effected, and upon receipt of written notice from Burns of his concurrence that a cure has been effectuated, any notice of termination delivered by Burns based on such claimed Good Reason shall be deemed withdrawn and shall not be effective to terminate this Agreement.

(f) by Lions Gate giving notice to Burns of termination without Cause.

10. Effect of Termination.

(a) With Cause. If Lions Gate terminates this Agreement pursuant to Section 9(d) above, Lions Gate shall have no further obligation to pay Burns any compensation of any kind other than the Accrued Obligations.

(b) Death or Disability. In the event of the termination of this Agreement pursuant to Section 9(b) or (c) above, Lions Gate shall have the obligation to pay Burns’s estate or Burns, as applicable, any Accrued Obligations. In addition, in the event of the termination of this Agreement due to Burns’ death or Disability, (i) any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options and SARs, become exercisable upon the date of death in the case of death or upon the date of termination for Disability in the case of Disability; and (ii) if such termination occurs during the three-year period after the Grant Date (as defined above), the time-based vesting requirements applicable to the SAR Award set forth in Section 5(b) above shall be deemed satisfied on the date of such termination and, if the VWAP Performance Goal has not previously been met, the SAR Award will remain outstanding and vest in full if the VWAP Performance Goal is met before the end of such three-year period (and, if the VWAP Performance Goal is not achieved, the SAR Award will terminate on the last day of such three-year period). In the event of a termination due to Burns’ Disability, Lions Gate shall continue to pay the premiums for life and disability premiums for Burns as contemplated by Section 7(c) above through the Expiration Date.

(c) Termination Without Cause or by Burns for Good Reason. If Lions Gate terminates Burns’ employment without Cause pursuant to Section 9(f) or Burns terminates his employment with Lions Gate for Good Reason pursuant to Section 9(e)(iv) above and, in either case, the release requirement under Section 10(d) is met, then Lions Gate shall pay Burns, subject to Section 12(b) and in addition to the Accrued Obligations, the following payments and benefits (collectively, the “Severance Benefits”):

 

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  (i)

except as provided in Section 6(b), a cash severance payment equal to the present value (using the then prevailing rate of interest charged to Lions Gate by its principal lender as the discount rate) of payment of Burns’ Base Salary through the Expiration Date, such payment to be made in a lump sum as soon as practicable after (and in all events not more than sixty (60) days after) the date of Burns’ Separation from Service; provided, however, that if the 60-day period following Burns’ Separation From Service spans two calendar years, such payment shall be made within such 60-day period but in the second of the two calendar years;

 

  (ii)

if Burns timely elects continued health coverage for himself (and, if applicable his eligible dependents) under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”), Lions Gate will pay or reimburse Burns’ COBRA premiums for up to six (6) months following his Separation from Service (provided that Lions Gate’s obligation to make any payment pursuant to this sentence shall cease upon the date Burns becomes eligible for substantially similar coverage under the health plan of a future employer);

 

  (iii)

(x) any Pre-Existing Equity, to the extent then outstanding and unvested, will be fully vested and, in the case of stock options and SARs, become exercisable upon the date of Burns’ Separation from Service; and (y) if such termination occurs during the three-year period after the Grant Date (as defined above), the time-based vesting requirements applicable to the SAR Award set forth in Section 5(b) above shall be deemed satisfied on the date of such termination and, if the VWAP Performance Goal has not previously been met, the SAR Award will remain outstanding and vest in full if the VWAP Performance Goal is met before the end of such three-year period (and, if the VWAP Performance Goal is not achieved, the SAR Award will terminate on the last day of such three-year period);

 

  (iv)

Burns shall be entitled to payment of (a) any Discretionary Bonus that would otherwise have been paid to Burns had his employment with Lions Gate not terminated with respect to any fiscal year that ended before the date of his termination (to the extent such bonus has not previously been paid) and (b) (x) any Discretionary Bonus that would otherwise have been paid to Burns had his employment with Lions Gate not terminated with respect to the fiscal year in which the date of his termination occurs (or, in the case of a termination of Burns’ employment described in Section 6(b)(i), the greater of the target amount of Burns’ Discretionary Bonus in effect for such fiscal year and any Discretionary Bonus that would otherwise have been paid to Burns had his employment with Lions Gate not terminated with respect to such fiscal year), multiplied by (y) a fraction, the numerator of which is the total number of days in such fiscal year on which Burns was employed by Lions Gate and the denominator of which is the total number of days in such fiscal year; and

 

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  (v)

Lions Gate shall continue to pay the premiums for life and disability insurance for Burns as contemplated by Section 7(c) above through the Expiration Date.

If Burns’ employment with Lions Gate is terminated pursuant to Sections 6(b), 9(a) – (c) or 9(e) – (f) above, Burns shall have no obligation to mitigate and Lions Gate shall have no right to offset any income thereafter received by Burns against Lions Gate’s payment obligations to him.

(d) Release. Notwithstanding any other provision herein, Burns’ right to receive any severance benefits pursuant to Section 6(b) or Section 10(c) of this Agreement shall be subject to his execution and delivery to Lions Gate of a general release of claims in substantially the form attached hereto as Exhibit A (with such changes as may be reasonably required to such form to help ensure its enforceability in light of any changes in applicable law) not more than twenty-one (21) days (forty-five (45) days if required under applicable law) after the date Lions Gate provides the final form of release to Burns (and Burns’ not revoking such release within any revocation period provided under applicable law). Lions Gate shall provide the final form of release agreement to Burns not later than seven (7) days following the termination date.

11. Public Morals. Burns shall act at all times with due regard to public morals, conventions and Lions Gate policies as applied to other senior executives of Lions Gate. If Burns commits any act, or if Burns conducts Burns’ behavior in a manner, which shall be an offense involving moral turpitude under federal, state or local laws, or which might tend to bring Burns to public disrepute, contempt, scandal or ridicule based on a commonly held standard of causing material harm to Lions Gate, Lions Gate shall have the right to terminate this Agreement upon written notice to Burns given at any time following the date on which the commission of such act, or such conduct, shall have become known to Lions Gate pursuant to Section 9(d)(iv) of this Agreement.

12. Section 409A.

(a) It is intended that any amounts payable under this Agreement and any exercise of authority or discretion hereunder by Lions Gate or Burns shall comply with Section 409A of the Code (including the Treasury regulations and other published guidance relating thereto) (“Section 409A”) so as not to subject Burns to payment of any interest or additional tax imposed under Section 409A. To the extent that any amount payable under this Agreement would trigger the additional tax imposed by Section 409A, this Agreement shall be construed and interpreted in a manner to avoid such additional tax yet preserve (to the nearest extent reasonably possible) the intended benefit payable to Burns.

 

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(b) Notwithstanding any other provision herein, if Burns is a “specified employee” within the meaning of Treasury Regulation Section 1.409A-1(i) as of the date of Burns’ Separation from Service, Burns shall not be entitled to any payment or benefit pursuant to Section 6(b) or 10(c) above until the earlier of (i) the date which is six (6) months after his Separation from Service for any reason other than death, or (ii) the date of Burns’ death. Any amounts otherwise payable to Burns upon or in the six (6) month period following Burns’ Separation from Service that are not so paid by reason of this paragraph shall be paid as soon as practicable (and in all events within thirty (30) days) after the date that is six (6) months after Burns’ Separation from Service (or, if earlier, as soon as practicable, and in all events within thirty (30) days, after the date of Burns’ death) and any such payments shall be increased by an amount equal to interest on such payments for the period commencing with the date such payment would have otherwise been made but for this Section 12(b) (the “Original Payment Date”) and ending on the date such payment is actually made, at an interest rate equal to the prevailing rate of interest charged to Lions Gate by its principal lender in effect as of the Original Payment Date. The provisions of this paragraph shall only apply if, and to the extent, required to avoid the imputation of any tax, penalty or interest pursuant to Section 409A of the Code.

(c) To the extent that any benefits or reimbursements pursuant to Section 6(b), 7 or 10(c) are taxable to Burns, any reimbursement payment due to Burns pursuant to any such provision shall be paid to Burns on or before the last day of Burns’ taxable year following the taxable year in which the related expense was incurred. The benefits and reimbursements pursuant to such provisions are not subject to liquidation or exchange for another benefit and the amount of such benefits and reimbursements that Burns receives in one taxable year shall not affect the amount of such benefits or reimbursements that Burns receives in any other taxable year.

13. Indemnification. Except with respect to claims resulting from Burns’ willful misconduct or acts outside the scope of his employment hereunder, Burns shall be defended, indemnified and held harmless by Lions Gate (whether during or after the Term) in respect of all claims arising from or in connection with his position or services as an officer of Lions Gate to the maximum extent permitted in accordance with Lions Gate’s Certificate of Incorporation, its By-Laws and under applicable law (including, without limitation and as applicable, attorney’s fees), and shall be covered by Lions Gate’s applicable directors and officers insurance policy, which coverage shall be no less favorable than that accorded any other officer or director of Lions Gate.

14. Company Policies. Burns shall abide by the provisions of all policy statements, including without limitation any conflict of interest policy statement, of Lions Gate or adopted by Lions Gate from time to time during the Term and furnished to Burns in writing or of which he has notice.

15. Non-Solicitation. Burns shall not, during the Term and for a period of one (1) year thereafter, directly or indirectly, induce or attempt to induce any employee or contractor of Lions Gate or its affiliates (other than Burns’ exclusive personal assistant), to leave Lions Gate or its affiliates or to render services for any other person, firm or corporation.

 

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16. Property of Lions Gate. Burns acknowledges that the relationship between the parties hereto is exclusively that of employer and employee and that Lions Gate’s obligations to him are exclusively contractual in nature. Lions Gate and/or its affiliates shall be the sole owner or owners of all interests and proceeds of Burns’ services hereunder, including without limitation, all ideas, concepts, formats, suggestions, developments, arrangements, designs, packages, programs, scripts, audio visual materials, promotional materials, photography and other intellectual properties and creative works which Burns may prepare, create, produce or otherwise develop in connection with and during his employment hereunder, including without limitation, all copyrights and all rights to reproduce, use, authorize others to use and sell such properties or works at any time or place for any purpose, free and clear of any claims by Burns (or anyone claiming under him) of any kind or character whatsoever (other than Burns’ right to compensation hereunder). Burns shall have no right in or to such properties or works and shall not use such properties or works for his own benefit or the benefit of any other person. Burns shall, at the reasonable request of Lions Gate, execute such assignments, certificates, applications, filings, instruments or other documents consistent herewith as Lions Gate may from time to time reasonably deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or defend its right, title and interest in or to such properties or works. Notwithstanding anything to the contrary herein, Burns’ personal rolodex shall remain his personal property during the Term of this Agreement and following its expiration or earlier termination. Burns’ assignment of rights in this paragraph does not apply to any invention which fully qualifies under Section 2870 of the California Labor Code.

17. Confidential Information. All memoranda, notes, records and other documents made or compiled by Burns, or made available to him during his employment with Lions Gate concerning the business or affairs of Lions Gate or its affiliates shall be Lions Gate’s property and shall be delivered to Lions Gate on the termination of this Agreement or at any other time on request from Lions Gate. Burns shall keep in confidence and shall not use for himself or others, or divulge to others except in the performance of his duties hereunder, any information concerning the business or affairs of Lions Gate or its affiliates which is not otherwise publicly available and which is obtained by Burns as a result of his employment, including without limitation, trade secrets or processes and information reasonably deemed by Lions Gate to be proprietary in nature, including without limitation, financial information, programming or plans of Lions Gate or its affiliates, unless disclosure is permitted by Lions Gate or required by law or legal process.

18. Right to Use Name. During the term, Lions Gate shall have the right to use Burns’ approved biography, name and approved likeness in connection with its business, including in advertising its products and services, but not for use as a direct or indirect endorsement.

19. Miscellaneous.

(a) Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of California without regard to principles of conflict of laws.

(b) Amendments. This Agreement may be amended or modified only by a written instrument executed by each of the parties hereto.

 

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(c) Titles and Headings. Section or other headings contained herein are for convenience of reference only and shall not affect in any way the meaning or interpretation of any of the terms or provisions hereof.

(d) Entire Agreement. This Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations and understandings of the parties in connection therewith (including, without limitation, the Prior Agreement, except as expressly provided herein). Notwithstanding the foregoing, except as expressly set forth herein, the terms and conditions of the agreements that evidence equity-based awards granted by Lions Gate to Burns that are outstanding as of the Effective Date are outside of the scope of the preceding provisions of this Section 19(d) and continue in effect.

(e) Successors and Assigns. This Agreement is binding upon the parties hereto and their respective successors, assigns, heirs and personal representatives. Except as specifically provided herein, neither of the parties hereto may assign the rights and duties of this Agreement or any interest therein, by operation of law or otherwise, without the prior written consent of the other party, except that, without such consent, Lions Gate shall assign this Agreement to, and provide for the assumption thereof by, any successor to all or substantially all of its stock, assets and business by dissolution, merger, consolidation, transfer of assets or otherwise.

(f) Arbitration. In exchange for the benefits of the speedy, economical and impartial dispute resolution procedure of arbitration, Lions Gate and Burns, with the advice and consent of their selected counsel, choose to forego their right to resolution of their disputes in a court of law by a judge or jury, and instead elect to treat their disputes, if any, pursuant to the Federal Arbitration Act and/or California Civil Procedure Code §§ 1281, et seq.

(i) Burns and Lions Gate agree that any and all claims or controversies whatsoever brought by Burns or Lions Gate, arising out of or relating to this Agreement, Burns’ employment with Lions Gate, or otherwise arising between Burns and Lions Gate, will be settled by final and binding arbitration in accordance with the applicable rules and procedures of Judicial Arbitration and Mediation Services, Inc. (“JAMS”). This includes all claims whether arising in tort or contract and whether arising under statute or common law. Such claims may include, but are not limited to, those relating to this Agreement, wrongful termination, retaliation, harassment, or any statutory claims under Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair Employment and Housing Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, or similar Federal or state statutes. In addition, any claims arising out of the public policy of California, any claims of wrongful termination, employment discrimination, retaliation, or harassment of any kind, as well as any claim related to the termination or non-renewal of this Agreement shall be arbitrated under the terms of this Agreement. The obligation to arbitrate such claims will survive the termination of this Agreement. Lions Gate shall be responsible for all costs of the arbitration services, including the fees and costs of the arbitrator and court reporter fees, unless Burns wishes to share such costs voluntarily. To the extent permitted by law, the hearing and all filings and other proceedings shall be treated in a private and confidential manner by the arbitrator and all parties and representatives, and shall not be disclosed except as necessary for any related judicial proceedings.

 

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(ii) The arbitration will be conducted before an arbitrator who is a member of JAMS and mutually selected by the parties from the JAMS Panel. In the event that the parties are unable to mutually agree upon an arbitrator, each party shall select an arbitrator from the JAMS Panel and the two selected arbitrators shall jointly select a third, and the arbitrators shall jointly preside over the arbitration. The arbitrator(s) will have jurisdiction to determine the arbitrability of any claim. The arbitrator(s) shall have a business office in or be a resident of Los Angeles County, California. The arbitrator(s) shall have the authority to grant all monetary or equitable relief (including, without limitation, injunctive relief, ancillary costs and fees, and punitive damages) available under state and Federal law. Either party shall have the right to appeal any adverse rulings or judgments to the JAMS Panel of Retired Appellate Court Justices. Judgment on any award rendered by the arbitrator(s) may be entered and enforced by any court having jurisdiction thereof.

(iii) Notwithstanding the foregoing, the parties agree to participate in non-binding mediation with a mutually selected mediator prior to initiation of any arbitration process, except that either party may file any formal arbitration demand as necessary to preserve their legal rights.

20. Limit on Benefits.

(a) Notwithstanding anything contained in this Agreement to the contrary, to the extent that the payments and benefits provided under this Agreement and benefits provided to, or for the benefit of, Burns under any other Lions Gate plan or agreement (such payments or benefits are collectively referred to as the “Payments” for purposes of this Section 20) would be subject to the excise tax (the “Excise Tax”) imposed under Section 4999 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the Payments shall be reduced (but not below zero) if and to the extent that a reduction in the Payments would result in Burns retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if Burns received all of the Payments (such reduced amount is referred to hereinafter as the “Limited Benefit Amount”). In such case, the Payments shall be reduced or eliminated by first reducing or eliminating cash severance payments, then by reducing or eliminating other cash payments, then by reducing or eliminating those payments or benefits which are not payable in cash, in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). Any notice given by Burns pursuant to the preceding sentence shall take precedence over the provisions of any other plan, arrangement or agreement governing Burns’ rights and entitlements to any benefits or compensation.

(b) A determination as to whether the Payments shall be reduced to the Limited Benefit Amount pursuant to this Agreement and the amount of such Limited Benefit Amount shall be made by Lions Gate’s independent public accountants or another certified public accounting firm of national reputation designated by Lions Gate (the “Accounting Firm”) at Lions Gate’s expense. Lions Gate and Burns shall use their reasonable efforts to cause the Accounting Firm to provide its determination (the “Determination”), together with detailed

 

14

supporting calculations and documentation to Lions Gate and Burns within five (5) days of the date of termination of Burns’ employment, if applicable, or such other time as requested by Lions Gate or Burns (provided Burns reasonably believes that any of the Payments may be subject to the Excise Tax), and if the Accounting Firm determines that no Excise Tax is payable by Burns with respect to any Payments, Lions Gate and Burns shall use their reasonable efforts to cause the Accounting Firm to furnish Burns with an opinion reasonably acceptable to Burns that no Excise Tax will be imposed with respect to any such Payments. Unless Burns provides written notice to Lions Gate within thirty (30) days of the delivery of the Determination to Burns that he disputes such Determination, the Determination shall be binding, final and conclusive upon Lions Gate and Burns.

21. Severability. Each section, subsection and lesser portion of this Agreement constitutes a separate and distinct undertaking, covenant and/or provision hereof. In the event that any provision of this Agreement shall finally be determined to be unlawful or unenforceable, such provision shall be deemed to be severed from this Agreement, but every other provision shall remain in full force and effect.

22. Construction. Each party has cooperated in the drafting and preparation of this Agreement. Hence, in any construction to be made of this Agreement, the same shall not be construed against any party on the basis that the party was the drafter.

23. Legal Counsel. In entering this Agreement, the parties represent that they have relied upon the advice of their attorneys, who are attorneys of their own choice, and that the terms of this Agreement have been completely read and explained to them by their attorneys, and that those terms are fully understood and voluntarily accepted by them.

24. Waiver. No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.

25. Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Photographic and facsimile copies of such signed counterparts may be used in lieu of the originals for any purpose.

26. Notices. All notices to be given pursuant to this Agreement shall be effected either by mail or personal delivery in writing as follows:

Lions Gate:

Lions Gate Entertainment

2700 Colorado Avenue, Suite 200

Santa Monica, California 90404

Attention: General Counsel

 

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Burns:

Michael Burns

c/o Lions Gate Entertainment

2700 Colorado Avenue, Suite 200

Santa Monica, California 90404

27. Tax Withholding. Notwithstanding anything else herein to the contrary, Lions Gate may withhold (or cause there to be withheld, as the case may be) from any amounts otherwise due or payable under or pursuant to this Agreement such federal, state and local income, employment, or other taxes as may be required to be withheld pursuant to any applicable law or regulation.

[Remainder of page intentionally left blank]

 

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In witness whereof, the parties hereto have executed this Agreement as of the date first above written.

 

“LIONS GATE”

LIONS GATE ENTERTAINMENT CORP.,

By:  

/s/ Corii D. Berg

Name: Corii D. Berg
Its: General Counsel
“BURNS”
/s/ Michael Burns
Michael Burns

 

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EXHIBIT A

FORM OF GENERAL RELEASE AGREEMENT

1. Release by Executive. [____________] (“Executive”), on his own behalf and on behalf of his descendants, dependents, heirs, executors, administrators, assigns and successors, and each of them, hereby acknowledges full and complete satisfaction of and releases and discharges and covenants not to sue Lions Gate Entertainment Corp. (the “Company”), its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as its and their assignees, successors, directors, officers, stockholders, partners, representatives, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with Executive’s employment or any other relationship with or interest in the Company or the termination thereof, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this General Release Agreement (this “Agreement”) set forth below, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, the Family and Medical Leave Act, the California Fair Employment and Housing Act, California Labor Code Section 132a, the California Family Rights Act, or any other federal, state or local law, regulation, ordinance, constitution or common law (collectively, the “Claims”); provided, however, that the foregoing release does not apply to any obligation of the Company to Executive pursuant to any of the following: (1) Section 6(b), 10(b) or 10(c), as applicable (and including any related provisions referred to in the applicable section), of the Employment Agreement dated as of [__________, 2020] by and between the Company and Executive (the “Employment Agreement”); (2) any equity-based awards previously granted by the Company to Executive, to the extent that such awards continue after the termination of Executive’s employment with the Company in accordance with the applicable terms of such awards; (3) any right to indemnification that Executive may have pursuant to the Company’s bylaws, its corporate charter or under any written indemnification agreement with the Company (or any corresponding provision of any subsidiary or affiliate of the Company) with respect to any loss, damages or expenses (including but not limited to attorneys’ fees to the extent otherwise provided) that Executive may in the future incur with respect to his service as an employee, officer or director of the Company or any of its subsidiaries or affiliates; (4) with respect to any rights that Executive may have to insurance coverage for such losses, damages or expenses under any Company (or subsidiary or affiliate) directors and officers liability insurance policy; (5) any rights to continued medical and dental coverage that Executive may have under COBRA; (6) any rights to payment of benefits that Executive may have under a retirement plan sponsored or maintained by the Company that is intended to qualify under Section 401(a) of the Internal Revenue Code of 1986, as amended; or (7) any deferred compensation or supplemental retirement benefits that Executive may be entitled to under a nonqualified deferred compensation or supplemental retirement plan of the Company. In addition, this release does not cover any Claim that cannot be so released as a

 

A-1

matter of applicable law. Notwithstanding anything to the contrary herein, nothing in this Agreement prohibits Executive from filing a charge with or participating in an investigation conducted by any state or federal government agencies. However, Executive does waive, to the maximum extent permitted by law, the right to receive any monetary or other recovery, should any agency or any other person pursue any claims on Executive’s behalf arising out of any claim released pursuant to this Agreement. For clarity, and as required by law, such waiver does not prevent Executive from accepting a whistleblower award from the Securities and Exchange Commission pursuant to Section 21F of the Securities Exchange Act of 1934, as amended. Executive acknowledges and agrees that he has received any and all leave and other benefits that he has been and is entitled to pursuant to the Family and Medical Leave Act of 1993.

2. Acknowledgement of Payment of Wages. Except for accrued vacation (which the parties agree totals approximately [____] days of pay) and salary for the current pay period, Executive acknowledges that he has received all amounts owed for his regular and usual salary (including, but not limited to, any bonus, severance, or other wages), and usual benefits through the date of this Agreement.

3. Waiver of Civil Code Section 1542. This Agreement is intended to be effective as a general release of and bar to each and every Claim hereinabove specified. Accordingly, Executive hereby expressly waives any rights and benefits conferred by Section 1542 of the California Civil Code and any similar provision of any other applicable state law as to the Claims. Section 1542 of the California Civil Code provides:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

Executive acknowledges that he later may discover claims, demands, causes of action or facts in addition to or different from those which Executive now knows or believes to exist with respect to the subject matter of this Agreement and which, if known or suspected at the time of executing this Agreement, may have materially affected its terms. Nevertheless, Executive hereby waives, as to the Claims, any claims, demands, and causes of action that might arise as a result of such different or additional claims, demands, causes of action or facts.

4. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this Agreement, he is waiving any and all rights or claims that he may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this Agreement. Executive further expressly acknowledges and agrees that:

(i) In return for this Agreement, he will receive consideration beyond that which he was already entitled to receive before entering into this Agreement;

(ii) He is hereby advised in writing by this Agreement to consult with an attorney before signing this Agreement;

 

A-2

(iii) He was given a copy of this Agreement on [____________] and informed that he had twenty-one (21) days within which to consider this Agreement and that if he wished to execute this Agreement prior to expiration of such 21-day period, he should execute the Acknowledgement and Waiver attached hereto as Exhibit A-1;

(iv) Nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

(v) He was informed that he has seven (7) days following the date of execution of this Agreement in which to revoke this Agreement, and this Agreement will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period. In the event that Executive exercises his right of revocation, neither the Company nor Executive will have any obligations under this Agreement.

5. No Transferred Claims. Executive represents and warrants to the Company that he has not heretofore assigned or transferred to any person not a party to this Agreement any released matter or any part or portion thereof.

6. Miscellaneous. The following provisions shall apply for purposes of this Agreement:

(a) Number and Gender. Where the context requires, the singular shall include the plural, the plural shall include the singular, and any gender shall include all other genders.

(b) Section Headings. The section headings of, and titles of paragraphs and subparagraphs contained in, this Agreement are for the purpose of convenience only, and they neither form a part of this Agreement nor are they to be used in the construction or interpretation thereof.

(c) Governing Law. This Agreement, and all questions relating to its validity, interpretation, performance and enforcement, as well as the legal relations hereby created between the parties hereto, shall be governed by and construed under, and interpreted and enforced in accordance with, the laws of the State of California, notwithstanding any California or other conflict of law provision to the contrary.

(d) Severability. If any provision of this Agreement or the application thereof is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provisions or applications and to this end the provisions of this Agreement are declared to be severable.

(e) Modifications. This Agreement may not be amended, modified or changed (in whole or in part), except by a formal, definitive written agreement expressly referring to this Agreement, which agreement is executed by both of the parties hereto.

 

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(f) Waiver. No waiver of any breach of any term or provision of this Agreement shall be construed to be, nor shall be, a waiver of any other breach of this Agreement. No waiver shall be binding unless in writing and signed by the party waiving the breach.

(g) Arbitration. Any controversy arising out of or relating to this Agreement shall be submitted to arbitration in accordance with the arbitration provisions of the Employment Agreement.

(h) Counterparts. This Agreement may be executed in counterparts, and each counterpart, when executed, shall have the efficacy of a signed original. Photographic copies of such signed counterparts may be used in lieu of the originals for any purpose.

[Remainder of page intentionally left blank]

 

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The undersigned have read and understand the consequences of this Agreement and voluntarily sign it. The undersigned declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

 

EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
    “EXECUTIVE”
   

 

    [Name]
EXECUTED this ________ day of ________ 20___, at ______________________ County, __________.
    “COMPANY”
   

Lions Gate Entertainment Corp.

   

By:

    
     

[Name]

     

[Title]

 

A-5

EXHIBIT A-1

ACKNOWLEDGMENT AND WAIVER

I, _____________, hereby acknowledge that I was given 21 days to consider the foregoing General Release Agreement and voluntarily chose to sign the General Release Agreement prior to the expiration of the 21-day period.

I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct.

EXECUTED this ___ day of ____________ 20___, at ___________ County, _________.

 

 

[Name]

EXHIBIT A-2

Hasbro, Inc. (HAS: NASDAQ)

Novica.com, UCLA Anderson School Board of Advisors, International Medical Corp Leadership Counsel and other various private and charitable entities.

Exhibit 10.11

AMENDMENT

to

EMPLOYMENT AGREEMENT

THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is dated as of April 9, 2025, by and between Lions Gate Entertainment Corp. (“Lions Gate”), and Bruce Tobey (“Employee”).

WHEREAS, Employee is currently employed by Lions Gate as its Executive Vice President and General Counsel pursuant to that certain Employment Agreement, dated as of March 27, 2023 (the “Employment Agreement”); and

WHEREAS, Lions Gate and Employee desire to amend the Employment Agreement as provided herein.

NOW, THEREFORE, the parties agree that the Employment Agreement is hereby amended, effective immediately, as follows:

1. The first sentence of Section 1(a) of the Employment Agreement is hereby amended and restated to read in its entirety as follows:

“(a) The term of this Agreement will begin March 27, 2023 and end March 31, 2028, subject to earlier termination as provided for in Section 8 below (the “Term”).”

2. Section 2(a) of the Employment Agreement is hereby amended and restated to read in its entirety as follows:

“(a) Salary. During the Term, Employee will initially be paid a base salary at the rate of One Million Dollars ($1,000,000.00) per year (“Base Salary”), payable in accordance with the Company’s normal payroll practices in effect. Effective as of April 1, 2025, the Base Salary will be increased to One Million Two Hundred Thousand Dollars ($1,200,000.00) per year.”

3. The first sentence of Section 2(c) of the Employment Agreement is hereby deleted in its entirety and replaced with the following provisions:

“(c) Bonuses. During the Term, Employee shall be eligible to receive annual performance bonuses with an initial annual target opportunity of seventy-five percent (75%) of Employee’s Base Salary based upon such Company and/or individual performance criteria as determined by the Compensation Committee (the “CCLG”) of the Board of Directors (the “Board”) of Lions Gate in consultation with the CEO, currently Jon Feltheimer, or the Company’s designee. Effective for the Company’s fiscal year commencing April 1, 2025, Employee’s annual target bonus shall be eighty-five percent (85%) of his Base Salary in effect on such date.”

4. The lead-in paragraph to Section 5(c) of the Employment Agreement is hereby deleted and replaced with the following provisions:

 

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“(c) Annual Equity Awards. The Company shall request that, at the first CCLG meeting to be held following each July 1 during the Term, commencing with July 1, 2023 and ending with July 1, 2027 (each, an “Annual Award Date”), and subject to Employee’s continued employment with the Company through the applicable Annual Award Date, the CCLG grant Employee an annual equity award (each, an “Annual Equity Award”). The total value of each Annual Equity Award shall initially be equivalent to One Million Dollars ($1,000,000) and, effective as of April 1, 2025, shall be increased to be equivalent to One Million Two Hundred Thousand Dollars ($1,200,000.00), each such award to be allocated (subject to Section 5(j)) as follows:”

5. Section 5(h)(iv) of the Employment Agreement is hereby amended to replace each reference to “March 31, 2026” in such section with “March 31, 2028”.

6. Section 8(a)(viii) of the Employment Agreement is hereby amended to replace each reference to “March 31, 2026” in such section with “March 31, 2028”.

7. Except as expressly modified herein, the Employment Agreement shall remain in full force and effect in accordance with its original terms.

8. Capitalized terms that are not defined herein shall have the meanings ascribed to them in the Agreement.

9. This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed and delivered on the day and year first above written.

 

LIONS GATE ENTERTAINMENT CORP.

 

By:  

/s/ Rahwa Ghebre-Ab

Name:   Rahwa Ghebre-Ab
Title:   Executive Vice President and Chief Human Resources Officer

 

EMPLOYEE

 

/s/ Bruce Tobey

Bruce Tobey

 

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Exhibit 10.14

INVESTOR RIGHTS AGREEMENT

dated as of

May 6, 2025

among

MHR FUND MANAGEMENT LLC,

LIBERTY GLOBAL VENTURES LIMITED,

LIONSGATE STUDIOS HOLDING CORP.,

LIBERTY GLOBAL LTD.,

and

the Mammoth Funds (as defined herein)

TABLE OF CONTENTS

 

          PAGE  
ARTICLE 1

 

DEFINITIONS

 

Section 1.01.

   

Definitions

      3  

Section 1.02.

   

Other Definitional and Interpretative Provisions

      9  
ARTICLE 2

 

CORPORATE GOVERNANCE

 

Section 2.01.

   

Board Designation Rights

     9  
ARTICLE 3

 

PRE-EMPTIVE RIGHTS

 

Section 3.01.

   

Pre-Emptive Rights

      12  
ARTICLE 4

 

CERTAIN COVENANTS AND AGREEMENTS

 

Section 4.01.

   

Restrictions on Transfers of Company Securities

      13  

Section 4.02.

   

MFN

      14  

Section 4.03.

   

Reserved

      15  

Section 4.04.

   

Information

      15  

Section 4.05.

   

Inconsistent Agreements

      15  

Section 4.06.

   

Reserved

      15  

Section 4.07.

   

Confidentiality

      15  

Section 4.08.

   

Compliance by Subsidiaries

      16  

Section 4.09.

   

Inapplicable to Certain Persons and Transactions

      16  
ARTICLE 5

 

TERMINATION

 

Section 5.01.

   

Termination

      16  

Section 5.02.

   

Effect of Termination

      17  

Section 5.03.

   

Consequences of Breach

      17  
ARTICLE 6

 

MISCELLANEOUS

 

Section 6.01.

   

Successors and Assigns

      17  

Section 6.02.

   

Notices

      18  

Section 6.03.

   

Amendments and Waivers

      18  

Section 6.04.

   

Governing Law

      18  

Section 6.05.

   

Jurisdiction

      18  

Section 6.06.

   

WAIVER OF JURY TRIAL

      18  

Section 6.07.

   

Specific Performance

      18  

Section 6.08.

   

Several Liability

      18  

Section 6.09.

   

Counterparts

      19  

Section 6.10.

   

Entire Agreement

      19  

Section 6.11.

   

Severability

      19  

Section 6.12.

   

Waiver and Release

      19  

 

ii

INVESTOR RIGHTS AGREEMENT

INVESTOR RIGHTS AGREEMENT (this “Agreement”), dated as of May 6, 2025 among MHR Fund Management LLC, a Delaware limited liability company (“Mammoth”), Liberty Global Ventures Limited, a limited company organized under the laws of England and Wales (“Leopard”), Lionsgate Studios Holding Corp., a corporation organized under the laws of British Columbia, Canada (the “Company” ), Liberty Global Ltd., an exempted company limited by shares organized under the laws of Bermuda (“Leopard Parent” and, together with Mammoth, the “Investors” and each, an “Investor”), and the affiliated funds of Mammoth party hereto (the “Mammoth Funds”).

W I T N E S S E T H :

WHEREAS, (i) Lions Gate Entertainment Corp., a corporation organized under the laws of British Columbia, Canada (“LGEC” prior to the Separation Effective Time (as defined in the Separation Agreement) and “Starz” at and from the Separation Effective Time ), and the Investors are parties to that certain investor rights agreement, dated as of November 10, 2015, as amended by Amendment No. 1 dated as of June 30, 2016 (the “LGEC IRA”) and (ii) Lionsgate Studios Corp., a corporation organized under the laws of British Columbia, Canada (“LG Studios”), and the Investors are parties to that certain investor rights agreement, dated as of May 13, 2024 (the “LG Studios IRA”);

WHEREAS, the board of directors of LGEC has determined that it is advisable and in the best interests of LGEC and its stakeholders, including its shareholders and creditors, to create two new publicly traded companies that shall operate the Starz Business (as defined in the Separation Agreement) and the LG Studios Business (as defined in the Separation Agreement) by way of a plan of arrangement under applicable corporate law (the “Plan of Arrangement”) pursuant to which LGEC’s shareholders will exchange all of their LGEC Shares (as defined in the Separation Agreement) for New Lionsgate New Common Shares and Starz Common Shares (defined below), in each case on a pro rata basis and as more fully described in the Separation Agreement, dated as of May 6, 2025, by and among the Company, LG Studios, LGEC and LG Sirius Holdings ULC (the “Separation Agreement”);

WHEREAS, the board of directors of LG Studios has determined that it is advisable and in the best interests of its shareholders to amalgamate with and into the Company pursuant to the Plan of Arrangement;

WHEREAS, in connection with the Transactions contemplated by the Separation Agreement, the Company and certain of the Investors are entering into a voting agreement, dated as of the date hereof (as it may be amended, modified or supplemented from time to time, the “Voting Agreement”); and

WHEREAS, in connection with the Separation Agreement and the Voting Agreement, the parties hereto wish to terminate the LGEC IRA and the LG Studios IRA and enter into this Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

Section 1.01. Definitions.

(a) As used herein, the following terms have the following meanings:

“Affiliate” means, with respect to any Person, (i) any Controlled Person of such Person, (ii) any other Person directly or indirectly controlling, controlled by or under common control with such Person or (iii) any

 

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Person (and its Subsidiaries) in relation to which such Person or any of its Controlled Persons is required, from time to time, whether alone or as part of a group, to make or maintain a filing with the SEC on Schedule 13D. For the purpose of this definition, the term “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; provided, that in no event shall Starz, the Company or any of their respective Subsidiaries or controlled Affiliates be considered an Affiliate of any Investor or any of its Subsidiaries, Affiliates, portfolio companies or affiliated investment funds, nor shall any Investor or any of its Subsidiaries, Affiliates, portfolio companies or affiliated investment funds be considered to be an Affiliate of Starz, the Company or any of their respective Subsidiaries or controlled Affiliates.

“Applicable Exchange Rules” means the requirements of the rules, regulations or listing standards promulgated by any national securities exchange on which the Common Shares are traded.

“Applicable Law” means, with respect to any Person, any transnational, domestic or foreign federal, provincial, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

“beneficially own” or “beneficial ownership” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act; provided that (i) the words “within 60 days” in Rule 13d-3(d)(1)(i) shall be disregarded for the purposes of this Agreement and (ii) a Person shall also be deemed to be the beneficial owner of, without duplication, (a) all Common Shares which such Person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to the exercise of any rights in connection with any securities or any agreement, arrangement or understanding (whether or not in writing), regardless of when such rights may be exercised and whether they are conditional, (b) all Common Shares which such Person has or shares the right to vote or dispose (provided that no Investor will be deemed to beneficially own Common Shares by virtue of this Agreement, the Voting Agreement or any agreement or arrangement among the Investors related thereto), (c) all Common Shares to which such Person has economic exposure through any derivative transaction that gives such Person the economic equivalent of ownership of an amount of Common Shares due to the fact that the value of the derivative is explicitly determined by reference to the price or value of Common Shares, or which provides such Person an opportunity, directly or indirectly, to profit, or to share in any profit, derived from any increase in the value of Common Shares, in any case without regard to whether (x) such derivative conveys any voting rights in Common Shares to such Person, (y) the derivative is required to be, or capable of being, settled through delivery of Common Shares, or (z) such Person may have entered into other transactions that hedge the economic effect of such beneficial ownership of Common Shares, and (d) for the avoidance of doubt, all Common Shares that are subject to a Hedging Transaction by such Person, except to the extent such Common Shares are delivered to the Hedging Counterparty in respect of (x) the settlement, termination or cancellation of such Hedging Transaction or (y) a foreclosure by the Hedging Counterparty; and provided, further, that no Investor will be deemed to beneficially own Common Shares by virtue of this Agreement, the Voting Agreement or any agreement or arrangement among the Investors related thereto.

“Board” means the board of directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in Vancouver, British Columbia or New York, New York are authorized or required by Applicable Law to close.

“Change of Control Transaction” means (i) a transaction whereby any Person or group would acquire, directly or indirectly, Voting Securities of the Company representing more than 50% of the Total Voting Power of the Company; (ii) the sale of all or substantially all of the consolidated assets of the Company and its

 

4

Subsidiaries; or (iii) a merger, consolidation, recapitalization or reorganization of the Company, unless securities representing more than 50% of the Total Voting Power of the Successor Company are immediately thereafter beneficially owned, directly or indirectly, by the Persons who beneficially owned the Company’s outstanding Voting Securities immediately prior to such transaction.

“Common Equivalents” means (i) with respect to Common Shares, the number of Common Shares, and (ii) with respect to any Company Securities that are convertible or exercisable into or exchangeable for Common Shares, the number of Common Shares issuable in respect of the conversion, exercise or exchange of such securities into Common Shares.

“Common Share” means a common share, without par value, of the Company and any other security into which such Common Shares may hereafter be converted or exchanged.

“Company Securities” means (i) the Common Shares, (ii) securities convertible or exercisable into, or exchangeable for, Common Shares, (iii) any other Voting Securities of the Company, (iv) any other equity or equity-linked security issued by the Company, (v) options, warrants or other rights to acquire any of the foregoing, and (vi) Subsidiary Securities (in each case whether or not issued by the Company or its Subsidiaries). For the avoidance of doubt, each of the foregoing clauses (i) through (vi) shall include any securities exposure to which is held in derivative form.

“Controlled Person” means, with respect to any Person, any other Person controlled by such Person. For the purpose of this definition, the term “control” (including, with a correlative meaning, the term “controlled by”), as used with respect to any Person, means either (i) beneficial ownership, directly or indirectly, of securities of any Person that represent 50% or more of the vote in the election of directors (or equivalent) or otherwise entitle the holder to nominate or designate a majority of the directors (or equivalent), or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. With respect to any LG Investor, a Controlled Person shall also include any Person which is jointly controlled by such LG Investor and one or more other LG Investors (and beneficial ownership shall be aggregated for such purposes). With respect to Mammoth, a Controlled Person shall also include any investment fund or investment vehicle that is managed or advised by Mammoth or one of its Affiliates.

“Exchange Act” means the Securities Exchange Act of 1934.

“Financial Institution” means a bank of internationally recognized standing that acts as a lender, secured party or other counterparty in Hedging Transactions and Financing Transactions without the purpose of influencing or controlling the management or policies of the Person that issued the equity securities pledged in such Financing Transactions or Hedging Transactions.

“Financing Counterparty” means any Financial Institution acting as lender, secured party or other counterparty in connection with a Financing Transaction.

“Financing Transaction” means any bona fide loan, borrowing or other transaction (other than any Hedging Transaction) used to finance, or refinance, the acquisition or holding by an Investor or any of its Controlled Persons of any Company Securities that (i) could not result in any Investor or any of its Controlled Persons ceasing to have the power to vote or direct the voting of any Company Securities (other than in connection with a default or the exercise of remedies by a Financing Counterparty) and (ii) does not have the effect of hedging the holder’s economic exposure with respect to such Company Securities (provided that, for the avoidance of doubt, a margin loan shall not be considered as having hedging effect for this purpose).

“Governmental Authority” means any transnational, domestic or foreign, federal, provincial, state or local governmental, regulatory, self-regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.

 

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“group” has the meaning given to such term under Section 13(d)(3) of the Exchange Act.

“Hedging Counterparty” means any Financial Institution acting as counterparty in connection with a Hedging Transaction.

“Hedging Transaction” means any forward, prepaid forward, put, call, collar, or other transaction pursuant to which any Person seeks to hedge its exposure to changes in the market price of any Company Securities and/or to finance, or refinance, the acquisition or holding by an Investor or any of its Controlled Persons of any Company Securities.

“Investor Designee” means any LG Designee or Mammoth Designee, as applicable.

“Joinder Transfer” means a Transfer, or series of related Transfers, of Company Securities that would result in or involve (x) a transferee acquiring a number of such Company Securities that would result in such Person, together with its Affiliates and any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities, becoming a beneficial owner of 5% or more of (i) the Total Voting Power of the Company or (ii) the outstanding Common Shares (or having the exposure to 5% or more of the Common Shares in derivative form), (y) the Transfer of Company Securities to any Person who at such time beneficially owns, together with its Affiliates and any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities, 5% or more of (i) the Total Voting Power of the Company or (ii) the outstanding Common Shares (or having the exposure to 5% or more of the Common Shares in derivative form), or (z) Company Securities being acquired by an Affiliate of an LG Investor or any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities. For the purposes of the definition of “Joinder Transfer,” any Transfer, or series of related Transfers, of Company Securities to Mammoth or any of its Affiliates shall not under any circumstances constitute a Joinder Transfer.

“LG Designee” means any person designated by Leopard Parent pursuant to Section 2.01(a)(ii) to serve as a director of the Board.

“LG Investor” has the meaning ascribed to such term in the Voting Agreement.

“LG Registration Rights Agreement” means that certain Registration Rights Agreement dated as of the date hereof, by and among the Company and Leopard.

“Mammoth Designee” means any person designated by Mammoth pursuant to Section 2.01(a)(i) to serve as a director of the Board (for the avoidance of doubt, including the Mammoth Independent Director).

“New Company” means (i) a Successor Company resulting from a Change of Control Transaction resulting in the Company being controlled by an Affiliate (other than a Controlled Person) of an LG Investor or (ii) a Successor Company not resulting from a Change of Control Transaction.

“New IRAs” means, collectively, this Agreement and the Starz IRA.

“New Lionsgate New Common Shares” shall mean the common shares, without par value, of New Lionsgate.

“Parent Change of Control Transaction” means, with respect to Leopard Parent, (i) a transaction whereby any Person or group would acquire, directly or indirectly, voting securities representing more than 50% of the Total Voting Power of such Person; or (ii) a merger, consolidation, recapitalization or reorganization of such Person.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

 

6

“Pro Rata Share” means, with respect to an Investor, the fraction that results from dividing (i) the number of Common Shares beneficially owned by such Investor disregarding any Common Shares deemed to be beneficially owned by such Investor as a result of being part of a “group” (together, (x) in the case of Mammoth, with any Common Shares beneficially owned by its Controlled Persons, without duplication and (y) in the case of Leopard Parent, with any Common Shares beneficially owned by its Controlled Persons, without duplication, without duplication) immediately before giving effect to the issuance described in the applicable Issuance Notice, as determined on a Common Equivalents basis, by (ii) the aggregate number of Common Shares outstanding immediately before giving effect to the issuance described in the applicable Issuance Notice, as determined on a Common Equivalents basis.

“Registration Rights Agreements” means (i) that certain Registration Rights Agreement dated as of the date hereof, by and among the Company and the MHR Group (as defined therein) and (ii) that certain Registration Rights Agreement dated as of the date hereof, by and among the Company and Leopard.

“SEC” means the Securities and Exchange Commission.

“Separation Effective Time” has the meaning ascribed to it in the Plan of Arrangement.

“Starz” means Starz Entertainment Corp. (f/k/a Lions Gate Entertainment Corp.), a corporation organized under the laws of British Columbia, Canada.

“Starz Common Shares” means the common shares, without par value, of Starz, created pursuant to the Plan of Arrangement.

“Starz IRA” means that certain investor rights agreement, dated as of the date hereof, by and among Mammoth, Leopard, Dragon, Starz, Leopard Parent, Dragon Parent and the Mammoth Funds.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person; provided that none of Starz, the Company or any Subsidiary or controlled Affiliate of Starz, LG Studios, the Company shall be considered a Subsidiary of any Investor or any of its Affiliates for purposes of this Agreement.

“Subsidiary Securities” means (i) the common stock of any Subsidiary of the Company, (ii) securities convertible or exercisable into, or exchangeable for, the common stock of any such Subsidiary, (iii) any shares of common stock or other voting securities of any such Subsidiary entitled, in the ordinary course, to vote in the election of directors of any such Subsidiary, (iv) any other equity or equity-linked security issued by any such Subsidiary and (v) options, warrants or other rights to acquire any of the foregoing (in each case whether or not issued by the Company or any such Subsidiary). For the avoidance of doubt, each of the foregoing clauses (i) through (v) shall include any securities exposure to which is held in derivative form.

“Successor Company” means any entity (i) that is the issuer of any securities into which any Company Securities or Subsidiary Securities are converted, exchanged, changed or reclassified (including by operation of law) or (ii) the securities of which are distributed in respect of Company Securities or Subsidiary Securities (including in connection with a spin off transaction).

“Total Voting Power” of a Person means the aggregate number of votes which may be cast by all holders of outstanding Voting Securities of such Person in the election of directors (or equivalent).

“Transfer” means, with respect to any Company Securities, (i) when used as a verb, to sell, assign, dispose of, exchange or otherwise transfer such Company Securities or any participation or interest therein, whether directly or indirectly (including pursuant to a derivative transaction), or agree or commit to do any of the foregoing, and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange or other

 

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transfer of such Company Securities or any participation or interest therein or any agreement or commitment to do any of the foregoing. “Transfer” shall exclude, however, with respect to any Company Securities, the entry into or performance of any Hedging Transaction or Financing Transaction in respect of such Company Securities and any payment or settlement thereunder (including, following the first anniversary of the date hereof, physical settlement) the granting of any lien, pledge, security interest, or other encumbrance in or on such Company Securities to a Hedging Counterparty or Financing Counterparty in connection with any Hedging Transaction or Financing Transaction, the rehypothecation of any Company Securities by the Hedging Counterparty or Financing Counterparty in connection with a Hedging Transaction or Financing Transaction, and any transfer to, by or at the request of such Hedging Counterparty or Financing Counterparty in connection with an exercise of remedies by the Hedging Counterparty or Financing Counterparty under such Hedging Transaction or Financing Transaction (but, for the avoidance of doubt, “Transfer” shall include any delivery of Company Securities in respect of the settlement, termination or cancellation of a Hedging Transaction or Financing Transaction occurring prior to the first anniversary of the date hereof other than in connection with the exercise of remedies by a Hedging Counterparty or Financing Counterparty).

“Voting Securities” means (i) in respect of the Company, Common Shares and all other securities of the Company entitled to vote in the election of directors of the Company, or (ii) in respect of any other Person, all securities of such other Person entitled to vote in the election of directors (or equivalent).

“Willful Breach” means, with respect to any party to this Agreement, a material breach, or failure to perform, that is the consequence of an intentional action or omission of such party or any of its Controlled Persons with the actual knowledge that the taking of, or failure to take, such action would, or would be reasonably expected to, cause a material breach of this Agreement.

(b) Each of the following terms is defined in the Section set forth opposite such term:

 

Term

   

Section

Agreement

   

Preamble

Company

   

Preamble

Company Parties

   

6.12

Confidential Information

   

4.07(b)

email

   

6.02

Exercise Notice

   

3.01(c)

Investor

   

Preamble

Investors

   

Preamble

Irrevocable Resignation

   

2.01(a)

Issuance Notice

   

3.01(a)

Leopard

   

Preamble

Leopard Parent

   

Preamble

LG Studios

   

Recitals

LG Studios IRA

   

Recitals

LGEC

   

Recitals

LGEC IRA

   

Recitals

Mammoth

   

Preamble

Mammoth Funds

   

Preamble

Mammoth Independent Director

   

2.01(a)

New Issue Securities

   

3.01

Nomination Obligations

   

2.01(a)

Plan of Arrangement

   

Recitals

Receiving Party

   

4.07(a)

Separation Agreement

   

Recitals

Superior Arrangement

   

4.02(a)

Voting Agreement

   

Recitals

 

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Section 1.02. Other Definitional and Interpretative Provisions. (a) 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 captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules 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 terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined 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. “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 statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are, unless expressly stated otherwise, to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to one gender include all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

ARTICLE 2

CORPORATE GOVERNANCE

Section 2.01. Board Designation Rights. (a) Effective as of the Separation Effective Time and at all times thereafter, until the termination of this Agreement, the size of the Board shall be no greater than (or, if it would result in an impairment of an Investor’s rights hereunder, less than) 14 directors (provided that, if any person designated by an Investor to be an Investor Designee in accordance with this Agreement shall have failed to be elected or appointed as a director on the Board as a result of a breach by the Company of its obligations under Section 2.01(d) or a breach by another Investor of its obligations with regard to the Company under Section 3.03(a) of the Voting Agreement, the Company shall increase the size of the Board by the number of such Investor Designees so that such Investor Designees can be appointed to the Board), and the Company agrees to take the actions set forth in Section 2.01(d) to ensure that, subject to Section 2.01(a)(i)(A)(2), effective as promptly as practicable on or after the date hereof, the Board includes:

(i) for so long as Mammoth and its Controlled Persons in the aggregate beneficially own at least:

(A) 10,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event):

(1) two individuals designated from time to time by Mammoth; provided that as a condition to each such designee’s appointment to the Board and inclusion in the Company’s slate of director nominees, such designee (x) agrees to provide to the Company, prior to nomination and appointment and on an ongoing basis while such designee is serving as a member of the Board, (a) such information and materials as is required to be disclosed in proxy statements under Applicable Law or as is otherwise reasonably requested by the Company from time to time from all members of the Board in connection with the Company’s legal, regulatory, auditor or stock exchange requirements, (b) completed D&O Questionnaires in the customary form requested by the Company from time to time from members of the Board, (c) customary consents to be named in the Company’s proxy statement and to serve on the Board if elected, and (d) an executed irrevocable resignation in the form attached hereto as Exhibit A (each, an “Irrevocable Resignation”), (y) to the extent required of all Board members, shall agree to comply with all written policies, procedures, processes, codes, rules, standards and guidelines applicable to Board members (and of which such Investor Designee has been provided written copies in advance (or

 

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which have been filed with the SEC or posted on the Company’s website)), including the Company’s Code of Business Conduct and Ethics for Directors, Officers and Employees, Corporate Governance Guidelines, Disclosure Policy and Related Person Transaction Policy, and to preserve (subject to Section 4.07) the confidentiality of Company business and information, including discussions or matters considered in meetings of the Board or Board committees, and (z) shall have a reasonable amount of business experience to be a director of a publicly traded company in the S&P 1500, although such experience need not be in the same industry or industries, and be in good standing as a director in all material respects (such obligations in clauses (x), (y) and (z), the “Nomination Obligations”); and

(2) one individual designated from time to time by Mammoth who (i) would be (x) an independent director of the Company under Section 303A.02 of the New York Stock Exchange’s Listed Company Manual and (y) considered an independent director of Mammoth under Section 303A.02 of the New York Stock Exchange’s Listed Company Manual if Mammoth were traded on the New York Stock Exchange and (ii) is approved by the Board (such approval not to be unreasonably withheld, conditioned or delayed; it being agreed that (x) such approval shall not be withheld in a manner that prevents Mammoth from designating the Mammoth Independent Director starting with the first annual general meeting of the Company following the date of this Agreement and (y) in the event the Board does not approve Mammoth’s designation, Mammoth shall have the right to designate additional individuals until one of such individuals is approved) (the “Mammoth Independent Director”); provided, that as a condition to such designee’s appointment to the Board and inclusion in the Company’s slate of director nominees, such designee shall have complied, and continue to comply, with the Nomination Obligations.

(B) 7,500,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), but less than 10,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), two individuals designated by Mammoth; provided, that as a condition to such designees’ appointment to the Board and inclusion in the Company’s slate of director nominees, such designees shall have complied, and continue to comply, with the Nomination Obligations; and

(C) 5,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), but less than 7,500,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), one individual designated by Mammoth; provided, that as a condition to such designee’s appointment to the Board and inclusion in the Company’s slate of director nominees, such designee shall have complied, and continue to comply, with the Nomination Obligations.

(ii) for so long as Leopard Parent and its Controlled Persons in the aggregate beneficially own at least 5,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), one individual designated from time to time by Leopard Parent; provided, that as a condition to such designee’s appointment to the Board and inclusion in the Company’s slate of director nominees, such designee shall have complied, and continue to comply, with the Nomination Obligations.

(b) The initial Mammoth Designees shall be Dr. Mark H. Rachesky and Emily Fine and the initial Mammoth Independent Director shall be John D. Harkey, Jr.

(c) The initial LG Designee shall be Michael T. Fries.

(d) The Company agrees to cause each individual designated pursuant to this Section 2.01 to be nominated for election as a director on the Board on the Company’s slate of directors, and to take all other necessary actions, subject to Applicable Law, to ensure that the composition of the Board as of the Separation Effective Time and thereafter is as set forth in this Section 2.01, including by calling a meeting of the Board and/or Company shareholders (it being agreed that the Board shall appoint the initial LG Designee and the initial

 

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Mammoth Designees to the Board effective as of immediately following the Separation Effective Time), recommending to Company shareholders the election of the designees selected pursuant to this Section 2.01, and using its reasonable best efforts to solicit proxies in favor of the election of any such individuals to the Board from the shareholders of the Company eligible to vote for the election of directors, which efforts shall be no less than the efforts used to solicit proxies in favor of the election of other individuals nominated to the Board by the Company. Without limiting the foregoing, subject to continued compliance with the Nomination Obligations, at any annual general or other meeting of shareholders of the Company at which directors are to be elected (including any special meeting called by the Company pursuant to the preceding sentence), the Company shall, at the applicable Investor’s election, either re-nominate for election each then-serving Investor Designee (provided that, if at such time an Investor shall be entitled to nominate fewer Investor Designees pursuant to Section 2.01(a) than the number of then-serving Investor Designees designated by such Investor, such Investor shall notify the Company in writing of the Investor Designee(s) that shall not be nominated for subsequent election) or such other Investor Designee(s) as the applicable Investor may designate to the Company in writing.

(e) If, as a result of death, disability, retirement, resignation, removal (with or without cause) or otherwise, there shall exist or occur any vacancy of a seat on the Board previously occupied by an Investor Designee, the Investor that designated such Investor Designee shall have the right to designate another individual to fill such vacancy and serve as a director on the Board pursuant to the terms and conditions of Section 2.01(a).

(f) For the avoidance of doubt, the Company acknowledges and agrees that any Investor Designee (other than the Mammoth Independent Director) may, at the applicable Investor’s discretion, be an existing director, officer, employee or consultant of such Investor or any of its Affiliates, provided that such Investor Designee complies with the Nomination Obligations.

(g) Each Investor shall keep the Company regularly apprised of its beneficial ownership of Common Shares.

(h) In furtherance of the foregoing,

(i) if Leopard Parent and its Controlled Persons cease to beneficially own in the aggregate at least 5,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), Leopard Parent shall cause such Investor Designee to promptly irrevocably tender his or her resignation from the Board and any committee on which he or she serves, effective immediately upon its acceptance by the Company, pursuant to the terms of his or her Irrevocable Resignation.

(ii) if Mammoth and its Controlled Persons cease to beneficially own in the aggregate:

(A) at least 10,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), but continue to beneficially own at least 7,500,000 Common Shares (in each case, as adjusted for any stock split, stock dividend, reverse stock split or similar event), Mammoth agrees to designate at least one of the Mammoth Designees (who may be, at Mammoth’s option, the Mammoth Independent Director), who shall, and to cause such Mammoth Designee to, promptly irrevocably tender resignation from the Board and any committee on which they serve, effective immediately upon acceptance of such resignation by the Company, pursuant to the terms of their Irrevocable Resignations; provided, however, that if there are less than three Mammoth Designees on the Board at such time, Mammoth shall not be required to cause any Mammoth Designee to tender their resignation from the Board or any committee on which they serve;

(B) at least 7,500,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), but continue to beneficially own at least 5,000,000 Common Shares (in each case, as adjusted for any stock split, stock dividend, reverse stock split or similar event), Mammoth agrees to designate at least two Mammoth Designees (one of whom may be, at Mammoth’s option, the Mammoth Independent Director), who shall, and to cause such Mammoth Designees to, promptly irrevocably tender resignation from the Board and any committee on which they serve,

 

11

effective immediately upon acceptance of such resignations by the Company, pursuant to the terms of their Irrevocable Resignations; provided, however, that if there are only two Mammoth Designees on the Board at such time, Mammoth shall only be required to cause one Mammoth Designee (who may be, at Mammoth’s option, the Mammoth Independent Director) to tender their resignation from the Board and any committee on which they serve; provided further, however, that if there is only one Mammoth Designee on the Board at such time, Mammoth shall not be required to cause any Mammoth Designee to tender their resignation from the Board or any committee on which they serve; or

(C) at least 5,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), Mammoth agrees to cause all Mammoth Designees to promptly irrevocably tender their resignations from the Board and any committee on which they serve, effective immediately upon the acceptance of such resignations by the Company, pursuant to the terms of their Irrevocable Resignations.

ARTICLE 3

PRE-EMPTIVE RIGHTS

Section 3.01. Pre-Emptive Rights. Except as otherwise provided in this Section 3.01 (including Section 3.01(f)), each time the Company proposes to issue any (i) Common Shares or (ii) Company Securities that are convertible or exercisable into or exchangeable for Common Shares to any Person for cash consideration (any such Common Shares or Company Securities, “New Issue Securities”), the Company shall first offer the New Issue Securities to each Investor who, as of the date of the applicable Issuance Notice (as defined below), beneficially owns, together with its Controlled Persons, at least 3,000,000 Common Shares in the aggregate (as adjusted for any stock split, stock dividend, reverse stock split or similar event), in accordance with the following provisions:

(a) The Company shall give a notice to each Investor (the “Issuance Notice”) stating (i) its intention to issue the New Issue Securities, (ii) the amount and description of such New Issue Securities to be issued and (iii) the purchase price (calculated as of the proposed issuance date) and the other terms upon which the Company is offering the New Issue Securities.

(b) Subject to Section 3.01(f), transmittal of the Issuance Notice to each Investor by the Company shall constitute an offer by the Company to sell to such Investor up to its Pro Rata Share of the New Issue Securities for the price and upon the terms set forth in the Issuance Notice.

(c) Each Investor who desires to purchase any or all of its Pro Rata Share of the Company Securities specified in the Issuance Notice shall deliver notice to the Company (each, an “Exercise Notice”) of its election to purchase such Company Securities within 15 Business Days of receipt of the Issuance Notice; provided that if the Company reasonably determines in good faith that a 15 Business Day period is not practical, the Company shall specify a shorter period (which shall be as long a period as is reasonably practical but in no event less than 5 Business Days) in the Issuance Notice. The Exercise Notice shall specify the number (or amount) of Company Securities to be purchased by such Investor and shall constitute exercise by such Investor of its rights under this Section 3.01 and a binding agreement of such Investor to purchase, at the price and on the terms specified in the Issuance Notice, the number (or amount) of Company Securities specified in the Exercise Notice, subject to Section 3.01(f). If, at the termination of such 15-Business Day period (as reduced pursuant to the proviso to the first sentence of this Section 3.01(c)), any Investor shall not have delivered an Exercise Notice to the Company, such Investor shall be deemed to have waived all of its rights under this Section 3.01 with respect to the purchase of such Company Securities.

(d) The Company shall have 90 days from the date of the Issuance Notice to consummate the proposed issuance of any or all of such Company Securities that the Investors have not elected to purchase pursuant to Section 3.01(c) at the price and upon terms that are not more favorable to the purchasers or less favorable to the

 

12

Company than those specified in the Issuance Notice; provided that, if such issuance is subject to regulatory approval or shareholder approval pursuant to Applicable Exchange Rules, such 90-day period shall be extended until the expiration of five Business Days after all such approvals have been received. If the Company proposes to issue any New Issue Securities after the expiration of such 90-day period (as extended pursuant to the proviso of the previous sentence), it shall again comply with the procedures set forth in this Section 3.01.

(e) At the consummation of the issuance of any New Issue Securities purchased by any Investor exercising pre-emptive rights pursuant to this Section 3.01 (which shall occur substantially simultaneously with the issuance of all other New Issue Securities), the Company shall issue such New Issues Securities to such Investor against payment by such Investor of the purchase price for such New Issue Securities in accordance with the terms and conditions as specified in the Issuance Notice.

(f) Notwithstanding the foregoing and for the avoidance of doubt, “New Issue Securities” shall not include, and no Investor shall be entitled to purchase Company Securities pursuant to this Section 3.01 in connection with issuances of, Company Securities (i) issued to employees of the Company or any Subsidiary pursuant to employee benefit plans or arrangements approved by the Board (including any Company Securities issuable upon the exercise of any Company Securities granted pursuant to any such plans or arrangements), (ii) issued in connection with any bona fide restructuring of outstanding debt of the Company or any of its Subsidiaries or as a bona fide de minimis “equity kicker” to financial institutions, commercial lenders, brokers/finders or any similar party, or their respective designees, in connection with the incurrence or guarantee of indebtedness by the Company or any of its Subsidiaries, (iii) issued in connection with any bona fide acquisition of another Person (whether by merger, exchange offer, take-over bid, amalgamation, plan of arrangement, business combination or acquisition of the capital stock of such Person, acquisition of all or substantially all of the assets of such Person, or other similar transaction), to the sellers in such transaction as consideration for such acquisition, (iv) issued in connection with the exchange of outstanding Company Securities for other Company Securities or the exercise, conversion, subdivision, combination, recapitalization or reorganization of outstanding Company Securities that were issued in compliance with this Section 3.01 or were exempt from this Section 3.01 upon issuance, (v) if the Company reasonably determines in good faith that complying with this Section 3.01 would violate Applicable Law (other than with respect to the Company’s obligation to obtain regulatory approval or shareholder approval pursuant to Applicable Exchange Rules), (vi) issued in connection with any transaction pursuant to which all shareholders of the Company have the opportunity to receive Company Securities or shares of a successor to the Company on a pro rata basis in respect of their Company Securities, (vii) issued solely to the Company or its wholly-owned Controlled Persons or (viii) issued in connection with the Transactions.

(g) The Company shall not be obligated to consummate any proposed issuance of New Issue Securities, nor be liable to any Investor if the Company fails to consummate any proposed issuance of New Issue Securities for whatever reason, regardless of whether it shall have delivered an Issuance Notice or received any Exercise Notices in respect of such proposed issuance.

(h) Each Investor’s rights under this Section 3.01 shall be assignable, in whole or in part, to any of such Investor’s Controlled Persons, by written notice to the Company.

(i) The Company shall not issue any New Issue Securities to the extent that complying with this Section 3.01 would require the Company to obtain shareholder approval pursuant to Applicable Exchange Rules with respect to such issuance unless the Company obtains shareholder approval with respect to such issuance (including any shareholder approval which the Company may obtain in advance for issuances that occur within a five-year period).

ARTICLE 4

CERTAIN COVENANTS AND AGREEMENTS

Section 4.01. Restrictions on Transfers of Company Securities.

 

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(a) From and after the Separation Effective Time, neither Leopard Parent nor any of its Controlled Persons shall, directly or indirectly, Transfer any Company Securities unless the transferee, at the time of and as a condition to such Transfer, agrees to comply with the restrictions and obligations of this Agreement (including the restrictions and obligations set forth in this Section 4.01(a), Section 4.02, Section 4.07 and Article 6) as if it were Leopard Parent by executing and delivering such documents as may be necessary in the reasonable opinion of Mammoth and the Company; provided that this sentence shall not apply to a Transfer of Company Securities that would not constitute a Joinder Transfer. For the avoidance of doubt, no rights or benefits arising hereunder or by reason hereof shall be assignable by any party hereto, except as expressly provided herein.

(b) For the avoidance of doubt, the provisions of Section 4.01(a) shall not have any applicability to the Transfer of the securities of Leopard Parent, including as a result of a merger, consolidation, recapitalization, or reorganization of Leopard Parent; provided that in the event of a Parent Change of Control Transaction, the rights, benefits, entitlements and obligations of such LG Investor and its Controlled Persons under the terms of this Agreement and the Voting Agreement with regard to the Company shall cease and be of no further force or effect with respect to the applicable LG Investor (and, for the avoidance of doubt, such LG Investor shall cause its Investor Designees to resign from the Board in connection with such Parent Change of Control), unless (i) the ultimate parent entity of the surviving company in such Parent Change of Control Transaction agrees to comply with the restrictions and obligations of this Agreement and the Voting Agreement with regard to the Company as if it were Leopard Parent by executing and delivering such documents as may be necessary in the reasonable opinion of Mammoth and the Company or (ii) such Parent Change of Control involves a LG Investor or any of its Affiliates, in which case the ultimate parent entity of the surviving company in such Parent Change of Control Transaction shall agree to comply with the restrictions and obligations of this Agreement and the Voting Agreement with regard to the Company as if it were Leopard Parent by executing and delivering such documents as may be necessary in the reasonable opinion of Mammoth and the Company.

Section 4.02. MFN. (a) The Company and each LG Investor agrees that, from and after the date hereof until the date that neither Mammoth nor any of its Affiliates owns at least 5,000,000 Common Shares (as adjusted for any stock split, stock dividend, reverse stock split or similar event), if the Company or any of its Subsidiaries enters into any legally binding contract, agreement, arrangement or understanding (or any amendment thereto) with Leopard Parent or its Affiliates in their capacity as a shareholder of the Company, including relating to any of the matters addressed by this Agreement, the Registration Rights Agreements or the Voting Agreement, including the nomination, designation, recommendation and election of directors, other governance rights or registration rights, which contains terms or conditions that are more favorable to such Person, or more restrictive to the Company, than those to which Mammoth and its Affiliates has agreed with the Company (a “Superior Arrangement”), unless the Company reasonably determines, in good faith, following advice of legal counsel to such effect, that such Superior Arrangement is not enforceable against the Company, but excluding any such Superior Arrangement (other than with any LG Investor or any of their respective Controlled Persons) that is significantly related to the material acquisition of assets or securities of another company, the sale of all or substantially all of the assets of the Company, or any other material business combination for the benefit of the Company and its shareholders as a whole, where the Company’s benefit from any such transaction significantly relates to the Company’s business and operations, then within two Business Days after entering into any such Superior Arrangement the Company shall offer Mammoth and its Affiliates the opportunity to enter into an agreement on the same terms and conditions as the Superior Arrangement. To the extent any such agreement constitutes a waiver or amendment of this Agreement, the Company and the LG Investors (on behalf of themselves and their respective Affiliates) hereby consent to any such waiver or amendment. For the avoidance of doubt, nothing contained in this Section shall be construed to permit the Company and the LG Investors to amend this Agreement or the Voting Agreement without the prior written consent of Mammoth.

(b) The parties hereto acknowledge that Leopard Parent and its Subsidiaries may enter into commercial agreements with the Company from time to time and the parties hereto agree that the provisions of this

 

14

Section 4.02 shall not apply to the terms of such commercial agreements, so long as such terms do not relate to any of the matters addressed by this Agreement, the Registration Rights Agreements or the Voting Agreement (including the nomination, designation, recommendation and election of directors, other governance rights, or registration rights).

Section 4.03. Reserved.

Section 4.04. Information. The Company hereby confirms to each of the LG Investors and Mammoth that (i) the Company’s head office is not located in British Columbia and is located in Santa Monica, California, and (ii) the Company’s executive officers who administer the business of the Company are not resident in British Columbia and are primarily resident within the State of California.

Section 4.05. Inconsistent Agreements. The Company, each Investor and each of the Mammoth Funds represents and agrees that it has not and shall not, and its Controlled Persons have not and shall not, (i) grant any proxy, (ii) enter into or agree to be bound by any voting trust or agreement with respect to Company Securities or (iii) enter into any agreement or arrangement of any kind with any Person, in each case if any such proxy, voting trust, agreement or arrangement is inconsistent with the provisions of, or for the purpose or with the effect of denying or reducing the rights of any party to, this Agreement, the Voting Agreement or the Registration Rights Agreements (including by reducing the number of securities that the Investors are otherwise entitled to include in a registration pursuant to the Registration Rights Agreements); provided that, for the avoidance of doubt, and subject to Section 4.04(b) of the Voting Agreement, the entering into or performance of any Hedging Transaction or Financing Transaction, or the rehypothecation of Company Securities by the Hedging Counterparty in connection therewith, or any other action taken in connection therewith that is excluded from the definition of “Transfer” pursuant to the second sentence thereof, shall not be prohibited by this Section 4.05.

Section 4.06. Reserved.

Section 4.07. Confidentiality. (a) Nothing in this Agreement shall restrict or prevent any Investor Designee from sharing, and the Company acknowledges and agrees that each Investor Designee may share, with the Investor that designated such Investor Designee and such Investor’s Controlled Persons, any Confidential Information; provided that, with respect to any such Confidential Information, such Investor and such Controlled Persons (the “Receiving Party”) shall be subject to the following confidentiality obligations and such Investor shall be responsible for any breach of such obligations by its Controlled Persons (and, to the extent disclosed pursuant to clause (a)(i) below, its officers, employees and representatives):

(i) Each Receiving Party acknowledges and agrees that it shall not disclose any Confidential Information to any Person, except that Confidential Information may be disclosed:

(A) to its officers, employees, directors, members, partners, agents, advisors and other representatives who need to know such information in connection with the performance of their duties;

(B) to the extent required by any oral or written questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar legal process to which the Receiving Party or any of its officers, employees and representatives is subject, or as may be required in connection with the assertion, prosecution or defense by such Receiving Party or any of its officers, employees and representatives of any claim, demand, action, suit or proceeding with respect to any matters related hereto; provided that the Receiving Party or its applicable officers, employees and representatives shall provide the Company with prompt notice of any such request, to the extent practicable and legally permitted, so that the Company may seek confidential treatment, an appropriate protective order or similar relief, and the Receiving Party or its applicable officers, employees and representatives shall reasonably cooperate (at the Company’s expense) with such efforts by the Company; and

(C) to the extent required to permit such Receiving Party or any of its officers, employees and representatives to comply with Applicable Law or applicable rules or regulations of any stock

 

15

exchange on which securities of such Receiving Party or its Affiliates are listed; provided that the Receiving Party or its applicable officers, employees and representatives shall provide the Company with prior notice of any such required disclosure, to the extent practicable and legally permitted, so that the Company may seek confidential treatment, an appropriate protective order or similar relief, and the Receiving Party or its applicable officers, employees and representatives shall reasonably cooperate (at the Company’s expense) with such efforts by the Company.

(b) For purposes of this Agreement, “Confidential Information” means any nonpublic information received by any Receiving Party from its Investor Designee concerning the Company, its Affiliates, or its or their respective financial condition, business, operations or prospects; provided that “Confidential Information” does not include information that (i) is or becomes generally available to the public other than as a result of a disclosure by the Receiving Party or its directors, officers, employees, counsel, investment advisers or other agents or representatives in violation of this Agreement, (ii) is or was available to the Receiving Party on a non-confidential basis prior to its disclosure to the Receiving Party by the Company, (iii) was or becomes available to the Receiving Party on a non-confidential basis from a source other than the Company, which source is or was (at the time of receipt of the relevant information) not, to the best of the Receiving Party’s knowledge, bound by a confidentiality agreement with (or other confidentiality obligation to) the Company, or (iv) is independently developed by the Receiving Party without violating any confidentiality agreement with, or other obligation of secrecy to, the Company.

Section 4.08. Compliance by Subsidiaries. Leopard Parent shall cause Leopard (and its Subsidiaries) to comply with their obligations under this Agreement (and guarantees such performance and any liabilities of such Persons arising from a breach hereof, which guarantee shall be immediate and shall not be contingent upon the exercise or enforcement by Mammoth or the Company of whatever remedies they may have against Leopard (and its Subsidiaries).

Section 4.09. Inapplicable to Certain Persons and Transactions.

(a) No provision of this Agreement shall be binding on any Person solely because such Person is:

(i) a Hedging Counterparty;

(ii) a holder of Company Securities as a result of the rehypothecation of Company Securities by a Hedging Counterparty or Financing Counterparty;

(iii) a transferee of Company Securities pursuant to settlement under, or pursuant to default rights or the exercise of remedies by a Hedging Counterparty or Financing Counterparty in connection with, any Hedging Transaction or Financing Transaction; or

(iv) an Investor Designee receiving Company Securities as compensation in connection with his or her service as a director of the Board; provided that such Company Securities shall be included in any calculation of beneficial ownership in accordance with the terms of this Agreement.

(b) Subject to the limitations set forth in Section 4.04(b) of the Voting Agreement, no provision of this Agreement shall prohibit any Person from entering into, performing or settling Hedging Transactions or Financing Transactions in relation to any Company Securities, or granting liens and other security interests in connection therewith, from exercising remedies thereunder, or from permitting a Hedging Counterparty to rehypothecate Company Securities in connection with a Hedging Transaction nor shall any of the foregoing described in this Section 4.09(b) be deemed, in and of itself, a violation of this Agreement.

ARTICLE 5

TERMINATION

Section 5.01. Termination. This Agreement shall automatically terminate, without any further action by any Person, upon the earlier of (i) the written agreement of each party hereto to terminate this Agreement and

 

16

(ii) the consummation of (A) a transaction whereby any Person or group, other than an LG Investor or any of its Controlled Persons, would acquire, directly or indirectly, Voting Securities of the Company representing more than 50% of the Total Voting Power of the Company; (B) the sale of all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than to an LG Investor or any of its Controlled Persons; or (C) a merger, consolidation, recapitalization or reorganization of the Company, and, as a result thereof, securities representing more than 50% of the Total Voting Power of the Successor Company cease to immediately thereafter be beneficially owned, directly or indirectly, by (x) the Persons who beneficially owned the Company’s outstanding Voting Securities immediately prior to such transaction or (y) an LG Investor or any of its Controlled Persons. Any Investor that, together with its Controlled Persons, ceases to beneficially own any Company Securities shall cease to be bound by, or benefit from, the terms hereof (other than the provisions of Sections 4.07 and 4.08 (in respect of the provisions referred to in this Section 5.01) and Article 6).

Section 5.02. Effect of Termination. Upon any termination of this Agreement in accordance with the provisions of Section 5.01 hereof, this Agreement shall become void and of no further effect; provided that (i) the Irrevocable Resignations and the provisions of Sections 4.07 and 4.08 (in respect of this clause (i) and clause (ii) of this proviso), this Section 5.02 and Article 6 shall survive any termination pursuant to Section 5.01 and (ii) any breach occurring prior to such termination shall survive such termination.

Section 5.03. Consequences of Breach. Upon the occurrence of a Willful Breach by an LG Investor of Section 4.01 of this Agreement or the Voting Agreement that has a material negative consequence on the Company or Mammoth or any of their respective Controlled Persons (in each case, that if curable, is not cured within 10 days of written notice thereof), in addition to any and all other remedies that may be available to any other party, and without any further action by any Person, the rights, benefits and entitlements of such LG Investor and its Controlled Persons under the terms of this Agreement (including, but not limited to, the rights, benefits and entitlements set forth in Article 2 and Article 3), Section 2.01(c) and Section 3.03 of the Voting Agreement and the LG Registration Rights Agreement shall cease and be of no further force or effect with respect to such breaching LG Investor; provided that (a) the obligations and agreements of, and restrictions and limitations on, such LG Investor shall remain binding upon such LG Investor and shall continue in full force and effect and (b) such LG Investor shall cause its designated LG Designee, if any, to promptly irrevocably tender his or her resignation from the Board and any committee on which he or she serves, effective immediately upon its acceptance by the Company, pursuant to the terms of his or her Irrevocable Resignation.

ARTICLE 6

MISCELLANEOUS

Section 6.01. Successors and Assigns. (a) This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, successors, legal representatives and permitted assigns.

(b) Except as expressly provided herein, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any party hereto pursuant to any Transfer of Company Securities or otherwise. Notwithstanding the foregoing, this Agreement shall be assignable among Leopard Parent and its Controlled Persons; provided that no such assignment shall relieve Leopard Parent of its obligations pursuant to this Agreement.

(c) Except as expressly set forth in this Agreement, including Section 6.12, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the parties hereto and their respective successors and assigns.

(d) The Company agrees that the Company will not enter into any transaction or take any other action resulting in the creation of a New Company, unless proper provision is made so that each of the Company and such New Company, as applicable, succeeds to the provisions of this Agreement, mutatis mutandis, including by entry into an investor rights agreement with the Investors or their applicable Affiliates.

 

17

Section 6.02. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile transmission and electronic mail (“email”) transmission, so long as a receipt of such email is requested and received) and shall be given: (i) if to the Company, to the contact information set forth under the Company’s name on its signature page hereto, and (ii) if to an Investor, to the contact information set forth under such Investor’s name on its signature page hereto, or such other address, facsimile number or email address as such party may hereafter specify for the purpose by notice to the other parties hereto. All notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

Section 6.03. Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. 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 herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law.

Section 6.04. Governing Law. This Agreement and all claims and causes of action arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law rules of such state.

Section 6.05. Jurisdiction. The parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.02 shall be deemed effective service of process on such party.

Section 6.06. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.07. Specific Performance. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

Section 6.08. Several Liability. The obligations of the Investors under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance or non-performance of the obligations of any other Investor. In the event of any damages arising out of the breach of this Agreement by two or more Investors, each Investor shall be responsible only for the portion of such damages arising from such Investor’s own breach.

 

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Section 6.09. 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.

Section 6.10. Entire Agreement. This Agreement, the Voting Agreement and the Registration Rights Agreements constitute the entire agreement among the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, among the parties hereto with respect to the subject matter hereof and thereof. In furtherance hereof, the parties hereby agree that the LGEC IRA and the LG Studios IRA are hereby superseded and terminated in their entirety, and shall be of no further force or effect whatsoever, effective immediately as of the entry into the New IRAs, subject to Article 5 of the LGEC IRA and Section  5.02 of the LG Studios IRA.

Section 6.11. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, 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 in an acceptable manner so that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 6.12. Waiver and Release. Notwithstanding anything to the contrary in this Agreement or the Voting Agreement, the Investors hereby irrevocably acknowledge and agree that the execution of this Agreement, together with the Starz IRA, constitutes full performance and satisfaction of Section 6.01(d) of the LG Studios IRA and Section 6.01(d) of the LGEC IRA in connection with the Transactions and any future transaction involving the Company or any of its Subsidiaries. Each Investor, on behalf of itself and its Controlled Persons and Affiliates and its and their respective officers, directors, equity holders, managers, employees, representatives, agents, successors and assigns, hereby releases, waives, and forever relinquishes all claims, demands, obligations, liabilities and causes of action of whatever kind or nature, whether known or unknown, matured or unmatured, arising at law or in equity, which any of them have, may have, or might assert at the time of execution of this Agreement against Starz, LG Studios or the Company and/or their respective Controlled Persons, Affiliates, officers, directors, equity holders, managers, employees, representatives, agents, successors and assigns (the “Company Parties”), directly or indirectly, which occurred, existed, was taken, permitted or begun prior to the execution of this Agreement, arising out of, related to, based upon, or in any manner connected with any actual or alleged breach of Section 6.01(d) of the LG Studios IRA and/or Section 6.01(d) of the LGEC IRA, solely in connection with the Transaction, prior to the execution of this Agreement. This Section 6.12 is intended to benefit, and to be enforceable by, each of the Company Parties and their respective legal representatives, successors and assigns.

[Signature pages follow]

 

19

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

MHR Fund Management LLC

By:

  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
For Notices:
 

MHR Fund Management LLC

40 West 57th Street, Floor 24,

 

New York, NY 10019

  Attention: Janet Yeung
  Facsimile No.: (212) 262-9356
  Email: jyeung@mhrfund.com
with a copy (which shall not constitute notice) to:
  Clifford Chance
  Two Manhattan West 375 9th Ave.
  New York, NY 10001
 

Attention: David I. Schultz

 

Email: David.Schultz@CliffordChance.com

Signature Page to Investor Rights Agreement

 

20

MHR Capital Partners Master Account LP
By:   MHR Advisors LLC, its general partner
By:  

/s/ Janet Yeung

Name:   Janet Yeung
Title:   Authorized Signatory
MHR Capital Partners (100) LP
By:   MHR Advisors LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
MHR Institutional Partners II LP
By:   MHR Institutional Advisors II LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
MHR Institutional Partners IIA LP
By:   MHR Institutional Advisors II LLC,
    its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

Signature Page to Investor Rights Agreement

 

21

MHR Institutional Partners III LP
By:   MHR Institutional Advisors III LLC,
  its general partner
By:  

/s/ Janet Yeung

Name:   Janet Yeung
Title:   Authorized Signatory
MHR Institutional Partners IV LP
By:   MHR Institutional Advisors IV LLC,
  its general partner
By:  

/s/ Janet Yeung

Name:   Janet Yeung
Title:   Authorized Signatory
For Notices:
 

MHR Fund Management LLC

40 West 57th Street, Floor 24,

 

New York, NY 10019

  Attention: Janet Yeung
  Facsimile No.: (212) 262-9356
 

Email: jyeung@mhrfund.com

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

 

Clifford Chance

 

Two Manhattan West 375 9th Ave.

 

New York, NY 10001

 

Attention: David I. Schultz

 

Email: David.Schultz@CliffordChance.com

Signature Page to Investor Rights Agreement

 

22

Liberty Global Ventures Limited
By:  

/s/ Jeremy Evans

  Name: Jeremy Evans
  Title: Director
Liberty Global Ltd.
By:  

/s/ Bryan H. Hall

  Name: Bryan H. Hall
  Title: Executive Vice President, General Counsel

 

For Notices:
Liberty Global Ltd.
1550 Wewatta Street
Suite 1000
Denver, Colorado 80202
Attention:   General Counsel,
  Legal Department
E-mail:   LegalUS@libertyglobal.com
with a copy to:
Liberty Global Ventures Limited
Griffin House
161 Hammersmith Road
London, United Kingdom, W6 8BS
Attention:   General Counsel,
  Legal Department
E-mail:   LegalUS@libertyglobal.com
with a copy (which shall not constitute notice) to:
A&O Shearman
599 Lexington Avenue
New York, NY 10022
Attention:   Daniel Litowitz
  Cody Wright
E-mail:   daniel.litowitz@aoshearman.com
  cody.wright@aoshearman.com

Signature Page to Investor Rights Agreement

 

23

Lionsgate Studios Holding Corp.
By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Principal Executive Officer, President and Secretary

 

For Notices:

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404
Attention: Bruce Tobey
Email:  btobey@lionsgate.com
with a copy (which shall not constitute notice) to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention:  

Mark A. Stagliano

Email:  

MAStagliano@wlrk.com

Signature Page to Investor Rights Agreement

 

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EXHIBIT A-1

FORM OF IRREVOCABLE RESIGNATION

FOR INVESTOR DESIGNEES OF MHR FUND MANAGEMENT LLC

Board of Directors

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Re: Resignation

Ladies and Gentlemen:

This irrevocable resignation is delivered pursuant to Section 2.01(a) of that certain Investor Rights Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp. (the “Company”), MHR Fund Management LLC, Liberty Global Ventures Limited and Liberty Global Ltd. Capitalized terms used herein but not defined shall have the meaning set forth in the Agreement. In connection with my appointment to the Board of Directors (the “Board”) of the Company, I hereby irrevocably tender my resignation from my position as a director of the Company and from any and all committees of the Board on which I serve; provided that this resignation shall be effective upon, and only in the event that the Board accepts this resignation following, receipt of notice from the Company that I am the Investor Designee designated by Mammoth to resign pursuant to Section 2.01(h) of the Agreement) or the Agreement is terminated in accordance with Section 5.01 thereof.

 

Sincerely,

 

 

Name:

 

25

EXHIBIT A-2

FORM OF IRREVOCABLE RESIGNATION

FOR INVESTOR DESIGNEE OF LIBERTY GLOBAL LTD.

Board of Directors

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Re: Resignation

Ladies and Gentlemen:

This irrevocable resignation is delivered pursuant to Section 2.01(a) of that certain Investor Rights Agreement, dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp. (the “Company”), MHR Fund Management LLC, Liberty Global Ventures Limited and Liberty Global Ltd. Capitalized terms used herein but not defined shall have the meaning set forth in the Agreement. In connection with my appointment to the Board of Directors (the “Board”) of the Company, I hereby irrevocably tender my resignation from my position as a director of the Company and from any and all committees of the Board on which I serve; provided that this resignation shall be effective upon, and only in the event that the Board accepts this resignation following, receipt of notice from the Company that: I am the Investor Designee designated by Leopard Parent to resign pursuant to Section 2.01(i) of the Agreement or the Agreement is terminated in accordance with Section 5.01 thereof.

 

Sincerely,

 

 

Name:

 

26

Exhibit 10.15

VOTING AGREEMENT

dated as of

May 6, 2025

among

LIONSGATE STUDIOS HOLDING CORP.,

LIBERTY GLOBAL VENTURES LIMITED,

MHR FUND MANAGEMENT LLC,

LIBERTY GLOBAL LTD.,

and

the Mammoth Funds (as defined herein)

TABLE OF CONTENTS

 

          Page  
ARTICLE I DEFINITIONS      3  

Section 1.01

    Definitions      3  

Section 1.02

    Other Definitional and Interpretative Provisions      8  
ARTICLE II RESERVED      9  
ARTICLE III VOTING ARRANGEMENTS      9  

Section 3.01

    Reserved      9  

Section 3.02

    Excess Securities      9  

Section 3.03

    Investor Board Designees      9  

Section 3.04

    Reserved      10  
ARTICLE IV OTHER AGREEMENTS      10  

Section 4.01

    Agreement to Be Bound      10  

Section 4.02

    Information Relating to Affiliates      11  

Section 4.03

    Consequences of Breach      11  

Section 4.04

    Inapplicable to Certain Persons and Transactions      11  

Section 4.05

    Compliance by Subsidiaries      12  
ARTICLE V TERMINATION      12  

Section 5.01

    Termination      12  

Section 5.02

    Effect of Termination      12  
ARTICLE VI MISCELLANEOUS      12  

Section 6.01

    Successors and Assigns      12  

Section 6.02

    Notices      12  

Section 6.03

    Amendments and Waivers      13  

Section 6.04

    Governing Law      13  

Section 6.05

    Jurisdiction      13  

Section 6.06

    WAIVER OF JURY TRIAL      13  

Section 6.07

    Several Liability      13  

Section 6.08

    Specific Performance      13  

Section 6.09

    Counterparts; Effectiveness; Third Party Beneficiaries      14  

Section 6.10

    Entire Agreement      14  

Section 6.11

    Severability      14  

Section 6.12

    Authority; Effect      14  

 

ii

VOTING AGREEMENT

This VOTING AGREEMENT (this “Agreement”), dated as of May 6, 2025, among MHR Fund Management LLC, a Delaware limited liability company (“Mammoth”), the affiliated funds of Mammoth party hereto (the “Mammoth Funds”), Liberty Global Ventures Limited (f/k/a Liberty Global Incorporated Limited), a limited company organized under the laws of England and Wales (“Leopard”), Lionsgate Studios Holding Corp., a corporation organized under the laws of British Columbia, Canada (subject to Section 1.02(b), the “Company”) and Liberty Global Ltd. (f/k/a Liberty Global plc), a Bermuda exempted company limited by shares (“Leopard Parent”, and together with Mammoth, the “Investors” and each, an “Investor”) (collectively, the “Parties).

W I T N E S S E T H :

WHEREAS, the Investors, the Mammoth Funds, Leopard, Lions Gate Entertainment Corp., a corporation organized under the laws of British Columbia, Canada (“LGEC”) and Lionsgate Studios Corp., a corporation organized under the laws of British Columbia, Canada (“LG Studios”), Discovery Lightning Investments Ltd., a limited company organized under the laws of England and Wales and Warner Bros Discovery Inc. (f/k/a Discovery Communications, Inc.), a Delaware corporation, are party to that certain Voting and Standstill Agreement, dated as of November 10, 2015, as amended on June 30, 2016 and May 13, 2024 (as so amended, the “Original Agreement”; capitalized terms used but not defined herein shall have the meanings set forth in the Original Agreement); and

WHEREAS, the board of directors of LGEC has determined that it is advisable and in the best interests of LGEC and its stakeholders, including its shareholders and creditors, to create two new publicly traded companies that shall operate the Starz Business (as defined in the Separation Agreement) and the LG Studios Business (as defined in the Separation Agreement) by way of a plan of arrangement under applicable corporate law (the “Plan of Arrangement”) pursuant to which LGEC’s shareholders will exchange all of their LGEC Shares (as defined in the Separation Agreement) for New Lionsgate New Common Shares and Starz Common Shares (defined below), in each case on a pro rata basis and as more fully described in the Separation Agreement, dated as of May 6, 2025, by and among the Company, LG Studios, LGEC and LG Sirius Holdings ULC.

WHEREAS, the board of directors of LG Studios has determined that it is advisable and in the best interests of its shareholders to approve a special resolution adopting a statutory Plan of Arrangement;

WHEREAS, in connection with the Separation Agreement and the Transactions (as defined in the Separation Agreement), the Parties desire, effective as of Effective Time, to terminate the Original Agreement and enter into this Agreement and that certain Voting Agreement, dated as of the date hereof, by and among Starz, Discovery Lightning Investments Ltd., Warner Bros Discovery Inc. and the Parties (the “Other Voting Agreement”).

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the Parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Definitions. As used herein, the following terms have the following meanings:

“Affiliate” means, with respect to any Person, (i) any Controlled Person of such Person, (ii) any other Person directly or indirectly controlling, controlled by or under common control with such Person or (iii) any Person (and its Subsidiaries) in relation to which such Person or any of its Controlled Persons is required, from

 

3

time to time, whether alone or as part of a group, to make or maintain a filing with the SEC on Schedule 13D. For the purpose of this definition, the term “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; provided that in no event shall the Company, Starz or any of their respective Subsidiaries or controlled Affiliates be considered an Affiliate of any Investor or any of its Subsidiaries, Affiliates, portfolio companies or affiliated investment funds, nor shall any Investor or any of its Subsidiaries, Affiliates, portfolio companies or affiliated investment funds be considered to be an Affiliate of the Company, Starz or any of their respective Subsidiaries or controlled Affiliates.

“Applicable Law” means, with respect to any Person, any transnational, domestic or foreign federal, provincial, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as amended unless expressly specified otherwise.

“beneficially own” or “beneficial ownership” has the meaning set forth in Rule 13d-3 promulgated under the Exchange Act; provided that (i) the words “within 60 days” in Rule 13d-3(d)(1)(i) shall be disregarded for the purposes of this Agreement and (ii) a Person shall also be deemed to be the beneficial owner of, without duplication, (a) all Common Shares which such Person has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to the exercise of any rights in connection with any securities or any agreement, arrangement or understanding (whether or not in writing), regardless of when such rights may be exercised and whether they are conditional, (b) all Common Shares which such Person has or shares the right to vote or dispose (provided that no Investor will be deemed to beneficially own Common Shares by virtue of the Company Investor Rights Agreement, this Agreement or any agreement or arrangement among the Investors related thereto), (c) all Common Shares to which such Person has economic exposure through any derivative transaction that gives such Person the economic equivalent of ownership of an amount of Common Shares due to the fact that the value of the derivative is explicitly determined by reference to the price or value of Common Shares, or which provides such Person an opportunity, directly or indirectly, to profit, or to share in any profit, derived from any increase in the value of Common Shares, in any case without regard to whether (x) such derivative conveys any voting rights in Common Shares to such Person, (y) the derivative is required to be, or capable of being, settled through delivery of Common Shares, or (z) such Person may have entered into other transactions that hedge the economic effect of such beneficial ownership of Common Shares, and (d) for the avoidance of doubt, all Common Shares that are subject to a Hedging Transaction by such Person, except to the extent such Common Shares are delivered to the Hedging Counterparty in respect of (x) the settlement, termination or cancellation of such Hedging Transaction or (y) a foreclosure by the Hedging Counterparty; and provided, further, that no Investor will be deemed to beneficially own Common Shares by virtue of the Company Investor Rights Agreement, this Agreement or any agreement or arrangement among the Investors related thereto.

“Board” means, subject to Section 1.02(b), the board of directors of the Company.

“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks in Vancouver, British Columbia or New York, New York are authorized or required by Applicable Law to close.

“Change of Control Transaction” means, subject to Section 1.02(b), (i) a transaction whereby any Person or group would acquire, directly or indirectly, Voting Securities representing more than 50% of the Total Voting Power; (ii) the sale of all or substantially all of the consolidated assets of the Company and its Subsidiaries; or (iii) a merger, consolidation, recapitalization or reorganization of the Company, unless securities representing more than 50% of the Total Voting Power of the Successor Company are immediately thereafter beneficially owned, directly or indirectly, by the Persons who beneficially owned the Company’s outstanding Voting Securities immediately prior to such transaction.

 

4

“Common Share” means, subject to Section 1.02(b), a common share without par value of the Company, and any other security into which such Common Shares may hereafter be converted or exchanged.

“Company Investor Rights Agreement” means that certain investor rights agreement, dated as of the date hereof, by and among Mammoth, Leopard, the Company, Leopard Parent, and the Mammoth Funds.

“Company Securities” means, subject to Section 1.02(b), (i) the Common Shares, (ii) securities convertible or exercisable into, or exchangeable for, Common Shares, (iii) any other Voting Securities, (iv) any other equity or equity-linked security issued by the Company, (v) options, warrants or other rights to acquire any of the foregoing, and (vi) Subsidiary Securities (in each case whether or not issued by the Company or its Subsidiaries). For the avoidance of doubt, each of the foregoing (i) through (vi) shall include any securities exposure to which is held in derivative form.

“Controlled Person” means, with respect to any Person, any other Person controlled by such Person. For the purpose of this definition, the term “control” (including, with a correlative meaning, the term “controlled by”), as used with respect to any Person, means either (i) beneficial ownership, directly or indirectly, of securities of any Person that represent 50% or more of the vote in the election of directors (or equivalent) or otherwise entitle the holder to nominate or designate a majority of the directors (or equivalent), or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise. With respect to any LG Investor, a Controlled Person shall also include any Person which is jointly controlled, directly or indirectly, by such LG Investor and one or more other LG Investors (and beneficial ownership shall be aggregated for such purposes). With respect to Mammoth, a Controlled Person shall also include any investment fund or investment vehicle that is managed or advised by Mammoth or one of its Affiliates.

“Effective Time” has the meaning ascribed to “Separation Effective Time” in the Plan of Arrangement.

“Excess Securities” means such number of Voting Securities representing the amount of Voting Power, if any, by which the Voting Power represented by Voting Securities beneficially owned, in the aggregate, by all LG Investors and their respective Affiliates and any Person that is a member of a group with any such Persons with respect to Company Securities exceeds 18.5% of the Total Voting Power. For the purposes of the definition of “Excess Securities,” Mammoth and its Affiliates shall not under any circumstances constitute part of a “group” with the LG Investors or any of their Affiliates.

“Exchange Act” means the Securities Exchange Act of 1934.

“Financial Institution” means a bank of internationally recognized standing that acts as a lender, secured party or other counterparty in Hedging Transactions and Financing Transactions without the purpose of influencing or controlling the management or policies of the Person that issued the equity securities pledged in such Financing Transactions or Hedging Transactions.

“Financing Counterparty” means any Financial Institution acting as lender, secured party or other counterparty in connection with a Financing Transaction.

“Financing Transaction” means any bona fide loan, borrowing or other transaction (other than any Hedging Transaction) used to finance, or refinance, the acquisition or holding by an Investor or any of its Controlled Persons of any Company Securities that (i) could not result in any Investor or any of its Controlled Persons ceasing to have the power to vote or direct the voting of any Company Securities (other than in connection with a default or the exercise of remedies by a Financing Counterparty) and (ii) does not have the effect of hedging any Investor’s or any of its Controlled Persons’ exposure to changes in the market price of any Company Securities (provided that, for the avoidance of doubt, a margin loan shall not be considered to have a hedging effect for this purpose).

 

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“Governmental Authority” means any transnational, domestic or foreign, federal, provincial, state or local governmental, regulatory, self-regulatory or administrative authority, department, court, agency or official, including any political subdivision thereof.

“group” has meaning within the meaning of Section 13(d)(3) of the Exchange Act.

“Hedging Counterparty” means any Financial Institution acting as counterparty in connection with a Hedging Transaction.

“Hedging Transaction” means any forward, prepaid forward, put, call, collar, or other transaction pursuant to which any Person seeks to hedge its exposure to changes in the market price of any Company Securities (including to finance, or refinance, the acquisition or holding by an Investor or any of its Controlled Persons of any Company Securities).

“Investor Designee” means any director of the Board who has been nominated by an Investor pursuant to the terms of the Company Investor Rights Agreement.

“Investor Rights Agreements” means, collectively, (i) the Company Investor Rights Agreement and (ii) that certain investor rights agreement, dated as of the date hereof, by and among the Company, Mammoth, Leopard, Leopard Parent and the Mammoth Funds.

“Joinder Transfer” means a Transfer, or series of related Transfers, of Company Securities that would result in or involve (x) a transferee acquiring a number of such Company Securities that would result in such Person, together with its Affiliates and any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities, becoming a beneficial owner of 5% or more of (i) the Total Voting Power or (ii) the outstanding Common Shares (or having the exposure to 5% or more of the Common Shares in derivative form), (y) the Transfer of Company Securities to any Person who at such time beneficially owns, together with its Affiliates and any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities, 5% or more of (i) the Total Voting Power or (ii) the outstanding Common Shares (or having the exposure to 5% or more of the Common Shares in derivative form), or (z) Company Securities being acquired by an Affiliate of an LG Investor or any Person that is a member of a group with such Person or any of its Affiliates with respect to Company Securities. For the purposes of the definition of “Joinder Transfer,” any Transfer or series of related Transfers, of Company Securities to Mammoth or any of its Affiliates shall not under any circumstances constitute a Joinder Transfer.

“LG Investor” means, collectively, Leopard Parent and any other Person that is required to become a party to this Agreement pursuant to Section 4.01.

“LG Registration Rights Agreement” means that certain Registration Rights Agreement dated as of the date hereof by and among the Company and Leopard.

“LG Required Vote Amount” means, with respect to any LG Investor at any time, a number of votes equal to (a) the aggregate Voting Power represented by the Voting Securities beneficially owned by such LG Investor and its Controlled Persons at such time multiplied by (b) a fraction, (x) the numerator of which is the aggregate Voting Power represented by the Voting Securities beneficially owned by Mammoth and its Controlled Persons at such time (other than Voting Power represented by the Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction) and (y) the denominator of which is the aggregate Voting Power represented by the Voting Securities beneficially owned by Mammoth and its Controlled Persons at such time.

“Mammoth Required Vote Amount” means, at any time, a number of votes equal to (a) the aggregate Voting Power represented by the Voting Securities beneficially owned by Mammoth and its Controlled Persons

 

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at such time multiplied by (b) a fraction, (x) the numerator of which is the aggregate Voting Power represented by the Voting Securities beneficially owned by the LG Investors and their respective Controlled Persons at such time (other than Voting Power represented by the Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction) and (y) the denominator of which is the aggregate Voting Power represented by the Voting Securities beneficially owned by the LG Investors and their respective Controlled Persons at such time.

“New Company” means (i) a Successor Company resulting from a Change of Control Transaction resulting in the Company being controlled by an Affiliate (other than a Controlled Person) of an LG Investor or (ii) a Successor Company not resulting from a Change of Control Transaction.

“New Lionsgate New Common Shares” means the common shares, without par value, of New Lionsgate.

“Parent Change of Control Transaction” means, with respect to Leopard Parent, (i) a transaction whereby any Person or group would acquire, directly or indirectly, voting securities representing more than 50% of the total voting power of such Person; or (ii) a merger, consolidation, recapitalization or reorganization of such Person.

“Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a Governmental Authority.

“SEC” means the U.S. Securities and Exchange Commission.

“Starz Common Shares” means the common shares, without par value, of Starz, created pursuant to the Plan of Arrangement.

“Starz” means Starz Entertainment Corp. (f/k/a Lions Gate Entertainment Corp.)], a corporation organized under the laws of British Columbia, Canada.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person; provided that none of the Company or any Subsidiary or controlled Affiliate of the Company shall be considered a Subsidiary of any Investor or any of its Affiliates for purposes of this Agreement.

“Subsidiary Securities” means, subject to Section 1.02(b), (i) the common stock of any Subsidiary of the Company, (ii) securities convertible or exercisable into, or exchangeable for, the common stock of any such Subsidiary, (iii) any shares of common stock or other voting securities of any such Subsidiary entitled, in the ordinary course, to vote in the election of directors of any such Subsidiary, (iv) any other equity or equity-linked security issued by any such Subsidiary and (v) options, warrants or other rights to acquire any of the foregoing (in each case whether or not issued by the Company or any such Subsidiary). For the avoidance of doubt, each of the foregoing clauses (i) through (v) shall include any securities exposure to which is held in derivative form.

“Successor Company” means any entity (i) that is the issuer of any securities into which any Company Securities or Subsidiary Securities are converted, exchanged, changed or reclassified (including by operation of law) or (ii) the securities of which are distributed in respect of Company Securities or Subsidiary Securities (including in connection with a spin off transaction).

“Total Voting Power” means the aggregate number of votes which may be cast by all holders of outstanding Voting Securities in the election of directors.

 

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“Transfer” means, with respect to any Company Securities, (i) when used as a verb, to sell, assign, dispose of, exchange or otherwise transfer such Company Securities or any participation or interest therein, whether directly or indirectly (including pursuant to a derivative transaction), or agree or commit to do any of the foregoing, and (ii) when used as a noun, a direct or indirect sale, assignment, disposition, exchange or other transfer of such Company Securities or any participation or interest therein or any agreement or commitment to do any of the foregoing. “Transfer” shall exclude, however, with respect to any Company Securities, the entry into or performance of any Hedging Transaction or Financing Transaction in respect of such Company Securities and any payment or settlement thereunder, the granting of any lien, pledge, security interest, or other encumbrance in or on such Company Securities to a Hedging Counterparty or Financing Counterparty in connection with any Hedging Transaction or Financing Transaction, the rehypothecation of any Company Securities by the Hedging Counterparty or Financing Counterparty in connection with a Hedging Transaction or Financing Transaction, and any transfer to, by or at the request of such Hedging Counterparty or Financing Counterparty in connection with an exercise of remedies by the Hedging Counterparty or Financing Counterparty under such Hedging Transaction or Financing Transaction.

“Voting Power” means the aggregate number of votes which may be cast by a holder of outstanding Voting Securities in the election of directors.

“Voting Securities” means, subject to Section 1.02(b), Common Shares entitled to vote in the election of directors of the Company and all other securities of the Company entitled to vote in the election of directors of the Company.

“Willful Breach” means, with respect to any Party, a material breach, or failure to perform, that is the consequence of an intentional action or omission of such Party or any of its Controlled Persons with the actual knowledge that the taking of, or failure to take, such action would, or would be reasonably expected to, cause a material breach of this Agreement.

Section 1.02 Other Definitional and Interpretative Provisions.

(a) 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 captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules 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 terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined 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. “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 statute shall be deemed to refer to such statute as amended from time to time and to any rules or regulations promulgated thereunder. References to any agreement or contract are, unless expressly stated otherwise, to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to one gender include all genders. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting or causing any instrument to be drafted.

(b) The terms Board, Change of Control Transaction, Common Shares, Company, Company Securities, Subsidiary Securities and Voting Securities shall be deemed to include applicable references to any New Company and such terms (including as used in other defined terms) shall be construed accordingly.

 

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ARTICLE II

RESERVED

ARTICLE III

VOTING ARRANGEMENTS

Section 3.01 Reserved.

Section 3.02 Excess Securities. Each LG Investor agrees that such LG Investor shall, and shall cause its Controlled Persons to, as applicable, (a) cause the Voting Securities beneficially owned (other than (x) Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction and (y) Voting Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) by such LG Investor and/or any of its Controlled Persons to be present for quorum purposes at any shareholder meeting of the Company considering any merger, amalgamation, plan of arrangement, consolidation, business combination, third party tender offer, asset sale or other similar transaction involving the Company or any of its Subsidiaries (and any proposal relating to (i) the issuance of capital, (ii) an increase in the authorized capital or (iii) an amendment to any constitutional documents in connection with any of the foregoing, in the case of this clause (iii), so long as such proposal does not have a disproportionately adverse effect (not solely resulting from the proportionate number of Voting Securities held by the LG Investors and their Controlled Persons) on the LG Investors and their Controlled Persons as compared to the other holders of Voting Securities) and (b) vote its and their respective pro rata portion of the Excess Securities, or execute proxies or written consents with respect to the same, as the case may be, approving such transaction (and any proposal relating to (i) the issuance of capital, (ii) an increase in the authorized capital or (iii) an amendment to any constitutional documents in connection with any of the foregoing, in the case of this clause (iii), so long as such proposal does not have a disproportionately adverse effect (not solely resulting from the proportionate number of Voting Securities held by the LG Investors and their Controlled Persons) on the LG Investors and their Controlled Persons as compared to the other holders of Voting Securities) in the same proportion as the votes cast by all shareholders of the Company on such matter (other than votes cast by the LG Investors, their respective Affiliates or any Person that is a part of a group with any such Persons). For the purposes of this Section 3.02, Mammoth and its Affiliates shall not under any circumstances constitute part of a group with the LG Investors or any of their Affiliates. For purposes of this Section 3.02, “pro rata portion” means, with respect to any LG Investor and its Controlled Persons, a number of Voting Securities representing Voting Power equal to the product of (x) the Excess Securities multiplied by (y) a fraction, (1) the numerator of which is the Voting Securities beneficially owned (other than (x) Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction and (y) Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) by such LG Investor and/or any of its Controlled Persons and (2) the denominator of which is the Voting Securities beneficially owned (other than (x) Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction and (y) Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) by all LG Investors and/or any of their respective Controlled Persons in the aggregate.

Section 3.03 Investor Board Designees.

(a) Subject to the following sentence, each Investor agrees that, for so long as any Investor has the right to nominate at least one Investor Designee, each Investor shall, and shall cause each of its Controlled Persons to, (i) cause the Voting Securities beneficially owned by such Investor and/or any of its Controlled Persons (other than (x) Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction and (y) Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) to be voted in favor of all Investor Designees of any other Investor and (ii) not vote any of the Voting Securities beneficially owned by such Investor and/or any of its Controlled Persons (other than (x) Voting Securities rehypothecated by a Hedging

 

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Counterparty in connection with a Hedging Transaction and (y) Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) in favor of the removal of any Investor Designee of any other Investor; provided that, if an Investor entitled to nominate any such director shall request in writing the removal of such director, each other Investor shall, and shall cause each of its Controlled Persons to, vote the Voting Securities beneficially owned by such Investor and/or any of its Controlled Persons (other than (x) Voting Securities rehypothecated by a Hedging Counterparty in connection with a Hedging Transaction and (y) Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”) in favor of such removal. Notwithstanding the foregoing, with respect to each Investor and its Controlled Persons, the voting obligations in this Section 3.03 shall only apply, in the case of Mammoth, to the Mammoth Required Vote Amount, and, in the case of each LG Investor, to the LG Required Vote Amount with respect to such LG Investor.

(b) In the event that any person designated by an LG Investor to be an Investor Designee in accordance with the Company Investor Rights Agreement shall have failed to be elected or appointed as a director on the Board in accordance with Section 2.01 of the Company Investor Rights Agreement as a result of a breach by the Company of its obligations under Section 2.01(d) of the Company Investor Rights Agreement or a breach by Mammoth of its obligations under Section 3.03(a) of this Agreement:

(i) the Company shall use its best efforts to appoint such person to the Board as an “additional director” under Applicable Law, including by increasing the size of the Board if necessary therefor;

(ii) to the extent that the Company is unable or unwilling to, or otherwise does not, appoint such person to the Board in accordance with Section 3.03(b)(i) above, such LG Investor shall use its best efforts to pursue all legal remedies reasonably available to it (including seeking specific performance), at the reasonable cost and expense of the breaching Party(ies), to enforce its rights under Article 2 of the Company Investor Rights Agreement and this Section 3.03; and

(iii) Mammoth shall use its best efforts to cooperate with and facilitate the efforts of the Company and such LG Investor under Section 3.03(b)(i) and Section 3.03(b)(ii) above.

Section 3.04 Reserved

ARTICLE IV

OTHER AGREEMENTS

Section 4.01 Agreement to Be Bound. No LG Investor or any of its Controlled Persons shall, directly or indirectly, Transfer any Company Securities (including any primary or secondary sales (by merger, consolidation or otherwise) of any equity interests of any Controlled Person of an LG Investor) unless the transferee, at the time of and as a condition to such Transfer, agrees to be bound by the terms of this Agreement as if it were an LG Investor by executing and delivering such documents as may be necessary in the reasonable opinion of Mammoth and the Company; provided that this Section 4.01 shall not apply to a Transfer of Company Securities that would not constitute a Joinder Transfer. The provisions of this Section 4.01 shall not have any applicability to the Transfer of securities of Leopard Parent, including as a result of a merger, consolidation, recapitalization, or reorganization of Leopard Parent; provided that in the event of a Parent Change of Control Transaction, the rights, benefits, entitlements and obligations of the applicable LG Investor and its Controlled Persons under this Agreement and the Company Investor Rights Agreement shall cease and be of no further force or effect with respect to the applicable LG Investor (and for the avoidance of doubt such LG Investor shall cause its Investor Designees to resign from the Board in connection with such Parent Change of Control), unless (i) the ultimate parent entity of the surviving company in such Parent Change of Control Transaction agrees to comply with the restrictions and obligations of this Agreement and the Company Investor Rights Agreement as if it were Leopard Parent, as applicable, by executing and delivering such documents as may be necessary in the

 

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reasonable opinion of Mammoth and the Company or (ii) such Parent Change of Control involves an LG Investor or any of its Affiliates, in which case the ultimate parent entity of the surviving company in such Parent Change of Control Transaction shall agree to comply with the restrictions and obligations of this Agreement and the Company Investor Rights Agreement as if it were Leopard Parent, as applicable, by executing and delivering such documents as may be necessary in the reasonable opinion of Mammoth and the Company.

Section 4.02 Information Relating to Affiliates. Within 5 Business Days of receipt by an LG Investor of a written request by Mammoth or the Company, such LG Investor shall deliver to Mammoth or the Company, as applicable, (i) a true and correct list identifying, as of the date of such list, each of its Affiliates who beneficially owns Company Securities and/or Voting Securities and the amount of Company Securities and/or Voting Securities beneficially owned by such Affiliates, in each case, to the extent known by such LG Investor after reasonable inquiry and (ii) other information reasonably requested by such Person to monitor compliance with Article 3. In addition, each Investor shall provide to the other Investors written notice as soon as practicable after (x) the entry into any Hedging Transaction or Financing Transaction and (y) any rehypothecation or other event with respect to a Hedging Transaction or a Financing Transaction that would reasonably be expected to result in such Investor losing its right to vote any Company Securities.

Section 4.03 Consequences of Breach. Upon the occurrence of a Willful Breach by an LG Investor of this Agreement that has a material negative consequence on the Company or Mammoth or any of their respective Controlled Persons (that, if curable, is not cured within 10 days of written notice thereof), in addition to any and all other remedies that may be available to any other Party, and without any further action by any Person, the rights, benefits and entitlements of such LG Investor and its Controlled Persons under Section 2.01(c) and Section 3.03 of this Agreement, the Company Investor Rights Agreement and the LG Registration Rights Agreements shall cease and be of no further force or effect; provided that the obligations and agreements of, and restrictions and limitations on, such LG Investor shall remain binding upon such LG Investor and shall continue in full force and effect.

Section 4.04 Inapplicable to Certain Persons and Transactions.

(a) No provision of this Agreement shall be binding on any Person solely because such Person is:

(i) a Hedging Counterparty;

(ii) a holder of Company Securities as a result of the rehypothecation of Company Securities by a Hedging Counterparty or Financing Counterparty;

(iii) a transferee of Company Securities pursuant to settlement under, or pursuant to default rights or the exercise of remedies by a Hedging Counterparty or Financing Counterparty in connection with, any Hedging Transaction or Financing Transaction; or

(iv) an Investor Designee receiving Company Securities as compensation in connection with his or her service as a director of the Board; provided that such Company Securities shall be included in any calculation of beneficial ownership in accordance with the terms of this Agreement.

(b) Notwithstanding anything in this Agreement to the contrary, each Investor shall not, and shall not permit any of its Controlled Persons to, enter into any Hedging Transaction that would result in more than 50% of the Voting Power represented by Voting Securities beneficially owned by such Persons in the aggregate being subject to Hedging Transactions (other than Company Securities beneficially owned by such Person solely as a result of clause (ii)(a) or (ii)(c) of the proviso in the definition of “beneficial ownership”). Except for Hedging Transactions or Financing Transactions, none of the Investors or any of their respective Controlled Persons shall enter into any loan, borrowing, hedging or other similar arrangement with respect to any Company Securities in which such Investor or any of its Controlled Persons has beneficial ownership.

 

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(c) Other than as set forth in Section 4.04(b) of this Agreement or Section 4.01(a) of the Company Investor Rights Agreement, no provision of this Agreement shall prohibit any Person from entering into, performing or settling Hedging Transactions or Financing Transactions in relation to any Company Securities, or granting liens and other security interests in connection therewith, from exercising remedies thereunder, or from permitting a Hedging Counterparty to rehypothecate Company Securities in connection with a Hedging Transaction, nor shall any of the foregoing described in this Section 4.04(c) be deemed, in and of itself, a violation of this Agreement.

Section 4.05 Compliance by Subsidiaries. Leopard Parent shall cause Leopard (and its Subsidiaries), respectively, to comply with their obligations under this Agreement (and guarantees such performance and any liabilities of such Persons arising from a breach hereof, which guarantee shall be immediate and shall not be contingent upon the exercise or enforcement by Mammoth or the Company of whatever remedies they may have against Leopard (and its Subsidiaries).

ARTICLE V

TERMINATION

Section 5.01 Termination. This Agreement shall automatically terminate, without any further action by any Person, upon (i) the written agreement of each Party to terminate this Agreement or (ii) the occurrence of any Change of Control Transaction resulting in the creation of a New Company pursuant to clause (a) of the definition thereof.

Section 5.02 Effect of Termination. Upon any termination of this Agreement in accordance with the provisions of Section 5.01 hereof, this Agreement shall become void and of no further effect; provided that (i) the provisions of Section 4.05, this Section 5.02 and Article 6 shall survive any termination pursuant to Section 5.01 and (ii) any breach occurring prior to such termination shall survive such termination.

ARTICLE VI

MISCELLANEOUS

Section 6.01 Successors and Assigns.

(a) This Agreement shall inure to the benefit of and be binding upon the Parties and their respective heirs, successors, legal representatives and permitted assigns.

(b) Except as expressly provided herein, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by any Party pursuant to any transfer of Company Securities or otherwise.

(c) Except as expressly set forth in this Agreement, no provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

Section 6.02 Notices. All notices, requests and other communications to any Party hereunder shall be in writing (including (i) confirmed facsimile transmission and (ii) electronic mail (“email”) transmission, so long as a receipt of such email is requested and received) and shall be given to the contact information set forth under such Investor’s name on its signature page hereto, or such other address, facsimile number or email address as such Party may hereafter specify in writing to all Parties for the purpose by notice to the other Parties. All notices, requests and other communications shall be deemed received on the date of receipt by the recipient

 

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thereof if received prior to 5:00 p.m. in the place of receipt and such day is a business day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding business day in the place of receipt.

Section 6.03 Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each Party, or in the case of a waiver, by the Party against whom the waiver is to be effective. 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 herein provided shall be cumulative and not exclusive of any rights or remedies provided by Applicable Law. For the avoidance of doubt, the Parties acknowledge and agree that it is intended that the Company and Mammoth are separate beneficiaries of all the LG Investors’ obligations under this Agreement and, accordingly, each of the Company and Mammoth shall be separately entitled to bring an action seeking an injunction to prevent breaches of, or enforce compliance with, such obligations, and any waiver of such obligations shall require the written waiver of each of the Company and Mammoth separately; provided that if Mammoth (together with its Affiliates) ceases to beneficially own at least 5,000,000 Common Shares (adjusted for any stock split, stock dividend, reverse stock split or similar event), Mammoth shall no longer be entitled to enforce, or be required to waive or to consent to any waiver by the Company of, such obligations of the LG Investors. No Investor shall be entitled to recover from any other Investor or the Company (i) punitive damages or (ii) except in the case of a Willful Breach, consequential damages.

Section 6.04 Governing Law. This Agreement and all claims and causes of action arising out of or relating to this Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law rules of such state.

Section 6.05 Jurisdiction. The Parties agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York or any New York State court sitting in New York City, so long as one of such courts shall have subject matter jurisdiction over such suit, action or proceeding, and that any cause of action arising out of this Agreement shall be deemed to have arisen from a transaction of business in the State of New York, and each of the Parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 6.02 shall be deemed effective service of process on such Party.

Section 6.06 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 6.07 Several Liability. The obligations of the Investors under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance or non-performance of the obligations of any other Investor. In the event of any damages arising out of the breach of this Agreement by two or more Investors, each Investor shall be responsible only for the portion of such damages arising from such Investor’s own breach.

Section 6.08 Specific Performance. Each Party acknowledges that the remedies at law of the other Parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact,

 

13

any Party, without posting any bond, and in addition to all other remedies that may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy that may then be available.

Section 6.09 Counterparts; Effectiveness; Third Party Beneficiaries. 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. Until and unless each Party has received a counterpart hereof signed by the other Party, this Agreement shall have no effect and no Party shall have any right or obligation hereunder (whether by virtue of any other oral or written agreement or other communication). No provision of this Agreement is intended to confer any rights, benefits, remedies, obligations, or liabilities hereunder upon any Person other than the Parties and their respective successors and assigns.

Section 6.10 Entire Agreement. This Agreement, the Other Voting Agreement, the Investor Rights Agreements and the Registration Rights Agreements (as defined in the Investor Rights Agreements) constitute the entire agreement among the Parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, among the Parties with respect to the subject matter hereof and thereof. In furtherance hereof, the Parties agree that the Original Agreement is hereby superseded and terminated in its entirety, and shall be of no further force or effect whatsoever, effective immediately as of the entry into this Agreement and the Other Voting Agreement, subject to Section 5.02 of the Original Agreement.

Section 6.11 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party. Upon such a determination, 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 in an acceptable manner so that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

Section 6.12 Authority; Effect. Each Party, severally and not jointly, represents and warrants to and agrees with each other Party that (a) the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized on behalf of such Party and do not violate any agreement or other instrument applicable to such Party or by which its assets are bound and (b) this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, except to the extent that the enforcement of the rights and remedies created hereby is subject to (i) bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors generally and (ii) general principles of equity. This Agreement does not, and shall not be construed to, give rise to the creation of a partnership among any of the Parties, or to constitute any of such Parties members of a joint venture or other association.

[Signature pages follow]

 

14

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

 

LIONSGATE STUDIOS HOLDING CORP.

By:  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Principal Executive Officer, President and Secretary
For Notices:

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404
Attention: Bruce Tobey
Email: btobey@lionsgate.com
with a copy (which shall not constitute notice) to:

Wachtell, Lipton, Rosen & Katz

51 West 52nd Street

New York, NY 10019
Attention:   Mark A. Stagliano
Email:   MAStagliano@wlrk.com

 

15

MHR Fund Management LLC

By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
For Notices:

MHR Fund Management LLC

40 West 57th Street, Floor 24,

New York, NY 10019

Attention: Janet Yeung
Facsimile No.: (212) 262-9356
Email: jyeung@mhrfund.com
with a copy (which shall not constitute notice) to:
    Clifford Chance
  Two Manhattan West 375 9th Ave.
  New York, NY 10001
  Attention: David I. Schultz
  Email: David.Schultz@CliffordChance.com

 

16

MHR Capital Partners Master Account LP
By:   MHR Advisors LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR Capital Partners (100) LP
By:   MHR Advisors LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR Institutional Partners II LP
By:   MHR Institutional Advisors II LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR Institutional Partners IIA LP
By:   MHR Institutional Advisors II LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

17

MHR Institutional Partners III LP
By:   MHR Institutional Advisors III LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
MHR Institutional Partners IV LP
By:   MHR Institutional Advisors IV LLC,
  its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory
For Notices:

MHR Fund Management LLC

40 West 57th Street, Floor 24,

New York, NY 10019

Attention: Janet Yeung
Facsimile No.: (212) 262-9356
Email: jyeung@mhrfund.com
with a copy (which shall not constitute notice) to:
  Clifford Chance
 

Two Manhattan West

375 9th Ave.

  New York, NY 10001
  Attention: David I. Schultz
  Email: David.Schultz@CliffordChance.com

 

18

Liberty Global Ventures Limited
By:  

/s/ Jeremy Evans

  Name: Jeremy Evans
  Title: Director
Liberty Global Ltd.
By:  

/s/ Bryan H. Hall

  Name: Bryan H. Hall
  Title: Executive Vice President, General Counsel

For Notices:

Liberty Global Ltd.

1550 Wewatta Street

Suite 1000

Denver, Colorado 80202

Attention:   General Counsel,
  Legal Department
E-mail:   LegalUS@libertyglobal.com
with a copy to:
Liberty Global Ventures Limited

Griffin House

161 Hammersmith Road

London, United Kingdom, W6 8BS
Attention:   General Counsel,
  Legal Department
E-mail:   LegalUS@libertyglobal.com
with a copy (which shall not constitute notice) to:
A&O Shearman
599 Lexington Avenue
New York, NY 10022
Attention:   Daniel Litowitz
  Cody Wright
E-mail:   daniel.litowitz@aoshearman.com
  cody.wright@aoshearman.com

 

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Exhibit 10.16

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

LIONSGATE STUDIOS HOLDING CORP.

AND

THE PERSONS LISTED ON THE

SIGNATURE PAGES HEREOF

DATED AS OF MAY 6, 2025

TABLE OF CONTENTS

 

     Page  

ARTICLE I DEFINITIONS

      3  

1.1 Defined Terms

      3  

1.2 General Interpretive Principles

      6  

ARTICLE II DEMAND REGISTRATION

      7  

2.1 Demand Registration

      7  

2.2 Effective Registration

      7  

2.3 Underwritten Offerings

      7  

2.4 Priority on Demand Registrations

      8  

2.5 Withdrawal and Cancellation of Registration

      8  

2.6 Registration Statement Form

      9  

ARTICLE III PIGGYBACK REGISTRATIONS

      9  

3.1 Holder Piggyback Registration

      9  

3.2 Priority on Piggyback Registrations

      10  

3.3 Withdrawals

      10  

3.4 Underwritten Offerings

      11  

ARTICLE IV SHELF REGISTRATION

      11  

4.1 Shelf Registration Filing

      11  

4.2 Required Period and Shelf Registration Procedures

      11  

4.3 Underwritten Shelf Offerings

      12  

ARTICLE V STANDSTILL AND SUSPENSION PERIODS

      13  

5.1 Company Standstill Period

      13  

5.2 Suspension Period

      14  

5.3 Holder Standstill Period

      14  

ARTICLE VI REGISTRATION PROCEDURES

      15  

6.1 Company Obligations

      15  

6.2 Holder Obligations

      18  

6.3 Hedging Transactions

      18  

ARTICLE VII INDEMNIFICATION

      19  

7.1 Indemnification by the Company

      19  

7.2 Indemnification by the Holders

      20  

7.3 Notice of Claims, Etc.

      20  

7.4 Contribution

      21  

7.5 Indemnification Payments; Other Remedies; Primacy of Indemnification

      21  

ARTICLE VIII REGISTRATION EXPENSES

      22  

ARTICLE IX RULE 144

      22  

ARTICLE X MISCELLANEOUS

      23  

10.1 Notice Generally

      23  

10.2 Successors and Assigns

      24  

10.3 Amendments; Waivers

      24  

10.4 MHR Representative

      24  

10.5 Calculations of Beneficial Ownership

      24  

10.6 No Third Party Beneficiaries

      24  

10.7 Injunctive Relief

      24  

10.8 Termination of Registration Rights; Survival

      25  

10.9 Attorneys’ Fees

      25  

10.10 Severability

      25  

10.11 Headings

      25  

10.12 Governing Law; Jurisdiction

      25  

10.13 Counterparts and Facsimile Execution

      25  

10.14 Entire Agreement

      25  

10.15 Further Assurances

      25  

 

ii

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp., a corporation organized under the laws of British Columbia, Canada (the “Company”) and the Holders (as hereinafter defined) of Registrable Securities (as hereinafter defined), including any Additional Holders (as hereinafter defined) who subsequently become parties to this Agreement in accordance with the terms of this Agreement.

W I T N E S S E T H :

WHEREAS, Lions Gate Entertainment Corp., a corporation organized under the laws of British Columbia, Canada (“LGEC” prior to the Separation Effective Time (as defined in the Separation Agreement) and “Starz” at and from the Separation Effective Time ) and the Holders entered into a Registration Rights Agreement, dated as of October 22, 2009 (the “Original Agreement”), as amended on February 3, 2016 (together with the Original Agreement, the “LGEC RRA”); and

WHEREAS, the board of directors of LGEC has determined that it is advisable and in the best interests of LGEC and its stakeholders, including its shareholders and creditors, to create two new publicly traded companies that shall operate the Starz Business (as defined in the Separation Agreement) and the LG Studios Business (as defined in the Separation Agreement) by way of a plan of arrangement under applicable corporate law (the “Plan of Arrangement”) pursuant to which, inter alia, LGEC’s shareholders will exchange all of their LGEC Shares (as defined in the Separation Agreement) for New Lionsgate New Common Shares and Starz Common Shares (defined below), in each case, on a pro rata basis and as more fully described in the Separation Agreement, dated as of May 6, 2025, by and between the Company and Starz Entertainment Corp. (“Starz,” f/k/a Lions Gate Entertainment Corp.), a corporation organized under the laws of British Columbia, Canada (the “Separation Agreement”); and

WHEREAS, in connection with the Separation Agreement and the Transactions contemplated thereby, the parties hereto wish to terminate the LGEC RRA and enter into this Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Defined Terms.

As used in this Agreement, the following capitalized terms (in their singular and plural forms, as applicable) have the following meanings:

“Action” has the meaning assigned to such term in Section 7.3 hereof.

“Additional Holders” means any (i) Affiliate of any Holder or (ii) Permitted Assignee, in each case who, at any time and from time to time, owns Registrable Securities, and has agreed to be bound by the terms hereof and thereby has become a Holder for purposes of this Agreement, all at the relevant time.

“Adverse Effect” has the meaning assigned to such term in Section 2.4 hereof.

“Affiliate” of a Person means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such other Person. For purposes of this definition, the term “control” (including the terms “controlled by” and “under common control with”) means the possession,

 

3

direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that in no event shall the Company, Starz, Liberty Global plc (“Liberty”), Warner Bros. Discovery, Inc. (“Discovery”), or any of their respective Subsidiaries, controlled Affiliates, portfolio companies or affiliated investment funds be considered an Affiliate of any Holder or Additional Holder or any of their respective Subsidiaries, Affiliates, portfolio companies or affiliated investment funds, nor shall any Holder or Additional Holder or any of their respective Subsidiaries, Affiliates, portfolio companies or affiliated investment funds be considered to be an Affiliate of the Company, Starz, Liberty, Discovery, or any of their respective Subsidiaries, controlled Affiliates, portfolio companies or affiliated investment funds.

“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement, as the same may be amended, supplemented or restated from time to time.

“Bring-Down Suspension Notice” has the meaning assigned to such term in Section 5.2(b) hereof.

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York are authorized or obligated by law or executive order to close.

“Commission” means the United States Securities and Exchange Commission and any successor United States federal agency or governmental authority having similar powers.

“Common Shares” means the common shares, no par value per share, of the Company, as authorized from time to time.

“Company” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Company Indemnified Person” has the meaning assigned to such term in Section 7.2 hereof.

“Demand Registration” has the meaning assigned to such term in Section 2.1 hereof.

“Demand Request” has the meaning assigned to such term in Section 2.1 hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

“FINRA” has the meaning assigned to such term in Section 6.1(n) hereof.

“Fund Indemnitors” has the meaning assigned to such term in Section 7.5(c) hereof.

“Holder” means any Person who is a member of the MHR Group (including any Additional Holder) who owns Registrable Securities at the relevant time and is or has become a party to this Agreement.

“Indemnified Person” has the meaning assigned to such term in Section 7.1 hereof.

“Indemnitee” has the meaning assigned to such term in Section 7.3 hereof.

“Inspectors” has the meaning assigned to such term in Section 6.1(k) hereof.

“LGEC RRA” has the meaning assigned to such term in the recitals to this Agreement, as the same may be amended, supplemented or restated from time to time.

“Loss” and “Losses” have the meanings assigned to such terms in Section 7.1 hereof.

 

4

“MHR Group” means Dr. Mark H. Rachesky, M.D., MHR Fund Management LLC, its affiliated investment funds and their respective general partners and equity holders, at any time and from time to time, in each case who are Affiliates of Dr. Mark H. Rachesky and/or MHR Fund Management LLC at the relevant time; provided, however, that for purposes of determining (A) the MHR Group’s awareness or knowledge of material adverse information relating to the Company for purposes of Sections 2.5 and 3.3 hereunder, the “MHR Group” means Dr. Mark H. Rachesky, M.D. and any director, manager, officer or employee of MHR Fund Management LLC or of any investment fund Affiliated with either Dr. Mark H. Rachesky, M.D. or MHR Fund Management LLC, considered collectively and in the aggregate, and (B) whether the MHR Group possesses material, non-public information with respect to the Company for purposes of Section 5.2(c) hereunder, the “MHR Group” means (x) Dr. Mark. H. Rachesky, M.D., (y) any director, manager, officer or employee of MHR Fund Management LLC or of any investment fund Affiliated with either Dr. Mark H. Rachesky, M.D. or MHR Fund Management LLC who is authorized to conduct trading activity on behalf of such entities in respect of the Company securities or is authorized to make trading decisions for or on behalf of Dr. Mark H. Rachesky, M.D., MHR Fund Management LLC or any investment fund Affiliated therewith, and (z) any other employee of MHR Fund Management LLC or any investment fund Affiliated with either Dr. Mark H. Rachesky, M.D. or MHR Fund Management LLC who, if in possession of material non-public information regarding the Company, would restrict such entities from trading in the Company securities under the United States federal securities law, in each case considered collectively and in the aggregate.

“MHR Representative” means MHR Fund Management LLC or such other member of the MHR Group as may be designated at any time and from time to time by written notice from the Holders to the Company in accordance with Section 10.1.

“Minimum Registrable Securities” means (i) 2,300,000 Registrable Securities (as adjusted for any stock splits, stock dividends, combinations, reorganizations or similar events) or (ii) such lesser number of Registrable Securities as would be expected to have an aggregate value of at least $20 million based on market prices prevailing at the time of the offering.

“New Lionsgate New Common Shares” shall mean the common shares, without par value, of the Company.

“Participating Holder” means any Holder on whose behalf Registrable Securities are registered pursuant to Article II, III or IV hereof.

“Permitted Assignee” means any member of the MHR Group who receives Registrable Securities from a Holder or a Holder’s Affiliates and who agrees to be bound by the terms hereof and thereby has become a Holder for purposes of this Agreement.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Piggyback Registration” has the meaning assigned to such term in Section 3.1 hereof.

“Piggyback Request” has the meaning assigned to such term in Section 3.1 hereof.

“Piggybacking Holders” has the meaning assigned to such term in Section 3.2 hereof.

“Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus and all material incorporated by reference in such prospectus.

“Records” has the meaning assigned to such term in Section 6.1(k) hereof.

 

5

“register,” “registered” and “registration” mean a registration effected by preparing and filing with the Commission a Registration Statement on an appropriate form in compliance with the Securities Act, and the declaration or order of the Commission of the effectiveness of such Registration Statement under the Securities Act.

“Registrable Securities” means (i) Common Shares and (ii) any securities that may be issued or distributed or be issuable in respect thereof, including by way of stock dividend, stock split or other similar distribution, payment in kind with respect to any interest payment, merger, consolidation, exchange offer, recapitalization or reclassification or similar transaction or exercise or conversion of any of the foregoing, in the case of each of foregoing clause (i) and this clause (ii), which are held by any of the Holders now or at any time in the future; provided, however, that as to any Registrable Securities, such securities shall cease to constitute “Registrable Securities” for purposes of this Agreement if and when (i) a Registration Statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of pursuant such Registration Statement, (ii) such securities are distributed pursuant to Rule 144, (iii) such securities are otherwise sold or transferred (other than in a transaction under clause (i) or (ii) above) by a Person in a transaction in which such Person’s rights under this Agreement are not assigned, (iv) such securities are no longer outstanding or (v) such securities are, in the reasonable determination of the Holder thereof, otherwise freely transferable by such Holder without any restriction under the Securities Act at the time such Holder consummates the sale or transfer of such securities.

“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

“Requesting Holder(s)” has the meaning assigned to such term in Section 2.1 hereof.

“Rule 144” means Rule 144 (or any similar provision then in force) promulgated under the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

“Shelf Registration Statement” has the meaning assigned to such term in Section 4.1(a) hereof.

“Starz Common Shares” means the common shares, without par value, of Starz Entertainment Corp. (f/k/a Lions Gate Entertainment Corp.), created pursuant to the Plan of Arrangement.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person.

“Suspension Notice” has the meaning assigned to such term in Section 5.2(b) hereof.

“Suspension Period” has the meaning assigned to such term in Section 5.2(a) hereof.

“Ten Percent Holder” means any Person that beneficially owns, at the relevant time, at least 10% of the then outstanding Common Shares and is a party to a registration rights agreement with the Company.

“Underwritten Offering” means a registration in which securities of the Company are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

1.2 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as

 

6

well as the singular and to cover all genders. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms “hereof,” “herein,” “hereunder” and similar terms refer to this Agreement as a whole (including the exhibits and schedules hereto), and references herein to “Sections” refer to Sections of this Agreement. The words “include,” “includes” and “including,” when used in this Agreement, shall be deemed to be followed by the words “without limitation.”

ARTICLE II

DEMAND REGISTRATION

2.1 Demand Registration. Subject to the provisions contained in this Section 2.1 and in Sections 5.2 and 5.3 hereof, any Holder or group of Holders may, from time to time (each, a “Requesting Holder” and collectively, the “Requesting Holders”), make a request in writing (a “Demand Request”) that the Company effect the registration under the Securities Act of any specified number of shares of Registrable Securities held by the Requesting Holder(s) (a “Demand Registration”); provided, however, that the Company shall in no event be required to effect:

(a) more than two (2) Demand Registrations in the aggregate (it being agreed by the parties that all of such Demand Registrations remain available as of the date hereof);

(b) more than one (1) Demand Registration in any 12-month period; and

(c) any Demand Registration if the Shelf Registration Statement is then effective, and such Shelf Registration Statement may be utilized by the Requesting Holders for the offering and sale of all of their Registrable Securities without a requirement under the Commission’s rules and regulations for a post-effective amendment thereto.

Subject to the provisions contained in this Section 2.1 and in Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, the Company shall cause to be included in a Registration Statement on an appropriate form under the Securities Act, filed with the Commission as promptly as practicable but in any event not later than 60 days after receiving a Demand Request, such Registrable Securities as may be requested by such Requesting Holders in their Demand Request. The Company shall use its reasonable efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as possible after such filing.

2.2 Effective Registration. A registration shall not count as a Demand Registration under this Agreement (i) unless the related Registration Statement has been declared effective under the Securities Act and has remained effective until such time as (x) all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders (but in no event for a period of more than 180 days after such Registration Statement becomes effective not including any Suspension Periods) or (y) a majority of the Registrable Securities covered thereby held by the Requesting Holders have been withdrawn or cancelled from such Demand Registration (other than as contemplated by the first sentence of Section 2.5); (ii) if, after a Registration Statement has become effective, an offering of Registrable Securities pursuant to such Registration Statement is terminated by any stop order, injunction, or other order of the Commission or other governmental agency or court, unless and until (x) such stop order or injunction is removed, rescinded or otherwise terminated, (y) any Requesting Holder thereafter elects, in its sole discretion, to continue the offering and (z) the related Registration Statement remains effective until the time periods specified in subclauses (x) and (y) of clause (i) above; or (iii) if pursuant to Section 2.4 hereof, the Requesting Holders are cut back to fewer than 75% of the Registrable Securities requested to be registered in the aggregate and at the time of the request there was not in effect the Shelf Registration Statement.

2.3 Underwritten Offerings. If any Requesting Holder in the case of an offering pursuant to a Demand Registration so elects, such offering shall be in the form of an Underwritten Offering. With respect to any such

 

7

Underwritten Offering pursuant to a Demand Registration, the Company and the MHR Representative shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering, which firm shall be reasonably acceptable to the Requesting Holders.

2.4 Priority on Demand Registrations. With respect to any Demand Registration (including any Underwritten Offering of Registrable Securities pursuant to a Demand Registration), subject to Article III, no securities to be sold for the account of any Person (including the Company) other than the Requesting Holders shall be included in a Demand Registration; provided that securities to be sold for the account of the Company and any Ten Percent Holder may be included in such Demand Registration if, and only if, the managing underwriter advises the Requesting Holders and the Company in writing (or, in the case of a Demand Registration not being underwritten, the Requesting Holders determine in good faith after considering the relevant facts and circumstances at the relevant time) that the inclusion of such securities shall not adversely affect the price or success of the offering by the Requesting Holders (an “Adverse Effect”). Furthermore, in the event that the managing underwriter advises the Requesting Holders in writing (or the Requesting Holders determine, as applicable, in good faith after considering the relevant facts and circumstances at the relevant time) that the amount of Registrable Securities proposed to be included in such Demand Registration by the Requesting Holders is sufficiently large (even after exclusion of all securities proposed to be sold for the account of the Company or any Ten Percent Holder pursuant to the immediately preceding sentence) to cause an Adverse Effect, the number of Registrable Securities to be included in such Demand Registration shall be allocated among all such Requesting Holders pro rata for each Holder based on the percentage derived by dividing (i) the number of Registrable Securities that each such Holder requested to be included in such Demand Registration by (ii) the aggregate number of Registrable Securities that all Requesting Holders requested to be included in such Demand Registration; provided, however, that if, as a result of such proration, any Requesting Holder shall not be entitled to include in a registration all Registrable Securities of the class or series that such Holder had requested to be included, such Holder may elect to withdraw its request to include such Registrable Securities in such registration or may reduce the number requested to be included; provided, however, that (a) such request must be made in writing prior to the earlier of the execution of the underwriting agreement, if any, or the execution of the custody agreement with respect to such registration, if any, and (b) such withdrawal or reduction shall be irrevocable.

2.5 Withdrawal and Cancellation of Registration. Any Participating Holder may withdraw its Registrable Securities from a Demand Registration at any time and any Requesting Holders shall have the right to cancel a proposed Demand Registration of Registrable Securities pursuant to this Article II in accordance with the first sentence of Section 3.3 hereof (i) when the request for cancellation is based upon material adverse information relating to the Company that none of the members of the MHR Group were aware of at the time of the Demand Request (including, for the avoidance of doubt, material adverse information that is materially different from the information that the MHR Group was aware of at the time of the Demand Request), (ii) if a Suspension Period occurs after a Demand Request but before the Registrable Securities covered by such Demand Request are sold, transferred, exchanged or disposed of in accordance with such Demand Request, or (iii) if the Company has breached its obligations hereunder with respect to such Demand Registration and such breach has caused, or would reasonably be expected to cause, an Adverse Effect. Upon such cancellation, the Company shall cease all efforts to secure registration with respect to Registrable Securities of Participating Holders and such Demand Registration shall not be counted as a Demand Registration under this Agreement for any purpose; provided, however, that notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the expenses of the Participating Holders incurred in connection with such cancelled registration through the date that is four (4) Business Days after the date on which any Participating Holders (X) had a right to cancel pursuant to the foregoing clauses (i) or (ii), or (Y) became aware of their right to cancel pursuant to the foregoing clause (iii), in each of clause (X) and this clause (Y) to the extent such expenses are as described in clauses (i) through (x) of the first sentence of Article VIII hereof. Any expense reimbursement paid pursuant to clause (Y) of the immediately preceding sentence shall be in addition to any other remedy to which the Participating Holders may

 

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be entitled in law or in equity (but, for the avoidance of doubt, the Participating Holders may not recover the same expense twice).

2.6 Registration Statement Form. Registrations under this Article II shall be on such appropriate registration form of the Commission then applicable to the Company (i) as shall be selected by the Company and as shall be reasonably acceptable to the Requesting Holders and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ requests for such registration. Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the Company proposes to effect registration by filing a registration statement on Form S-3 (or any successor or similar short-form registration statement), (y) such registration is in connection with an Underwritten Offering and (z) the managing underwriter shall advise the Company in writing that, in its or their opinion, the use of another form of registration statement (or the inclusion, rather than the incorporation by reference, of information in the Prospectus related to a registration statement on Form S-3 (or other short-form registration statement)) is of material importance to the success of such proposed offering, then such registration shall be effected on such other form (or such information shall be so included in such Prospectus).

ARTICLE III

PIGGYBACK REGISTRATIONS

3.1 Holder Piggyback Registration. If the Company proposes to file a Registration Statement (including, for the avoidance of doubt, a shelf registration statement or amendment or supplement thereto) with respect to an offering of Common Shares, or securities convertible into or exchangeable for Common Shares, for its own account or for the account of securityholders (other than the Holders) of the Company (except pursuant to registrations of Common Shares, or securities convertible into or exchangeable for Common Shares, to be delivered as consideration in any merger, acquisition or other business combination or registrations on Form S-4 or any successor form, on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan, an offering of securities solely to then existing securityholders of the Company, a dividend reinvestment plan or an exchange offer) on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give written notice of such proposed filing to the Holders not less than 21 days before the anticipated filing date, describing in reasonable detail the proposed registration (including the number and class or series of securities proposed to be registered, the proposed date of filing of such Registration Statement, any proposed means of distribution of such securities, any proposed managing underwriter of such securities and a good faith estimate by the Company of the proposed maximum offering price of such securities as such price is proposed to appear on the facing page of such Registration Statement), and offering such Holders the opportunity to register such number of Registrable Securities of the same class as those being registered by the Company as each such Holder may request in writing (each a “Piggyback Registration”). Subject to Sections 5.2 and 5.3 hereof, upon the written request of any Holder (a “Piggyback Request”), received by the Company no later than ten (10) Business Days after receipt by such Holder of the notice sent by the Company, to register, on the same terms and conditions as the same class of securities otherwise being sold pursuant to such registration, any of such Holder’s Registrable Securities of the same class as those being registered (which request shall state the intended method of disposition thereof if the securities otherwise being sold are being sold by more than one method of disposition), the Company shall use its reasonable efforts to cause such Registrable Securities as to which registration shall have been so requested to be included in the Registration Statement proposed to be filed by the Company on the same terms and conditions as the same class of securities otherwise being sold pursuant to such registration; provided, however, that notwithstanding the foregoing, the Company may at any time, in its sole discretion, without the consent of any other Holder, delay or abandon the proposed offering in which any Holder had requested to participate pursuant to this Section 3.1 or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the related Registration Statement or other governmental approvals, registrations or qualifications. In such event, the Company shall so notify each Holder that had notified the Company in accordance with this Section 3.1 of its

 

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intention to participate in such offering and the Company shall incur no liability for its failure to complete any such offering; provided, however, that in the event the Company has initiated the offering for its own account, the Company shall pay all expenses incurred by a Holder in connection with such delayed, abandoned or cancelled registration to the extent such expenses are described in clauses (i) through (x) of the first sentence of Article VIII hereof.

3.2 Priority on Piggyback Registrations. If the managing underwriter for a Piggyback Registration effected by means of an Underwritten Offering (or in the case of a Piggyback Registration not being underwritten, the Company, in good faith) advises the Holders in writing that the inclusion of the Registrable Securities and securities proposed to be included by Holders who have elected to participate pursuant to Section 3.1 and any other Persons who have elected to participate in such offering pursuant to written agreements with the Company (in each case, “Piggybacking Holders”) and proposed to be included by the Company, would cause an Adverse Effect, then the Company shall be obligated to include in such Registration Statement only that number of Registrable Securities which, in the judgment of the managing underwriter (or the Company in good faith, as applicable), would not have an Adverse Effect, in the priority listed below:

(a) if the registration is undertaken for the Company’s account: (x) first, the securities that the Company desires to include, and (y) second, the securities (or, in the case of a Holder, the Registrable Securities) proposed to be included by the Piggybacking Holders. Any reduction in the number of securities to be included in a Registration Statement pursuant to the foregoing clause (y) shall be effected by allocating the number of securities to be included (after including securities contemplated by clause (x)) pro rata among all the Piggybacking Holders based for each such Piggybacking Holder on the percentage derived by dividing (i) the aggregate number of Common Shares that such Piggybacking Holder holds by (ii) the total number of Common Shares that all such Piggybacking Holders hold in the aggregate; and

(b) if the registration is undertaken at the demand of a securityholder of the Company (other than the Holders), (x) first, the securities that the demanding securityholder desires to include, and (y) second, the securities (or in the case of Holders, the Registrable Securities) proposed to be included by the Piggybacking Holders and by the Company. Any reduction in the number of securities to be included in a Registration Statement pursuant to the foregoing clause (y) shall be effected by allocating the number of securities to be included (after including securities contemplated by clause (x)) pro rata among the Piggybacking Holders based for each such Piggybacking Holder on the percentage derived by dividing (i) the aggregate number of Common Shares that such Piggybacking Holder holds by (ii) the total number of Common Shares that all such Piggybacking Holders hold in the aggregate; provided, however, that the Company shall be entitled to participate on a pro rata basis up to the sum of the number of securities allocated to the Piggybacking Holders pursuant to this sentence, unless the managing underwriter (or in the case of a Piggyback Registration not being underwritten, the Company, in good faith) determines that inclusion of additional securities by the Company above such amount would not cause an Adverse Effect.

3.3 Withdrawals. Each Holder shall have the right to withdraw its request for inclusion of all or any of its Registrable Securities in any Registration Statement pursuant to this Article III by giving written notice to the Company of its request to withdraw; provided, however, that (i) such request must be made in writing prior to the execution of the underwriting agreement with respect to such registration or, in the case of a non-underwritten offering, the effective date of the Registration Statement or applicable prospectus supplement pertaining to such offering and (ii) such withdrawal shall be irrevocable. In the event that a Holder withdraws and (i) the request for withdrawal is based upon material adverse information relating to the Company that none of the members of the MHR Group were aware of at the time of the Holder’s Piggyback Request (including, for the avoidance of doubt, material adverse information that is materially different from the information that the MHR Group was aware of at the time of the Piggyback Request), (ii) if a Suspension Period occurs after such Piggyback Request but before the Registrable Securities covered by such Piggyback Request are sold, transferred, exchanged or disposed of in accordance with such Piggyback Request, or (iii) if the Company has breached its obligations hereunder with respect to such Piggyback Registration and such breach has caused, or would reasonably be expected to cause, an

 

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Adverse Effect, then the Company shall pay all expenses incurred by a Holder in connection with such cancelled registration through the date that is four (4) Business Days after the date on which any Participating Holders (X) had a right to withdraw pursuant to the foregoing clauses (i) or (ii), or (Y) became aware of their right to withdraw pursuant to the foregoing clause (iii), in each of clause (X) and this clause (Y) to the extent such expenses are as described in clauses (i) through (x) of the first sentence of Article VIII hereof. Any expense reimbursement paid pursuant to clause (Y) of the immediately preceding sentence shall be in addition to any other remedy to which the Participating Holders may be entitled in law or in equity (but, for the avoidance of doubt, the Participating Holders may not recover the same expense twice).

3.4 Underwritten Offerings.

(a) In connection with the exercise of any registration rights granted to Holders pursuant to this Article III, if the registration is to be effected by means of an Underwritten Offering, the Company may condition participation in such registration by any such Holder upon inclusion of the Registrable Securities being so registered in such underwriting and such Holder’s entering into an underwriting agreement pursuant to Section 6.2(d) hereof.

(b) With respect to any offering of Registrable Securities in the form of an Underwritten Offering in which Holders elect to participate pursuant to this Article III, the Company and the MHR Representative shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering.

ARTICLE IV

SHELF REGISTRATION

4.1 Shelf Registration Filing.

(a) Subject to Section 4.1(b) and Sections 5.2 and 5.3 hereof, within sixty (60) days following a written request by a Holder (a “Shelf Request”), the Company shall file with the Commission, and use its reasonable efforts to have declared effective as soon as practicable, a Registration Statement (the “Shelf Registration Statement”) relating to the offer and sale of all of the Registrable Securities held by the Holders to the public from time to time, on a delayed or continuous basis. Subject to Section 4.3(c) hereof, any Shelf Registration Statement may be a universal shelf registration statement that relates to the offer and sale of the Company securities other than Registrable Securities. Any registration effected pursuant this Section 4.1(a) shall not be deemed to constitute a Demand Registration. The Shelf Registration Statement shall specify the intended method of distribution of the subject Registrable Securities substantially in the form of Exhibit A attached hereto. The Company shall file the Shelf Registration Statement on Form S-3 or, if the Company or the offering of the Registrable Securities does not satisfy the requirements for use of such form, such other form as may be appropriate; provided, however, that if the Shelf Registration Statement is not filed on Form S-3, the Company shall, promptly upon meeting the requirements for use of such form, file an appropriate amendment to the Shelf Registration Statement to convert it to Form S-3.

(b) Any subsequent Shelf Requests after the initial Shelf Request pursuant to Section 4.1(a) may only be made after such date that the MHR Group beneficially owns at least one (1) million additional Common Shares (as adjusted for any stock splits, stock dividends, combinations, reorganizations or similar events) which were not beneficially owned by the MHR Group as of the date of the immediately prior Shelf Request.

4.2 Required Period and Shelf Registration Procedures. Subject to Section 4.1 and to any Suspension Period(s) referred to below, the Company shall (i) cause the Shelf Registration Statement to include a resale Prospectus intended to permit each Holder to sell, at such Holder’s election, all or part of the applicable class or series of Registrable Securities held by such Holder without restriction under the Securities Act, (ii) use its

 

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reasonable efforts to prepare and file with the Commission such supplements, amendments and post-effective amendments to such Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement continuously effective for so long as the securities registered thereunder constitute Registrable Securities, and (iii) use its reasonable efforts to cause the resale Prospectus to be supplemented by any Prospectus supplement required in order for such Holders to sell their Registrable Securities without restriction under the Securities Act.

4.3 Underwritten Shelf Offerings.

(a) Subject to Section 4.3(b), if the Holders who are included in any offering pursuant to a Shelf Registration Statement so elect, and such Holders have requested to include at least the Minimum Registrable Securities owned by them in such offering, then the Holders may elect to conduct such offering in the form of an Underwritten Offering and the terms of this Article IV shall otherwise apply with respect to such Underwritten Offering on such Shelf Registration Statement. With respect to any such qualifying Underwritten Offering, the Company and the MHR Representative shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering, which firm shall be reasonably acceptable to the Participating Holders.

(b) Notwithstanding Sections 4.1 and 4.3(a), subject to the Company’s compliance with its obligations under Article III hereof, the Company shall not be obligated to take any action (including, for the avoidance of doubt, filing a Shelf Registration Statement or amendment thereto) to effect an Underwritten Offering on a Shelf Registration Statement and no Holder shall sell, or offer to sell, any Registrable Securities in any Underwritten Offering requested pursuant to Section 4.3(a) if, within the 30-day period prior to any election by a Holder pursuant to Section 4.3(a), the Company has issued a notice to the Holders pursuant to Section 3.1 hereof of a proposed registered Underwritten Offering of Common Shares for its own account, continuing while the Company continues in good faith to pursue such registered Underwritten Offering and ending upon the earliest to occur of: (A) in the case of a Registration Statement on Form S-3 (or any successor or similar short-form registration statement), forty-five (45) days and in the case of a Registration Statement on Form S-1 (or any successor or similar long-form registration statement), sixty (60) days, in each case following the Company’s issuance of the notice to the Holders pursuant to Section 3.1 hereof, unless, on or prior to such date, the Company shall have executed an underwriting agreement with the managing underwriter with respect to such proposed Underwritten Offering; provided that such forty-five (45) or sixty (60) day period (as applicable) shall be extended for up to forty-five (45) additional days if the underwriting agreement has not been executed because there has been a failure to resolve all requirements of the Commission in connection with declaring such Registration Statement or applicable prospectus supplement effective during such additional 45-day period; (B) the abandonment, cessation or withdrawal of such Underwritten Offering; (C) 90 days following the effective date of the prospectus supplement pertaining to such Underwritten Offering; or (D) the date that all of the Common Shares covered thereby have been disposed of in accordance with the intended methods of disposition. If the Company issues a notice of a proposed Underwritten Offering of Common Shares for its own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws such Underwritten Offering, any notice thereafter issued by the Company of a subsequent proposed Underwritten Offering of Common Shares for its own account pursuant to Section 3.1 hereof shall not pre-empt the Company’s obligations pursuant to Section 4.1 or 4.3(a) or restrict the Holders’ rights to sell, or offer to sell, any Registrable Securities in any Underwritten Offering requested pursuant to Section 4.1 or 4.3(a) during the 30-day period commencing on the day immediately following the date that the MHR Group receives notice from the Company of such abandonment, cessation or withdrawal of such Underwritten Offering.

(c) With respect to any Underwritten Offering of Registrable Securities on a Shelf Registration Statement initiated by the Holders pursuant to Section 4.3(a) hereof, no securities to be sold for the account of any Person (including the Company) other than the Holders shall be included in such Underwritten Offering; provided that securities to be sold for the account of the Company and any Ten Percent Holder may be included in such Shelf Registration Statement if, and only if, the managing underwriter advises the Holders and the Company in writing that the inclusion of such securities would not have an Adverse Effect on such Underwritten Offering.

 

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ARTICLE V

STANDSTILL AND SUSPENSION PERIODS

5.1 Company Standstill Period. Subject to Sections 2.4 and 4.3(c), in the event of (i) any Demand Registration pursuant to Section 2.1 hereof in which the Requesting Holders are registering more than the Minimum Registrable Securities in the aggregate, (ii) any Underwritten Offering pursuant to Section 2.3 hereof or (iii) any Underwritten Offering on a Shelf Registration Statement pursuant to Section 4.3(a) hereof, the Company agrees not to, without the prior written consent of the Holders, (x) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, relating to, any securities of the Company that are substantially similar to such Registrable Securities, including but not limited to any options or warrants to purchase Common Shares or any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Shares or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (y) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or any such other securities, whether any such transaction described in clause (x) or this clause (y) above is to be settled by delivery of Common Shares or such other securities, in cash or otherwise (in each case, other than (A) any securities issued upon the exercise of any option or warrant or the conversion, exchange or redemption of any security outstanding as of the beginning of the applicable standstill period, (B) any options, restricted stock units or other equity awards granted to employees, officers or directors pursuant to any of the Company’s employee or director stock option, incentive or benefit plans existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (C) any securities issued pursuant to the Company’s employee stock purchase plan or pursuant to equity awards of any kind under any of the Company’s employee or director stock option, incentive or benefit plans existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (D) the filing of any registration statement on Form S-8 or other appropriate form as required by the Act, and any amendments to such forms, in respect of any securities or any other of the Company’s equity based securities issuable pursuant to any employee benefit plan of the Company existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (E) any Common Shares issuable in lieu of the payment of cash dividends pursuant to the Company’s quarterly cash dividend policy, (F) any Common Shares or any other of the Company’s equity securities, in an amount up to an aggregate of 10.0% of the Company’s fully-diluted shares outstanding as the beginning of the applicable standstill period, issuable in connection with any transaction, including, without limitation, a merger, acquisition or other business combination, an asset sale or a carve-out, and the filing of any registration statement in connection therewith, (G) any Common Shares or any other of the Company’s equity securities issuable in connection with any rescission of purchases of Common Shares under the Company’s 401(k) Plan and (H) any transaction or series of related transactions involving up to $150,000,000 of the Company’s equity or debt securities) (a) in the case of any Demand Registration pursuant to Section 2.1 in which the Requesting Holders are registering more than the Minimum Registrable Securities in the aggregate or any Underwritten Offering pursuant to Section 2.4, during the ninety (90) day period (not including any Suspension Periods) commencing on the effective date of the Registration Statement relating to such Registrable Securities or, if earlier, the date that all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders or the abandonment, cessation or withdrawal of such offering by all the Requesting Holders, and (b) in the case of an Underwritten Offering on a Shelf Registration Statement pursuant to Section 4.3(a) hereof, during the ninety (90) day period (not including any Suspension Periods) commencing on the effective date of the prospectus supplement pertaining to such Underwritten Offering or, if earlier, the date that all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders or the abandonment, cessation or withdrawal of such Underwritten Offering by all the Requesting Holders.

 

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5.2 Suspension Period.

(a) The Company shall not be required to use reasonable efforts to cause a Registration Statement to be filed pursuant to this Agreement or to be declared effective, or to keep current any Registration Statement or file any prospectus supplement or amendment (other than as required by the periodic report and proxy statement disclosure requirements of the Securities Exchange Act of 1934, including Sections 13 or 15(d) thereof and Forms 10-K, 10-Q, 8-K or 14A thereunder), or permit Holders to sell or transfer securities thereunder, if the Company possesses material non-public information and determines in good faith that it need not otherwise make such disclosure or filing; provided that at all times the Company continues in good faith to make public disclosures so as to continue and comply with its past practice with respect to the non-disclosure of material non-public information. In furtherance of and pursuant to the last proviso of the preceding sentence and following public disclosure by the Company, at such time as the Company no longer possesses material non-public information regarding the Company, the Suspension Period (as defined below) shall immediately terminate. Any period during which the Holders are prohibited from effecting sales or the Company exercises its rights in each case pursuant to this Section 5.2(a) shall constitute a “Suspension Period.”

(b) Each Holder agrees that, upon receipt of a written notice from the Company of a Suspension Period (a “Suspension Notice”), such Holder shall forthwith discontinue any disposition of Registrable Securities pursuant to any Registration Statement until such Holder’s receipt of a notice from the Company to the effect that such Suspension Period has terminated. On the last day of any thirty (30) day period following delivery of the Suspension Notice during which the Suspension Period remains in effect, the Company shall deliver a written notice to the MHR Representative that the Suspension Period remains in effect (a “Bring-Down Suspension Notice”). Any Suspension Notice or Bring-Down Suspension Notice shall (i) be signed by the Chief Executive Officer, Chief Financial Officer, General Counsel, President or any Vice President of the Company and (ii) provide that, as of the date of such Suspension Notice or Bring-Down Suspension Notice, as the case may be, the Company (a) possesses material non-public information, (b) has determined in good faith that it need not publicly disclose such material non-public information and (c) has continued in good faith to make public disclosures so as to continue and comply with its past practice with respect to the non-disclosure of material non-public information. If so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession, of the most recent Prospectus covering such Registrable Securities at the time of receipt of such Suspension Notice. The Company covenants and agrees that it shall not deliver a Suspension Notice with respect to a Suspension Period unless all the Company employees, officers and directors who are subject to the Company’s Insider Trading Compliance Policy, and who are prohibited by the terms thereof from effecting any public sales of securities of the Company beneficially owned by them, are so prohibited for the duration of such Suspension Period. In the event of a Suspension Notice, the Company shall, promptly after such time as it no longer possesses material non-public information that it has determined in good faith need not otherwise be disclosed, provide notice to all Holders that the Suspension Period has ended, and take any and all actions necessary or desirable to give effect to any Holders’ rights under this Agreement that may have been affected by such notice, including the Holders’ Demand Registration rights and rights with respect to the Shelf Registration Statement.

(c) During any time that any member of the MHR Group possesses material, non-public information with respect to the Company, no Holder may effect any sales under any Registration Statement of the Company; provided, however, that the MHR Group shall not be in breach of this Section 5.2(c) if the Company (X) was aware of the material non-public information in the MHR Group’s possession at the time of the Holder’s sale (including, for the avoidance of doubt, non-public information in the MHR Group’s possession at the time of the Holder’s sale that is reasonably required in order to determine the materiality of such non-public information) and (Y) did not issue a Suspension Notice with respect thereto prior to such sale.

5.3 Holder Standstill Period. Each Holder of Registrable Securities (whether or not such Registrable Securities are covered by the Shelf Registration Statement or by a Registration Statement filed pursuant to Section 2.1 or 3.1 hereof) agrees to enter into a customary lock-up agreement with the managing underwriter for

 

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any Underwritten Offering of the Company’s securities for its own account with respect to the same class or series of securities being registered pursuant to such Registration Statement, containing terms reasonably acceptable to such managing underwriter (with an exception for transfers pursuant to hedging transactions entered into prior to the time that the MHR Representative had notice of such Underwritten Offering), covering the period commencing 15 days prior to the effective date of the Registration Statement or, if applicable, the prospectus supplement, pertaining to such Underwritten Offering relating to such securities of the Company and ending on the 90th day after such effective date (or such shorter period as shall have been agreed to by the Company’s executive officers and directors in their respective lock-up agreements); provided, however, that the obligations of each Holder under this Section 5.3 shall apply only: (i) if such Holder shall be afforded the right (whether or not exercised by the Holder) to include Registrable Securities in such Underwritten Offering in accordance with and subject to the provisions of Article III hereof; (ii) to the extent that each of the Company’s executive officers, directors and Ten Percent Holders enter into lock-up agreements with such managing underwriter, which agreements shall not contain terms more favorable to such executive officers, directors or Ten Percent Holders than those contained in the lock-up agreement entered into by such Holder; and (iii) if the aggregate restriction periods in such Holder’s lock-up agreements entered into pursuant to this Section 5.3 shall not exceed an aggregate of 180 days during any 365-day period.

ARTICLE VI

REGISTRATION PROCEDURES

6.1 Company Obligations. Whenever the Company is required pursuant to this Agreement to register Registrable Securities, it shall (it being understood and agreed that except as otherwise expressly set forth in this Article VI, if any other provision of this Agreement is more favorable to the Holders than the provisions of this Article VI, such other provision shall apply):

(a) provide the Participating Holders and their respective counsel with a reasonable opportunity to review, and comment on, any Registration Statement to be prepared and filed pursuant to this Agreement prior to the filing thereof with the Commission, and make all changes thereto as any Participating Holder may reasonably request in writing to the extent such changes are required, in the reasonable judgment of the Company’s counsel, by the Securities Act and, except in the case of a registration under Article III, not file any Registration Statement or Prospectus or amendments or supplements thereto, which registers Registrable Securities held by Holders, to which the Holders of a majority of the class or series of Registrable Securities covered by the same or the underwriter or underwriters, if any, shall reasonably object;

(b) cause any such Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of such Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission promulgated thereunder and (ii) not to contain any 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 light of the circumstances under which they were made, not misleading (except that this clause (ii) shall not apply to statements made or statements omitted by the Company in reliance upon and in conformity with written information furnished to the Company by any Holder solely with respect to such Holder and specifically for inclusion in the Registration Statement or any amendment or supplement thereto), or, if for any other reason it shall be necessary to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission an amendment or supplement to such Registration Statement or Prospectus which will correct such statement or omission or effect such compliance;

(c) furnish, at its expense, to the Participating Holders such number of conformed copies of such Registration Statement and of each such amendment thereto (in each case including all exhibits thereto, except

 

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that the Company shall not be obligated to furnish to any such Participating Holder more than two (2) copies of such exhibits), such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus and each supplement thereto), and such number of the documents, if any, incorporated by reference in such Registration Statement or Prospectus, as the Participating Holders reasonably may request; provided that the Company shall have no obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR or IDEA system;

(d) use its reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under such securities or “blue sky” laws of the states of the United States as the Participating Holders reasonably shall request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to do any and all other acts and things that may be necessary or advisable to enable the Participating Holders to consummate the disposition in such jurisdictions of the Registrable Securities covered by such Registration Statement, except that the Company shall not, for any such purpose, be required to qualify generally to do business as a foreign corporation in any jurisdiction in which it is not obligated to be so qualified, or to subject itself to material taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; and use its reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such securities regulatory authorities or governmental agencies as may be necessary to enable such Participating Holders to consummate the disposition of such Registrable Securities;

(e) promptly notify the Participating Holders, at any time when a Prospectus or Prospectus supplement relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the occurrence of any event as a result of which, the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any 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, which untrue statement or omission requires amendment of the Registration Statement or supplementing of the Prospectus, and, as promptly as practicable (subject to Section 5.2 hereof), prepare and furnish, at its expense, to the Participating Holders a reasonable number of copies of a supplement to such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include 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 with respect to Registrable Securities registered pursuant to such Registration Statement, each Holder agrees that it shall not enter into any transaction for the sale of any Registrable Securities pursuant to such Registration Statement during the time after the furnishing of the Company’s notice that the Company is preparing a supplement to or an amendment of such Prospectus or Registration Statement and until the filing and effectiveness thereof;

(f) use its reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to holders of its securities, as soon as practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first month of the first fiscal quarter after the effective date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(g) provide, and cause to be maintained, a transfer agent and registrar for the Registrable Securities covered by such Registration Statement (which transfer agent and registrar shall, at the Company’s option, be the Company’s existing transfer agent and registrar) from and after a date not later than the effective date of such Registration Statement;

(h) notify the Participating Holders and the managing underwriter, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Registration Statement, Prospectus, Prospectus supplement or post-effective amendment related to such Registration Statement has been filed, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective,

 

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(ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

(i) use its reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as practicable;

(j) in the event of an Underwritten Offering of Registrable Securities pursuant to Section 2.3 or 4.3 hereof, enter into customary agreements (including underwriting agreements in customary form, which may include, in the case of an Underwritten Offering on a firm commitment basis, “lock-up” obligations substantially similar to Section 5.1 hereof) and take such other actions (including using its reasonable efforts to make such road show presentations and otherwise engaging in such reasonable marketing support in connection with any such Underwritten Offering, including the obligation to make its executive officers available for such purpose if so requested by the managing underwriter for such offering) as are reasonably requested by the managing underwriter in order to expedite or facilitate the sale of such Registrable Securities;

(k) make available for inspection by each Participating Holder, any underwriter participating in any disposition pursuant to such registration, and any attorney, accountant or other agent retained by such Participating Holder or any such underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and any of its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the officers, directors and employees of the Company to supply all information reasonably requested by any such Inspector in connection with such registration, provided, however, that (i) in connection with any such inspection, any such Inspectors shall cooperate to the extent reasonably practicable to minimize any disruption to the operation by the Company of its business and shall comply with all the Company site safety rules, (ii) Records and information obtained hereunder shall be used by such Inspectors only to exercise their due diligence responsibility and (iii) Records or information furnished or made available hereunder shall be kept confidential and shall not be disclosed by such Participating Holder, underwriter or Inspectors unless (A) the disclosing party advises the other party that the disclosure of such Records or information is necessary to avoid or correct a misstatement or omission in a Registration Statement or is otherwise required by law, (B) the release of such Records or information is ordered pursuant to a subpoena or other order from a court or governmental authority of competent jurisdiction ( provided, however, that such Person shall use its reasonable efforts to provide the Company with prior written notice of such requirement to afford the Company with an opportunity to seek a protective order or other appropriate remedy in response) or (C) such Records or information otherwise become generally available to the public other than through disclosure by such Participating Holder, underwriter or Inspector in breach hereof or by any Person in breach of any other confidentiality arrangement;

(l) in connection with any registration of an Underwritten Offering of Registrable Securities hereunder, use all reasonable efforts to furnish to each Participating Holder and to the managing underwriter, if any, a signed counterpart, addressed to such Participating Holder and the managing underwriter, if any, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company’s independent public accountants pursuant to Statement on Auditing Standards No. 72 (or any successor thereto), each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as each such Participating Holder and the managing underwriter, if any, reasonably requests;

(m) in connection with any registration of an Underwritten Offering of Registrable Securities hereunder, provide officers’ certificates and other customary closing documents;

 

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(n) reasonably cooperate with each seller of Registrable Securities and any underwriter in the disposition of such Registrable Securities and with underwriters’ counsel, if any, in connection with any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”);

(o) use its reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed;

(p) cooperate with the Participating Holders and the managing underwriter, underwriters or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and

(q) use its reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities.

6.2 Holder Obligations. Each Holder agrees:

(a) that it shall furnish to the Company such information regarding such Holder and the plan and method of distribution of Registrable Securities intended by such Holder (i) as the Company may, from time to time, reasonably request in writing and (ii) as shall be required by law or by the Commission in connection therewith;

(b) that information obtained by it or by its Inspectors shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such information is made generally available to the public;

(c) to use its reasonable efforts, prior to making any disclosure allowed by Section 6.1(k)(iii)(A) or (B) hereof, to inform the Company that such disclosure is necessary to avoid or correct a misstatement or omission in the Registration Statement or ordered pursuant to a subpoena or other order from a court or governmental authority of competent jurisdiction or otherwise required by law;

(d) in the case of an Underwritten Offering of Registrable Securities pursuant to this Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with the underwriters for such offering containing such representations and warranties by each Holder and such other terms and provisions as are customarily contained in such underwriting agreements, including customary indemnity and contribution provisions and “lock-up” obligations substantially similar to Section 5.3 hereof; and

(e) to notify the Company as soon as practicable if it becomes aware of the occurrence of any event, development or fact as a result of which a Registration Statement or any Prospectus or supplement, as then in effect, contains an untrue statement of a material fact with respect to such Holder or omits to state any material fact with respect to such Holder required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Holder shall not be required to notify the Company, or may limit such notification, as the case may be, solely to the extent necessary, as determined in good faith by such Holder on the advice of counsel, in order not to be in violation of or default under any applicable law, regulation, rule, stock exchange requirement, self-regulatory body, supervisory authority, legal process or fiduciary duty.

6.3 Hedging Transactions. The parties agree that the provisions of this Agreement relating to the registration, offer and sale of Registrable Securities apply also to any transaction which transfers some or all of the economic risk of ownership of Registrable Securities, including any forward contract, equity swap, put or call, put or call equivalent position, collar, margin loan, sale of exchangeable security or similar transaction

 

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(including the registration, offer and sale under the Securities Act of Registrable Securities pledged to the counterparty to such transaction or of securities of the same class as the underlying Registrable Securities by the counterparty to such transaction in connection therewith), and that the counterparty to such transaction shall be selected in the sole discretion of the Holders.

ARTICLE VII

INDEMNIFICATION

7.1 Indemnification by the Company. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless to the full extent permitted by law (i) each Holder, such Holder’s Affiliates and their respective officers, directors, managers, partners, stockholders, employees, advisors, agents and other representatives of the foregoing, and each of their respective successors and assigns, and each Person who controls any of the foregoing within the meaning of the Securities Act and the Exchange Act, and (ii) any selling agent selected by the Holders or their Affiliates with respect to such Registrable Securities (each such Person being sometimes referred to as an “Indemnified Person”), against any and all losses, claims, damages, liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Person is a party thereto) and expenses (including reasonable costs of investigations and legal expenses), joint or several (each a “Loss” and collectively “Losses”), to which such Indemnified Person may become subject, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which such Registrable Securities were included for registration under the Securities Act, including any preliminary or summary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus) or any document incorporated by reference therein, or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading; and the Company agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall have no obligation to provide any indemnification or reimbursement hereunder (i) to the extent that any such Losses (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Holder, or on the Holder’s behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, or (ii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of Holders), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary Prospectus and corrected in a final, amended or supplemented Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the final, amended or supplemented Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act, or (iii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of Holders), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a final Prospectus but was corrected in an amended or supplemented final Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the amended or supplemented final Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act. The indemnity provided in this Section 7.1 shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Person and shall survive the transfer or disposal of the

 

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Registrable Securities by the Holder or any such other Persons. The Company will also indemnify, if applicable and if requested, underwriters, selling brokers, dealer managers and similar securities industry professionals participating in any distribution pursuant hereto, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Indemnified Persons. This indemnity shall be in addition to any liability the Company may otherwise have.

7.2 Indemnification by the Holders. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each Holder shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7.1 hereof) the Company, each director and officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act and the Exchange Act (each such Person being sometimes referred to as a “Company Indemnified Person”), against Losses to which the Company or any such Persons may become subject under the Securities Act or otherwise, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which Registrable Securities were included for registration under the Securities Act, or any preliminary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus), or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading, in each case, only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder, or on such Holder’s behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement; and each Holder agrees to reimburse such Company Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that a Holder’s aggregate liability under this Agreement shall be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount and expenses) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to such registration.

7.3 Notice of Claims, Etc. Promptly after receipt by any Person entitled to indemnity under Section 7.1 or 7.2 hereof (an “Indemnitee”) of notice of the commencement of any action or proceeding (an “Action”) involving a claim referred to in such Sections, such Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice to such indemnifying party of the commencement of such Action; provided, however, that the failure of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations under Sections 7.1 or 7.2 hereof, except to the extent that the indemnifying party is actually prejudiced by such failure. In case an Action is brought against any Indemnitee, and such Indemnitee notifies the indemnifying party of the commencement thereof, each indemnifying party shall be entitled to participate therein and, to the extent it elects to do so by written notice delivered to the Indemnitee promptly after receiving the aforesaid notice, to assume the defense thereof with counsel selected by such Indemnitee and reasonably satisfactory to such indemnifying party. Notwithstanding the foregoing, the Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party, (ii) the indemnifying party shall not have employed counsel to take charge of the defense of such Action, reasonably promptly after notice of the commencement thereof or (iii) such Indemnitee reasonably shall have concluded that there may be defenses available to it which are different from or additional to those available to the indemnifying party which, if the indemnifying party and the Indemnitee were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the events specified in clauses (i), (ii) or this clause (iii) of the preceding sentence shall have occurred or otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be borne by the indemnifying party; it being understood, however, that the indemnifying

 

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party shall not, in connection with any one such claim or proceeding, or separate but substantially similar or related claims or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnitees hereunder, or for fees and expenses that are not reasonable. Anything in this Section 7.3 to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any action effected without its prior written consent (which consent shall not unreasonably be withheld or delayed), but if settled with the prior written consent of the indemnifying party, or if there shall be a final judgment adverse to the Indemnitee, the indemnifying party agrees to indemnify the Indemnitee from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement or compromise, with respect to any pending or threatened action or claim in respect of which the Indemnitee would be entitled to indemnification or contribution hereunder (whether or not the Indemnitee is an actual party to such action or claim), which (i) does not include as a term thereof the unconditional release of the Indemnitee from all liability in respect of such action or claim or (ii) includes an admission of fault, culpability or a failure to act by or on behalf of the Indemnitee.

7.4 Contribution. If the indemnification provided for in this Article VII is unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand, which relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitee or indemnifying party, and such parties’ relative intent, knowledge, access to information and opportunity to correct or mitigate the damage in respect of or prevent the untrue statement or omission giving rise to such indemnification obligation; provided, however, that a Holder’s aggregate liability under this Section 7.4 shall be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount but before deducting expenses) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to such registration. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7.4 were determined solely by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above. 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 is not guilty of such fraudulent misrepresentation.

7.5 Indemnification Payments; Other Remedies; Primacy of Indemnification.

(a) Periodic payments of amounts required to be paid pursuant to this Article VII shall be made during the course of the investigation or defense, as and when reasonably itemized bills therefor are delivered to the indemnifying party in respect of any particular Loss as incurred.

(b) The remedies provided in this Article VII are not exclusive and shall not limit any rights or remedies that may otherwise be available to an Indemnitee at law or in equity.

(c) Primacy of Indemnification. The Company hereby acknowledges that certain of the Indemnified Persons have certain rights to indemnification, advancement of expenses and/or insurance provided by MHR Fund Management LLC and/or certain of its Affiliates (collectively, the “Fund Indemnitors”). The Company hereby agrees that (i) it is the indemnitor of first resort (i.e., its obligations to the Indemnified Persons are primary and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for the same Losses incurred by any of the Indemnified Persons are secondary to any such obligation of the Company), (ii) that it shall be liable for the full amount of all Losses to the extent legally permitted and as required by the terms of this Agreement and the articles and other organizational documents of the Company (or any other agreement between the Company and the relevant Indemnified Person), without regard to any rights any Indemnified Person may have against the Fund Indemnitors, and (iii) it irrevocably waives, relinquishes and

 

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releases the Fund Indemnitors from any and all claims (x) against the Fund Indemnitors for contribution, indemnification, subrogation or any other recovery of any kind in respect thereof and (y) that any Indemnified Person must seek indemnification from any Fund Indemnitor before the Company must perform its indemnification obligations under this Agreement. No advancement or payment by the Fund Indemnitors on behalf of any Indemnified Person with respect to any claim for which such Indemnified Person has sought indemnification from the Company hereunder shall affect the foregoing. The Fund Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery which any Indemnified Person would have had against the Company if the Fund Indemnitors had not advanced or paid any amount to or on behalf of such Indemnified Person. The Company and the Indemnified Persons agree that the Fund Indemnitors are express third party beneficiaries of this Article  VII.

ARTICLE VIII

REGISTRATION EXPENSES

In connection with any offerings pursuant to a Registration Statement hereunder, the Company shall pay (i) all registration and filing fees, (ii) all fees and expenses of compliance with state securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” laws qualifications of the Registrable Securities), (iii) printing and duplicating expenses, (iv) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (v) fees and disbursements of counsel for the Company and fees and expenses of independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters or with any required special audits), (vi) the reasonable fees and expenses of any special experts retained by the Company, (vii) fees and expenses in connection with any review of underwriting arrangements by FINRA, (viii) reasonable fees and expenses of not more than one counsel for the Participating Holders (as a group), (ix) fees and expenses in connection with listing, if applicable, the Registrable Securities on a securities exchange or the Nasdaq National Market, and (x) all duplicating, distribution and delivery expenses. In connection any offerings pursuant to a Registration Statement, each Participating Holder shall pay (a) any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities by such Participating Holder in connection with an Underwritten Offering; (b) any out-of-pocket expenses of such Participating Holder including any fees and expenses of brokers or counsel to such Participating Holder (other than as set forth in clause (viii) of the immediately preceding sentence); and (c) any applicable transfer taxes.

ARTICLE IX

RULE 144

With a view to making available to the Holders the benefits of Rule 144 and any other similar rule or regulation of the Commission that may at any time permit a Holder to sell Registrable Securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company covenants that, from and after the time that and for so long as it is subject to Section 13 or 15(d) of the Exchange Act thereafter, it shall use its reasonable efforts to file in a timely manner all reports required to be filed by it under the Exchange Act, and that it shall comply with the requirements of Rule 144(c), as such Rule may be amended from time to time (or any similar rule or regulation hereafter adopted by the Commission), regarding the availability of current public information to the extent required to enable any Holder to sell Registrable Securities without registration under the Securities Act pursuant to the resale provisions of Rule 144 (or any similar rule or regulation). Upon the request of any Holder, the Company shall promptly deliver to such Holder a written statement as to whether it has complied with such requirements and, upon such Holder’s compliance with the applicable provisions of Rule 144 and its delivery of such documents and certificates as the Company’s transfer agent may reasonably request in connection therewith, shall take such reasonable action as may be required (including using its reasonable

 

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efforts to cause legal counsel to issue an appropriate opinion) to cause its transfer agent to effectuate any transfer of Registrable Securities properly requested by such Holder, in accordance with the terms and conditions of Rule 144.

ARTICLE X

MISCELLANEOUS

10.1 Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be deemed sufficiently given or made if in writing and signed by the party making the same, and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback, addressed as follows:

if to any Holder or the MHR Representative, at:

MHR Fund Management LLC

40 West 57th Street, Floor 24,

New York, NY 10019

Attention: Janet Yeung

Facsimile No.: (212) 262-9356

Email: jyeung@mhrfund.com

with copies to:

Clifford Chance Two Manhattan West 

375 9th Ave.

New York, NY 10001

Attention: David I. Schultz

Email: David.Schultz@CliffordChance.com

and if to the Company, to:

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Attention: General Counsel

E-mail: Bruce Tobey

with copies to:

Wachtell, Lipton, Rosen & Katz

51 W. 52nd Street

New York, NY 10019

Attn: Mark A. Stagliano

Telephone: (212) 403-1060

Facsimile: (212) 403-2060

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served and received on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail (by registered or certified mail, return receipt requested, postage prepaid),

 

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whichever is earlier. Each Holder as of the date hereof acknowledges and agrees that, as of the date hereof, it holds the number of Registrable Securities set forth next to its name on Schedule I attached hereto. Any member of the MHR Group that desires to become an Additional Holder in accordance with the terms of this Agreement shall provide written notice to the Company setting forth its address and the number of Registrable Securities held by such Person and agreeing to be bound by the terms hereof, and upon receipt of such notice the Company shall amend Schedule I attached hereto to reflect such Additional Holder, its address and the number of Registrable Securities held thereby without any further action or consent required from the parties to this Agreement. From time to time and promptly following a written request by the Company, each such Holder and Additional Holder shall provide written notice to the Company of any increase or decrease in the number of Registrable Securities held by such Person, and upon receipt of any such notice, the Company shall amend Schedule I attached hereto to reflect such increase or decrease in the number of Registrable Securities held by such Person without any further action or consent required from the parties to this Agreement; provided that if any such Holder or Additional Holder discloses such increase or decrease in the number of Registrable Securities held by such person in any filing made pursuant to Section 13 or 16 of the Exchange Act, such Holder or Additional Holder, as the case may be, shall be deemed to have provided notice to the Company as provided in this sentence. Solely for purposes of this Agreement, in determining the number of Registrable Securities outstanding at any time and the Holders thereof, the Company shall be entitled to rely conclusively on Schedule I attached hereto (as so amended in accordance with the terms of this Agreement to reflect all such written notices received by the Company from time to time).

10.2 Successors and Assigns. This Agreement may not be assigned by any Holder other than to a Permitted Assignee ( provided, however, that such Permitted Assignee agrees in writing to be bound by the terms of this Agreement), whereupon such Permitted Assignee shall be deemed to be a Holder for all purposes of this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and all successors to the Company and the Holders.

10.3 Amendments; Waivers. Subject to Section 10.4, (a) any provision of this Agreement affecting a party may be amended or modified only by a written agreement signed by each such affected party and (b) no provision of this Agreement affecting a party may be waived except pursuant to a writing signed by each such affected party.

10.4 MHR Representative. The Company shall be entitled to rely upon the written communications of the MHR Representative, acting on behalf of any Holder, relating to matters addressed in this Agreement as communications of the Holders, including, without limitation, elections by Holders to exercise registration rights and any amendments, waivers or consents made pursuant to this Agreement. Any notice or communication delivered to the MHR Representative shall be deemed to have been delivered to each Holder for all purposes hereof. Each of the Holders shall use their reasonable efforts to conduct all written communications to the Company pursuant to this Agreement through the MHR Representative.

10.5 Calculations of Beneficial Ownership. All calculations of beneficial ownership for purposes of this Agreement shall be calculated in accordance with Rule 13(d) of the Exchange Act, as amended from time to time.

10.6 No Third Party Beneficiaries. This Agreement is not intended to and shall not confer any rights or remedies on any persons that are not party hereto other than as expressly set forth in Section 7.5(c), Article VII and Section 10.4.

10.7 Injunctive Relief. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including, without limitation, specific

 

24

performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

10.8 Termination of Registration Rights; Survival. All rights granted to Holders under this Agreement shall terminate on the first anniversary of the date that the MHR Group both (a) beneficially owns in the aggregate less than 28,568,868 Common Shares (which amount, for the avoidance of doubt, represents approximately 10% of the Common Shares outstanding as of May 7, 2025), subject to equitable adjustment for any stock splits, stock dividends, combinations, reorganizations or similar events, so long as such number of Common Shares (as adjusted) beneficially owned represents less than 10% of the Common Shares outstanding at that time, and (y) ceases to have a designated representative on the Board of Directors of the Company. The provisions of Articles VII, VIII and X shall survive any termination of this Agreement.

10.9 Attorneys’ Fees. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall, to the extent permitted by applicable law, be entitled to recover reasonable attorneys’ fees in addition to any other available remedy.

10.10 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

10.11 Headings. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

10.12 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth in Section 10.1 hereof, such service to become effective ten (10) days after such mailing.

10.13 Counterparts and Facsimile Execution. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by facsimile signatures.

10.14 Entire Agreement. Except for that certain letter agreement by and between Dr. Mark H. Rachesky, M.D. and the Company, dated July 9, 2009 (other than paragraphs (a) through (e) of such letter agreement), this Agreement (i) embodies the entire agreement and understanding between the Company and the Holders in respect of the subject matter contained herein and (ii) supersedes all prior agreements and understandings between the parties with respect to the subject matter of this Agreement. In furtherance hereof, the parties hereby agree that the LGEC RRA is hereby superseded and terminated in its entirety, and shall be of no further force or effect whatsoever, effective immediately as of the entry into this Agreement.

10.15 Further Assurances. Each of the parties hereto shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

[Remainder of page intentionally left blank.]

 

25

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

LIONSGATE STUDIOS HOLDING CORP.

By:

  

/s/ Adrian Kuzycz

  Name: Adrian Kuzycz
  Title: Principal Executive Officer, Secretary and President

 

MHR CAPITAL PARTNERS MASTER ACCOUNT LP

MHR Advisors LLC, its general partner

By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR CAPITAL PARTNERS (100) LP

MHR Advisors LLC, its general partner

By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR INSTITUTIONAL PARTNERS II LP
By:   MHR Institutional Advisors II LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

MHR INSTITUTIONAL PARTNERS IIA LP
By:   MHR Institutional Advisors II LLC, its general partner
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

26

MHR INSTITUTIONAL PARTNERS III LP
By:   MHR Institutional Advisors III LLC, its general partner
By:  

/s/ Janet Yeung

Name:   Janet Yeung
Title:   Authorized Signatory

 

MHR INSTITUTIONAL PARTNERS IV LP
By:   MHR Institutional Advisors IV LLC, its general partner
By:  

/s/ Janet Yeung

Name:   Janet Yeung
Title:   Authorized Signatory

 

MHR FUND MANAGEMENT LLC
By:  

/s/ Janet Yeung

  Name: Janet Yeung
  Title: Authorized Signatory

 

27

EXHIBIT A

PLAN OF DISTRIBUTION

The selling securityholders, or their pledgees, donees, transferees, or any of their successors in interest selling shares received from a named selling securityholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus (all of whom may be selling securityholders), may sell the securities from time to time on any stock exchange or automated interdealer quotation system on which the securities are listed, in the over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at prices otherwise negotiated. The selling securityholders may sell the securities by one or more of the following methods, without limitation:

 

  (a)

block trades in which the broker or dealer so engaged shall attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

  (b)

purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant to this prospectus;

 

  (c)

an exchange distribution in accordance with the rules of any stock exchange on which the securities are listed;

 

  (d)

ordinary brokerage transactions and transactions in which the broker solicits purchases;

 

  (e)

privately negotiated transactions;

 

  (f)

short sales;

 

  (g)

through the writing of options on the securities, whether or not the options are listed on an options exchange;

 

  (h)

through the distribution of the securities by any selling securityholder to its partners, members or stockholders;

 

  (i)

one or more underwritten offerings on a firm commitment or best efforts basis; and

 

  (j)

any combination of any of these methods of sale.

The selling securityholders may also transfer the securities by gift. The issuer does not know of any arrangements by the selling securityholders for the sale of any of the securities.

The selling securityholders may engage brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers to participate in effecting sales of the securities. These brokers, dealers or underwriters may act as principals, or as an agent of a selling securityholder. Broker-dealers may agree with a selling securityholder to sell a specified number of the securities at a stipulated price per security. If the broker-dealer is unable to sell securities acting as agent for a selling securityholder, it may purchase as principal any unsold securities at the stipulated price. Broker-dealers who acquire securities as principals may thereafter resell the securities from time to time in transactions on any stock exchange or automated interdealer quotation system on which the securities are then listed, at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. Broker-dealers may use block transactions and sales to and through broker-dealers, including transactions of the nature described above. The selling securityholders may also sell the securities in accordance with Rule 144 under the Securities Act of 1933, as amended, rather than pursuant to this prospectus, regardless of whether the securities are covered by this prospectus.

From time to time, one or more of the selling securityholders may pledge, hypothecate or grant a security interest in some or all of the securities owned by them. The pledgees, secured parties or persons to whom the securities have been hypothecated shall, upon foreclosure in the event of default, be deemed to be selling securityholders. As and when a selling securityholder takes such actions, the number of securities offered under

 

28

this prospectus on behalf of such selling securityholder shall decrease. The plan of distribution for that selling securityholder’s securities shall otherwise remain unchanged. In addition, a selling securityholder may, from time to time, sell the securities short, and, in those instances, this prospectus may be delivered in connection with the short sales and the securities offered under this prospectus may be used to cover short sales.

To the extent required under the Securities Act of 1933, as amended, the aggregate amount of selling securityholders’ securities being offered and the terms of the offering, the names of any agents, brokers, dealers or underwriters and any applicable commission with respect to a particular offer shall be set forth in an accompanying prospectus supplement. Any underwriters, dealers, brokers or agents participating in the distribution of the securities may receive compensation in the form of underwriting discounts, concessions, commissions or fees from a selling securityholder and/or purchasers of selling securityholders’ securities for whom they may act (which compensation as to a particular broker-dealer might be in excess of customary commissions).

The selling securityholders and any underwriters, brokers, dealers or agents that participate in the distribution of the securities may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, and any discounts, concessions, commissions or fees received by them and any profit on the resale of the securities sold by them may be deemed to be underwriting discounts and commissions.

A selling securityholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of the securities in the course of hedging the positions they assume with that selling securityholder, including, without limitation, in connection with distributions of the securities by those broker-dealers. A selling securityholder may enter into option or other transactions with broker-dealers that involve the delivery of the securities offered hereby to the broker-dealers, who may then resell or otherwise transfer those securities. A selling securityholder may also loan or pledge the securities offered hereby to a broker-dealer and the broker-dealer may sell the securities offered hereby so loaned or upon a default may sell or otherwise transfer the pledged securities offered hereby.

A selling securityholder may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by the selling securityholder or borrowed from the selling securityholder or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from the selling securityholder in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions shall be an underwriter and, if not identified in this prospectus, shall be identified in the applicable prospectus supplement (or a post-effective amendment).

The selling securityholders and other persons participating in the sale or distribution of the securities shall be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M. This regulation may limit the timing of purchases and sales of any of the securities by the selling securityholders and any other person. The anti-manipulation rules under the Securities Exchange Act of 1934 may apply to sales of securities in the market and to the activities of the selling securityholders and their affiliates. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. These restrictions may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities.

The issuer has agreed to indemnify in certain circumstances the selling securityholders and any brokers, dealers and agents (who may be deemed to be underwriters), if any, of the securities covered by the registration statement, against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The

 

29

selling securityholders have agreed to indemnify the issuer in certain circumstances against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

The issuer agreed to register the securities under the Securities Act of 1933, as amended, and to keep the registration statement of which this prospectus is a part effective for a specified period of time. The issuer has generally agreed to pay all expenses in connection with this offering, including the fees and expenses of counsel of the selling securityholders, but not including any underwriting discounts, concessions, commissions or fees of the selling securityholders or any applicable transfer taxes.

The issuer shall not receive any proceeds from sales of any securities by the selling securityholders.

The issuer cannot assure you that the selling securityholders shall sell all or any portion of the securities offered hereby.

 

30

SCHEDULE I

 

31

Exhibit 10.17

REGISTRATION RIGHTS AGREEMENT

BY AND AMONG

LIONSGATE STUDIOS HOLDING CORP.

AND

THE PERSONS LISTED ON THE

SIGNATURE PAGES HEREOF

DATED AS OF MAY 6, 2025

TABLE OF CONTENTS

 

          Page  
ARTICLE I DEFINITIONS      4  
1.1    Defined Terms      4  
1.2    General Interpretive Principles      7  
ARTICLE II DEMAND REGISTRATION      8  
2.1    Demand Registration      8  
2.2    Effective Registration      8  
2.3    Underwritten Offerings      8  
2.4    Priority on Demand Registrations      8  
2.5    Withdrawal and Cancellation of Registration      9  
2.6    Registration Statement Form      9  
ARTICLE III PIGGYBACK REGISTRATIONS      10  
3.1    Holder Piggyback Registration      10  
3.2    Priority on Piggyback Registrations      10  
3.3    Withdrawals      11  
3.4    Underwritten Offerings      12  
ARTICLE IV SHELF REGISTRATION      12  
4.1    Shelf Registration Filing      12  
4.2    Required Period and Shelf Registration Procedures      12  
4.3    Underwritten Shelf Offerings      12  
ARTICLE V STANDSTILL AND SUSPENSION PERIODS      13  
5.1    Company Standstill Period      13  
5.2    Suspension Period      14  
5.3    Holder Standstill Period      15  
ARTICLE VI REGISTRATION PROCEDURES      16  
6.1    Company Obligations      16  
6.2    Holder Obligations      19  
6.3    Hedging Transactions      19  
ARTICLE VII INDEMNIFICATION      20  
7.1    Indemnification by the Company      20  
7.2    Indemnification by the Holders      21  
7.3    Notice of Claims, Etc.      21  
7.4    Contribution      22  
7.5    Indemnification Payments; Other Remedies; Primacy of Indemnification      22  
ARTICLE VIII REGISTRATION EXPENSES      23  
ARTICLE IX RULE 144      23  
ARTICLE X MISCELLANEOUS      23  
10.1    Notice Generally      23  
10.2    SuDDessors and Assigns      25  
10.3    Amendments; Waivers      25  
10.4    Liberty Representative      25  
10.5    Calculations of Beneficial Ownership      25  
10.6    No Third Party Beneficiaries      25  
10.7    Injunctive Relief      26  
10.8    Termination of Registration Rights; Survival      26  

 

ii

          Page  
10.9    Attorneys’ Fees      26  
10.10    Severability      26  
10.11    Headings      26  
10.12    Governing Law; Jurisdiction      26  
10.13    Counterparts and Facsimile Execution      26  
10.14    Entire Agreement      26  
10.15    Further Assurances      27  

 

iii

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of May 6, 2025, by and among Lionsgate Studios Holding Corp., a corporation organized under the laws of British Columbia, Canada (the “Company”), and the Holders (as hereinafter defined) of Registrable Securities (as hereinafter defined), including any Additional Holders (as hereinafter defined) who subsequently become parties to this Agreement in accordance with the terms of this Agreement.

W I T N E S S E T H :

WHEREAS, Lions Gate Entertainment Corp., a corporation organized under the laws of British Columbia, Canada (“LGEC” prior to the Separation Effective Time (as defined in the Separation Agreement) and “Starz” at and from the Separation Effective Time ) and the Holders entered into a Registration Rights Agreement, dated as of November 10, 2015 (the “Original Agreement”); and

WHEREAS, the board of directors of LGEC has determined that it is advisable and in the best interests of LGEC and its stakeholders, including its shareholders and creditors, to create two new publicly traded companies that shall operate the Starz Business (as defined in the Separation Agreement) and the LG Studios Business (as defined in the Separation Agreement) by way of a plan of arrangement under applicable corporate law (the “Plan of Arrangement”) pursuant to which, inter alia, LGEC’s shareholders will exchange all of their LGEC Shares (as defined in the Separation Agreement) for New Lionsgate New Common Shares and Starz Common Shares (defined below), in each case, on a pro rata basis and as more fully described in the Separation Agreement, dated as of May 6, 2025, by and between the Company and Starz Entertainment Corp. (“Starz,” f/k/a Lions Gate Entertainment Corp.), a corporation organized under the laws of British Columbia, Canada(the “Separation Agreement”); and

WHEREAS, in connection with the Separation Agreement and the Transactions contemplated thereby, the parties hereto wish to terminate the Original Agreement and enter into this Agreement.

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following capitalized terms (in their singular and plural forms, as applicable) have the following meanings:

“Action” has the meaning assigned to such term in Section 7.3 hereof.

“Additional Holders” means any (i) Affiliate of any Holder or (ii) Permitted Assignee, in each case who, at any time and from time to time, owns Registrable Securities, and has agreed to be bound by the terms hereof and thereby has become a Holder for purposes of this Agreement, all at the relevant time.

“Adverse Effect” has the meaning assigned to such term in Section 2.4 hereof.

“Affiliate” of a Person means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such other Person. For purposes of this definition,

 

4

the term “control” (including the terms “controlled by” and “under common control with”) means the possession, direct or indirect, of the power to cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, that in no event shall the Company, Starz, Warner Bros. Discovery, Inc. (“Discovery”), John C. Malone, MHR Fund Management LLC (“MHR”) or any of their respective Subsidiaries, controlled Affiliates, portfolio companies or affiliated investment funds be considered an Affiliate of any Holder or Additional Holder or any of their respective Subsidiaries, Affiliates, portfolio companies or affiliated investment funds, nor shall any Holder or Additional Holder or any of their respective Subsidiaries, Affiliates, portfolio companies or affiliated investment funds be considered to be an Affiliate of the Company, Starz, Discovery, John C. Malone, MHR or any of their respective Subsidiaries, controlled Affiliates, portfolio companies or affiliated investment funds.

“Agreement” has the meaning assigned to such term in the introductory paragraph to this Agreement, as the same may be amended, supplemented or restated from time to time.

“Bring-Down Suspension Notice” has the meaning assigned to such term in Section 5.2(b) hereof.

“Business Day” means each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which banking institutions in the Borough of Manhattan, The City of New York are authorized or obligated by law or executive order to close.

“Commission” means the United States Securities and Exchange Commission and any successor United States federal agency or governmental authority having similar powers.

“Common Shares” means the common shares, no par value per share, of the Company, as authorized from time to time.

“Company” has the meaning assigned to such term in the introductory paragraph to this Agreement.

“Company Indemnified Person” has the meaning assigned to such term in Section 7.2 hereof.

“Demand Registration” has the meaning assigned to such term in Section 2.1 hereof.

“Demand Request” has the meaning assigned to such term in Section 2.1 hereof.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

“FINRA” has the meaning assigned to such term in Section 6.1(n) hereof.

“Holder” means any Person who is a member of the Liberty Group (including any Additional Holder) who owns Registrable Securities at the relevant time and is or has become a party to this Agreement.

“Indemnified Person” has the meaning assigned to such term in Section 7.1 hereof.

“Indemnitee” has the meaning assigned to such term in Section 7.3 hereof.

“Indemnitors” has the meaning assigned to such term in Section 7.5(c) hereof.

“Inspectors” has the meaning assigned to such term in Section 6.1(k) hereof.

“Liberty” means Liberty Global Ltd.

 

5

“Liberty Group” means Liberty and its Subsidiaries; provided, however, that for purposes of determining (A) the Liberty Group’s awareness or knowledge of material adverse information relating to the Company for purposes of Sections 2.5 and 3.3 hereunder and (B) whether the Liberty Group possesses material, non-public information with respect to the Company for purposes of Section 5.2(c) hereunder, the “Liberty Group” means (x) any director, officer or employee of Liberty or any of its Subsidiaries who, if in possession of material non-public information regarding the Company, would restrict Liberty from trading in the Company securities under the United States federal securities law.

“Liberty Representative” means Liberty Global Ventures Limited or such other member of the Liberty Group as may be designated at any time and from time to time by written notice from the Holders to the Company in accordance with Section 10.1.

“Loss” and “Losses” have the meanings assigned to such terms in Section 7.1 hereof.

“Minimum Registrable Securities” means (i) 2,000,000 Registrable Securities (as adjusted for any stock splits, stock dividends, combinations, reorganizations or similar events) or (ii) such lesser number of Registrable Securities as would be expected to have an aggregate value of at least $20 million based on market prices prevailing at the time of the offering.

“New Lionsgate New Common Shares” shall mean the common shares, without par value, of the Company.

“Participating Holder” means any Holder on whose behalf Registrable Securities are registered pursuant to Articles II, III or IV hereof.

“Permitted Assignee” means any member of the Liberty Group who receives Registrable Securities from a Holder or a Holder’s Affiliates and who agrees to be bound by the terms hereof and thereby has become a Holder for purposes of this Agreement.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Piggybacking Holders” has the meaning assigned to such term in Section 3.2 hereof.

“Piggyback Registration” has the meaning assigned to such term in Section 3.1 hereof.

“Piggyback Request” has the meaning assigned to such term in Section 3.1 hereof.

“Prospectus” means the prospectus included in any Registration Statement, all amendments and supplements to such prospectus and all material incorporated by reference in such prospectus.

“Records” has the meaning assigned to such term in Section 6.1(k) hereof.

“register,” “registered” and “registration” mean a registration effected by preparing and filing with the Commission a Registration Statement on an appropriate form in compliance with the Securities Act, and the declaration or order of the Commission of the effectiveness of such Registration Statement under the Securities Act.

“Registrable Securities” means (i) Common Shares and (ii) any securities that may be issued or distributed or be issuable in respect thereof, including by way of stock dividend, stock split or other similar distribution, payment in kind with respect to any interest payment, merger, consolidation, exchange offer, recapitalization or reclassification or similar transaction or exercise or conversion of any of the foregoing, in the case of each of

 

6

foregoing clause (i) and this clause (ii), which are held by any of the Holders now or at any time in the future; provided, however, that as to any Registrable Securities, such securities shall cease to constitute “Registrable Securities” for purposes of this Agreement if and when (i) a Registration Statement with respect to the sale of such securities shall have been declared effective under the Securities Act and such securities shall have been disposed of pursuant such Registration Statement, (ii) such securities are distributed pursuant to Rule 144, (iii) such securities are otherwise sold or transferred (other than in a transaction under clause (i) or (ii) above) by a Person in a transaction in which such Person’s rights under this Agreement are not assigned, (iv) such securities are no longer outstanding or (v) such securities are, in the reasonable determination of the Holder thereof, otherwise freely transferable by such Holder without any restriction under the Securities Act at the time such Holder consummates the sale or transfer of such securities.

“Registration Statement” means any registration statement of the Company filed with, or to be filed with, the Commission under the rules and regulations promulgated under the Securities Act, including the Prospectus, amendments and supplements to such registration statement, including post-effective amendments, and all exhibits and all material incorporated by reference in such registration statement.

“Requesting Holder(s)” has the meaning assigned to such term in Section 2.1 hereof.

“Rule 144” means Rule 144 (or any similar provision then in force) promulgated under the Securities Act.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute, and the rules and regulations of the Commission thereunder.

“Shelf Registration Statement” has the meaning assigned to such term in Section 4.1(a) hereof.

“Starz Common Shares” means the common shares, without par value, of Starz Entertainment Corp. (f/k/a Lions Gate Entertainment Corp.), created pursuant to the Plan of Arrangement.

“Subsidiary” means, with respect to any Person, any entity of which securities or other ownership interests having voting power to elect a majority of the board of directors or other persons performing similar functions are directly or indirectly owned by such Person.

“Suspension Notice” has the meaning assigned to such term in Section 5.2(b) hereof.

“Suspension Period” has the meaning assigned to such term in Section 5.2(a) hereof.

“Ten Percent Holder” means any Person that beneficially owns, at the relevant time, at least 10% of the then outstanding Common Shares and is a party to a registration rights agreement with the Company.

“Underwritten Offering” means a registration in which securities of the Company are sold to an underwriter or underwriters on a firm commitment basis for reoffering to the public.

1.2 General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned to this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms “hereof,” “herein,” “hereunder” and similar terms refer to this Agreement as a whole (including the exhibits and schedules hereto), and references herein to “Sections” refer to Sections of this Agreement. The words “include,” “includes” and “including,” when used in this Agreement, shall be deemed to be followed by the words “without limitation.”

 

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ARTICLE II

DEMAND REGISTRATION

2.1 Demand Registration. Subject to the provisions contained in this Section 2.1 and in Sections 5.2 and 5.3 hereof, any Holder or group of Holders may, from time to time (each, a “Requesting Holder” and collectively, the “Requesting Holders”), make a request in writing (a “Demand Request”) that the Company effect the registration under the Securities Act of any specified number of shares of Registrable Securities held by the Requesting Holder(s) (a “Demand Registration”); provided, however, that the Company shall in no event be required to effect:

(a) more than two (2) Demand Registrations in the aggregate;

(b) more than one (1) Demand Registration in any 12-month period; and

(c) any Demand Registration if the Shelf Registration Statement is then effective, and such Shelf Registration Statement may be utilized by the Requesting Holders for the offering and sale of all of their Registrable Securities without a requirement under the Commission’s rules and regulations for a post-effective amendment thereto.

Subject to the provisions contained in this Section 2.1 and in Sections 5.2 and 5.3 hereof, upon receipt of a Demand Request, the Company shall cause to be included in a Registration Statement on an appropriate form under the Securities Act, filed with the Commission as promptly as practicable but in any event not later than 60 days after receiving a Demand Request, such Registrable Securities as may be requested by such Requesting Holders in their Demand Request. The Company shall use its reasonable efforts to cause any such Registration Statement to be declared effective under the Securities Act as promptly as possible after such filing.

2.2 Effective Registration. A registration shall not count as a Demand Registration under this Agreement (i) unless the related Registration Statement has been declared effective under the Securities Act and has remained effective until such time as (x) all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders (but in no event for a period of more than 180 days after such Registration Statement becomes effective not including any Suspension Periods) or (y) a majority of the Registrable Securities covered thereby held by the Requesting Holders have been withdrawn or cancelled from such Demand Registration (other than as contemplated by the first sentence of Section 2.5); (ii) if, after a Registration Statement has become effective, an offering of Registrable Securities pursuant to such Registration Statement is terminated by any stop order, injunction, or other order of the Commission or other governmental agency or court, unless and until (x) such stop order or injunction is removed, rescinded or otherwise terminated, (y) any Requesting Holder thereafter elects, in its sole discretion, to continue the offering and (z) the related Registration Statement remains effective until the time periods specified in subclauses (x) and (y) of clause (i) above; or (iii) if pursuant to Section 2.4 hereof, the Requesting Holders are cut back to fewer than 75% of the Registrable Securities requested to be registered in the aggregate and at the time of the request there was not in effect the Shelf Registration Statement.

2.3 Underwritten Offerings. If any Requesting Holder in the case of an offering pursuant to a Demand Registration so elects, such offering shall be in the form of an Underwritten Offering. With respect to any such Underwritten Offering pursuant to a Demand Registration, the Company and Liberty shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering, which firm shall be reasonably acceptable to the Requesting Holders.

2.4 Priority on Demand Registrations. With respect to any Demand Registration (including any Underwritten Offering of Registrable Securities pursuant to a Demand Registration), subject to Article III, no securities to be sold for the account of any Person (including the Company) other than the Requesting Holders

 

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shall be included in a Demand Registration; provided that securities to be sold for the account of the Company and any Ten Percent Holder may be included in such Demand Registration if, and only if, the managing underwriter advises the Requesting Holders and the Company in writing (or, in the case of a Demand Registration not being underwritten, the Requesting Holders determine in good faith after considering the relevant facts and circumstances at the relevant time) that the inclusion of such securities shall not adversely affect the price or success of the offering by the Requesting Holders (an “Adverse Effect”). Furthermore, in the event that the managing underwriter advises the Requesting Holders in writing (or the Requesting Holders determine, as applicable, in good faith after considering the relevant facts and circumstances at the relevant time) that the amount of Registrable Securities proposed to be included in such Demand Registration by the Requesting Holders is sufficiently large (even after exclusion of all securities proposed to be sold for the account of the Company or any Ten Percent Holder pursuant to the immediately preceding sentence) to cause an Adverse Effect, the number of Registrable Securities to be included in such Demand Registration shall be allocated among all such Requesting Holders pro rata for each Holder based on the percentage derived by dividing (i) the number of Registrable Securities that each such Holder requested to be included in such Demand Registration by (ii) the aggregate number of Registrable Securities that all Requesting Holders requested to be included in such Demand Registration; provided, however, that if, as a result of such proration, any Requesting Holder shall not be entitled to include in a registration all Registrable Securities of the class or series that such Holder had requested to be included, such Holder may elect to withdraw its request to include such Registrable Securities in such registration or may reduce the number requested to be included; provided, further, however, that (a) such request must be made in writing prior to the earlier of the execution of the underwriting agreement, if any, or the execution of the custody agreement with respect to such registration, if any, and (b) such withdrawal or reduction shall be irrevocable.

2.5 Withdrawal and Cancellation of Registration. Any Participating Holder may withdraw its Registrable Securities from a Demand Registration at any time and any Requesting Holders shall have the right to cancel a proposed Demand Registration of Registrable Securities pursuant to this Article II in accordance with the first sentence of Section 3.3 hereof (i) when the request for cancellation is based upon material adverse information relating to the Company that the Liberty Group was not aware of at the time of the Demand Request (including, for the avoidance of doubt, material adverse information that is materially different from the information that the Liberty Group was aware of at the time of the Demand Request), (ii) if a Suspension Period occurs after a Demand Request but before the Registrable Securities covered by such Demand Request are sold, transferred, exchanged or disposed of in accordance with such Demand Request, or (iii) if the Company has breached its obligations hereunder with respect to such Demand Registration and such breach has caused, or would reasonably be expected to cause, an Adverse Effect. Upon such cancellation, the Company shall cease all efforts to secure registration with respect to Registrable Securities of Participating Holders and such Demand Registration shall not be counted as a Demand Registration under this Agreement for any purpose; provided, however, that notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the expenses of the Participating Holders incurred in connection with such cancelled registration through the date that is four (4) Business Days after the date on which any Participating Holders (X) had a right to cancel pursuant to the foregoing clauses (i) or (ii), or (Y) became aware of their right to cancel pursuant to the foregoing clause (iii), in each of clause (X) and this clause (Y) to the extent such expenses are as described in clauses (i) through (x) of the first sentence of Article VIII hereof. Any expense reimbursement paid pursuant to clause (Y) of the immediately preceding sentence shall be in addition to any other remedy to which the Participating Holders may be entitled in law or in equity (but, for the avoidance of doubt, the Participating Holders may not recover the same expense twice).

2.6 Registration Statement Form. Registrations under this Article II shall be on such appropriate registration form of the Commission then applicable to the Company (i) as shall be selected by the Company and as shall be reasonably acceptable to the Requesting Holders and (ii) as shall permit the disposition of the Registrable Securities in accordance with the intended method or methods of disposition specified in the applicable Holders’ requests for such registration. Notwithstanding the foregoing, if, pursuant to a Demand Registration, (x) the Company proposes to effect registration by filing a registration statement on Form S-3 (or

 

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any successor or similar short-form registration statement), (y) such registration is in connection with an Underwritten Offering and (z) the managing underwriter shall advise the Company in writing that, in its or their opinion, the use of another form of registration statement (or the inclusion, rather than the incorporation by reference, of information in the Prospectus related to a registration statement on Form S-3 (or other short-form registration statement)) is of material importance to the success of such proposed offering, then such registration shall be effected on such other form (or such information shall be so included in such Prospectus).

ARTICLE III

PIGGYBACK REGISTRATIONS

3.1 Holder Piggyback Registration. If the Company proposes to file a Registration Statement (including, for the avoidance of doubt, a shelf registration statement or amendment or supplement thereto) with respect to an offering of Common Shares, or securities convertible into or exchangeable for Common Shares, for its own account or for the account of securityholders (other than the Holders) of the Company (except pursuant to registrations in connection with any merger, acquisition or other business combination or registrations on Form S-4 or any successor form, on Form S-8 or any successor form relating solely to securities issued pursuant to any benefit plan, an offering of securities solely to then existing securityholders of the Company, a dividend reinvestment plan or an exchange offer) on a form that would permit registration of Registrable Securities for sale to the public under the Securities Act, then the Company shall give written notice of such proposed filing to the Holders not less than 21 days before the anticipated filing date, describing in reasonable detail the proposed registration (including the number and class or series of securities proposed to be registered, the proposed date of filing of such Registration Statement, any proposed means of distribution of such securities, any proposed managing underwriter of such securities and a good faith estimate by the Company of the proposed maximum offering price of such securities as such price is proposed to appear on the facing page of such Registration Statement), and offering such Holders the opportunity to register such number of Registrable Securities of the same class as those being registered by the Company as each such Holder may request in writing (each a “Piggyback Registration”). Subject to Sections 5.2 and 5.3 hereof, upon the written request of any Holder (a “Piggyback Request”), received by the Company no later than ten (10) Business Days after receipt by such Holder of the notice sent by the Company, to register, on the same terms and conditions as the same class of securities otherwise being sold pursuant to such registration, any of such Holder’s Registrable Securities of the same class as those being registered (which request shall state the intended method of disposition thereof if the securities otherwise being sold are being sold by more than one method of disposition), the Company shall use its reasonable efforts to cause such Registrable Securities as to which registration shall have been so requested to be included in the Registration Statement proposed to be filed by the Company on the same terms and conditions as the same class of securities otherwise being sold pursuant to such registration; provided, however, that notwithstanding the foregoing, the Company may at any time, in its sole discretion, without the consent of any other Holder, delay or abandon the proposed offering in which any Holder had requested to participate pursuant to this Section 3.1 or cease the filing (or obtaining or maintaining the effectiveness) of or withdraw the related Registration Statement or other governmental approvals, registrations or qualifications. In such event, the Company shall so notify each Holder that had notified the Company in accordance with this Section 3.1 of its intention to participate in such offering and the Company shall incur no liability for its failure to complete any such offering; provided, however, that in the event the Company has initiated the offering for its own account, the Company shall pay all expenses incurred by a Holder in connection with such delayed, abandoned or cancelled registration to the extent such expenses are described in clauses (i) through (x) of the first sentence of Article VIII hereof.

3.2 Priority on Piggyback Registrations. If the managing underwriter for a Piggyback Registration effected by means of an Underwritten Offering (or in the case of a Piggyback Registration not being underwritten, the Company, in good faith) advises the Holders in writing that the inclusion of the Registrable Securities and securities proposed to be included by Holders who have elected to participate pursuant to Section 3.1 and any

 

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other Persons who have elected to participate in such offering pursuant to written agreements with the Company (in each case, “Piggybacking Holders”) and proposed to be included by the Company, would cause an Adverse Effect, then the Company shall be obligated to include in such Registration Statement only that number of Registrable Securities which, in the judgment of the managing underwriter (or the Company in good faith, as applicable), would not have an Adverse Effect, in the priority listed below:

(a) if the registration is undertaken for the Company’s account: (x) first, the securities that the Company desires to include, and (y) second, the securities (or, in the case of a Holder, the Registrable Securities) proposed to be included by the Piggybacking Holders. Any reduction in the number of securities to be included in a Registration Statement pursuant to the foregoing clause (y) shall be effected by allocating the number of securities to be included (after including securities contemplated by clause (x)) pro rata among all the Piggybacking Holders based for each such Piggybacking Holder on the percentage derived by dividing (i) the aggregate number of Common Shares that such Piggybacking Holder holds by (ii) the total number of Common Shares that all such Piggybacking Holders hold in the aggregate; and

(b) if the registration is undertaken at the demand of a securityholder of the Company (other than the Holders), (x) first, the securities that the demanding securityholder desires to include, and (y) second, the securities (or in the case of Holders, the Registrable Securities) proposed to be included by the Piggybacking Holders and by the Company. Any reduction in the number of securities to be included in a Registration Statement pursuant to the foregoing clause (y) shall be effected by allocating the number of securities to be included (after including securities contemplated by clause (x)) pro rata among the Piggybacking Holders based for each such Piggybacking Holder on the percentage derived by dividing (i) the aggregate number of Common Shares that such Piggybacking Holder holds by (ii) the total number of Common Shares that all such Piggybacking Holders hold in the aggregate; provided, however, that the Company shall be entitled to participate on a pro rata basis up to the sum of the number of securities allocated to the Piggybacking Holders pursuant to this sentence, unless the managing underwriter (or in the case of a Piggyback Registration not being underwritten, the Company, in good faith) determines that inclusion of additional securities by the Company above such amount would not cause an Adverse Effect.

3.3 Withdrawals. Each Holder shall have the right to withdraw its request for inclusion of all or any of its Registrable Securities in any Registration Statement pursuant to this Article III by giving written notice to the Company of its request to withdraw; provided, however, that (i) such request must be made in writing prior to the execution of the underwriting agreement with respect to such registration or, in the case of a non-underwritten offering, the effective date of the Registration Statement or applicable prospectus supplement pertaining to such offering and (ii) such withdrawal shall be irrevocable. In the event that a Holder withdraws and (i) the request for withdrawal is based upon material adverse information relating to the Company that the Liberty Group was not aware of at the time of the Holder’s Piggyback Request (including, for the avoidance of doubt, material adverse information that is materially different from the information that the Liberty Group was aware of at the time of the Piggyback Request), (ii) if a Suspension Period occurs after such Piggyback Request but before the Registrable Securities covered by such Piggyback Request are sold, transferred, exchanged or disposed of in accordance with such Piggyback Request, or (iii) if the Company has breached its obligations hereunder with respect to such Piggyback Registration and such breach has caused, or would reasonably be expected to cause, an Adverse Effect, then the Company shall pay all expenses incurred by a Holder in connection with such cancelled registration through the date that is four (4) Business Days after the date on which any Participating Holders (X) had a right to withdraw pursuant to the foregoing clauses (i) or (ii), or (Y) became aware of their right to withdraw pursuant to the foregoing clause (iii), in each of clauses (X) and (Y) to the extent such expenses are as described in clauses (i) through (x) of the first sentence of Article VIII hereof. Any expense reimbursement paid pursuant to clause (Y) of the immediately preceding sentence shall be in addition to any other remedy to which the Participating Holders may be entitled in law or in equity (but, for the avoidance of doubt, the Participating Holders may not recover the same expense twice).

 

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3.4 Underwritten Offerings.

(a) In connection with the exercise of any registration rights granted to Holders pursuant to this Article III, if the registration is to be effected by means of an Underwritten Offering, the Company may condition participation in such registration by any such Holder upon inclusion of the Registrable Securities being so registered in such underwriting and such Holder’s entering into an underwriting agreement pursuant to Section 6.2(d) hereof.

(b) With respect to any offering of Registrable Securities in the form of an Underwritten Offering in which Holders elect to participate pursuant to this Article III, the Company and Liberty shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering.

ARTICLE IV

SHELF REGISTRATION

4.1 Shelf Registration Filing.

(a) Subject to Section 4.1(b) and Sections 5.2 and 5.3 hereof, within sixty (60) days following a written request by a Holder (a “Shelf Request”), the Company shall file with the Commission, and use its reasonable efforts to have declared effective as soon as practicable, a Registration Statement (the “Shelf Registration Statement”) relating to the offer and sale of all of the Registrable Securities held by the Holders to the public from time to time, on a delayed or continuous basis. Subject to Section 4.3(c) hereof, any Shelf Registration Statement may be a universal shelf registration statement that relates to the offer and sale of the Company securities other than Registrable Securities. Any registration effected pursuant this Section 4.1(a) shall not be deemed to constitute a Demand Registration. The Shelf Registration Statement shall specify the intended method of distribution of the subject Registrable Securities substantially in the form of Exhibit A attached hereto. The Company shall file the Shelf Registration Statement on Form S-3 or, if the Company or the offering of the Registrable Securities does not satisfy the requirements for use of such form, such other form as may be appropriate; provided, however, that if the Shelf Registration Statement is not filed on Form S-3, the Company shall, promptly upon meeting the requirements for use of such form, file an appropriate amendment to the Shelf Registration Statement to convert it to Form S-3.

(b) Any subsequent Shelf Requests after the initial Shelf Request pursuant to Section 4.1(a) may only be made after such date that the Liberty Group beneficially owns at least one (1) million additional Common Shares (as adjusted for any stock splits, stock dividends, combinations, reorganizations or similar events) which were not beneficially owned by the Liberty Group as of the date of the immediately prior Shelf Request.

4.2 Required Period and Shelf Registration Procedures. Subject to Section 4.1 and to any Suspension Period(s) referred to below, the Company shall (i) cause the Shelf Registration Statement to include a resale Prospectus intended to permit each Holder to sell, at such Holder’s election, all or part of the applicable class or series of Registrable Securities held by such Holder without restriction under the Securities Act, (ii) use its reasonable efforts to prepare and file with the Commission such supplements, amendments and post-effective amendments to such Shelf Registration Statement as may be necessary to keep such Shelf Registration Statement continuously effective for so long as the securities registered thereunder constitute Registrable Securities, and (iii) use its reasonable efforts to cause the resale Prospectus to be supplemented by any Prospectus supplement required in order for such Holders to sell their Registrable Securities without restriction under the Securities Act.

4.3 Underwritten Shelf Offerings.

(a) Subject to Section 4.3(b), if the Holders who are included in any offering pursuant to a Shelf Registration Statement so elect, and such Holders have requested to include at least the Minimum Registrable

 

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Securities owned by them in such offering, then the Holders may elect to conduct such offering in the form of an Underwritten Offering and the terms of this Article IV shall otherwise apply with respect to such Underwritten Offering on such Shelf Registration Statement. With respect to any such qualifying Underwritten Offering, the Company and Liberty shall jointly select an investment banking firm of national standing to be the managing underwriter for the offering, which firm shall be reasonably acceptable to the Participating Holders.

(b) Notwithstanding Sections 4.1 and 4.3(a), subject to the Company’s compliance with its obligations under Article III hereof, the Company shall not be obligated to take any action (including, for the avoidance of doubt, filing a Shelf Registration Statement or amendment thereto) to effect an Underwritten Offering on a Shelf Registration Statement and no Holder shall sell, or offer to sell, any Registrable Securities in any Underwritten Offering requested pursuant to Section 4.3(a) if, within the 30-day period prior to any election by a Holder pursuant to Section 4.3(a), the Company has issued a notice to the Holders pursuant to Section 3.1 hereof of a proposed registered Underwritten Offering of Common Shares for its own account, continuing while the Company continues in good faith to pursue such registered Underwritten Offering and ending upon the earliest to occur of: (A) in the case of a Registration Statement on Form S-3 (or any successor or similar short-form registration statement), forty-five (45) days and in the case of a Registration Statement on Form S-1 (or any successor or similar long-form registration statement), sixty (60) days, in each case following the Company’s issuance of the notice to the Holders pursuant to Section 3.1 hereof, unless, on or prior to such date, the Company shall have executed an underwriting agreement with the managing underwriter with respect to such proposed Underwritten Offering; provided that such forty-five (45) or sixty (60) day period (as applicable) shall be extended for up to forty-five (45) additional days if the underwriting agreement has not been executed because there has been a failure to resolve all requirements of the Commission in connection with declaring such Registration Statement or applicable prospectus supplement effective during such additional 45-day period; (B) the abandonment, cessation or withdrawal of such Underwritten Offering; (C) 90 days following the effective date of the prospectus supplement pertaining to such Underwritten Offering; or (D) the date that all of the Common Shares covered thereby have been disposed of in accordance with the intended methods of disposition. If the Company issues a notice of a proposed Underwritten Offering of Common Shares for its own account pursuant to Section 3.1 hereof and subsequently abandons, ceases or withdraws such Underwritten Offering, any notice thereafter issued by the Company of a subsequent proposed Underwritten Offering of Common Shares for its own account pursuant to Section 3.1 hereof shall not pre-empt the Company’s obligations pursuant to Section 4.1 or 4.3(a) or restrict the Holders’ rights to sell, or offer to sell, any Registrable Securities in any Underwritten Offering requested pursuant to Section 4.1 or 4.3(a) during the 30-day period commencing on the day immediately following the date that the Liberty Group receives notice from the Company of such abandonment, cessation or withdrawal of such Underwritten Offering.

(c) With respect to any Underwritten Offering of Registrable Securities on a Shelf Registration Statement initiated by the Holders pursuant to Section 4.3(a) hereof, no securities to be sold for the account of any Person (including the Company) other than the Holders shall be included in such Underwritten Offering; provided that securities to be sold for the account of the Company and any Ten Percent Holder may be included in such Shelf Registration Statement if, and only if, the managing underwriter advises the Holders and the Company in writing that the inclusion of such securities would not have an Adverse Effect on such Underwritten Offering.

ARTICLE V

STANDSTILL AND SUSPENSION PERIODS

5.1 Company Standstill Period. Subject to Sections 2.4 and 4.3(c), in the event of (i) any Demand Registration pursuant to Section 2.1 hereof in which the Requesting Holders are registering more than the Minimum Registrable Securities in the aggregate, (ii) any Underwritten Offering pursuant to Section 2.3 hereof or (iii) any Underwritten Offering on a Shelf Registration Statement pursuant to Section 4.3(a) hereof, the

 

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Company agrees not to, without the prior written consent of the Holders, (x) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise transfer or dispose of, directly or indirectly, or file with the Securities and Exchange Commission a registration statement under the Securities Act of 1933, as amended, relating to, any securities of the Company that are substantially similar to such Registrable Securities, including but not limited to any options or warrants to purchase Common Shares or any securities that are convertible into or exchangeable for, or that represent the right to receive, Common Shares or any such substantially similar securities, or publicly disclose the intention to make any offer, sale, pledge, disposition or filing or (y) enter into any swap or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Shares or any such other securities, whether any such transaction described in clause (x) or this clause (y) is to be settled by delivery of Common Shares or such other securities, in cash or otherwise (in each case, other than (A) any securities issued upon the exercise of any option or warrant or the conversion, exchange or redemption of any security outstanding as of the beginning of the applicable standstill period, (B) any options, restricted stock units or other equity awards granted to employees, officers or directors pursuant to any of the Company’s employee or director stock option, incentive or benefit plans existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (C) any securities issued pursuant to the Company’s employee stock purchase plan or pursuant to equity awards of any kind under any of the Company’s employee or director stock option, incentive or benefit plans existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (D) the filing of any registration statement on Form S-8 or other appropriate form as required by the Act, and any amendments to such forms, in respect of any securities or any other of the Company’s equity based securities issuable pursuant to any employee benefit plan of the Company existing as of the beginning of the applicable standstill period or assumed by the Company in connection with any merger, acquisition or other business combination, (E) any Common Shares issuable in lieu of the payment of cash dividends pursuant to the Company’s quarterly cash dividend policy, (F) any Common Shares or any other of the Company’s equity securities, in an amount up to an aggregate of 10.0% of the Company’s fully-diluted shares outstanding as the beginning of the applicable standstill period, issuable in connection with any transaction, including, without limitation, a merger, acquisition or other business combination, an asset sale or a carve-out, and the filing of any registration statement in connection therewith, (G) any Common Shares or any other of the Company’s equity securities issuable in connection with any rescission of purchases of Common Shares under the Company’s 401(k) Plan and (H) any transaction or series of related transactions involving up to $150,000,000 of the Company’s equity or debt securities), (a) in the case of any Demand Registration pursuant to Section 2.1 in which the Requesting Holders are registering more than the Minimum Registrable Securities in the aggregate or any Underwritten Offering pursuant to Section 2.4, during the ninety (90) day period (not including any Suspension Periods) commencing on the effective date of the Registration Statement relating to such Registrable Securities or, if earlier, the date that all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders or the abandonment, cessation or withdrawal of such offering by all the Requesting Holders, and (b) in the case of an Underwritten Offering on a Shelf Registration Statement pursuant to Section 4.3(a) hereof, during the ninety (90) day period (not including any Suspension Periods) commencing on the effective date of the prospectus supplement pertaining to such Underwritten Offering or, if earlier, the date that all of such Registrable Securities covered thereby have been disposed of in accordance with the intended methods of disposition by the Participating Holders or the abandonment, cessation or withdrawal of such Underwritten Offering by all the Requesting Holders.

5.2 Suspension Period.

(a) The Company shall not be required to use reasonable efforts to cause a Registration Statement to be filed pursuant to this Agreement or to be declared effective, or to keep current any Registration Statement or file any prospectus supplement or amendment (other than as required by the periodic report and proxy statement disclosure requirements of the Securities Exchange Act of 1934, including Sections 13 or 15(d) thereof and Forms 10-K, 10-Q, 8-K or 14A thereunder), or permit Holders to sell or transfer securities thereunder, if the Company possesses material non-public information and determines in good faith that it need not otherwise

 

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make such disclosure or filing; provided that at all times the Company continues in good faith to make public disclosures so as to continue and comply with its past practice with respect to the non-disclosure of material non-public information. In furtherance of and pursuant to the last proviso of the preceding sentence and following public disclosure by the Company, at such time as the Company no longer possesses material non-public information regarding the Company, the Suspension Period (as defined below) shall immediately terminate. Any period during which the Holders are prohibited from effecting sales or the Company exercises its rights in each case pursuant to this Section 5.2(a) shall constitute a “Suspension Period.”

(b) Each Holder agrees that, upon receipt of a written notice from the Company of a Suspension Period (a “Suspension Notice”), such Holder shall forthwith discontinue any disposition of Registrable Securities pursuant to any Registration Statement until such Holder’s receipt of a notice from the Company to the effect that such Suspension Period has terminated. On the last day of any thirty (30) day period following delivery of the Suspension Notice during which the Suspension Period remains in effect, the Company shall deliver a written notice to the Liberty Representative that the Suspension Period remains in effect (a “Bring-Down Suspension Notice”). Any Suspension Notice or Bring-Down Suspension Notice shall (i) be signed by the Chief Executive Officer, Chief Financial Officer, General Counsel, President or any Vice President of the Company and (ii) provide that, as of the date of such Suspension Notice or Bring-Down Suspension Notice, as the case may be, the Company (a) possesses material non-public information, (b) has determined in good faith that it need not publicly disclose such material non-public information and (c) has continued in good faith to make public disclosures so as to continue and comply with its past practice with respect to the non-disclosure of material non-public information. If so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies, then in such Holder’s possession, of the most recent Prospectus covering such Registrable Securities at the time of receipt of such Suspension Notice. The Company covenants and agrees that it shall not deliver a Suspension Notice with respect to a Suspension Period unless all the Company employees, officers and directors who are subject to the Company’s Insider Trading Compliance Policy, and who are prohibited by the terms thereof from effecting any public sales of securities of the Company beneficially owned by them, are so prohibited for the duration of such Suspension Period. In the event of a Suspension Notice, the Company shall, promptly after such time as it no longer possesses material non-public information that it has determined in good faith need not otherwise be disclosed, provide notice to all Holders that the Suspension Period has ended, and take any and all actions necessary or desirable to give effect to any Holders’ rights under this Agreement that may have been affected by such notice, including the Holders’ Demand Registration rights and rights with respect to the Shelf Registration Statement.

(c) During any time that the Liberty Group possesses material, non-public information with respect to the Company, no Holder may effect any sales under any Registration Statement of the Company; provided, however, that the Liberty Group shall not be in breach of this Section 5.2(c) if the Company (X) was aware of the material non-public information in the Liberty Group’s possession at the time of the Holder’s sale (including, for the avoidance of doubt, non-public information in the Liberty Group’s possession at the time of the Holder’s sale that is reasonably required in order to determine the materiality of such non-public information) and (Y) did not issue a Suspension Notice with respect thereto prior to such sale.

5.3 Holder Standstill Period. Each Holder of Registrable Securities (whether or not such Registrable Securities are covered by the Shelf Registration Statement or by a Registration Statement filed pursuant to Section 2.1 or 3.1 hereof) agrees to enter into a customary lock-up agreement with the managing underwriter for any Underwritten Offering of the Company’s securities for its own account with respect to the same class or series of securities being registered pursuant to such Registration Statement, containing terms reasonably acceptable to such managing underwriter (with an exception for transfers pursuant to hedging transactions entered into prior to the time that Liberty had notice of such Underwritten Offering), covering the period commencing 15 days prior to the effective date of the Registration Statement or, if applicable, the prospectus supplement, pertaining to such Underwritten Offering relating to such securities of the Company and ending on the 90th day after such effective date (or such shorter period as shall have been agreed to by the Company’s executive officers and directors in their respective lock-up agreements); provided, however, that the obligations

 

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of each Holder under this Section 5.3 shall apply only: (i) if such Holder shall be afforded the right (whether or not exercised by the Holder) to include Registrable Securities in such Underwritten Offering in accordance with and subject to the provisions of Article III hereof; (ii) to the extent that each of the Company’s executive officers, directors and Ten Percent Holders enter into lock-up agreements with such managing underwriter, which agreements shall not contain terms more favorable to such executive officers, directors or Ten Percent Holders than those contained in the lock-up agreement entered into by such Holder; and (iii) if the aggregate restriction periods in such Holder’s lock-up agreements entered into pursuant to this Section  5.3 shall not exceed an aggregate of 180 days during any 365-day period.

ARTICLE VI

REGISTRATION PROCEDURES

6.1 Company Obligations. Whenever the Company is required pursuant to this Agreement to register Registrable Securities, it shall (it being understood and agreed that except as otherwise expressly set forth in this Article VI, if any other provision of this Agreement is more favorable to the Holders than the provisions of this Article VI, such other provision shall apply):

(a) provide the Participating Holders and their respective counsel with a reasonable opportunity to review, and comment on, any Registration Statement to be prepared and filed pursuant to this Agreement prior to the filing thereof with the Commission, and make all changes thereto as any Participating Holder may reasonably request in writing to the extent such changes are required, in the reasonable judgment of the Company’s counsel, by the Securities Act and, except in the case of a registration under Article III, not file any Registration Statement or Prospectus or amendments or supplements thereto, which registers Registrable Securities held by Holders, to which the Holders of a majority of the class or series of Registrable Securities covered by the same or the underwriter or underwriters, if any, shall reasonably object;

(b) cause any such Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of such Registration Statement, amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act and the rules and regulations of the Commission promulgated thereunder and (ii) not to contain any 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 light of the circumstances under which they were made, not misleading (except that this clause (ii) shall not apply to statements made or statements omitted by the Company in reliance upon and in conformity with written information furnished to the Company by any Holder solely with respect to such Holder and specifically for inclusion in the Registration Statement or any amendment or supplement thereto), or, if for any other reason it shall be necessary to amend or supplement such Registration Statement or Prospectus in order to comply with the Securities Act and, in either case as promptly as reasonably practicable thereafter, prepare and file with the Commission an amendment or supplement to such Registration Statement or Prospectus which will correct such statement or omission or effect such compliance;

(c) furnish, at its expense, to the Participating Holders such number of conformed copies of such Registration Statement and of each such amendment thereto (in each case including all exhibits thereto, except that the Company shall not be obligated to furnish to any such Participating Holder more than two (2) copies of such exhibits), such number of copies of the Prospectus included in such Registration Statement (including each preliminary Prospectus and each supplement thereto), and such number of the documents, if any, incorporated by reference in such Registration Statement or Prospectus, as the Participating Holders reasonably may request; provided that the Company shall have no obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR or IDEA system;

 

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(d) use its reasonable efforts to register or qualify the Registrable Securities covered by such Registration Statement under such securities or “blue sky” laws of the states of the United States as the Participating Holders reasonably shall request, to keep such registration or qualification in effect for so long as such Registration Statement remains in effect, and to do any and all other acts and things that may be necessary or advisable to enable the Participating Holders to consummate the disposition in such jurisdictions of the Registrable Securities covered by such Registration Statement, except that the Company shall not, for any such purpose, be required to qualify generally to do business as a foreign corporation in any jurisdiction in which it is not obligated to be so qualified, or to subject itself to material taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; and use its reasonable efforts to obtain all other approvals, consents, exemptions or authorizations from such securities regulatory authorities or governmental agencies as may be necessary to enable such Participating Holders to consummate the disposition of such Registrable Securities;

(e) promptly notify the Participating Holders, at any time when a Prospectus or Prospectus supplement relating thereto is required to be delivered under the Securities Act, upon discovery that, or upon the occurrence of any event as a result of which, the Prospectus included in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any 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, which untrue statement or omission requires amendment of the Registration Statement or supplementing of the Prospectus, and, as promptly as practicable (subject to Section 5.2 hereof), prepare and furnish, at its expense, to the Participating Holders a reasonable number of copies of a supplement to such Prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not include 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 with respect to Registrable Securities registered pursuant to such Registration Statement, each Holder agrees that it shall not enter into any transaction for the sale of any Registrable Securities pursuant to such Registration Statement during the time after the furnishing of the Company’s notice that the Company is preparing a supplement to or an amendment of such Prospectus or Registration Statement and until the filing and effectiveness thereof;

(f) use its reasonable efforts to comply with all applicable rules and regulations of the Commission, and make available to holders of its securities, as soon as practicable, an earnings statement covering the period of at least 12 months, but not more than 18 months, beginning with the first month of the first fiscal quarter after the effective date of such Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;

(g) provide, and cause to be maintained, a transfer agent and registrar for the Registrable Securities covered by such Registration Statement (which transfer agent and registrar shall, at the Company’s option, be the Company’s existing transfer agent and registrar) from and after a date not later than the effective date of such Registration Statement;

(h) notify the Participating Holders and the managing underwriter, if any, promptly, and (if requested by any such Person) confirm such notice in writing, (i) when a Registration Statement, Prospectus, Prospectus supplement or post-effective amendment related to such Registration Statement has been filed, and, with respect to such Registration Statement or any post-effective amendment thereto, when the same has become effective, (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to such Registration Statement or related Prospectus, (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of such Registration Statement or the initiation of any proceedings for that purpose and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose;

 

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(i) use its reasonable efforts to obtain the withdrawal of any order suspending the effectiveness of such Registration Statement, or the lifting of any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as practicable;

(j) in the event of an Underwritten Offering of Registrable Securities pursuant to Section 2.3 or 4.3 hereof, enter into customary agreements (including underwriting agreements in customary form, which may include, in the case of an Underwritten Offering on a firm commitment basis, “lock-up” obligations substantially similar to Section 5.1 hereof) and take such other actions (including using its reasonable efforts to make such road show presentations and otherwise engaging in such reasonable marketing support in connection with any such Underwritten Offering, including the obligation to make its executive officers available for such purpose if so requested by the managing underwriter for such offering) as are reasonably requested by the managing underwriter in order to expedite or facilitate the sale of such Registrable Securities;

(k) make available for inspection by each Participating Holder, any underwriter participating in any disposition pursuant to such registration, and any attorney, accountant or other agent retained by such Participating Holder or any such underwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and any of its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the officers, directors and employees of the Company to supply all information reasonably requested by any such Inspector in connection with such registration, provided, however, that (i) in connection with any such inspection, any such Inspectors shall cooperate to the extent reasonably practicable to minimize any disruption to the operation by the Company of its business and shall comply with all the Company site safety rules, (ii) Records and information obtained hereunder shall be used by such Inspectors only to exercise their due diligence responsibility and (iii) Records or information furnished or made available hereunder shall be kept confidential and shall not be disclosed by such Participating Holder, underwriter or Inspectors unless (A) the disclosing party advises the other party that the disclosure of such Records or information is necessary to avoid or correct a misstatement or omission in a Registration Statement or is otherwise required by law, (B) the release of such Records or information is ordered pursuant to a subpoena or other order from a court or governmental authority of competent jurisdiction (provided, however, that such Person shall use its reasonable efforts to provide the Company with prior written notice of such requirement to afford the Company with an opportunity to seek a protective order or other appropriate remedy in response) or (C) such Records or information otherwise become generally available to the public other than through disclosure by such Participating Holder, underwriter or Inspector in breach hereof or by any Person in breach of any other confidentiality arrangement;

(l) in connection with any registration of an Underwritten Offering of Registrable Securities hereunder, use all reasonable efforts to furnish to each Participating Holder and to the managing underwriter, if any, a signed counterpart, addressed to such Participating Holder and the managing underwriter, if any, of (i) an opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the Company’s independent public accountants pursuant to Statement on Auditing Standards No. 72 (or any successor thereto), each in customary form and covering such matters of the type customarily covered by opinions or comfort letters, as the case may be, as each such Participating Holder and the managing underwriter, if any, reasonably requests;

(m) in connection with any registration of an Underwritten Offering of Registrable Securities hereunder, provide officers’ certificates and other customary closing documents;

(n) reasonably cooperate with each seller of Registrable Securities and any underwriter in the disposition of such Registrable Securities and with underwriters’ counsel, if any, in connection with any filings required to be made with the Financial Industry Regulatory Authority (“FINRA”);

(o) use its reasonable efforts to cause all such Registrable Securities to be listed on each securities exchange on which securities of the same class or series issued by the Company are then listed;

 

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(p) cooperate with the Participating Holders and the managing underwriter, underwriters or agent, if any, to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and

(q) use its reasonable efforts to cause the Registrable Securities covered by the applicable Registration Statement to be registered with or approved by such other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter or underwriters, if any, to consummate the disposition of such Registrable Securities.

6.2 Holder Obligations. Each Holder agrees:

(a) that it shall furnish to the Company such information regarding such Holder and the plan and method of distribution of Registrable Securities intended by such Holder (i) as the Company may, from time to time, reasonably request in writing and (ii) as shall be required by law or by the Commission in connection therewith;

(b) that information obtained by it or by its Inspectors shall be deemed confidential and shall not be used by it as the basis for any market transactions in the securities of the Company or its Affiliates unless and until such information is made generally available to the public;

(c) to use its reasonable efforts, prior to making any disclosure allowed by Section 6.1(k)(iii)(A) or (B) hereof, to inform the Company that such disclosure is necessary to avoid or correct a misstatement or omission in the Registration Statement or ordered pursuant to a subpoena or other order from a court or governmental authority of competent jurisdiction or otherwise required by law;

(d) in the case of an Underwritten Offering of Registrable Securities pursuant to this Agreement, if requested by the managing underwriter, to enter into an underwriting agreement with the underwriters for such offering containing such representations and warranties by each Holder and such other terms and provisions as are customarily contained in such underwriting agreements, including customary indemnity and contribution provisions and “lock-up” obligations substantially similar to Section 5.3 hereof; and

(e) to notify the Company as soon as practicable if it becomes aware of the occurrence of any event, development or fact as a result of which a Registration Statement or any Prospectus or supplement, as then in effect, contains an untrue statement of a material fact with respect to such Holder or omits to state any material fact with respect to such Holder required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the Holder shall not be required to notify the Company, or may limit such notification, as the case may be, solely to the extent necessary, as determined in good faith by such Holder on the advice of counsel, in order not to be in violation of or default under any applicable law, regulation, rule, stock exchange requirement, self-regulatory body, supervisory authority, legal process or fiduciary duty.

6.3 Hedging Transactions. The parties agree that the provisions of this Agreement relating to the registration, offer and sale of Registrable Securities apply also to any transaction which transfers some or all of the economic risk of ownership of Registrable Securities, including any forward contract, equity swap, put or call, put or call equivalent position, collar, margin loan, sale of exchangeable security or similar transaction (including the registration, offer and sale under the Securities Act of Registrable Securities pledged to the counterparty to such transaction or of securities of the same class as the underlying Registrable Securities by the counterparty to such transaction in connection therewith), and that the counterparty to such transaction shall be selected in the sole discretion of the Holders.

 

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ARTICLE VII

INDEMNIFICATION

7.1 Indemnification by the Company. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless to the full extent permitted by law (i) each Holder, such Holder’s Affiliates and their respective officers, directors, managers, partners, stockholders, employees, advisors, agents and other representatives of the foregoing, and each of their respective successors and assigns, and each Person who controls any of the foregoing within the meaning of the Securities Act and the Exchange Act, and (ii) any selling agent selected by the Holders or their Affiliates with respect to such Registrable Securities (each such Person being sometimes referred to as an “Indemnified Person”), against any and all losses, claims, damages, liabilities (or actions or proceedings in respect thereof, whether or not such Indemnified Person is a party thereto) and expenses (including reasonable costs of investigations and legal expenses), joint or several (each a “Loss” and collectively “Losses”), to which such Indemnified Person may become subject, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which such Registrable Securities were included for registration under the Securities Act, including any preliminary or summary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus) or any document incorporated by reference therein, or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading; and the Company agrees to reimburse such Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company shall have no obligation to provide any indemnification or reimbursement hereunder (i) to the extent that any such Losses (or actions or proceedings in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, in reliance upon and in conformity with written information furnished to the Company by the Holder, or on the Holder’s behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement, or (ii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of Holders), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a preliminary Prospectus and corrected in a final, amended or supplemented Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the final, amended or supplemented Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act, or (iii) in the case of a sale directly by a Holder of Registrable Securities (including a sale of such Registrable Securities through any underwriter retained by such Holder engaging in a distribution solely on behalf of Holders), to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was contained in a final Prospectus but was corrected in an amended or supplemented final Prospectus provided to such Holder prior to the confirmation of the sale of the Registrable Securities to the Person asserting any such Loss, and such Holder failed to deliver a copy of the amended or supplemented final Prospectus at or prior to such confirmation of sale in any case in which such delivery is required by the Securities Act. The indemnity provided in this Section 7.1 shall remain in full force and effect regardless of any investigation made by or on behalf of such Holder or any Indemnified Person and shall survive the transfer or disposal of the Registrable Securities by the Holder or any such other Persons. The Company will also indemnify, if applicable and if requested, underwriters, selling brokers, dealer managers and similar securities industry professionals participating in any distribution pursuant hereto, their officers and directors and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Indemnified Persons. This indemnity shall be in addition to any liability the Company may otherwise have.

 

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7.2 Indemnification by the Holders. In the event of any registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each Holder shall, severally and not jointly, indemnify and hold harmless (in the same manner and to the same extent as set forth in Section 7.1 hereof) the Company, each director and officer of the Company and each other Person, if any, who controls the Company within the meaning of the Securities Act and the Exchange Act (each such Person being sometimes referred to as a “Company Indemnified Person”), against Losses to which the Company or any such Persons may become subject under the Securities Act or otherwise, to the extent that such Losses (or related actions or proceedings) arise out of or are based upon (A) any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement in which Registrable Securities were included for registration under the Securities Act, or any preliminary Prospectus or any final Prospectus included in such Registration Statement (or any amendment or supplement to such Registration Statement or Prospectus), or (B) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, (in the case of the Prospectus and any preliminary Prospectus in light of the circumstances under which they were made) not misleading, in each case, only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement in reliance upon and in conformity with written information furnished to the Company by such Holder, or on such Holder’s behalf, specifically for inclusion, respectively, in such Registration Statement, preliminary Prospectus, final Prospectus, amendment or supplement; and each Holder agrees to reimburse such Company Indemnified Person for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that a Holder’s aggregate liability under this Agreement shall be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount and expenses) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to such registration.

7.3 Notice of Claims, Etc. Promptly after receipt by any Person entitled to indemnity under Section 7.1 or 7.2 hereof (an “Indemnitee”) of notice of the commencement of any action or proceeding (an “Action”) involving a claim referred to in such Sections, such Indemnitee shall, if indemnification is sought against an indemnifying party, give written notice to such indemnifying party of the commencement of such Action; provided, however, that the failure of any Indemnitee to give said notice shall not relieve the indemnifying party of its obligations under Sections 7.1 or 7.2 hereof, except to the extent that the indemnifying party is actually prejudiced by such failure. In case an Action is brought against any Indemnitee, and such Indemnitee notifies the indemnifying party of the commencement thereof, each indemnifying party shall be entitled to participate therein and, to the extent it elects to do so by written notice delivered to the Indemnitee promptly after receiving the aforesaid notice, to assume the defense thereof with counsel selected by such Indemnitee and reasonably satisfactory to such indemnifying party. Notwithstanding the foregoing, the Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such Indemnitee, unless (i) the employment of such counsel shall have been authorized in writing by the indemnifying party, (ii) the indemnifying party shall not have employed counsel to take charge of the defense of such Action, reasonably promptly after notice of the commencement thereof or (iii) such Indemnitee reasonably shall have concluded that there may be defenses available to it which are different from or additional to those available to the indemnifying party which, if the indemnifying party and the Indemnitee were to be represented by the same counsel, could result in a conflict of interest for such counsel or materially prejudice the prosecution of the defenses available to such Indemnitee. If any of the events specified in clauses (i), (ii) or (iii) of the preceding sentence shall have occurred or otherwise shall be applicable, then the fees and expenses of counsel for the Indemnitee shall be borne by the indemnifying party; it being understood, however, that the indemnifying party shall not, in connection with any one such claim or proceeding, or separate but substantially similar or related claims or proceedings arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all Indemnitees hereunder, or for fees and expenses that are not reasonable. Anything in this Section 7.3 to the contrary notwithstanding, an indemnifying party shall not be liable for the settlement of any action effected without its prior written consent (which consent shall not unreasonably be withheld or delayed), but if settled with the prior written consent of the indemnifying party, or if there shall be a final judgment adverse to the Indemnitee, the indemnifying party agrees to indemnify the

 

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Indemnitee from and against any loss or liability by reason of such settlement or judgment. No indemnifying party shall, without the prior consent of the Indemnitee (which consent shall not be unreasonably withheld or delayed), consent to entry of any judgment or enter into any settlement or compromise, with respect to any pending or threatened action or claim in respect of which the Indemnitee would be entitled to indemnification or contribution hereunder (whether or not the Indemnitee is an actual party to such action or claim), which (i) does not include as a term thereof the unconditional release of the Indemnitee from all liability in respect of such action or claim or (ii) includes an admission of fault, culpability or a failure to act by or on behalf of the Indemnitee.

7.4 Contribution. If the indemnification provided for in this Article VII is unavailable or insufficient to hold harmless an Indemnitee in respect of any Losses, then each indemnifying party shall, in lieu of indemnifying such Indemnitee, contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as appropriate to reflect the relative fault of the indemnifying party, on the one hand, and the Indemnitee, on the other hand, which relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such Indemnitee or indemnifying party, and such parties’ relative intent, knowledge, access to information and opportunity to correct or mitigate the damage in respect of or prevent the untrue statement or omission giving rise to such indemnification obligation; provided, however, that a Holder’s aggregate liability under this Section 7.4 shall be limited to an amount equal to the net proceeds (after deducting the underwriter’s discount but before deducting expenses) received by such Holder from the sale of such Holder’s Registrable Securities pursuant to such registration. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 7.4 were determined solely by pro rata allocation or by any other method of allocation which did not take account of the equitable considerations referred to above. 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 is not guilty of such fraudulent misrepresentation.

7.5 Indemnification Payments; Other Remedies; Primacy of Indemnification.

(a) Periodic payments of amounts required to be paid pursuant to this Article VII shall be made during the course of the investigation or defense, as and when reasonably itemized bills therefor are delivered to the indemnifying party in respect of any particular Loss as incurred.

(b) The remedies provided in this Article VII are not exclusive and shall not limit any rights or remedies that may otherwise be available to an Indemnitee at law or in equity.

(c) Primacy of Indemnification. The Company hereby acknowledges that certain of the Indemnified Persons have certain rights to indemnification, advancement of expenses and/or insurance provided by Liberty and/or certain of its Affiliates (collectively, the “Indemnitors”). The Company hereby agrees that (i) it is the indemnitor of first resort (i.e., its obligations to the Indemnified Persons are primary and any obligation of the Indemnitors to advance expenses or to provide indemnification for the same Losses incurred by any of the Indemnified Persons are secondary to any such obligation of the Company), (ii) that it shall be liable for the full amount of all Losses to the extent legally permitted and as required by the terms of this Agreement and the articles and other organizational documents of the Company (or any other agreement between the Company and the relevant Indemnified Person), without regard to any rights any Indemnified Person may have against the Indemnitors, and (iii) it irrevocably waives, relinquishes and releases the Indemnitors from any and all claims (x) against the Indemnitors for contribution, indemnification, subrogation or any other recovery of any kind in respect thereof and (y) that any Indemnified Person must seek indemnification from any Indemnitor before the Company must perform its indemnification obligations under this Agreement. No advancement or payment by the Indemnitors on behalf of any Indemnified Person with respect to any claim for which such Indemnified Person has sought indemnification from the Company hereunder shall affect the foregoing. The Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery which any Indemnified Person would have had against the Company if the Indemnitors had not advanced or paid any amount to or on behalf of such Indemnified Person. The Company and the Indemnified Persons agree that the Indemnitors are express third party beneficiaries of this Article VII.

 

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ARTICLE VIII

REGISTRATION EXPENSES

In connection with any offerings pursuant to a Registration Statement hereunder, the Company shall pay (i) all registration and filing fees, (ii) all fees and expenses of compliance with state securities or “blue sky” laws (including reasonable fees and disbursements of counsel in connection with “blue sky” laws qualifications of the Registrable Securities), (iii) printing and duplicating expenses, (iv) internal expenses of the Company (including all salaries and expenses of its officers and employees performing legal or accounting duties), (v) fees and disbursements of counsel for the Company and fees and expenses of independent certified public accountants retained by the Company (including the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters or with any required special audits), (vi) the reasonable fees and expenses of any special experts retained by the Company, (vii) fees and expenses in connection with any review of underwriting arrangements by FINRA, (viii) reasonable fees and expenses of not more than one counsel for the Participating Holders (as a group), (ix) fees and expenses in connection with listing, if applicable, the Registrable Securities on a securities exchange, and (x) all duplicating, distribution and delivery expenses. In connection any offerings pursuant to a Registration Statement, each Participating Holder shall pay (a) any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities by such Participating Holder in connection with an Underwritten Offering; (b) any out-of-pocket expenses of such Participating Holder including any fees and expenses of brokers or counsel to such Participating Holder (other than as set forth in clause (viii) of the immediately preceding sentence); and (c)  any applicable transfer taxes.

ARTICLE IX

RULE 144

With a view to making available to the Holders the benefits of Rule 144 and any other similar rule or regulation of the Commission that may at any time permit a Holder to sell Registrable Securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company covenants that, from and after the time that and for so long as it is subject to Section 13 or 15(d) of the Exchange Act thereafter, it shall use its reasonable efforts to file in a timely manner all reports required to be filed by it under the Exchange Act, and that it shall comply with the requirements of Rule 144(c), as such Rule may be amended from time to time (or any similar rule or regulation hereafter adopted by the Commission), regarding the availability of current public information to the extent required to enable any Holder to sell Registrable Securities without registration under the Securities Act pursuant to the resale provisions of Rule 144 (or any similar rule or regulation). Upon the request of any Holder, the Company shall promptly deliver to such Holder a written statement as to whether it has complied with such requirements and, upon such Holder’s compliance with the applicable provisions of Rule 144 and its delivery of such documents and certificates as the Company’s transfer agent may reasonably request in connection therewith, shall take such reasonable action as may be required (including using its reasonable efforts to cause legal counsel to issue an appropriate opinion) to cause its transfer agent to effectuate any transfer of Registrable Securities properly requested by such Holder, in accordance with the terms and conditions of Rule 144.

ARTICLE X

MISCELLANEOUS

10.1 Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made pursuant to the provisions of this Agreement shall be deemed sufficiently

 

23

given or made if in writing and signed by the party making the same, and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, or by telecopy and confirmed by telecopy answerback, addressed as follows:

if to any Holder or the Liberty Representative, at:

Liberty Global Ltd.

1550 Wewatta Street

Suite 1000

Denver, Colorado 80202

Attention: General Counsel, Legal Department

E-mail: LegalUS@libertyglobal.com

with a copy to:

Liberty Global Ventures Limited

Griffin House

161 Hammersmith Road

London, United Kingdom, W6 8BS

Attention: General Counsel, Legal Department

E-mail: LegalUS@libertyglobal.com

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

A&O Shearman

599 Lexington Avenue

New York, NY 10022

Attention:    Daniel Litowitz
   Cody Wright
E-mail:    daniel.litowitz@aoshearman.com
   cody.wright@aoshearman.com

and if to the Company, to:

Lionsgate Studios Holding Corp.

2700 Colorado Avenue

Santa Monica, CA 90404

Attention: General Counsel

E-mail: btobey@lionsgate.com

with copies to:

Wachtell, Lipton, Rosen & Katz

51 W. 52nd Street

New York, NY 10019

Attn:   

Mark A. Stagliano

Telephone: (212) 403-1060

Facsimile: (212) 403-2060

 

24

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served and received on the date on which personally delivered, with receipt acknowledged, telecopied and confirmed by telecopy answerback or three (3) Business Days after the same shall have been deposited in the United States mail (by registered or certified mail, return receipt requested, postage prepaid), whichever is earlier. Each Holder as of the date hereof acknowledges and agrees that, as of the date hereof, it holds the number of Registrable Securities set forth next to its name on Schedule I attached hereto. Any member of the Liberty Group that desires to become an Additional Holder in accordance with the terms of this Agreement shall provide written notice to the Company setting forth its address and the number of Registrable Securities held by such Person and agreeing to be bound by the terms hereof, and upon receipt of such notice the Company shall amend Schedule I attached hereto to reflect such Additional Holder, its address and the number of Registrable Securities held thereby without any further action or consent required from the parties to this Agreement. From time to time and promptly following a written request by the Company, each such Holder and Additional Holder shall provide written notice to the Company of any increase or decrease in the number of Registrable Securities held by such Person, and upon receipt of any such notice, the Company shall amend Schedule I attached hereto to reflect such increase or decrease in the number of Registrable Securities held by such Person without any further action or consent required from the parties to this Agreement; provided that if any such Holder or Additional Holder discloses such increase or decrease in the number of Registrable Securities held by such person in any filing made pursuant to Section 13 or 16 of the Exchange Act, such Holder or Additional Holder, as the case may be, shall be deemed to have provided notice to the Company as provided in this sentence. Solely for purposes of this Agreement, in determining the number of Registrable Securities outstanding at any time and the Holders thereof, the Company shall be entitled to rely conclusively on Schedule I attached hereto (as so amended in accordance with the terms of this Agreement to reflect all such written notices received by the Company from time to time).

10.2 Successors and Assigns. This Agreement may not be assigned by any Holder other than to a Permitted Assignee (provided, however, that such Permitted Assignee agrees in writing to be bound by the terms of this Agreement), whereupon such Permitted Assignee shall be deemed to be a Holder for all purposes of this Agreement. Subject to the preceding sentence, this Agreement shall be binding upon and inure to the benefit of the parties hereto and all successors to the Company and the Holders.

10.3 Amendments; Waivers. Subject to Section 10.4, (a) any provision of this Agreement affecting a party may be amended or modified only by a written agreement signed by each such affected party and (b) no provision of this Agreement affecting a party may be waived except pursuant to a writing signed by each such affected party.

10.4 Liberty Representative. The Company shall be entitled to rely upon the written communications of the Liberty Representative, acting on behalf of any Holder, relating to matters addressed in this Agreement as communications of the Holders, including, without limitation, elections by Holders to exercise registration rights and any amendments, waivers or consents made pursuant to this Agreement. Any notice or communication delivered to the Liberty Representative shall be deemed to have been delivered to each Holder for all purposes hereof. Each of the Holders shall use their reasonable efforts to conduct all written communications to the Company pursuant to this Agreement through the Liberty Representative.

10.5 Calculations of Beneficial Ownership. All calculations of beneficial ownership for purposes of this Agreement shall be calculated in accordance with Rule 13(d) of the Exchange Act, as amended from time to time.

10.6 No Third Party Beneficiaries. This Agreement is not intended to and shall not confer any rights or remedies on any persons that are not party hereto other than as expressly set forth in Section 7.5(c), Article VII and Section 10.4.

 

25

10.7 Injunctive Relief. It is hereby agreed and acknowledged that it will be impossible to measure in money the damages that would be suffered if the parties fail to comply with any of the obligations herein imposed on them and that in the event of any such failure, an aggrieved Person will be irreparably damaged and will not have an adequate remedy at law. Any such Person shall, therefore, be entitled (in addition to any other remedy to which it may be entitled in law or in equity) to injunctive relief, including, without limitation, specific performance, to enforce such obligations, and if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law.

10.8 Termination of Registration Rights; Survival. All rights granted to Holders under this Agreement shall terminate on the first anniversary of the date that the Liberty Group both (a) beneficially owns in the aggregate less than 5,713,774 Common Shares (which amount, for the avoidance of doubt, represents approximately 2% of the Common Shares outstanding as of May 7, 2025), subject to equitable adjustment for any stock splits, stock dividends, combinations, reorganizations or similar events, so long as such number of Common Shares (as adjusted) beneficially owned represents less than 2% of the Common Shares outstanding at that time, and (b) ceases to have a designated representative on the Board of Directors of the Company.

10.9 Attorneys’ Fees. In any action or proceeding brought to enforce any provision of this Agreement or where any provision hereof is validly asserted as a defense, the successful party shall, to the extent permitted by applicable law, be entitled to recover reasonable attorneys’ fees in addition to any other available remedy.

10.10 Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

10.11 Headings. The headings used in this Agreement are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Agreement.

10.12 Governing Law; Jurisdiction. THIS AGREEMENT SHALL BE GOVERNED EXCLUSIVELY BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Each party to this Agreement hereby irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement or any agreements or transactions contemplated hereby may be brought in the courts of the State of New York or of the United States of America for the Southern District of New York and hereby expressly submits to the personal jurisdiction and venue of such courts for the purposes thereof and expressly waives any claim of improper venue and any claim that such courts are an inconvenient forum. Each party hereby irrevocably consents to the service of process of any of the aforementioned courts in any such suit, action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the address set forth in Section 10.1 hereof, such service to become effective ten (10) days after such mailing.

10.13 Counterparts and Facsimile Execution. This Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by facsimile signatures.

10.14 Entire Agreement. This Agreement (i) embodies the entire agreement and understanding between the Company and the Holders in respect of the subject matter contained herein and (ii) supersedes all prior agreements and understandings between the parties with respect to the subject matter of this Agreement. In furtherance hereof, the parties hereby agree that the Original Agreement is hereby superseded and terminated in its entirety, and shall be of no further force or effect whatsoever, effective immediately as of the entry into this Agreement.

 

26

10.15 Further Assurances. Each of the parties hereto shall execute such documents and perform such further acts as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

[Remainder of page intentionally left blank.]

 

27

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the date first above written.

 

LIONSGATE STUDIOS HOLDING CORP.
By:  

/s/ Adrian Kuzycz

Name:   Adrian Kuzycz
Title:   Principal Executive Officer, President and Secretary
LIBERTY GLOBAL VENTURES LIMITED
By:  

/s/ Jeremy Evans

Name:   Jeremy Evans
Title:   Director

 

 

 

Signature Page to Registration Rights Agreement

 

28

EXHIBIT A

PLAN OF DISTRIBUTION

The selling securityholders, or their pledgees, donees, transferees, or any of their successors in interest selling shares received from a named selling securityholder as a gift, partnership distribution or other non-sale-related transfer after the date of this prospectus (all of whom may be selling securityholders), may sell the securities from time to time on any stock exchange or automated interdealer quotation system on which the securities are listed, in the over-the-counter market, in privately negotiated transactions or otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, at prices related to prevailing market prices or at prices otherwise negotiated. The selling securityholders may sell the securities by one or more of the following methods, without limitation:

 

  (a)

block trades in which the broker or dealer so engaged shall attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

  (b)

purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant to this prospectus;

 

  (c)

an exchange distribution in accordance with the rules of any stock exchange on which the securities are listed;

 

  (d)

ordinary brokerage transactions and transactions in which the broker solicits purchases;

 

  (e)

privately negotiated transactions;

 

  (f)

short sales;

 

  (g)

through the writing of options on the securities, whether or not the options are listed on an options exchange;

 

  (h)

through the distribution of the securities by any selling securityholder to its partners, members or stockholders;

 

  (i)

one or more underwritten offerings on a firm commitment or best efforts basis; and

 

  (j)

any combination of any of these methods of sale.

The selling securityholders may also transfer the securities by gift. The issuer does not know of any arrangements by the selling securityholders for the sale of any of the securities.

The selling securityholders may engage brokers and dealers, and any brokers or dealers may arrange for other brokers or dealers to participate in effecting sales of the securities. These brokers, dealers or underwriters may act as principals, or as an agent of a selling securityholder.

Broker-dealers may agree with a selling securityholder to sell a specified number of the securities at a stipulated price per security. If the broker-dealer is unable to sell securities acting as agent for a selling securityholder, it may purchase as principal any unsold securities at the stipulated price. Broker-dealers who acquire securities as principals may thereafter resell the securities from time to time in transactions on any stock exchange or automated interdealer quotation system on which the securities are then listed, at prices and on terms then prevailing at the time of sale, at prices related to the then-current market price or in negotiated transactions. Broker-dealers may use block transactions and sales to and through broker-dealers, including transactions of the nature described above. The selling securityholders may also sell the securities in accordance with Rule 144 under the Securities Act of 1933, as amended, rather than pursuant to this prospectus, regardless of whether the securities are covered by this prospectus.

 

29

From time to time, one or more of the selling securityholders may pledge, hypothecate or grant a security interest in some or all of the securities owned by them. The pledgees, secured parties or persons to whom the securities have been hypothecated shall, upon foreclosure in the event of default, be deemed to be selling securityholders. As and when a selling securityholder takes such actions, the number of securities offered under this prospectus on behalf of such selling securityholder shall decrease. The plan of distribution for that selling securityholder’s securities shall otherwise remain unchanged. In addition, a selling securityholder may, from time to time, sell the securities short, and, in those instances, this prospectus may be delivered in connection with the short sales and the securities offered under this prospectus may be used to cover short sales.

To the extent required under the Securities Act of 1933, as amended, the aggregate amount of selling securityholders’ securities being offered and the terms of the offering, the names of any agents, brokers, dealers or underwriters and any applicable commission with respect to a particular offer shall be set forth in an accompanying prospectus supplement. Any underwriters, dealers, brokers or agents participating in the distribution of the securities may receive compensation in the form of underwriting discounts, concessions, commissions or fees from a selling securityholder and/or purchasers of selling securityholders’ securities for whom they may act (which compensation as to a particular broker-dealer might be in excess of customary commissions).

The selling securityholders and any underwriters, brokers, dealers or agents that participate in the distribution of the securities may be deemed to be “underwriters” within the meaning of the Securities Act of 1933, as amended, and any discounts, concessions, commissions or fees received by them and any profit on the resale of the securities sold by them may be deemed to be underwriting discounts and commissions.

A selling securityholder may enter into hedging transactions with broker-dealers and the broker-dealers may engage in short sales of the securities in the course of hedging the positions they assume with that selling securityholder, including, without limitation, in connection with distributions of the securities by those broker-dealers. A selling securityholder may enter into option or other transactions with broker-dealers that involve the delivery of the securities offered hereby to the broker-dealers, who may then resell or otherwise transfer those securities. A selling securityholder may also loan or pledge the securities offered hereby to a broker-dealer and the broker-dealer may sell the securities offered hereby so loaned or upon a default may sell or otherwise transfer the pledged securities offered hereby.

A selling securityholder may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those derivatives, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions. If so, the third party may use securities pledged by the selling securityholder or borrowed from the selling securityholder or others to settle those sales or to close out any related open borrowings of stock, and may use securities received from the selling securityholder in settlement of those derivatives to close out any related open borrowings of stock. The third party in such sale transactions shall be an underwriter and, if not identified in this prospectus, shall be identified in the applicable prospectus supplement (or a post-effective amendment).

The selling securityholders and other persons participating in the sale or distribution of the securities shall be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including Regulation M. This regulation may limit the timing of purchases and sales of any of the securities by the selling securityholders and any other person. The anti-manipulation rules under the Securities Exchange Act of 1934 may apply to sales of securities in the market and to the activities of the selling securityholders and their affiliates. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of the securities to engage in market-making activities with respect to the particular securities being distributed for a period of up to five business days before the distribution. These restrictions may affect the marketability of the securities and the ability of any person or entity to engage in market-making activities with respect to the securities.

 

30

The issuer has agreed to indemnify in certain circumstances the selling securityholders and any brokers, dealers and agents (who may be deemed to be underwriters), if any, of the securities covered by the registration statement, against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The selling securityholders have agreed to indemnify the issuer in certain circumstances against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

The issuer agreed to register the securities under the Securities Act of 1933, as amended, and to keep the registration statement of which this prospectus is a part effective for a specified period of time. The issuer has generally agreed to pay all expenses in connection with this offering, including the fees and expenses of counsel of the selling securityholders, but not including any underwriting discounts, concessions, commissions or fees of the selling securityholders or any applicable transfer taxes.

The issuer shall not receive any proceeds from sales of any securities by the selling securityholders.

The issuer cannot assure you that the selling securityholders shall sell all or any portion of the securities offered hereby.

 

31

SCHEDULE I

 

32

Exhibit 10.19

AMENDMENT TO

SPONSOR OPTION AGREEMENT

dated as of

May 6, 2025

among

LIONSGATE STUDIOS CORP.,

LIONSGATE STUDIOS HOLDING CORP. ,

and

EAGLE EQUITY PARTNERS V, LLC

AMENDMENT TO SPONSOR OPTION AGREEMENT

This AMENDMENT TO SPONSOR OPTION AGREEMENT (this “Amendment”) dated as of May 6, 2025 is made by and among Lionsgate Studios Corp., a corporation organized under the laws of the Province of British Columbia, Canada (the “Issuer”), Lionsgate Studios Holding Corp., a corporation organized under the laws of the Province of British Columbia (the “New Lionsgate”) and Eagle Equity Partners V, LLC, a Delaware limited liability company (the “Sponsor”) (collectively the “Parties”).

W I T N E S S E T H :

WHEREAS, on May 13, 2024, Lions Gate Entertainment Corp., a corporation organized under the laws of the Province of British Columbia, Canada (“Lionsgate”) consummated a business combination (the “Business Combination”) resulting in the Issuer becoming a publicly-traded company and majority-owned subsidiary of Lionsgate and, in connection therewith, Screaming Eagle Acquisition Corp., SEAC II Corp. (each of the foregoing entities as predecessors in interest to the Issuer) and the Sponsor entered into a Sponsor Option Agreement dated as of May 10, 2024 (the “Agreement”) (capitalized terms used but not defined herein shall have the meanings set forth in the Agreement);

WHEREAS, following the Business Combination, the board of directors of Lionsgate (the “Lionsgate Board”) determined that it is advisable and in the best interests of Lionsgate and its stakeholders, including its shareholders and creditors, to create two publicly traded companies to separately operate the Starz Business (as defined in the Separation Agreement (as defined below)) and the LG Studios Business (as defined in the Separation Agreement (as defined below)), respectively;

WHEREAS, the Lionsgate Board, together with the board of directors of the Issuer (the “Issuer Board”) with respect to the shareholders of the Issuer, have further determined that it is appropriate and desirable to have (i) shareholders of Lionsgate exchange all of their LGEC Shares (as defined in the Separation Agreement (as defined below)) for New Lionsgate New Common Shares (as defined in the Separation Agreement (as defined below)) and Starz Common Shares (as defined in the Separation Agreement (as defined below)), and (ii) shareholders of the Issuer exchange all of their shares for New Lionsgate New Common Shares (as defined in the Separation Agreement (as defined below)), in each case, by way of a plan of arrangement under applicable corporate law, on a pro rata basis and as more fully described in the Separation Agreement dated as of May 6, 2025, by and between the Issuer, New Lionsgate, Lionsgate and LG Sirius Holdings ULC (the “Separation Agreement”); and

WHEREAS, in connection with the Separation Agreement and the consummation of the Transactions (as defined in the Separation Agreement) and pursuant to Section 10 of the Agreement, the Parties desire to amend the Agreement, effective as of the Separation Effective Time (as defined in the Separation Agreement).

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the Parties hereto agree as follows:

1. Addition of New Lionsgate. New Lionsgate hereby agrees to the provisions of, and hereby joins as a party to, the Agreement, mutatis mutandis, and all references to “Issuer” in the Agreement shall hereby be deemed to refer to New Lionsgate, as applicable (it being understood that, Lionsgate Studios Corp. shall hereby cease to be the “Issuer” under the Agreement ). By executing below, New Lionsgate is hereby deemed to have executed the Agreement with the same force and effect as if originally named a party thereto and hereby assumes all of the obligations of the Issuer under the Agreement in accordance with Section 10 thereof. The Sponsor hereby acknowledges and agrees that this Amendment shall be deemed to satisfy all of the adjustments contemplated by Section 10 of the Agreement and other actions to be taken by Issuer and/or New Lionsgate pursuant to Section 10 of the Agreement, in each case solely with respect to the Transactions (as defined in the Separation Agreement) (and not, for the avoidance of doubt, with respect to any other Fundamental Transaction that may later occur), and, effective as of the Separation Effective Time (as defined in the Separation Agreement), no Options shall be exercisable for the securities of any person other than New Lionsgate (for clarity, without limiting in any way the rights of the Sponsor with respect to any other Fundamental Transaction that may later occur).

2. Fundamental Transaction. Notwithstanding anything to the contrary in the Agreement, each Option shall hereby become exercisable, upon the terms and conditions specified in the Agreement and this Amendment and in lieu of the Shares immediately theretofore receivable upon the exercise of the Options, for a number of common shares, without par value, of New Lionsgate (such shares, the “New Shares”, it being understood that all references to Shares in the Agreement shall hereby be deemed to refer to the New Shares) equal to 2,177,191 (for clarity, such that the 2,200,000 Options shall be exercisable, upon the terms and conditions specified in the Agreement and this Amendment, in the aggregate, for 2,177,191 New Shares).

3. Other Amendments. Section 12(d) is hereby amended and restated in its entirety as follows:

Assignment; Third Parties. This Agreement and all of the provisions hereof will be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and permitted assigns (including, for the avoidance of doubt, to New Lionsgate as the successor and assign of the Issuer following the consummation of the Transactions (as defined in the Separation Agreement)). This Agreement and all obligations of the Sponsor are personal to the Sponsor and may not be transferred or delegated at any time, except in accordance with Section 6. Nothing contained in this Agreement shall be construed to confer upon any person who is not a signatory hereto any rights or benefits, as a third party beneficiary or otherwise. Notwithstanding anything to the contrary herein, the parties hereto acknowledge and agree that from and after the consummation of the Transactions (as defined in the Separation Agreement): (i) the rights and obligations hereunder of Lionsgate Studios Corp., as the Issuer, shall automatically, without any further action by any party, be assigned and transferred to, and be assumed by, Lionsgate Studios Holding Corp., and (ii) all references in this Agreement to the Issuer shall be deemed to refer to New Lionsgate as the Issuer with the same effect as if New Lionsgate had been named as the Issuer herein. No assignment (whether pursuant to a merger, by operation of Law, change of control or otherwise) will relieve the assigning Party of any of its obligations hereunder.

4. No Other Changes. All terms, covenants, agreements, conditions and other provisions of the Agreement, except as amended by this Amendment, remain in full force and effect.

[Signature Pages Follow]

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written.

 

LIONSGATE STUDIOS CORP.
By:   /s/ Bruce Tobey
 

Name: Bruce Tobey

 

Title: General Counsel

LIONSGATE STUDIOS HOLDING CORP.
By:   /s/ Adrian Kuzycz
 

Name: Adrian Kuzycz

 

Title: Chief Executive Officer, Principal Executive Officer, President and Secretary

EAGLE EQUITY PARTNERS V, LLC
By:   /s/ Eli Baker
 

Name: Eli Baker

 

Title: Managing Member

 

[Signature Page to Amendment to Sponsor Option Agreement]

Exhibit 10.20

STRICTLY CONFIDENTIAL

 

 
 

CREDIT AND GUARANTEE AGREEMENT

Dated as of May 6, 2025

among

LIONS GATE TELEVISION INC.,

as Borrower

THE GUARANTORS REFERRED TO HEREIN,

THE LENDERS REFERRED TO HEREIN,

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

and

JPMORGAN CHASE BANK, N.A., CITIZENS BANK, N.A., MUFG BANK, LTD.,

TRUIST SECURITIES, INC. AND WELLS FARGO & COMPANY,

as Joint Lead Arrangers,

and

BANK OF AMERICA, N.A. AND PNC BANK, N.A.,

as Co-Documentation Agents

 

 
 

TABLE OF CONTENTS

 

         Page  

ARTICLE 1 DEFINITIONS

      1  

SECTION 1.1.

  

Definitions

      1  

SECTION 1.2.

  

Other Interpretive Provisions

      69  

ARTICLE 2 THE LOANS

      73  

SECTION 2.1.

  

[Intentionally omitted]

      73  

SECTION 2.2.

  

Revolving Credit Loans

      73  

SECTION 2.3.

  

Letters of Credit

      73  

SECTION 2.4.

  

Applicable Interest Rates

      77  

SECTION 2.5.

  

Manner of Borrowing Loans and Designating Applicable Interest Rates

      78  

SECTION 2.6.

  

Minimum Borrowing Amounts; Maximum Term Benchmark Loans

      80  

SECTION 2.7.

  

Maturity of Loans

      80  

SECTION 2.8.

  

Prepayments

      80  

SECTION 2.9.

  

Place and Application of Payments

      82  

SECTION 2.10.

  

Commitment Terminations

      83  

SECTION 2.11.

  

Evidence of Indebtedness

      83  

SECTION 2.12.

  

Fees

      84  

SECTION 2.13.

  

Incremental Commitments

      84  

SECTION 2.14.

  

Provisions Relating to the Borrowing Base

      86  

SECTION 2.15.

  

[Intentionally omitted]

      86  

SECTION 2.16.

  

Defaulting Lenders

      86  

ARTICLE 3 CHANGES IN CIRCUMSTANCES, TAXES, INDEMNITY

      88  

SECTION 3.1.

  

Inability to Determine Interest Rate

      88  

SECTION 3.2.

  

Change in Legality

      90  

SECTION 3.3.

  

Change in Circumstances

      90  

SECTION 3.4.

  

Withholding Taxes

      92  

SECTION 3.5.

  

Foreign Currency Conversion

      95  

SECTION 3.6.

  

Indemnity

      95  

SECTION 3.7.

  

Replacement of Lenders

      95  

SECTION 3.8.

  

Interest Adjustments

      96  

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES

      96  

SECTION 4.1.

  

Existence and Power

      96  

SECTION 4.2.

  

Authority and No Violation

      97  

SECTION 4.3.

  

Governmental Approval

      97  

SECTION 4.4.

  

Binding Agreements

      97  

SECTION 4.5.

  

Financial Statements

      98  

SECTION 4.6.

  

No Material Adverse Change; No Default; Solvency

      98  

SECTION 4.7.

  

Ownership of Subsidiaries, etc.

      99  

SECTION 4.8.

  

Title to Properties

      99  

SECTION 4.9.

  

Litigation

      99  

SECTION 4.10.

  

Federal Reserve Regulations

      100  

SECTION 4.11.

  

Investment Company Act

      100  

SECTION 4.12.

  

Taxes

      100  

SECTION 4.13.

  

Compliance with ERISA; Labor Disputes

      100  

SECTION 4.14.

  

Non-U.S. Plan Compliance

      101  

 

i

TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 4.15.

  

Agreements

      101  

SECTION 4.16.

  

Creation, Validity and Perfection of Security Interest

      101  

SECTION 4.17.

  

Disclosure

      102  

SECTION 4.18.

  

Distribution Rights

      102  

SECTION 4.19.

  

Environmental Liabilities

      102  

SECTION 4.20.

  

Compliance with Laws

      102  

SECTION 4.21.

  

Real Property

      102  

SECTION 4.22.

  

OFAC, FCPA, etc.

      103  

SECTION 4.23.

  

Borrowing Base

      103  

SECTION 4.24.

  

Participations and Residuals

      103  

ARTICLE 5 CONDITIONS PRECEDENT

      104  

SECTION 5.1.

  

Conditions to Initial Credit Extension

      104  

SECTION 5.2.

  

Conditions to Each Subsequent Credit Extension

      107  

SECTION 5.3.

  

Conditions to Initial Inclusion of Each Item of Product in the Borrowing Base

      108  

ARTICLE 6 AFFIRMATIVE COVENANTS

      110  

SECTION 6.1.

  

Financial Statements and Other Information

      110  

SECTION 6.2.

  

Compliance Certificate; Borrowing Base Certificate and Other Information

      111  

SECTION 6.3.

  

Taxes

      112  

SECTION 6.4.

  

Corporate Existence

      113  

SECTION 6.5.

  

Maintenance of Properties and Insurance

      113  

SECTION 6.6.

  

Books and Records

      114  

SECTION 6.7.

  

Inspection and Third Party Audit Rights

      114  

SECTION 6.8.

  

Compliance with Laws

      115  

SECTION 6.9.

  

Compliance with Agreements

      115  

SECTION 6.10.

  

ERISA Event Notice

      115  

SECTION 6.11.

  

Non-U.S. Plan Compliance and Reports

      115  

SECTION 6.12.

  

Environmental Laws

      115  

SECTION 6.13.

  

Additional Guarantors

      116  

SECTION 6.14.

  

Further Assurances

      116  

SECTION 6.15.

  

OFAC, FCPA

      118  

SECTION 6.16.

  

[Reserved]

      118  

SECTION 6.17.

  

Post-Closing Actions

      118  

SECTION 6.18.

  

ERISA Matters

      118  

SECTION 6.19.

  

Payment Instructions

      118  

SECTION 6.20.

  

Pledgeholder Agreements and Laboratory Access Letters

      118  

SECTION 6.21.

  

Account Control Agreements

      119  

SECTION 6.22.

  

Use of Proceeds

      119  

ARTICLE 7 NEGATIVE COVENANTS

      119  

SECTION 7.1.

  

Limitations on Indebtedness

      119  

SECTION 7.2.

  

Limitations on Restricted Payments

      124  

SECTION 7.3.

  

Limitation on Liens

      129  

SECTION 7.4.

  

Limitation on Restrictions on Distribution from Restricted Subsidiaries

      129  

SECTION 7.5.

  

Limitation on Affiliate Transactions

      131  

SECTION 7.6.

  

Limitation on Mergers and Consolidations

      133  

 

ii

TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 7.7.

  

Limitation on Lines of Business

      135  

SECTION 7.8.

  

Limitation on Sales of Assets

      135  

SECTION 7.9.

  

Limitation on Receivables Financing

      138  

SECTION 7.10.

  

Canadian Pension Plans

      138  

ARTICLE 8 EVENTS OF DEFAULT

      139  

SECTION 8.1.

  

Events of Default

      139  

SECTION 8.2.

  

Non-Bankruptcy Defaults

      142  

SECTION 8.3.

  

Bankruptcy Defaults

      142  

SECTION 8.4.

  

Collateral for Undrawn Letters of Credit

      142  

SECTION 8.5.

  

Right to Realize on Collateral and Enforce Guarantees

      143  

ARTICLE 9 GUARANTEE

      143  

SECTION 9.1.

  

Guarantee

      143  

SECTION 9.2.

  

No Impairment of Guarantee, etc.

      144  

SECTION 9.3.

  

Continuation and Reinstatement, etc.

      144  

SECTION 9.4.

  

Limitation on Guaranteed Amount, etc.

      145  

SECTION 9.5.

  

Voluntary Arrangements

      145  

SECTION 9.6.

  

Release of Guarantees

      146  

SECTION 9.7.

  

Indemnity and Subrogation

      146  

SECTION 9.8.

  

Contribution and Subrogation

      147  

SECTION 9.9.

  

Subordination

      147  

SECTION 9.10.

  

Luxembourg Guarantors

      147  

ARTICLE 10 THE ADMINISTRATIVE AGENT AND THE ISSUING BANKS

      149  

SECTION 10.1.

  

Administration by the Administrative Agent

      149  

SECTION 10.2.

  

Sharing of Setoffs

      150  

SECTION 10.3.

  

Notice to the Lenders

      151  

SECTION 10.4.

  

Liability of the Administrative Agent, Issuing Banks

      151  

SECTION 10.5.

  

Reimbursement and Indemnification

      152  

SECTION 10.6.

  

Rights of Administrative Agent

      154  

SECTION 10.7.

  

Independent Investigation by Lenders

      154  

SECTION 10.8.

  

Agreement of Required Lenders

      155  

SECTION 10.9.

  

Notice of Transfer

      155  

SECTION 10.10.

  

Successor Administrative Agent

      155  

SECTION 10.11.

  

Administrative Agent May File Proofs of Claim

      155  

SECTION 10.12.

  

Québec Security

      156  

SECTION 10.13.

  

Other Agent Titles

      156  

SECTION 10.14.

  

Certain ERISA Matters

      156  

SECTION 10.15.

  

Collateral Matters

      158  

SECTION 10.16.

  

Credit Bidding

      158  

SECTION 10.17.

  

Borrower Communications

      159  

ARTICLE 11 MISCELLANEOUS

      161  

SECTION 11.1.

  

Notices

      161  

SECTION 11.2.

  

Termination, Survival of Agreement, Representations and Warranties, etc.

      161  

SECTION 11.3.

  

Successors and Assigns; Syndications; Loan Sales; Participations

      161  

SECTION 11.4.

  

Expenses; Documentary Taxes

      165  

 

iii

TABLE OF CONTENTS

(continued)

 

         Page  

SECTION 11.5.

  

Indemnification of the Administrative Agent, the Issuing Banks and the Lenders

      165  

SECTION 11.6.

  

Set-Off

      166  

SECTION 11.7.

  

CHOICE OF LAW

      166  

SECTION 11.8.

  

WAIVER OF JURY TRIAL

      166  

SECTION 11.9.

  

WAIVER WITH RESPECT TO DAMAGES

      167  

SECTION 11.10.

  

No Waiver

      167  

SECTION 11.11.

  

Extension of Payment Date

      167  

SECTION 11.12.

  

Amendments, etc.

      168  

SECTION 11.13.

  

Severability

      170  

SECTION 11.14.

  

SERVICE OF PROCESS; SUBMISSION TO JURISDICTION

      170  

SECTION 11.15.

  

Headings

      171  

SECTION 11.16.

  

Execution in Counterparts; Electronic Execution

      171  

SECTION 11.17.

  

USA Patriot Act, Beneficial Ownership Regulation, and PCML Act

      172  

SECTION 11.18.

  

Entire Agreement

      172  

SECTION 11.19.

  

Confidentiality

      172  

SECTION 11.20.

  

Judgment Currency

      173  

SECTION 11.21.

  

Lender Obligations Several

      173  

SECTION 11.22.

  

Acknowledgement and Consent to Bail-In of Affected Financial Institutions

      174  

SECTION 11.23.

  

Taxes

      174  

SECTION 11.24.

  

Acknowledgement Regarding Any Supported QFCs

      174  

 

iv

Schedules

 

1.1

   

Schedule of Commitments

1.2

   

Initial LUX/UK Guarantors

1.3

   

Acceptable Obligors and Allowable Amounts

1.4

   

Existing Investments

1.5

   

Acceptable Tax Credit Jurisdictions

4.7(b)

   

Unrestricted Subsidiaries

4.9

   

Litigation

4.21

   

Real Property

6.17

   

Post-Closing Actions

7.2(b)

   

Separation Transaction Restricted Payments

Exhibits

 

A

   

Form of Notice of Borrowing

B

   

Form of Notice of Continuation/Conversion

C

   

Form of Note

D

   

Form of Compliance Certificate

E

   

Form of Solvency Certificate

F

   

Form of Assignment and Assumption

G

   

Form of Joinder Agreement

H

   

Form of Borrowing Base Certificate

I

   

Form of Liquidity Certificate

J

   

Form of First Lien/Second Lien Intercreditor Agreement

 

v

CREDIT AND GUARANTEE AGREEMENT, dated as of May 6, 2025 (as it may be amended, supplemented or otherwise modified, amended and restated, renewed or replaced from time to time, the “Credit Agreement”), among (i) LIONS GATE TELEVISION INC., a corporation organized under the laws of Delaware (the “Borrower”); (ii) the Guarantors referred to herein; (iii) the Lenders referred to herein; and (iv) JPMorgan Chase Bank, N.A., as agent for the Lenders.

PRELIMINARY STATEMENTS

The Borrower has requested that the Lenders make available an $800,000,000 senior secured revolving credit facility (the “Facility”); provided, however, that the Borrower may increase the aggregate size of the Facility after the Closing Date to a total amount not in excess of $1,200,000,000 in accordance with Section 2.13 hereof.

Subject to the terms and conditions set forth herein, the Administrative Agent is willing to act as administrative agent for the Lenders, the Issuing Banks are willing to issue Letters of Credit and each Lender is willing to make Loans to the Borrower and participate in the Letters of Credit, in an aggregate principal amount at any one time outstanding not in excess of its Commitment hereunder.

Accordingly, the parties hereto hereby agree as follows:

ARTICLE 1

DEFINITIONS

SECTION 1.1. Definitions. The following terms when used herein shall have the following meanings (unless the context otherwise requires, any of the following terms may be used in the singular or the plural, depending on the reference):

“3 Arts Entertainment” shall have the meaning given to such term in the definition of Investments.

“42” shall have the meaning given to such term in the definition of Investments.

“Acceptable Domestic Account Debtor” shall mean any Person listed as such on Schedule 1.3 hereto (as modified from time to time in accordance with Section 2.14).

“Acceptable Foreign Account Debtor” shall mean any Person listed as such on Schedule 1.3 hereto (as modified from time to time in accordance with Section 2.14).

“Acceptable L/C” shall mean an irrevocable letter of credit which (i) is in form and on terms acceptable to the Administrative Agent, (ii) is payable in Dollars at an office of the issuing or confirming bank in New York City, and (iii) is issued or confirmed by (a) any Person that on the date of issuance or confirmation of the letter of credit, is a Lender; (b) any commercial bank that has (or which is the principal operating subsidiary of a holding company which has) as of the time such letter of credit is issued, public debt outstanding with a rating of at least “A” (or the equivalent of an “A”) from one of the nationally recognized debt rating agencies; or (c) any other bank which the Administrative Agent may in its sole discretion determine to be of acceptable credit quality.

“Acceptable Major Account Debtor” shall mean any Person listed as such on Schedule 1.3 hereto (as modified from time to time in accordance with Section 2.14).

“Acceptable Obligor” shall mean any of the Acceptable Domestic Account Debtors, the Acceptable Foreign Account Debtors, the Other Acceptable Foreign Account Debtors and the Acceptable Major Account Debtors.

“Acceptable Tax Credit” shall mean (A) the amount that a Credit Party (or a Special Purpose Producer, and in the case of a Special Purpose Producer, paragraph (ix) below shall also apply) is entitled to or can reasonably be expected to be entitled to receive as a monetary receivable (which, for purposes of this definition, shall include a transferable tax credit, if and at such time as such Credit Party has entered into a purchase and sale agreement in connection therewith of the type described in clause (B) below) with respect to any tax credit, rebate, grant or similar production incentive pursuant to the provisions of (i) the law of any State in the United States administering tax credit programs and referenced in Schedule 1.5, (ii) the federal law of the United States, (iii) the federal law of Canada or the law of any Canadian Province (an “Other Provincial Act”), (iv) the law of England and Wales (“English Law”), (v) the law of Australia (“Australia Law”) or (vi) the laws of those other territories identified in Schedule 1.5 or any other jurisdiction reasonably acceptable to the Administrative Agent (“Other Foreign Law”), acting for itself, the Issuing Banks and the Lenders, or, (B) if such Credit Party (or Special Purpose Producer or single purpose entity that has an agreement with a Credit Party or Special Purpose Producer, in each case in compliance with clause (ix) below) has entered into a definitive, arms’ length, purchase and sale agreement for the sale of such tax credit to a third-party, such lesser amount as may have been agreed by the Credit Party with the third-party in such definitive purchase and sale agreement in respect of any such tax credits; in either case, which meets the following criteria:

(i) the tax credit is in respect of an item of Product of a Credit Party that has commenced principal photography and that does not remain uncompleted beyond the time period, if any, permitted under the applicable State law, federal U.S. law, federal Canadian law, Other Provincial Act, English Law, Australia Law or Other Foreign Law with respect to such credit;

(ii) the Credit Party shall have delivered to the Administrative Agent the items listed in Section 5.3 hereof for the applicable item of Product to the extent required thereunder;

(iii) the Credit Party has applied for an eligibility certificate in respect of such tax credit for such item of Product and has requested to be provided with an estimated amount of the tax credit to which the Credit Party will be entitled (in each case, if applicable);

(iv) the amount of a refund of tax with respect to a tax credit that a Credit Party is entitled or can reasonably be expected to be entitled to receive is net of any tax, interest, penalty or other amount payable to any Governmental Authority by a Credit Party under the applicable State law, federal U.S. law, federal Canadian law, Other Provincial Act, English Law, Australia Law or Other Foreign Law, as applicable, or any other amount payable by the Credit Party to any Governmental Authority to which the credit has been applied by set-off or in any other manner whatsoever by any Governmental Authority;

(v) where (a) the Credit Party has not received the applicable tax certificate referred to in clause (iii) above and (b) the amount of a tax credit in respect of an item of Product, or in the case of a television series, any one season of such series, exceeds the sum of U.S. $20,000,000, the Credit Party has provided the Administrative Agent, on behalf of itself, the Issuing Bank and the Lenders, with an independent accountant’s opinion/review letter in form and substance reasonably satisfactory to the Administrative Agent confirming the estimated amount of the tax credit;

 

2

(vi) the amount of a refund of tax with respect to a tax credit that a Credit Party is entitled or can reasonably be expected to be entitled to receive is net of expenses relating to the filing of an eligibility certificate with the applicable Governmental Authority or any other filings or procedures necessary to receive such tax credit which have already been paid prior to determination of the amount of such Acceptable Tax Credit;

(vii) the Administrative Agent (for the benefit of itself, the Issuing Bank and the Lenders) has a first priority perfected security interest (subject to any guild or union liens) in the tax credit and notice of such security interest in accordance with any applicable requirements of the applicable State law, federal U.S. law, federal Canadian law, Other Provincial Act, English Law, Australia Law or Other Foreign Law, as applicable, and any other relevant Governmental Authority, provided, however, that such requirement shall not apply if the (a) Credit Party has entered into a definitive, arms’ length, purchase and sale agreement for the sale of the tax credit to a third-party or (b) tax credit is otherwise compliant with (ix) below;

(viii) there is no statutory requirement which makes the Acceptable Tax Credit speculative (e.g., (x) a provision that has a budgetary cap on the aggregate benefit allocable for any calendar year and as to which the relevant Credit Party has not reserved, by filing or other action, its allocable amount of that benefit or (y) a provision that incorporates a subjective component to be administered by any Governmental Authority, such as a subjective narrative or thematic “nexus” of such item of Product to the relevant jurisdiction unless such Governmental Authority has affirmatively either accepted such subjective component or waived the relevant subjective component, in each case in a manner that is to the reasonable satisfaction of the Administrative Agent in accordance with the relevant statutory requirements such that the acceptance or waiver, as the case may be, may not be overturned or superseded via subsequent subjective review process);

(ix) the tax credit is either: (a) received directly by a Credit Party; or (b) received by a Special Purpose Producer that (x) has excluded the tax credit from any collateral granted to the third party production lender that is providing the production loan for the applicable production and (y) has agreed to remit the tax credit payment to a Credit Party promptly following receipt thereof; or (c) received by a single purpose entity that is subject to a conduit structure (including security documentation if the tax credit being financed is more than $7,500,000) reasonably satisfactory to the Administrative Agent whereby such entity has agreed to remit the tax credit payment to a Credit Party promptly following receipt thereof; provided, however, that if any tax credit covered by (b) above is for more than $10,000,000 or if the aggregate of all such tax credits in (b) included in the Borrowing Base exceeds (or would, with the addition of the tax credit at issue, exceed) $50,000,000, then the Administrative Agent may require reasonable security documentation including a priority security interest (subject to any guild or union liens) in the tax credit and an intercreditor agreement, in form reasonably acceptable to the Administrative Agent and the Borrower, as a condition to the inclusion of such tax credit in the Borrowing Base; and

(x) such other actions or requirements as the Administrative Agent or its counsel may reasonably require;

provided, however, that

(w) to the extent that circumstances arise or occur that would cause the actual tax credit to be less than the amount that would be determined based on any estimated amounts as set forth on any applications for any certificate described in clause (iii) of this definition (as applicable), the Acceptable Tax Credit shall be reduced to reflect the revised estimate;

 

3

(x) an Acceptable Tax Credit shall cease to be an Acceptable Tax Credit (A) if the Credit Party has not filed its return of income and all other certificates, forms and documents required under the applicable legislation to be filed together therewith in order to claim such tax credit within fourteen (14) months from the end of the tax year of such Credit Party; provided, however, that such requirement shall not apply if such Credit Party has entered into a definitive, arms’ length, purchase and sale agreement for the sale of such tax credit to a third-party; or (B) if the relevant Governmental Authority has (i) denied the Credit Party’s application of the applicable certificate set forth in clause (iii) of this definition, (ii) not issued the applicable certificate within eighteen (18) months following the Credit Party’s application thereof or (iii) revoked or notified the Credit Party of their intention to revoke such certificate;

(y) a tax credit denominated in a currency other than Dollars which would otherwise be an Acceptable Tax Credit shall be excluded to the extent such tax credit, when aggregated with other Acceptable Tax Credits denominated in a currency other than Dollars, are in excess of the Dollar equivalent of U.S. $50,000,000 unless such excess amount is hedged in a reasonable manner; and

(z) the Administrative Agent may determine that a tax credit program is no longer acceptable for purposes of future Acceptable Tax Credits for Products that have not previously been included in the Borrowing Base if a change in the program or the Governmental Authority administering such program occurs that makes the program less credit-worthy in the Administrative Agent’s reasonable discretion; provided that in the event the Administrative Agent makes such a determination, LGSC or any Restricted Subsidiary shall be permitted to finance such tax credit to the extent permitted under this Credit Agreement.

“Account Control Agreement” shall mean an account control agreement (or blocked account agreement or any other foreign equivalent in the applicable jurisdiction) among the applicable Credit Party, the Administrative Agent and the applicable depository bank, which such agreement shall be in form and substance reasonably satisfactory to the Administrative Agent and the Borrower, as the same may be amended, supplemented or otherwise modified, renewed or replaced from time to time.

“Additional Assets” shall mean: (1) any property, plant, equipment or other assets (excluding working capital or current assets for the avoidance of doubt) to be used by LGSC or a Restricted Subsidiary in a Related Business; or (2) an investment in any one or more businesses or capital expenditures (which for purposes of this definition, shall include the acquisition of any item of Product) and any Permitted Investment, in each case used or useful to a Related Business.

“Additional Lender” shall mean, at any time, any bank or other financial institution that agrees to provide any portion of any Commitment Increase pursuant to an Incremental Amendment in accordance with Section 2.13; provided that the relevant Persons under Section 11.3 (including those specified in the definition of “Eligible Assignee”) shall have consented to such Additional Lender’s providing such Commitment Increases, if such consent would be required under Section 11.3 for an assignment of Commitments to such Additional Lender.

“Administrative Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as agent for the Lenders hereunder or such successor Administrative Agent as may be appointed pursuant to Section 10.10.

“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.

 

4

“Affiliate” of any specified Person shall mean any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) when used with respect to any Person means possession, directly or indirectly, of the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Affiliate Transaction” shall have the meaning given to such term in Section 7.5(a).

“Affiliated Persons” mean, with respect to any specified Person, (a) such specified Person’s parents, spouse, siblings, descendants, step children, step grandchildren, nieces and nephews and their respective spouses, (b) the estate, legatees and devisees of such specified Person and each of the Persons referred to in clause (a), and (c) any company, partnership, trust or other entity or investment vehicle controlled by any of the Persons referred to in clause (a) or (b) or the holdings of which are for the primary benefit of any of such Persons.

“Affiliated Group” shall mean a group of Persons, each of which is an Affiliate (other than by reason of having common directors or officers) of some other Person in the group.

“Agreed Independent Appraiser” shall mean Virtu Global Advisors or any other independent third-party appraiser reasonably acceptable to the Administrative Agent.

“Allowable Amount” shall mean, with respect to any Acceptable Obligor, such amount as may be specified on Schedule 1.3 hereto (as applicable) as the maximum aggregate exposure for such Acceptable Obligor (as modified from time to time in accordance with Section 2.14).

“Ancillary Document” shall have the meaning given to such term in Section 11.16.

“Applicable Law” shall mean all provisions of statutes, rules, regulations and orders of the United States, England and Wales, the Grand Duchy of Luxembourg or Canada, any state or province thereof or municipality therein or of any foreign governmental body or of any regulatory agency applicable to the Person in question, and all orders and decrees of all courts and arbitrators in proceedings or actions in which the Person in question is a party.

“Applicable Margin” shall mean, in the case of Base Rate Loans, 1.50% and in the case of Term Benchmark Loans, 2.50%.

“Application” shall have the meaning given to such term in Section 2.3(b).

“Approved Fund” shall mean any Person (other than a natural person) that is engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

“Approved Jurisdiction” shall mean (1) the United States or Canada or any state (but not any territory) or province thereof, (2) if elected by LGSC, the United Kingdom or Luxembourg or (3) any other jurisdiction approved by the Administrative Agent (not to be unreasonably withheld, conditioned or delayed).

 

5

“Arranger” shall mean, collectively, the Joint Lead Arrangers and Joint Bookrunners identified on the cover page of this Credit Agreement.

“Asset Sale” shall mean any direct or indirect sale, lease, transfer, issuance or other disposition, or a series of related sales, leases, transfers, issuances or dispositions that are part of a common plan, including any Sale/Leaseback Transaction, of (x) shares of Capital Stock of a Subsidiary (other than directors’ qualifying shares) or (y) other than in the ordinary course of business, other property or other assets (each referred to for the purposes of this definition as a “disposition”) by LGSC or any of the Restricted Subsidiaries, including any disposition by means of a merger, amalgamation, consolidation or similar transaction; provided that transfers of assets of the type specified in the definition of “Receivables Financing” (or a fractional undivided interest therein), including by a Receivables Subsidiary in a Qualified Receivables Financing, shall not constitute Asset Sales; provided, further, that “Asset Sale” shall be deemed to include a “division” of or by a limited liability company that (a) results in assets that had formerly been held by a Restricted Subsidiary ceasing to be held by a Restricted Subsidiary, and (b) would have constituted an “Asset Sale” had such assets been sold to a third party, rather than transferred by way of a division.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Sales:

(1) a disposition of assets by a Restricted Subsidiary to LGSC or by LGSC or a Restricted Subsidiary to a Restricted Subsidiary; provided that in the case of a sale by a Restricted Subsidiary to another Restricted Subsidiary, LGSC directly and/or indirectly owns an equal or greater percentage of the Common Stock of the transferee than of the transferor; provided that in the case of such a disposition of Collateral, the transferee, if a Guarantor subject to the Collateral Documents, shall cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by Applicable Law to preserve and protect the Lien on the Collateral owned by or transferred to the transferee, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the UCC, the applicable PPSA, the CCQ, or other similar statute or regulation of the relevant provinces, states or jurisdictions;

(2) the sale of Cash Equivalents or tax credits;

(3) a disposition of inventory, including without limitation, Product (not constituting the sale of a Product that in the aggregate would be considered a “library”), in the ordinary course of business;

(4) a disposition of obsolete or worn-out equipment or equipment that is no longer useful in the conduct of the business of LGSC and the Restricted Subsidiaries and that is disposed of in each case in the ordinary course of business (including the abandonment of any intellectual property or surrender or transfer for no consideration) or otherwise as may be required pursuant to the terms of any lease, sublease, license or sublicense;

(5) the disposition of all or substantially all of the assets of LGSC in a manner permitted under Section 7.6 or any disposition that constitutes a Change of Control;

(6) an issuance of Capital Stock by a Restricted Subsidiary to LGSC or to a Wholly-Owned Subsidiary;

(7) any Permitted Investment and any Restricted Payment that is permitted to be made, and is made, under Section 7.2;

 

6

(8) dispositions of assets or issuances or sales of Capital Stock of a Restricted Subsidiary in a single transaction or series of related transactions with a Fair Market Value of less than $5,000,000;

(9) the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(10) dispositions of receivables in connection with the compromise, settlement or collection thereof in the ordinary course of business or in bankruptcy or insolvency or similar proceedings and exclusive of factoring or similar arrangements;

(11) the issuance by a Restricted Subsidiary of Preferred Stock that is permitted under Section 7.1;

(12) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Credit Parties or the Restricted Subsidiaries;

(13) foreclosure on assets;

(14) any sale of Capital Stock in, Indebtedness or other securities of or Investments in, an Unrestricted Subsidiary;

(15) any exchange of assets (including Capital Stock) (including a combination of assets and Cash Equivalents) for assets (including Capital Stock) related to a Related Business of comparable or greater market value or usefulness to the business of LGSC and its Restricted Subsidiaries as a whole, as determined in good faith by LGSC;

(16) sales of Product outside of the ordinary course of business (including the sale of Product that in the aggregate would be considered a “library”) if sold for not less than Fair Market Value and not in excess of $45,000,000 in the aggregate from the Closing Date, in each case so long as the proceeds of such sales relying on this clause (16) are transferred directly or indirectly to one or more Credit Parties;

(17) sales of all or a portion of an interest in a Foreign Subsidiary that is not a Credit Party, provided that the consideration received is not less than Fair Market Value;

(18) (A) the sale or transfer of Product or intellectual property Product to any ProdCo as part of any Permitted Slate Transaction or (B) any Permitted Slate Financing, including the sale or transfer of any interests in copyrights, distribution rights and/or financial proceeds as contemplated by the definition thereof;

(19) the creation of revenue participations of the type described in Section 7.1(q); and

(20) any sale, transfer or other distribution made in connection with or pursuant to the Separation Transaction.

 

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“Assignment and Assumption” shall mean an agreement substantially in the form of Exhibit F hereto or such other form as is acceptable to the Administrative Agent, executed by the assignor, assignee and other parties as contemplated thereby.

“Available Tenor” shall mean, as of any date of determination and with respect to the then-current Benchmark, as applicable, any tenor for such Benchmark (or component thereof) or payment period for interest calculated with reference to such Benchmark (or component thereof), as applicable, that is or may be used for determining the length of an Interest Period for any term rate or otherwise, for determining any frequency of making payments of interest calculated pursuant to this Credit Agreement as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to clause (e) of Section 3.1.

“Average Life” shall mean, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Backlog Facility” shall mean that certain $175,000,000 senior secured investment grade financing credit facility dated as of May 16, 2022 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time) between inter alios BMP Funding II LLC, as borrower, Lions Gate Films Inc., as servicer, Truist Bank, as agent, and the lenders from time to time party thereto.

“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.

“Bail-In Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).

“Bankruptcy Code” shall mean the Bankruptcy Reform Act of 1978, as heretofore and hereafter amended, as codified at 11 U.S.C. § 101 et seq.

“Bankruptcy Law” shall mean the Bankruptcy Code, the Companies’ Creditors Arrangement Act (Canada), the Bankruptcy and Insolvency Act (Canada), the Winding-Up and Restructuring Act (Canada) or other U.S. federal or state law, Canadian federal or provincial law or the law of any other applicable jurisdiction relating to bankruptcy, insolvency, winding up, liquidation, reorganization or relief of debtors or plans of arrangement.

“Base Rate” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus 1⁄2 of 1% and (c) Term SOFR for a one month Interest Period as published two (2) U.S. Government Securities Business Days prior to such day (or, if such day is not a U.S. Government Securities Business Day, the next preceding U.S. Government Securities Business Day) plus 1.0%; provided that for purposes of this definition, Term SOFR for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or

 

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any amended publication time for the Term SOFR Reference Rate, as specified by the CME Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the Base Rate due to a change in the Prime Rate, the NYFRB Rate or Term SOFR shall be effective as of the opening of business on the day of such change in the Prime Rate, the NYFRB Rate or Term SOFR, respectively. If the Base Rate is being used as an alternate rate of interest pursuant to Section 3.1 hereof, then the Base Rate shall be the greater of clauses (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the Base Rate as so determined would be less than zero, such rate shall be deemed to be zero for purposes of this Credit Agreement.

“Base Rate Loans” shall mean Loans the rate of interest applicable to which is based upon the Base Rate.

“Benchmark” shall mean, initially, with respect to any Term Benchmark Loan, Term SOFR; provided that if a Benchmark Transition Event, and the related Benchmark Replacement Date have occurred with respect to Term SOFR, or the then-current Benchmark, then “Benchmark” shall mean the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to clause (b) of Section 3.1.

“Benchmark Replacement” shall mean, for any Available Tenor, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:

(1) the Daily Simple SOFR; or

(2) the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (ii) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for dollar-denominated syndicated credit facilities at such time in the United States and (b) the related Benchmark Replacement Adjustment;

If the Benchmark Replacement as determined pursuant to clause (1) or (2) above would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Credit Agreement and the other Fundamental Documents.

“Benchmark Replacement Adjustment” shall mean, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date and/or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for dollar-denominated syndicated credit facilities at such time.

 

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“Benchmark Replacement Conforming Changes” shall mean, with respect to any Benchmark Replacement and/or any Term Benchmark Loan, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, length of lookback periods, the applicability of breakage provisions, and other technical, administrative or operational matters) that the Administrative Agent in consultation with the Borrower decides may be appropriate to reflect the adoption and implementation of such Benchmark and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of such Benchmark exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Credit Agreement and the other Fundamental Documents).

“Benchmark Replacement Date” shall mean, with respect to any Benchmark, the earliest to occur of the following events with respect to such then-current Benchmark:

(1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely ceases to provide all Available Tenors of such Benchmark (or such component thereof); or

(2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the first date on which such Benchmark (or the published component used in the calculation thereof) has been or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or component thereof) have been determined and announced by the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be no longer representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (3) and even if such Benchmark (or component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.

For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (1) or (2) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Transition Event” shall mean, with respect to any Benchmark, the occurrence of one or more of the following events with respect to such then-current Benchmark:

(1) a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof);

 

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(2) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Federal Reserve Board, the NYFRB, the CME Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), in each case, which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide such Benchmark (or such component thereof) or, if such Benchmark is a term rate, any Available Tenor of such Benchmark (or such component thereof); or

(3) a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such Benchmark (or such component thereof) or, if such Benchmark is a term rate, all Available Tenors of such Benchmark (or such component thereof) are no longer, or as of a specified future date will no longer be, representative.

For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark if a public statement or publication of information set forth above has occurred with respect to each then-current Available Tenor of such Benchmark (or the published component used in the calculation thereof).

“Benchmark Unavailability Period” shall mean, with respect to any Benchmark, the period (if any) (x) beginning at the time that a Benchmark Replacement Date pursuant to clauses (1) or (2) of that definition has occurred if, at such time, no Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Fundamental Document in accordance with Section 3.1 and (y) ending at the time that a Benchmark Replacement has replaced such then-current Benchmark for all purposes hereunder and under any Fundamental Document in accordance with Section 3.1.

“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership or control as required by the Beneficial Ownership Regulation.

“Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.

“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code to which Section 4975 of the Code applies, and (c) any Person whose assets include (for purposes of the Plan Asset Regulations or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.

“BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.

“Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

 

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“Board of Directors” shall mean, as to any Person, the board of directors or managers, as applicable, of such Person (or, if such Person is a partnership, the board of directors or other governing body of the general partner of such Person) or any duly authorized committee thereof.

“Borrower” shall mean Lions Gate Television Inc., a Delaware corporation.

“Borrowing” shall mean the total of Loans of a single type advanced, continued for an additional Interest Period, or converted from a different type into such type by the Lenders on a single date and, in the case of Term Benchmark Loans, for a single Interest Period. Borrowings of Loans are made and maintained ratably from each of the Lenders according to their Percentages. A Borrowing of Loans is “advanced” on the day Lenders advance funds comprising such Borrowing to the Borrower, is “continued” on the date a new Interest Period for the same type of Loans commences for such Borrowing, and is “converted” when such Borrowing is changed from one type of Loan to the other, all as requested by the Borrower pursuant to Section 2.5(a) hereof. Base Rate Loans and Term Benchmark Loans are each a “type” of Loan.

“Borrowing Base” shall have the meaning set forth in Annex A hereto.

“Borrowing Base Certificate” shall mean a Borrowing Base Certificate to be delivered pursuant to Section 5.1(o) or Section 6.2(c), substantially in the form of Exhibit H.

“Budgeted Negative Cost” shall mean for any item of Product, the final budget which shall include the aggregate amount of the development and pre-production expenses of such item of Product plus the cost of all production elements usually and customarily included as part of the negative cost of a Picture or Program (as applicable), of like cost and quality, plus post production costs of such item of Product and all other delivery items, and shall specifically include charges for any fee which is to be paid to the obligor under the applicable Completion Guarantee (if any); provided that, in the case of an Item of Product which is acquired rather than produced by a Credit Party, the term “Budgeted Negative Cost” shall mean the acquisition price paid or to be paid by such Credit Party for such Item of Product pursuant to the applicable negative pickup documentation or co-financing documentation.

“Business Day” shall mean any day other than a Saturday, Sunday or other day on which banks are required or permitted to close in the State of New York, the State of California, the Province of British Columbia or the Province of Ontario; provided that, in addition to the foregoing, a Business Day shall be, in relation to Loans referencing Term SOFR and any interest rate settings, fundings, disbursements, settlements or payments of any such Loans referencing Term SOFR or any other dealings of such Loans referencing Term SOFR, any such day that is only a U.S. Government Securities Business Day.

“Canadian DB Plan” shall mean a “registered pension plan”, as such term is defined in subsection 248(1) of the ITAC, that contains a “defined benefit provision”, as such term is defined in section 147.1(1) of the ITAC, as amended from time to time.

“Canadian Pension Plan” shall mean each “registered pension plan” as such term is defined in subsection 248(1) of the ITAC that is established, maintained, administered or contributed to or required to be contributed to by any Credit Party for its employees or former employees or in respect of which any Credit Party has any liability, but does not include any Statutory Plans or Guild Pension Plans.

“Canadian Pledge and Security Agreement” shall mean the Canadian Pledge and Security Agreement, dated as of the Closing Date (as amended, restated, supplemented or otherwise modified from time to time), among the Credit Parties party thereto and the Administrative Agent.

 

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“Capital Stock” of any Person shall mean any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock and limited liability or partnership interests (whether general or limited), but excluding any Indebtedness convertible into such equity.

“Cash Collateral Account” shall mean any collateral account of the Credit Parties into which the appropriate Credit Parties shall from time-to-time deposit Dollars and which shall be subject to an Account Control Agreement in favor of the Administrative Agent.

“Cash Equivalents” shall mean:

(1) Dollars, Canadian dollars, pound sterling, euros, the national currency of any member state of the European Union or, in the case of any Foreign Subsidiary, such other local currencies held by it from time to time in the ordinary course of business;

(2) securities issued or directly and fully Guaranteed or insured by the United States, Canada, Switzerland, the United Kingdom or any country that is a member of the European Union, or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof), having maturities of not more than two years from the date of acquisition;

(3) marketable general obligations issued by any State of the United States of America or any political subdivision thereof or any Canadian province or any public instrumentality thereof maturing within two years from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either S&P or Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments;

(4) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than two years from the date of acquisition thereof issued by any commercial bank having a short term deposit rating at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P, or “P-2” or the equivalent thereof by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments;

(5) repurchase obligations for underlying securities of the types described in clauses (2), (3) and (4) entered into with any bank meeting the qualifications specified in clause (4) above;

(6) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P or “P-2” or the equivalent thereof by Moody’s, or carrying an equivalent rating by a nationally recognized rating agency, if both of the two named rating agencies cease publishing ratings of investments and in any case maturing within one year after the date of acquisition thereof;

(7) Indebtedness issued by Persons with a rating of “A” or higher from S&P or “A2” or higher from Moody’s (or reasonably equivalent ratings of another internationally recognized ratings agency) in each case with maturities not exceeding two years from the date of acquisition;

 

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(8) interests in any investment company or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (7) above; and

(9) instruments equivalent to those referred to in clauses (1) through (8) above denominated in any foreign currency comparable in credit quality and tenor to those referred to above and commonly used by corporations for cash management purposes in any jurisdiction outside the United States to the extent reasonably required in connection with any business conducted by any Subsidiary organized in such jurisdiction.

“CCQ” shall mean the Civil Code of Québec as in effect in the province of Québec on the Closing Date (as amended from time to time).

“Change in Law” shall mean the occurrence, after the Closing Date, of any of the following: (i) the adoption or taking effect of any law, rule, regulation or treaty, (ii) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Authority or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Authority, in each case not publicly announced before the Closing Date; provided that notwithstanding anything herein to the contrary, (a) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, and (b) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Change in Law,” regardless of the date enacted, adopted or issued.

“Change of Control” shall mean:

(i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than any Permitted Holder, becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” of all shares that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of LGSC (or its successor by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) (for the purposes of this clause, such person or group shall be deemed to beneficially own any Voting Stock of LGSC held by a parent entity, if such person or group “beneficially owns” (as defined above), directly or indirectly, more than 50% of the voting power of the Voting Stock of such parent entity);

(ii) the first day on which Continuing Directors cease to constitute a majority of the members of the Board of Directors of LGSC or any Permitted Parent Holdco;

(iii) the sale, assignment, lease, transfer, conveyance or other disposition (other than by way of merger, amalgamation, consolidation or plan of arrangement), in one or a series of related transactions, of all or substantially all of the assets of LGSC and the Restricted Subsidiaries taken as a whole, to any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) other than any Permitted Holder or a Restricted Subsidiary; or

(iv) LGSC (or its successor by merger, amalgamation, consolidation, plan of arrangement or purchase of all or substantially all of its assets) ceases to (x) own, directly or indirectly, more than 50% of the voting power of the Voting Stock of the Borrower or (y) have voting control of the Borrower;

 

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provided that the Separation Transaction and all transactions occurring on or before or substantially concurrently with the Separation Transaction shall not constitute a Change of Control.

“Claiming Guarantor” shall have the meaning given to such term in Section 9.8.

“Closing Date” shall mean the date on which the conditions precedent set forth in Section 5.1 were satisfied or waived, which date is May 6, 2025.

“CME Term SOFR Administrator” shall mean CME Group Benchmark Administration Limited as administrator of the forward-looking term Secured Overnight Financing Rate (SOFR) (or a successor administrator).

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Collateral” shall mean all property and assets, whether now owned or hereafter acquired, in which Liens are, from time to time, purported to be granted to secure the Obligations pursuant to the Collateral Documents, provided that notwithstanding anything to the contrary herein or in any Fundamental Document, in no case shall the Collateral include any Excluded Assets.

“Collateral Account” shall have the meaning given to such term in Section 8.4(b).

“Collateral Documents” shall mean the Pledge and Security Agreements, the Copyright Security Agreements, the Copyright Security Agreement Supplements, the Patent Security Agreements, the Patent Security Agreement Supplements, the Trademark Security Agreements, the Trademark Security Agreement Supplements, the Notices of Assignments (if any), the Account Control Agreements, the Pledgeholder Agreements (if any), the Laboratory Access Letters (if any), and any other instruments and documents executed and delivered pursuant to this Credit Agreement or any of the foregoing, as the same may be amended, supplemented, reaffirmed or otherwise modified from time to time and pursuant to which Collateral is pledged, assigned or granted to or on behalf of the Administrative Agent for the ratable benefit of the Lenders.

“Comerica Outside IP Debt Facility” shall mean that certain Credit, Security and Pledge Agreement dated as of July 3, 2024 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time) among, inter alios, eOne Library Financing LLC, as a borrower, Comerica Bank, as administrative agent, and the lenders party thereto.

“Commitment” shall mean, as to any Lender, the obligation of such Lender to make Loans and to participate in Letters of Credit issued for the account of the Borrower hereunder in an aggregate principal or face amount at any one time outstanding not to exceed the amount set forth for such Lender in Schedule 1.1, as the same may be (a) reduced or terminated from time to time pursuant to Section 2.10, (b) increased from time to time pursuant to Section 2.13, and (c) reduced or increased from time to time pursuant to Section 11.12.

“Commitment Fee” shall have the meaning given to such term in Section 2.12(a).

“Commitment Increase” shall have the meaning given to such term in Section 2.13(a).

 

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“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

“Common Stock” shall mean with respect to any Person, any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock whether or not outstanding on the Closing Date, and includes, without limitation, all series and classes of such common stock.

“Complete” or “Completed” or “Completion” shall mean with respect to any item of Product, that (1) either (a) sufficient elements have been delivered by or on behalf of the applicable Credit Parties or Restricted Subsidiaries to, and accepted, deemed or determined to be accepted and/or exploited by, a Person (other than LGSC, the Credit Parties, the Restricted Subsidiaries or Affiliates thereof) to permit such Person to exhibit the item of Product in the theatrical or other medium for which the item of Product is intended for initial exploitation or (b) an independent laboratory has in its possession a complete final 35 mm or 70 mm (or other size which has become standard in the industry) composite positive print, video master or other equivalent master copy of the item of Product as finally cut, main and end titled, edited, scored and assembled with sound track printed thereon in perfect synchronization with the photographic action and fit and ready for exhibition and distribution in the theatrical or other medium for which the item of Product is intended for initial exploitation, and (2) if such item of Product was acquired by the Credit Parties or Restricted Subsidiaries from an unaffiliated third party, the entire acquisition price or minimum advance shall have been paid to the extent then due and there is no condition or event (including, without limitation, the payment of money not yet due) the occurrence of which might result in the applicable Credit Parties or Restricted Subsidiaries losing any of their rights in such item of Product. In the case of a Product that is a Program and that is a multi-episode season of a series, if and to the extent that the timing of the license fee payments (including any premium, if applicable, and only if the premium is treated the same, for this purpose, as the base license fee payments) due to the acceptable Credit Party or Restricted Subsidiaries are tied to the delivery of individual episodes, and do not require either completion or delivery of all episodes as a condition to such payments, for such season, then the determination of whether such Program has been Completed shall be made on an episode-by-episode, rather than on a full season of episodes, basis.

“Completion Guarantee” shall mean, with respect to any item of Product, a completion guarantee, in customary form consistent with the past practice of LGSC or its Subsidiaries or otherwise reasonable and customary for transactions of such nature, which (1) names the production financier to the extent such item of Product is financed in accordance with Sections 7.1(c) or (m) as a beneficiary thereof to the extent of the Credit Parties’ financial interest in such item of Product and (2) guarantees that such item of Product will be Completed in a timely manner, or else payment may be made to such production financier of an amount of up to the aggregate amount expended on the production of such item of Product by, or for the account of, the Credit Parties plus interest on, and other bank charges with respect to, such amount.

“Compliance Certificate” shall mean the Compliance Certificate to be delivered pursuant to Section 6.2, substantially in the form of Exhibit D.

“Conditional Outside IP Debt Reserve” shall have the meaning given to such term in the proviso to the definition of “Borrowing Base” in Annex A hereto.

“Continuing Directors” shall mean, as of any date of determination, any member of the Board of Directors of LGSC or a Permitted Parent Holdco, as the case may be, who: (1) was a member of such Board of Directors on the Closing Date (or, in the case of a Permitted Parent Holdco, the date such Permitted Parent Holdco acquired 100% of the Voting Stock of LGSC if the members of the Board of

 

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Directors of such Permitted Parent Holdco were approved for the purpose of this definition, on or prior to such date, by a majority of the Continuing Directors of LGSC); or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of the relevant Board of Directors at the time of such nomination or election.

“Contributing Guarantor” shall have the meaning given to such term in Section 9.8 hereof.

“Controlled Foreign Corporation” shall mean any Subsidiary that is a “controlled foreign corporation” as defined in Section 957(a) of the Code.

“Copyright Security Agreement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Copyright Security Agreement Supplement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Corresponding Tenor” with respect to any Available Tenor shall mean, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.

“Covered Entity” shall mean any of the following:

(i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b);

(ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or

(iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).

“Covered Party” shall have the meaning given to such term in Section 11.24.

“Credit Agreement” shall have the meaning given to such term in the introductory paragraph of this Credit Agreement.

“Credit Extension” shall mean the advancing of any Loan or the issuance or extension of, or increase in the amount of, any Letter of Credit.

“Credit Parties” shall mean the Borrower and the Guarantors and “Credit Party” shall mean any one of them.

“Cumulative Ultimates” shall mean for any Seasoned Picture that was released theatrically in at least the United States, without double-counting,

(a) the Net Remaining Ultimates (prior to applying any present value discount) for such Seasoned Picture as of any date at which it is to be determined (the “Ultimates Determination Date”), plus

(b) the actual proceeds received by any Credit Party (and not payable to a third party) with respect to such Seasoned Picture prior to the Ultimates Determination Date (net of any expenses or other deductions of the type that would be deducted when computing Net Remaining Ultimates), plus

 

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(c) any Eligible Receivables with respect to such Seasoned Picture included elsewhere in the Borrowing Base (which, for purposes of this definition, shall be included at 100%) as of the Ultimates Determination Date.

“Currency Agreement” shall mean in respect of a Person any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

“Daily Simple SOFR” shall mean for any day (a “SOFR Rate Day”), a rate per annum equal to SOFR for the day (such day “SOFR Determination Date”) that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Rate Day is a U.S. Government Securities Business Day, such SOFR Rate Day or (ii) if such SOFR Rate Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Rate Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower. If by 5:00 p.m. (New York City time) on the second (2nd) U.S. Government Securities Business Day immediately following any SOFR Determination Date, SOFR in respect of such SOFR Determination Date has not been published on the SOFR Administrator’s Website and a Benchmark Replacement Date with respect to the Daily Simple SOFR has not occurred, then SOFR for such SOFR Determination Date will be SOFR as published in respect of the first preceding U.S. Government Securities Business Day for which such SOFR was published on the SOFR Administrator’s Website.

“Default” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

“Default Excess” shall have the meaning given to such term in Section 2.8(d) hereof.

“Default Right” shall have the meaning given to such term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.

“Defaulting Lender” shall mean, subject to the last sentence of Section 2.16, any Lender, as reasonably determined by the Administrative Agent, that has (a) failed to fund any portion of its Loans within three (3) Business Days of the date required to be funded by it hereunder, unless determined by the Administrative Agent to be the subject of a good faith dispute, (b) notified the Administrative Agent, any Issuing Bank (subject to such Issuing Bank that is not JPMorgan Chase Bank having given notice thereof to the Administrative Agent), any Lender (subject to such Lender having given notice thereof to the Administrative Agent) or the Borrower (subject to the Borrower having given notice thereof to the Administrative Agent) in writing that it does not intend to comply with any of its funding obligations under this Credit Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Credit Agreement or under other agreements in which it commits to extend credit, unless with respect to such other agreements, the Required Lenders determine there to be a good faith dispute, (c) failed, within three (3) Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Credit Agreement relating to its obligations to fund prospective Loans, (d) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless determined by the Administrative Agent to be the subject of a good faith dispute, (e) (1) on or after the Closing Date, becomes or is insolvent or has a parent company that becomes or is insolvent, or (2) on or after the Closing

 

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Date, becomes the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not become a Defaulting Lender pursuant to this clause (e) solely as a result of the acquisition or maintenance of an ownership interest in such Lender or Person controlling such Lender, or the exercise of control over such Lender or Person controlling such Lender, in each case by a Governmental Authority or instrumentality thereof, or (f) on or after the Closing Date, has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action.

“Disqualified Lender” shall mean (a) banks, financial institutions and other institutional lenders separately identified in writing by the Borrower to the Administrative Agent and made available to the Lenders prior to the Closing Date and otherwise specified in writing by the Borrower to the Administrative Agent and made available to the Lenders from time to time (it being understood that any update shall not apply retroactively to disqualify any Person that has previously acquired an assignment or participation interest in the Loans), (b) any competitors of LGSC or its Subsidiaries that were separately identified in writing by the Borrower to the Administrative Agent made available to the Lenders (it being understood that any update shall not apply retroactively to disqualify any Person that has previously acquired an assignment or participation interest in the Loans), and (c) in the case of each of the entities covered by clauses (a) and (b), any of their Affiliates (other than bona fide debt funds) that are either (i) identified in writing by the Borrower to the Administrative Agent and made available to the Lenders from time to time or (ii) clearly identifiable solely on the basis of the similarity of such Affiliate’s name to an entity so identified pursuant to clause (a) or (b). In no event shall the Administrative Agent be obligated to ascertain, monitor or inquire as to whether any prospective assignee, participant or other transferee is a Disqualified Lender or have any liability with respect to any assignment or participation made to a Disqualified Lender. The Administrative Agent shall have the right, and the Borrower hereby expressly authorizes the Administrative Agent, to provide a list of Disqualified Lenders to each Lender requesting the same.

“Disqualified Stock” shall mean, with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(2) is convertible into or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of LGSC or a Restricted Subsidiary (it being understood that upon such conversion or exchange it shall be an Incurrence of such Indebtedness or Disqualified Stock)); or

(3) is redeemable at the option of the holder of the Capital Stock in whole or in part, in each case on or prior to the date that is 91 days after the earlier of (a) the Maturity Date or (b) the date on which there are no Loans, Commitments or L/C Exposure outstanding, provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require a Credit Party to repurchase such Capital Stock upon the occurrence of a change of control or asset sale

 

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(each defined in a substantially identical manner to the corresponding definitions in this Credit Agreement) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) provide that the applicable Credit Parties may not repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or for which it is ratable or exchangeable) pursuant to such provision prior to the termination of the Facility.

“Distribution Agreements” shall mean (i) any and all agreements entered into by a Credit Party pursuant to which such Credit Party has sold, leased, licensed or assigned distribution rights or other exploitation rights to any item of Product to a Person that is not an Affiliate of such Credit Party and (ii) any and all agreements hereafter entered into by a Credit Party pursuant to which such Credit Party sells, leases, licenses or assigns distribution rights or other exploitation rights to any item of Product to a Person that is not an Affiliate of such Credit Party.

“Distributor” shall mean any Person who is a party to any agreement entered into, in its capacity as a distributor, subdistributor, licensee, grantee or assignee, with respect to the licensing, distribution or other exploitation of any rights to one or more items of Product.

“Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.

“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.

“EEA Resolution Authority” shall mean any public administrative authority or any Person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.

“Electronic Signature” shall mean an electronic sound, symbol, or process attached to, or associated with, a contract or other record and adopted by a Person with the intent to sign, authenticate or accept such contract or record.

“Eligible Assignee” shall mean:

(a) a Lender,

(b) an Affiliate of a Lender,

(c) an Approved Fund, and

(d) any other Person (other than a natural person or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person) approved in writing by (i) the Administrative Agent, (ii) the Issuing Banks, and (iii) unless an Event of Default described in Section 8.1(a), (f) or (g) has occurred and is continuing, the Borrower (each such approval not to be unreasonably withheld or delayed);

 

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provided that, notwithstanding the foregoing, (A) “Eligible Assignee” shall not include (x) any Disqualified Lenders, (y) any natural person or any holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person or (z) except as provided in Section 11.3, LGSC or any Subsidiary of LGSC, and (B) no Person shall be an Eligible Assignee pursuant to clause (a), (b) or (c) above unless such Person is, or is an Affiliate or an Approved Fund of, an existing Lender.

“Eligible L/C Receivable” shall have the same definition as an Eligible Receivable except that (i) an Acceptable L/C shall have been delivered to the Administrative Agent for the full amount of the receivable and (ii) such receivable need not be with an Acceptable Obligor.

“Eligible Receivables” shall mean, at any date at which the amount thereof is to be determined, an amount equal to the sum of the present values (discounted on a quarterly basis, in the case of amounts which are not due and payable within 12 months following the date of determination by a rate equal to the interest rate in effect on the date of the computation with regard to Base Rate Loans) of:

(a) all net amounts which pursuant to a binding agreement are contractually obligated to be paid to any Credit Party either unconditionally or subject only to normal delivery requirements, and which are reasonably expected by the Borrower to be payable and collected from Acceptable Obligors minus

(b) the sum, without double-counting, of (i) the following items (based on the relevant Credit Party’s then best estimates): royalties, residuals, commissions, participations and other payments to third parties, collection/distribution expenses and commissions, home video fulfillment costs, taxes (including foreign withholding, remittance and similar taxes) chargeable in respect of such accounts receivable, and any other projected expenses of a Credit Party arising in connection with such amounts and (ii) the outstanding amount of unrecouped advances made by a distributor to the extent subject to repayment by a Credit Party or adjustment or recoupment;

provided that an Eligible Receivable shall not include amounts:

(a) in the aggregate due from a single Acceptable Obligor which are in excess of the Allowable Amount with respect to such Acceptable Obligor or, in the case of an Affiliated Group, in the aggregate due from the relevant Acceptable Obligors with respect to that Affiliated Group, unless in either case such excess is supported by an Acceptable L/C;

(b) which in the reasonable judgment of the Administrative Agent, are subject to material conditions precedent to payment (including (i) a material performance obligation, (ii) a material executory aspect on the part of a Credit Party or any other party, (iii) obligations contingent upon future events not within the relevant Credit Party’s direct control (including any “essential element” risk for an uncompleted item of Product unless “essential element” insurance is maintained) or (iv) solely in the case of any Eligible Receivable in excess of $20,000,000, a morality provision that in the Administrative Agent’s reasonable discretion entitles the obligor to terminate its obligation with respect to such payment); provided, however, that otherwise Eligible Receivables which are attributable to items of Product acquired from a third party shall not be excluded pursuant to this clause (b) if the entire acquisition price or minimum advance shall have been paid to the extent then due and there is no material condition or event (other than payment of the remaining purchase price) the occurrence of which would likely result in any Credit Party losing its rights in such item of Product;

(c) which are more than 120 days past due, in the case of receivables (other than theatrical receivables);

 

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(d) which are theatrical receivables due from any obligor in connection with the theatrical exhibition, distribution or exploitation of an item of Product that are still outstanding six (6) months after their booking;

(e) in excess of the Dollar equivalent of U.S.$60,000,000 in the aggregate if they are to be paid in a currency other than United States Dollars unless hedged in a manner reasonably satisfactory to the Administrative Agent;

(f) to the extent included in the Credit Parties’ estimated bad debts;

(g) due from any obligor which has 40% or more of the total receivable amount from such obligor (x) 120 or more days past due, in the case of all receivables other than theatrical receivables or (y) six (6) months past the date of booking, for theatrical receivables (in each case exclusive of amounts that are being disputed or contested in good faith);

(h) for which there is bona fide request for a material credit, adjustment, compromise, offset, counterclaim or dispute; provided, however, that only the amount in question shall be excluded from such receivable;

(i) which arise from a multi-picture Distribution Agreement which expressly allows the obligor on such receivable to exercise a right of offset or recoupment for any amount payable to or advanced by such obligor under such Distribution Agreement of which the Borrower has knowledge, or has otherwise received notice, of such obligor’s intent to exercise such right of setoff, against any amount payable with respect to such receivable; provided, however, that only the maximum amount which such obligor may offset or recoup shall be excluded from Eligible Receivables;

(j) which are attributable to an item of Product or right in which a Credit Party cannot warrant sufficient title to the underlying rights to justify such receivable;

(k) in which the Administrative Agent (for the benefit of itself, the Issuing Banks and the Lenders) does not have a first priority perfected security interest (subject only to the categories of Liens identified in clauses (27), (28), (29) and (31) of the definition of “Permitted Liens” or such other Liens as the Required Lenders may reasonably agree);

(l) which are determined by the Administrative Agent in its reasonable discretion, acting in good faith, upon written notice from the Administrative Agent to the Borrower and effective 10 days subsequent to the Borrower’s receipt of such notice, to be unacceptable;

(m) which may be subject to repayment to the extent not earned by performance (other than performance consisting of completion and delivery), but only to the extent of the maximum potential reduction or repayment; or

(n) which will not become due and payable until one year or more after the Maturity Date.

“Eligible Unsold Rights Amount” shall be:

(a) U.S.$830,000,000 as of the Closing Date and

 

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(b) thereafter, the aggregate of the amounts for the various components of the Credit Parties’ unsold rights, determined by an Agreed Independent Appraiser selected and paid for by the Borrower exercised in good faith using methodology consistent with the Initial Valuation Report without double counting for items of Product that are receiving other credit in the Borrowing Base on an annual basis at the Administrative Agent’s or the Required Lenders’ request no more than once a year and shall be accompanied by a variance analysis of the value of such Eligible Unsold Rights Amount against the Eligible Unsold Rights Amount for the preceding period, substantially in the form and methodology used in the Initial Valuation Report or as otherwise reasonably agreed to by the Administrative Agent; provided, however, that (i) there will be interim reductions to the Eligible Unsold Rights Amount to reflect decreases, if any, in the remaining value of unsold rights resulting from unsold rights dispositions in excess of an aggregate amount of 10% or more of the gross valuation amount reflected in the prior Valuation Report during such interim period; and (ii) there will be interim increases to the Eligible Unsold Rights Amount, upon delivery of a supplemental valuation report meeting the above requirements, to reflect increases, if applicable, in the value of unsold rights resulting from a significant library acquisition.

“Eligible Unsold Rights Amount Advance Rate” shall mean 50%;

provided that if any variance analysis delivered pursuant to the most recent annual unsold rights valuation shows a negative variance greater than 20% (after giving effect to differences related to timing for release of items of Product) from the projections with respect to the eligible unsold rights (such variance to be calculated in a manner contained in the Initial Valuation Report) (for the avoidance of doubt which negative variance shall not be due to the timing of collections) (a “Negative Variance Report”), then the Eligible Unsold Rights Amount Advance Rate shall be decreased to 40% (it being understood that for purposes of decreasing the Eligible Unsold Rights Amount Advance Rate that valuations may be considered for such purposes not more frequently than annually);

provided, further, however, that (i) if a subsequent variance analysis (calculated in a consistent manner) delivered meets or shows a positive variance from the projections with respect to the eligible unsold rights as set forth in the prior year’s valuation (a “Positive Variance Report”), then the Eligible Unsold Rights Amount Advance Rate shall increase to 45% and (ii) if two consecutive Positive Variance Reports are delivered (without a Negative Variance Report in between the two Positive Variance Reports), then the Eligible Unsold Rights Amount Advance Rate shall increase to 50%; it being understood that for purposes of increasing the Eligible Unsold Rights Amount Advance Rate that valuations may be considered for such purposes not more frequently than annually.

“Environmental Laws” shall mean any and all federal, state, provincial, local or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees or requirements of any Governmental Authority regulating, relating to, or imposing liability or standards of conduct concerning, any Hazardous Material or environmental protection or health and safety, as now or at any time hereafter in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq., the Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 et seq., the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq., the Superfund Amendments and Reauthorization Act of 1986, Public Law 99-499, 100 Stat. 1613, the Emergency Planning and Community Right to Know Act, 42 U.S.C. § 11001 et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq., the Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and § 657, the Waste Management Act, R.S.B.C. 1996, c. 481, the Transportation of Dangerous Goods Act, R.S.B.C. 1996, c. 458 and other such laws relating to the storage, transportation, treatment and disposal of Hazardous Materials into the air, surface water, ground water, land surface, subsurface strata or any building or structure and, together, in each case, with any amendment thereto, and the regulations adopted pursuant thereto.

 

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“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. § 1001 et seq. and the regulations promulgated thereunder.

“ERISA Affiliate” shall mean any trade or business (whether or not incorporated) which is under common control with any Credit Party under Section 4001 of ERISA or which is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“ERISA Event” shall mean:

(a) the failure of any Plan to be maintained and operated in all respects in accordance with all Applicable Laws, including ERISA;

(b) the present value of all benefits under a Title IV Plan exceed the actuarial value of the assets of such Title IV Plan allocable to such benefits (based on those assumptions used to fund such Title IV Plan) as of the last valuation date applicable thereto;

(c) any event described in Section 4043(c) of ERISA and the regulations promulgated thereunder with respect to a Title IV Plan (other than an event for which the thirty (30) day notice period is waived);

(d) the imposition of any liability, or the existence of any circumstances pursuant to which any liability could be imposed, upon any Credit Party or any of their respective ERISA Affiliates under Chapter 43 of the Code with respect to any Title IV Plan or Multiemployer Plan, or with respect to any Plan that provides post-retirement welfare coverage (other than as required pursuant to Section 4980B of the Code);

(e) the withdrawal of any Credit Party or ERISA Affiliate from a Title IV Plan subject to Section 4063 of ERISA during a plan year in which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA;

(f) the complete or partial withdrawal of any Credit Party or any ERISA Affiliate from any Multiemployer Plan;

(g) the filing of a notice of intent to terminate a Title IV Plan or the treatment of a plan amendment as a termination under Section 4041 of ERISA;

(h) the termination of a Title IV Plan or Multiemployer Plan by the PBGC pursuant to Section 4042 of ERISA;

(i) the failure by any Credit Party or ERISA Affiliate to make when due required contributions to a Multiemployer Plan or Title IV Plan;

(j) the termination of a Multiemployer Plan under Section 4041A of ERISA or the insolvency of a Multiemployer Plan under Section 4245 of ERISA or a determination that a Multiemployer Plan is in “endangered”, “critical” or “critical and declining” status under the meaning of Section 432 of the Code or Section 304 or 305 of ERISA;

 

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(k) the termination of a Plan described in Section 4064 of ERISA;

(l) the failure to satisfy the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA), whether or not waived, with respect to any Title IV Plan;

(m) a determination that any Title IV Plan is or is expected to be in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA);

(n) the incurrence by any Credit Party or any of its ERISA Affiliates of any liability under Title IV of ERISA (other than non-delinquent premiums payable to the PBGC under Sections 4006 and 4007 of ERISA);

(o) the imposition of liability on any Credit Party or any ERISA Affiliate due to the cessation of operations at a facility under the circumstances described in Section 4062(e) of ERISA; or

(p) the occurrence of a non-exempt “prohibited transaction” with respect to which any Credit Party or any of the Subsidiaries is a “disqualified person” (within the meaning of Section 4975 of the Code) or a “party in interest” (within the meaning of Section 406 of ERISA) or with respect to which any Credit Party or any such Subsidiary could otherwise be liable.

“ERISA Lien” shall mean any Liens under ERISA or Section 412 of the Code.

“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.

“Event of Default” shall have the meaning given to such term in Section 8.1.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Account” shall mean a bank account of a Credit Party:

(a) which is used for the sole purpose of making payroll and withholding tax payments related thereto and other employee wage and benefit payments, severance, and accrued and unpaid or deferred employee compensation payments (including salaries, wages, benefits and expense reimbursements, 401(k), and other retirement plans and employee benefits),

(b) which is used solely as an escrow account or as a fiduciary or trust account held exclusively for the benefit of an unaffiliated third party,

(c) which is a zero balance account or that is swept into an account that is subject to an Account Control Agreement no less frequently than daily; or

(d) which is maintained with JPMorgan Chase Bank in the United Kingdom (or, in the Administrative Agent’s discretion, another foreign jurisdiction) and has an average daily balance less than the Dollar equivalent of $25,000,000.

“Excluded Assets” shall mean:

(1) the Fractional Aircraft Interest;

 

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(2) any Capital Stock or other equity interests (including, for the avoidance of doubt, Capital Stock or equity interests of any Unrestricted Subsidiary) owned by the Borrower or any Guarantor to the extent that, and for so long as, a pledge of such Capital Stock or other equity interests would violate Applicable Law or an enforceable contractual obligation binding on or relating to such Capital Stock or other equity interests;

(3) rights of any of the Borrower or any Guarantor under any license, contract or agreement or any property subject to a purchase money security interest or similar arrangement to the extent that pursuant to the terms of such license, contract, agreement, purchase money arrangement or similar arrangement the granting of a security interest in such rights would result in a termination or right of termination of, or is otherwise prohibited under, such agreement by the other party thereto, but only to the extent such prohibition on assignment is enforceable; provided, however, that upon the ineffectiveness, lapse or termination of any such provision, the Collateral shall include, and such Person shall be deemed to have granted a security interest in, all such rights and interests as if such provision had never been in effect;

(4) any other assets to the extent that, and for so long as, taking a security interest in such assets would violate any Applicable Law or regulation or an enforceable contractual obligation binding on the assets that existed at the time of the acquisition thereof and was not created or made binding on the assets in contemplation of or in connection with the acquisition of such assets;

(5) any leasehold interest in real property;

(6) any fee interest in real property with a Fair Market Value of $50,000,000 or less individually;

(7) motor vehicles and other assets subject to certificates of title;

(8) assets to the extent a security interest in such assets would result in a material adverse tax consequence (including as a result of the operation of Section 956 of the Code or any similar law or regulation in any applicable jurisdiction) as reasonably determined by LGSC in good faith upon notice to the Administrative Agent;

(9) those assets as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining such a security interest or perfection thereof are excessive in relation to the benefit to the Secured Parties of the security to be afforded thereby;

(10) any of the Capital Stock of Subsidiaries not owned directly by a Credit Party;

(11) any governmental licenses or state or local franchises, charters and authorizations, to the extent security interests in such licenses, franchises, charters or authorizations are prohibited or restricted thereby after giving effect to the applicable anti-assignment provisions of the UCC;

(12) “intent-to-use” trademark applications;

(13) letter of credit rights (except to the extent a security interest therein can be perfected by the filing of UCC financing statements);

 

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(14) any commercial tort claim with a value not in excess of $15,000,000 individually;

(15) voting equity interests (and any other interests constituting “voting stock” within the meaning of U.S. Treasury Regulations Section 1.956-2(c)(2)) in excess of 65% of all such voting equity interests (and “voting stock”) in (i) any Controlled Foreign Corporation, (ii) any FSHCO and (iii) any subsidiary that is a disregarded entity for U.S. federal income tax purposes and owns any equity interests (or any other interests constituting “voting stock” within the meaning of U.S. Treasury Regulations Section 1.956-2(c)(2)) in a Controlled Foreign Corporation or FSHCO;

(16) any Production Account relating to an item of Product the production of which is being financed by an outside financing that is permitted under Section 7.1;

(17) any Capital Stock or other equity interests owned by the Borrower or any Guarantor in a joint venture or entity not constituting a Subsidiary to the extent such Capital Stock or other equity interests are subject to transfer restrictions that extend to encumbrances on such Capital Stock or equity interests; and

(18) rights or interests of the Borrower or any Guarantor in any production incentive or tax credit owned by an Unrestricted Subsidiary or Special Purpose Producer (including the proceeds of such production incentive or tax credit and any refund or similar receipt attributable to such production incentive or tax credit) so long as no value attributable to such production incentive or tax credit is included in the Borrowing Base.

“Excluded Subsidiary” shall mean any of the following:

(a) each Immaterial Subsidiary;

(b) each Subsidiary that is not a Wholly-Owned Subsidiary; provided that if the Borrower or its Affiliates sell any ownership interest in a Subsidiary that was previously a Credit Party and the Borrower does not elect to cause such Subsidiary to become a Credit Party, then all outstanding Investments (except to the extent repaid as part of such equity sale transaction) in such Subsidiary shall constitute Investments and/or Restricted Payments hereunder that will be permitted to the extent they comply with Section 7.4 (provided, that any Subsidiary that is a Credit Party shall not be released as a Credit Party and become an Excluded Subsidiary solely because such Subsidiary is no longer a Wholly-Owned Subsidiary unless such Subsidiary became a non-Wholly-Owned Subsidiary pursuant to a transaction not prohibited by this Credit Agreement with a Person that is not an Affiliate (other than to the extent such Person becomes a non-Affiliate as a result of such transaction) for a bona fide business purpose (other than to release such Credit Party from its Guarantee));

(c) each Subsidiary that is prohibited from guaranteeing or granting Liens to secure the Obligations by any Applicable Law or that would require consent, approval, license or authorization of a Governmental Authority to guarantee or grant Liens to secure the Obligations (unless such consent, approval, license or authorization has been received);

(d) each Subsidiary that is prohibited by any applicable contractual requirement (not created in contemplation of the acquisition by the Credit Parties of such Subsidiary) from Guaranteeing or granting Liens to secure the Obligations on the Closing Date or at the time such Subsidiary becomes a Subsidiary not in violation of Section 7.4 (and for so long as such restriction or any replacement or renewal thereof is in effect);

 

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(e) (i) any Subsidiary which engages in no activities other than in connection with the financing of accounts receivable, and (ii) each Receivables Subsidiary;

(f) any Foreign Subsidiary in which any Subsidiary organized in the United States, any state thereof, or the District of Columbia owns (within the meaning of Section 958(a) of the Code) any equity interest or Capital Stock;

(g) any U.S. Subsidiary (i) that is an FSHCO or (ii) that is a Subsidiary of a Controlled Foreign Corporation;

(h) any Foreign Subsidiary other than a Subsidiary which is organized in Canada, the United Kingdom or Luxembourg or any province thereof;

(i) any other Subsidiary with respect to which the Administrative Agent and the Borrower reasonably agree that the cost or other consequences (including, without limitation, tax consequences (including as a result of the operation of Section 956 of the Code or any similar Applicable Law in any applicable jurisdiction)) of providing a guarantee of or granting Liens to secure the Obligations are likely to be excessive in relation to the value to be afforded thereby;

(j) any other Subsidiary if in the reasonable good faith determination of the Borrower in consultation with the Administrative Agent, a guarantee by such Subsidiary would result in materially adverse tax consequences to any Credit Party or any Subsidiary of a Credit Party;

(k) each Unrestricted Subsidiary;

(l) any Subsidiary that is a “captive” insurance company;

(m) not-for-profit Subsidiaries;

(n) Subsidiaries which are Special Purpose Producers to the extent that (i) such Special Purpose Producer (A) has incurred (or is reasonably expected in connection with the financing plan for such Special Purpose Producer to incur) production loans, tax credit loans or any Other Permitted Priority Indebtedness and/or (B)(I) was formed for the purpose of incurring a tax credit loan or holding or collecting tax credits in connection with the applicable production and (II) has guaranteed or granted liens on any of its assets to secure, or is reasonably expected to guarantee or grant liens on its assets to secure, the applicable production loan, tax credit loan or any Other Permitted Priority Indebtedness and (ii) some or all distribution and other exploitation rights in the relevant Products or the audio-visual product or live shows and experiences or location-based entertainment produced by such Special Purpose Producer are licensed to a Credit Party; and

(o) any ProdCo.

“Excluded Swap Obligation” shall mean, with respect to any Credit Party, any obligation to pay or perform under any Hedging Obligation if, and to the extent that, and only for so long as, all or a portion of the guarantee of such Credit Party of, or the grant by such Credit Party of a security interest to secure, as applicable, such Hedging Obligations (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission

 

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(or the application or official interpretation of any thereof) by virtue of (a) such Credit Party’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder or (b) in the case of a Hedging Obligation subject to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Guarantor is a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act (or any successor provision thereto), in each case the time the guarantee given by such Credit Party or the grant of such security interest, as applicable, becomes effective with respect to such Hedging Obligation. If a Hedging Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Hedging Obligation that is attributable to swaps for which such guarantee or security interest is or becomes illegal.

“Excluded Taxes” shall mean taxes imposed on or with respect to a Person or required to be withheld or deducted from a payment to a Person pursuant to this Credit Agreement or any other Fundamental Document (a “Recipient”):

(1) where such Person is subject to such taxes by reason of its carrying on business (other than any taxes arising solely from such Lender having entered into this Credit Agreement) in the jurisdiction imposing such tax (the “Relevant Taxing Jurisdiction”), having a permanent establishment in the Relevant Taxing Jurisdiction, being organized under the laws of the Relevant Taxing Jurisdiction or a subdivision thereof, or being an actual or deemed resident in the Relevant Taxing Jurisdiction;

(2) if the Borrower is reincorporated, reorganized, continued or otherwise becomes an entity governed by the federal laws of Canada or the laws of a province or territory of Canada in accordance with Section 7.6(b)(ii) or any other provision in this Agreement, that would not have been imposed but for (i) a Recipient not dealing at arm’s length (within the meaning of the ITAC) with the Borrower or a Guarantor, (ii) a Recipient being a “specified shareholder” (as defined in subsection 18(5) of the ITAC) of the Borrower or not dealing at arm’s length with a “specified shareholder” (as defined in subsection 18(5) of the ITAC) of the Borrower for purposes of the ITAC, or (iii) the Borrower being a “specified entity” (as defined in subsection 18.4(1) of the ITAC) in respect of a Recipient (except in the case of (i) to (iii) where (x) the non-arm’s length relationship, (y) the Recipient being a “specified shareholder” of the Borrower or not dealing at arm’s length with a “specified shareholder” of the Borrower, or (z) the Borrower being a “specified entity” in respect of the Recipient, as applicable, arises from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Fundamental Document, or sold or assigned an interest in any Loan or Fundamental Document);

(3) by reason of the failure of such Person to complete, execute and deliver to the Borrower or the applicable Guarantor any form or document to the extent applicable to such Person that may be required by law or by reason of administration of such law or which is reasonably requested in writing to be delivered to the Borrower or such Guarantor in order to enable the Borrower or such Guarantor to make any payments hereunder or under any other Fundamental Document without deduction or withholding for taxes, or with deduction or withholding of a lesser amount, which form or document shall be delivered prior to the date on which the relevant payment is made;

(4) which are Other Connection Taxes;

 

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(5) U.S. federal withholding taxes imposed on amounts payable to or for the account of such Person with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (x) such Person acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 3.7(i)), or (y) such Person changes its Relevant Taxing Jurisdiction, except in each case to the extent that, pursuant to Section 3.4, amounts with respect to such taxes were payable either to such Person’s assignor immediately before such Person acquired the applicable interest in such Loan or Commitment or to such Person immediately before it changed its Relevant Taxing Jurisdiction in accordance with Section 3.3(d)(ii) or Section 3.4(g);

(6) [reserved];

(7) in respect of any taxes imposed under FATCA;

(8) in respect of any withholding tax imposed by the Luxembourg law of 23 December 2005 as amended; or

(9) in respect of any Luxembourg registration duties (droits d’enregistrement) due before the Registration, Estates and VAT Department (Administration de l’enregistrement, des domaines et de la TVA) in Luxembourg in case of voluntary registration of any of the Fundamental Document when such registration is not required to maintain or preserve the rights of the Lenders under the Fundamental Documents.

“Existing Credit Agreement” shall mean that Credit and Guarantee Agreement, dated as of December 8, 2016 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time prior to the Closing Date), among Lions Gate Capital Holdings LLC, as borrower, the guarantors referred to therein, the lenders referred to therein and JPMorgan Chase Bank, N.A., as agent for the lenders thereunder.

“Facility” shall have the meaning given to such term in the Preliminary Statements hereto.

“Fair Market Value” shall mean, with respect to any asset or liability, the fair market value of such asset or liability as determined by LGSC in good faith.

“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the Closing Date (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof any agreements entered into pursuant to Section 1471(b)(1) of the Code and any intergovernmental agreements between the United States and any other jurisdiction entered into in connection with the foregoing (including any treaty, law, regulation or other official guidance adopted pursuant to any such intergovernmental agreement).

“Federal Funds Rate” shall mean, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Credit Agreement.

“Federal Reserve Board” shall mean the Board of Governors of the Federal Reserve System of the United States of America.

“Fee Letter” shall mean the Fee Letter dated as of November 22, 2024 between the Administrative Agent and Lionsgate Studios Corp., as amended, supplemented or amended and restated from time to time.

 

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“Fee Payment Date” shall mean (a) the fifteenth day following the last day of each March, June, September and December (or if such date is not a Business Day, the next successive Business Day) and (b) the Maturity Date.

“Finance Lease Obligations” shall mean an obligation that is required to be classified and accounted for as a finance lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation will be the capitalized amount of such obligation at the time any determination thereof is to be made as determined in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty; provided that obligations of LGSC or the Restricted Subsidiaries, or of a special purpose or other entity not consolidated with LGSC and the Restricted Subsidiaries, either existing on Closing Date or created thereafter that (a) initially were not included on the consolidated balance sheet of LGSC as finance leases and were subsequently characterized as finance leases or, in the case of such a special purpose or other entity becoming consolidated with LGSC and the Restricted Subsidiaries were required to be characterized as finance leases upon such consideration, in either case, due to a change in accounting treatment or otherwise, or (b) did not exist on such date and were required to be characterized as finance leases but would not have been required to be treated as finance leases on such date had they existed at that time, shall for all purposes not be treated as Finance Lease Obligations or Indebtedness (it being understood and agreed, for the avoidance of doubt, that Finance Lease Obligations shall not include operating leases as such term is defined under GAAP).

“Fixed Amounts” shall have the meaning given to such term in Section 1.2(d).

“Flood Insurance Laws” shall mean, collectively, (i) National Flood Insurance Reform Act of 1994 (which comprehensively revised the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973) as now or hereafter in effect or any successor statute thereto, (ii) the Flood Insurance Reform Act of 2004 as now or hereafter in effect or any successor statute there-to and (iii) the Biggert-Waters Flood Insurance Reform Act of 2012 as now or hereafter in effect or any successor statute thereto.

“Foreign Subsidiary” shall mean any Restricted Subsidiary that is not organized under the laws of the United States of America or any state thereof or the District of Columbia, and any Subsidiary of such Restricted Subsidiary.

“Fractional Aircraft Interest” shall mean a fractional interest in an executive jet aircraft and/or a single purpose trust formed solely to hold such interest, with an acquisition cost for such interest or such trust which may not exceed $10,000,000.

“FSHCO” shall mean any Subsidiary that owns no material assets (directly or through subsidiaries) other than equity interests (and any other interests constituting “voting stock” within the meaning of U.S. Treasury Regulations Section 1.956-2(c)(2)) of one or more Controlled Foreign Corporations.

“Fundamental Documents” shall mean this Credit Agreement, the Notes, the Collateral Documents, each Incremental Amendment, and any other ancillary documentation which is required to be or is otherwise executed by any Credit Party and delivered to the Administrative Agent in connection with this Credit Agreement or any of the documents listed above (including any amendments or modifications to any of the documents listed above).

 

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“GAAP” shall mean generally accepted accounting principles in the United States of America as in effect from time to time, including those set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession, subject in all cases to paragraph (c) below of this Article 1. All ratios and computations based on GAAP contained in this Credit Agreement will be computed in conformity with GAAP, except that in the event LGSC is acquired in a transaction that is accounted for using purchase accounting, the effects of the application of purchase accounting shall be disregarded in the calculation of such ratios and other computations contained in this Credit Agreement.

“Governmental Authority” shall mean any federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case whether of the United States, Canada, Luxembourg or any foreign jurisdiction.

“Gross Borrowing Base” shall mean the sum of:

(a) 100% of Eligible Receivables from Acceptable Major Account Debtors, plus

(b) 100% of Eligible L/C Receivables, plus

(c) 100% of Eligible Receivables from Acceptable Domestic Account Debtors, plus

(d) 100% of Eligible Receivables from Acceptable Foreign Account Debtors, plus

(e) 100% of Acceptable Tax Credits, plus

(f) 100% of Eligible Receivables from Other Acceptable Foreign Account Debtors, plus

(g) 100% of Other Receivables, plus

(h) 100% of the Eligible Unsold Rights Amount, plus

(i) 100% of Net Remaining Ultimates, plus

(j) 100% of unrestricted cash and Cash Equivalents of the Credit Parties, plus

(k) 100% of amounts held in the Cash Collateral Account(s), minus

(l) to the extent not already deducted, the aggregate amount of all accrued but unpaid residuals owed to any trade guild with respect to any item of Product, to the extent that the obligation of any Credit Party to pay such residuals is secured by a security interest in such item of Product or rights therein or proceeds thereof, which security interest is not subordinated to the security interests of the Lenders.

“Guarantee” shall mean any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

 

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(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” will not include endorsements for collection or deposit or for indemnification in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantors” shall mean LGSC and each Restricted Subsidiary which is a signatory of this Credit Agreement as a Guarantor and any other direct or indirect Restricted Subsidiary acquired or created after the date hereof which becomes a signatory to this Credit Agreement as a Guarantor pursuant to Section 6.13.

“Guild Pension Plans” shall mean retirement and savings plans that are registered pursuant to the ITAC that any Credit Party is required to contribute to on behalf of its employees or independent contractors who are members of guilds or unions, in the ordinary course of business pursuant to a collective bargaining agreement.

“Hazardous Materials” shall mean any flammable materials, explosives, radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic substances, or similar materials defined in any Environmental Law.

“Hedging Obligations” of any Person shall mean the obligations of such Person pursuant to any Interest Rate Agreement or Currency Agreement.

“Hypothecary Representative” has the meaning set out in Section 10.12.

“Immaterial Subsidiary” shall mean any Subsidiary that (a) did not, as of the last day of the fiscal quarter of LGSC most recently ended for which financial statements have been (or were required to be) delivered pursuant to Section 6.1(a) or 6.1(b), have assets with a value in excess of 3.0% of the Total Assets or revenues representing in excess of 3.0% of Total Revenues of LGSC and its Restricted Subsidiaries on a consolidated basis as of such date, and (b) taken together with all such Subsidiaries as of such date, did not have assets with a value in excess of 7.5% of Total Assets or revenues representing in excess of 7.5% of Total Revenues of LGSC and its Restricted Subsidiaries on a consolidated basis as of such date.

“Incremental Amendment” shall have the meaning given to such term in Section 2.13(a).

“Incur” shall mean issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary (whether by merger, amalgamation, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the terms “Incurred”, “Incurring” and “Incurrence” have meanings correlative to the foregoing.

“Incurrence Based Amounts” shall have the meaning given to such term in Section 1.2(d).

 

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“Indebtedness” shall mean, with respect to any Person on any date of determination (without duplication):

(1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

(2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) the principal component of all obligations of such Person in respect of letters of credit, bankers’ acceptances or other similar instruments (including reimbursement obligations with respect thereto except to the extent such reimbursement obligation relates to a trade payable and such obligation is satisfied within 90 days of Incurrence);

(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property, which purchase price is due more than six months after the date of placing such property in service or taking delivery and title thereto, except (a) any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business and (b) any earn-out obligation until the amount of such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP;

(5) Finance Lease Obligations of such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor);

(6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary of a Credit Party that is not a Guarantor, any Preferred Stock;

(7) the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons;

(8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person (whether or not such items would appear on the balance sheet of the guarantor or obligor); and

(9) to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such Hedging Obligation that would be payable by such Person at such time).

Notwithstanding anything in this Credit Agreement to the contrary, (x) Indebtedness shall not include, and shall be calculated without giving effect to, the effects of Financial Accounting Standards Board Accounting Standards Codification 825 and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Credit Agreement as a result of accounting for any embedded derivatives created by the terms of such Indebtedness and any such amounts that would have constituted Indebtedness under this Credit Agreement but for the application of this sentence shall not be deemed an incurrence of Indebtedness under this Credit Agreement and (y) Indebtedness shall not include obligations under or in respect of any Qualified Receivables Financing.

 

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“Indemnified Party” shall have the meaning given to such term in Section 10.4.

“Indemnified Taxes” shall mean taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of the Borrower under any Fundamental Document.

“Initial LUX/UK Guarantors” shall mean the Subsidiaries listed on Schedule 1.2.

“Initial Unrestricted Subsidiaries” shall mean each Subsidiary of LGSC set forth in Schedule 4.7(b) to this Credit Agreement.

“Initial Valuation Report” shall mean the Valuation Report delivered pursuant to Section 5.1(q).

“Intercreditor Agreement” shall mean (x) with respect to junior Indebtedness, the First Lien/Second Lien Intercreditor Agreement substantially in the form attached hereto as Exhibit J, with such changes as are reasonably acceptable to the Administrative Agent and the Borrower, or (y) such other intercreditor or subordination agreements reasonably acceptable to the Administrative Agent and the Borrower to be entered into from time to time with respect to Other Permitted Priority Indebtedness, Permitted Slate Financings, Permitted Slate Transactions, and Indebtedness secured by Liens permitted by clauses (16), (17), (18), (20), (24), (33), (36) or (39) of the definition of “Permitted Liens”, or other secured Indebtedness permitted hereunder.

“Interest Deficit” shall have the meaning given to such term in Section 3.8.

“Interest Payment Date” shall mean (a) as to any Base Rate Loan, the last day of each March, June, September and December to occur while such Loan is outstanding and the Maturity Date, (b) as to any Term Benchmark Loan having an Interest Period of three (3) months or less, the last day of such Interest Period, (c) as to any Term Benchmark Loan having an Interest Period longer than three (3) months, each day that is three (3) months, or a whole multiple thereof, after the first day of such Interest Period and the last day of such Interest Period, and (d) as to any Loan (other than any Loan that is a Base Rate Loan), the date of any repayment or prepayment made in respect thereof.

“Interest Period” shall mean, as to any Term Benchmark Loan, (a) initially, the period commencing on the borrowing or conversion date, as the case may be, with respect to such Term Benchmark Loan and ending one (1), three (3) or six (6) months thereafter, as selected by the Borrower in its notice of borrowing or notice of conversion, as the case may be, given with respect thereto, and provided in each case that such tenor has not been removed in accordance with Section 3.1(d); and (b) thereafter, each period commencing on the last day of the next preceding Interest Period applicable to such Term Benchmark Loan and ending one (1), three (3) or six (6) months thereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not later than 11:00 A.M., New York City time, on the date that is three (3) Business Days prior to the last day of the then current Interest Period with respect thereto; provided that, all of the foregoing provisions relating to Interest Periods are subject to the following:

(i) if any Interest Period would otherwise end on a day that is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period into another calendar month in which event such Interest Period shall end on the immediately preceding Business Day;

(ii) the Borrower may not select an Interest Period that would extend beyond the Maturity Date; and

 

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(iii) any Interest Period that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period) shall end on the last Business Day of a calendar month.

“Interest Rate Agreement” shall mean with respect to any Person any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

“Intra Group Liabilities” shall have the meaning given to such term in Section 9.10.

“Investment” shall mean, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit other than a time deposit or indemnity provision) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such other Person and all other items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP; provided that none of the following will be deemed to be an Investment:

(1) Hedging Obligations entered into in compliance with this Credit Agreement;

(2) endorsements of negotiable instruments and documents in the ordinary course of business;

(3) an acquisition of assets, Capital Stock or other securities by LGSC or a Subsidiary for consideration to the extent such consideration consists of Common Stock of LGSC;

(4) accounts receivable, trade credit and advances to customers in the ordinary course of business;

(5) commission, travel and similar advances to officers, employees and consultants made in the ordinary course of business; and

(6) any assets or securities received in satisfaction or partial satisfaction thereof from financially troubled account debtors to the extent reasonably necessary in order to prevent or limit loss and any prepayments and other credits to suppliers made in the ordinary course of business.

For purposes of Section 7.2 of this Credit Agreement,

(a) “Investment” will include the portion (proportionate to LGSC’s equity interest in a Restricted Subsidiary to be designated as an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, LGSC will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (i) LGSC’s aggregate “Investment” in such Subsidiary as of the time of such redesignation less (ii) the portion (proportionate to LGSC’s collective equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time that such Subsidiary is so re-designated a Restricted Subsidiary;

 

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(b) any property transferred to or from an Unrestricted Subsidiary will be valued at its Fair Market Value at the time of such transfer;

(c) if LGSC or any Restricted Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of LGSC, LGSC shall be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Capital Stock of such Subsidiary not sold or disposed of; and

(d) the amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced by any dividend, distribution, interest payment, return of capital, repayment or other amount received in cash and Cash Equivalents by LGSC or a Restricted Subsidiary in respect of such Investment to the extent such amounts do not increase any other baskets under this Credit Agreement without double-counting and to the extent not inconsistent with the terms of this Credit Agreement.

“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such later version thereof as may be in effect at the time of issuance).

“Issuing Bank” shall mean each of (i) (a) JPMorgan Chase Bank, N.A., with respect to up to $40,000,000 of Letters of Credit, (b) Citizens Bank, N.A., with respect to up to $15,000,000 of Letters of Credit, (c) MUFG Bank, Ltd., with respect to up to $15,000,000 of Letters of Credit, (d) Truist Bank, with respect to up to $15,000,000 of Letters of Credit and (e) Wells Fargo Bank, N.A., with respect to up to $15,000,000 of Letters of Credit, in each case, acting through any of its affiliates or branches, and (ii) any other Issuing Bank designated pursuant to Section 2.3(j) in each case in its capacity as an Issuing Bank, and its successors in such capacity as provided in Section 2.3(i). An Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by affiliates of such Issuing Bank, in which case the term Issuing Bank shall include any such affiliates with respect to Letters of Credit issued by such Affiliate. Each reference herein to “the Issuing Bank” shall be deemed to be a reference to the relevant Issuing Bank.

“ITAC” shall mean the Income Tax Act (Canada), as amended.

“Joinder Agreement” shall mean the “Instrument of Assumption and Joinder,” substantially in the form attached hereto as Exhibit G.

“Joint Venture” shall mean a joint venture or similar venture with one or more unrelated parties (whether structured as a corporation, partnership, limited liability company or other entity) in which LGSC or any of its Restricted Subsidiaries own Capital Stock and which is formed and operated to conduct a Related Business.

“Judgment Conversion Date” shall have the meaning given to such term in Section 11.10.

“L/C Backstop” shall mean, in respect of any Letter of Credit, (a) a letter of credit delivered to the Issuing Bank which may be drawn by the Issuing Bank to satisfy any obligations of the Borrower in respect of such Letter of Credit or (b) cash or Cash Equivalents deposited with the Issuing Bank to satisfy any obligation of the Borrower in respect of such Letter of Credit, in each case, in an amount not to exceed

 

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103.00% (or such higher amount for non-Dollar denominated Letters of Credit as determined by the Administrative Agent in its reasonable discretion) of the undrawn face amount and any unpaid Reimbursement Obligations with respect to such Letter of Credit and on terms and pursuant to arrangements (including, if applicable, any appropriate reimbursement agreement) reasonably satisfactory to the respective Issuing Bank.

“L/C Disbursement” shall mean a payment or disbursement made by an Issuing Bank pursuant to a Letter of Credit.

“L/C Exposure” shall mean, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all L/C Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The L/C Exposure of any Lender at any time shall be its Percentage of the total L/C Exposure at such time. For all purposes of this Credit Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.13 or 3.14 of the ISP or Article 36 of the UCP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn. Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided that with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

“L/C Obligations” shall mean the aggregate undrawn face amounts of all outstanding Letters of Credit and all unpaid Reimbursement Obligations.

“L/C Sublimit” shall mean $100,000,000, as reduced pursuant to the terms hereof.

“Lender” and “Lenders” shall mean the several banks and other financial institutions and other lenders from time-to-time party to this Credit Agreement (but excluding Disqualified Lenders), including each assignee Lender pursuant to Section 11.3.

“Lending Office” shall mean, with respect to any of the Lenders, the branch or branches (or affiliate or affiliates) from which such Lender’s Loans are made or maintained and for the account of which all payments of principal of, and interest on, such Lender’s Loans are made, as notified to the Administrative Agent from time to time.

“Letter of Credit” shall have the meaning given to such term in Section 2.3(a).

“Letter of Credit Commitment” shall have the meaning given to such term in Section 2.3(a).

“LGSC” shall mean Lionsgate Studios Corp. (formerly known as Lionsgate Studios Holding Corp.), a corporation organized under the laws of the province of British Columbia, Canada.

“Lien” shall mean, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, charge, hypothec, security interest, preference, priority or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under Applicable Law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any other agreement to give a security interest in and any filing of or agreement to give any financing statement or similar documents as may be required under the applicable PPSA, the CCQ, or UCC (or equivalent statutes) of any jurisdiction; provided that in no event shall an operating lease, or any license or covenant not to sue under intellectual property rights (unless granted as a security interest or lien), be deemed to constitute a Lien.

 

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“Limited Condition Transaction” shall mean (x) any acquisition or investment (including by way of merger, amalgamation, consolidation or other business combination or the acquisition of Capital Stock or otherwise), by one or more of the Borrower and its Restricted Subsidiaries of or in any assets, business or Person, in each case, whose consummation is not conditioned on the availability of, or on obtaining, third-party financing or (y) any redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock by one or more of the Borrower and its Subsidiaries requiring irrevocable notice in advance of such redemption, purchase, repurchase, defeasance, satisfaction and discharge or prepayment.

“Liquidity Certificate” shall mean a Liquidity Certificate to be delivered pursuant to Section 5.1(p) or Section 6.2(b), substantially in the form of Exhibit I.

“Liquidity Ratio” shall have the meaning assigned to such term in Section 6.2(b).

“Loan” or “Loans” shall have the meaning assigned to such term in Section 2.2.

“Luxembourg” shall mean the Grand Duchy of Luxembourg.

“Luxembourg Guarantor” shall have the meaning assigned to such term in Section 9.10.

“Material Adverse Effect” shall mean any change or effect that has a materially adverse effect on (a) the business, assets, properties, operations or financial condition of LGSC and its Restricted Subsidiaries, taken as a whole, (b) the legal right, power or authority of any material Credit Party to perform its respective payment obligations under the Fundamental Documents to which it is a party or (c) the validity or enforceability of, or the rights, remedies or benefits available to the Lenders under, the Fundamental Documents, taken as a whole.

“Material Indebtedness” shall mean consolidated Indebtedness of the Credit Parties in an aggregate principal amount equal to or greater than $75,000,000.

“Maturity Date” shall mean May 6, 2030.

“Moody’s” shall mean Moody’s Investors Service, Inc., and any successor-in-interest thereto.

“Multiemployer Plan” shall mean a plan described in Section 4001(a)(3) of ERISA to which any Credit Party or ERISA Affiliate is making or accruing an obligation to make contributions, or has within any of the seven preceding plan years made or accrued an obligation to make contributions.

“Negative Pick-up Obligation” shall mean a commitment to pay a certain sum of money or other Investment made by LGSC or any Restricted Subsidiary in order to obtain ownership, distribution rights or sales agency rights in any item of Product, including, for the avoidance of doubt, any item of Product produced by LGSC or any Restricted Subsidiary. Negative Pick-up Obligation includes both “traditional” negative pickup arrangements and indirect structures.

“Negative Variance Report” shall have the meaning given to such term in the definition of Eligible Unsold Rights Amount Advance Rate.

 

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“Net Remaining Contractual Ultimates” shall mean Net Remaining Ultimates that are reported by the Borrower in writing as being contracted (i.e., stated or otherwise determinable amounts payable by a credit-worthy third party to the applicable Distributor, the payment of which are only subject to the passage of time and/or invoicing).

“Net Remaining Ultimates” shall mean with respect to any theatrical motion picture (on a Product-by-Product basis), the first cycle amounts (which are to be no greater than ten (10) years from the initial theatrical release) which are projected by the Borrower to become payable to a Credit Party as determined by the Borrower from time to time in accordance with this paragraph and in a manner otherwise reasonably acceptable to the Administrative Agent. The Net Remaining Ultimates shall be calculated initially on the date which is sixty (60) days after the initial general theatrical release in the United States of any such item of Product and thereafter on each date on which Borrowing Base Certificates are delivered from time to time. The computation of the Net Remaining Ultimates will be:

(i) computed in a manner consistent with ultimates prepared by the Borrower for accounting purposes,

(ii) based, to the extent available, upon any supporting written material delivered to a Borrower under the relevant Distribution Agreement which will indicate the remaining uncollected amounts payable to the Borrower,

(iii) present valued at the rate used by the Borrower for accounting purposes, not to be less than 8%,

(iv) after deduction for all distribution fees and other remaining amounts deductible or which may be offset by a distributor or licensee from its obligation to make payments to the Borrower and any other remaining cost or expense incurred by a Credit Party for the distribution or other exploitation of such item of Product,

(v) reduced by all Eligible Receivables and Other Receivables with respect to such Product, for any applicable territory and media which are otherwise included in the Borrowing Base, and

(vi) shall not include any amounts in which the Administrative Agent (for the benefit of itself, any Issuing Bank and the Lenders) does not have a first priority perfected security interest under the UCC or other relevant personal property regime and applicable copyright law (subject only to the categories of Liens identified in clauses (27), (28), (29) and (31) of the definition of “Permitted Liens” or such other Liens as the Required Lenders may reasonably agree).

“Non-Guarantor Subsidiary” shall mean any Restricted Subsidiary that is not a Guarantor.

“Non-U.S. Plan” shall mean any plan, fund (including, without limitation, any superannuation fund) or other similar program established, contributed to (regardless of whether through direct contributions or through employee withholding) or maintained outside the United States by a Credit Party or one or more Subsidiaries of a Credit Party primarily for the benefit of employees of the Credit Party or such Subsidiaries residing outside the United States, which plan, fund or other similar program provides, or results in, retirement income, a deferral of income in contemplation of retirement or payments to be made upon termination of employment, and which plan is not subject to ERISA or the Code; provided, however, that “Non-U.S. Plan” shall not include any such plan, fund or program sponsored or maintained by a Governmental Authority. For the avoidance of doubt, Non-U.S. Plans include Canadian Pension Plans but excludes Statutory Plans and Guild Pension Plans.

 

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“Note” shall have the meaning given to such term in Section 2.11(d).

“NYFRB” shall mean the Federal Reserve Bank of New York.

“NYFRB Rate” shall mean, for any day, the greater of (a) the Federal Funds Rate in effect on such day and (b) the Overnight Bank Funding Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” shall mean the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a Federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates shall be less than zero, such rate shall be deemed to be zero for purposes of this Credit Agreement.

“NYFRB’s Website” shall mean the website of the NYFRB at http://www.newyorkfed.org, or any successor source.

“Obligations” shall mean (a) the obligation of the Borrower to make due and punctual payment of principal and interest on the Loans, the face amount of the Commitment Fees, any reimbursement obligations in respect of Letters of Credit, costs and attorneys’ fees and all other monetary obligations of the Borrower and the Guarantors to the Administrative Agent, the Issuing Banks or any Lender under this Credit Agreement, the Notes, any other Fundamental Document or the Fee Letter (including interest accruing after the maturity of the Loans and reimbursement obligations and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding relating to any Credit Party, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) and (b) all amounts payable under any Specified Swap Agreement or any Specified Cash Management Agreement, provided that (i) the Obligations of the Credit Parties under any Specified Swap Agreement and Specified Cash Management Agreements shall be secured and guaranteed pursuant to the Collateral Documents only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (ii) any release of Collateral or Guarantors effected in the manner permitted by this Credit Agreement or any Collateral Document shall not require the consent of any counterparty under such agreement pursuant to any Fundamental Document; and, provided, further, that notwithstanding anything to the contrary, for all purposes of the Fundamental Documents, the Obligations of any Guarantor shall exclude any Excluded Swap Obligation of such Guarantor.

“OFAC” shall have the meaning given to such term in Section 4.22.

“Officer” shall mean the Manager, the Chief Executive Officer, the President, the Chief Financial Officer, Chief Strategic Officer, any President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Borrower. “Officer” of any Guarantor has a correlative meaning and, in the case of any Luxembourg Guarantor, shall mean any director, manager or authorized signatory.

“Officer’s Certificate” shall mean a certificate signed by an Officer of the Borrower.

“Other Acceptable Foreign Account Debtor” shall mean any Person listed as such on Schedule 1.5 hereto (as modified from time to time in accordance with Section 2.14).

“Other Connection Taxes” shall mean, with respect to any Person, taxes imposed as a result of a present or former connection between such Person and the Relevant Taxing Jurisdiction (other than connections arising from such Person having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Fundamental Document, or sold or assigned an interest in any Loan or Fundamental Document).

 

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“Other Permitted Priority Indebtedness” shall mean any Indebtedness which is (a) permitted to be Incurred after the Closing Date by Section 7.1(m), Section 7.1(n), Section 7.1(o), Section 7.1(r), Section 7.1(s), Section 7.1(t), Section 7.1(u) or Section 7.1(v) hereof or (b) incurred prior to the Closing Date but of any type described in the foregoing clause (a).

“Other Receivables” shall mean those receivables or other rights to receive payments that meet all of the requirements of an “Eligible Receivable” but the obligor is not an Acceptable Obligor.

“Outside IP Debt Facilities Transfer Basket” shall have the meaning given to such term in Section 7.8(c).

“Outside IP Debt Facility” shall mean any IP-backed credit facility as in effect on the Closing Date (as amended, restated, supplemented or otherwise modified from time to time in a manner not material and adverse to the Lenders); provided that notwithstanding anything herein or otherwise to the contrary, the term Outside IP Debt Facility shall not include any purchase money financing, indebtedness of Special Purpose Producers, participations and residuals, Replication Advances, indebtedness secured by liens on tax credits, the Tax Credit Facility, the Backlog Facility, any Production Financing, any Receivables Financing, any Permitted Slate Financing, or any similar financings or arrangements.

“Overnight Bank Funding Rate” shall mean, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions (as such composite rate shall be determined by the NYFRB as set forth on the NYFRB’s Website from time to time) and published on the next succeeding Business Day by the NYFRB as an overnight bank funding rate (from and after such date as the NYFRB shall commence to publish such composite rate).

“Participant” shall have the meaning given to such term in Section 11.3(d).

“Participant Register” shall have the meaning given to such term in Section 11.3(d).

“Participating Interest” shall have the meaning given to such term in Section 2.3(d).

“Participating Lender” shall have the meaning given to such term in Section 2.3(d).

“Patent Security Agreement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Patent Security Agreement Supplement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Payment” shall have the meaning given to such term in Section 10.5(c).

“payment default” shall have the meaning given to such term in Section 8.1(e).

“Payment Notice” shall have the meaning given to such term in Section 10.5(c).

“PBGC” shall mean the Pension Benefit Guaranty Corporation and its successors.

 

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“PCML Act” shall mean the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), as amended.

“Pension Plan” shall mean a Plan described in Section 3(2) of ERISA.

“Percentage” shall mean for each Lender, the percentage of the aggregate Commitments represented by such Lender’s Commitment or, if the Commitments have been terminated, the percentage held by such Lender (including through participation interests in Reimbursement Obligations) of the aggregate principal amount of all Loans and L/C Obligations then outstanding.

“Permitted Holder” shall mean, at any time, each of:

(a) (i) Dr. Mark H. Rachesky, M.D. and (ii) any Affiliate of such Person, or any Affiliated Persons of such Persons;

(b) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) of which any Person described in clause (a) hereof is a member, provided that Persons described in clause (a) hereof beneficially own a majority of the Voting Stock of LGSC beneficially owned by all members of such group; and

(c) any Person (including LGSC upon a sale of all or substantially all of its assets to a Subsidiary thereof in a transaction permitted under Section 7.6) (x) that acquires (or otherwise holds), directly or indirectly, 100% of the voting power of the Voting Stock of LGSC and, immediately after giving effect to such acquisition and any related transactions, has no material assets other than Capital Stock of LGSC and (y) of which no other Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) other than any of the Permitted Holders specified in clauses (a) and (b) above, holds more than 50% of the total voting power of the Voting Stock thereof (any Person described in clause (c) hereof, a “Permitted Parent Holdco”).

“Permitted Investment” shall mean:

(a) an Investment by (i) a Credit Party in another Credit Party and (ii) a non-Credit Party Restricted Subsidiary in another non-Credit Party Restricted Subsidiary;

(b) so long as no Default or Event of Default has occurred and is continuing after giving pro forma effect to any such Investment, an Investment by LGSC or any Restricted Subsidiary in a Person that is engaged in a Related Business if as a result of such Investment:

(i) such Person becomes a Restricted Subsidiary; or

(ii) such Person, in one transaction or a series of related transactions, is merged, amalgamated, or consolidated with or into, or transfers or conveys all or substantially all of its assets to, or is liquidated into LGSC or a Restricted Subsidiary,

and, in each case, any Investment held by such Person; provided that such Investment was not acquired by such Person in contemplation of such acquisition, merger, amalgamation, consolidation or transfer; provided, further, that for any Investment made pursuant to this clause (b) with a purchase price in excess of $250,000,000, immediately after giving effect to such Investment the aggregate Revolving Exposure under the Facility shall not exceed 80% of the Borrowing Base at

 

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the point in time of closing of such Investment and the Borrower shall deliver to the Administrative Agent an Officer’s Certificate certifying the same, and, if requested by the Administrative Agent, reasonably detailed back-up calculations demonstrating compliance with such 80% threshold (it being understood and agreed that for the purposes of such calculation, (x) the Borrower shall be entitled to treat all assets of the target that would otherwise qualify for inclusion in the Borrowing Base as being in the Borrowing Base so long as such person becomes a Credit Party within 60 days (or such other time as may be reasonably agreed by the Borrower and the Administrative Agent) following the consummation of such acquisition and such assets satisfy all other criteria set forth in the definition of Borrowing Base herein and (y) the Borrowing Base will be calculated without taking into account the cap on Eligible Unsold Rights Amount or the cap on Acceptable Tax Credits);

(c) cash and Cash Equivalents;

(d) receivables owing to any Credit Party or Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as such Credit Party or Restricted Subsidiary deems reasonable under the circumstances;

(e) payroll, travel, services (e.g., shared services arrangements) to the extent permitted by Section 7.5(b)(vii) and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(f) loans or advances to employees, officers or directors of the Credit Parties not in excess of $10,000,000 at any time outstanding;

(g) any Investment acquired by a Credit Party or Restricted Subsidiary:

(h) (i) in exchange for any other Investment or accounts receivable held by a Credit Party or Restricted Subsidiary in connection with or as a result of a bankruptcy, insolvency, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable; or (ii) as a result of a foreclosure (or similar remedy) by a Credit Party or Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(i) Investments made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 7.8 or any other disposition of assets not constituting an Asset Sale;

(j) Investments in existence on the Closing Date (and all such Investments with a fair market value as of the Closing Date in excess of $100,000,000 shall be identified in Schedule 1.4 hereto) and all exchanges, extensions, refinancings and renewals thereof;

(k) Currency Agreements, Interest Rate Agreements and related Hedging Obligations, which transactions or obligations are Incurred in compliance with Section 7.1;

 

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(l) Guarantees and other Investments issued in accordance with Section 7.1 relating to Negative Pick-up Obligations, Program Acquisition Guarantees, minimum guarantees to acquire items of Product or interests therein, or similar activities, in each case in the ordinary course of business;

(m) Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan in an amount not to exceed the amount of compensation expense recognized by the Credit Parties and Restricted Subsidiaries in connection with such plans;

(n) Investments in an aggregate amount outstanding at the time made not to exceed the RP/Investments Basket;

(o) other Investments so long as in each case:

(i) no Default or Event of Default would result after giving pro forma effect to such Investment,

(ii) on a Pro Forma Basis after giving effect to such Investment, the Liquidity Ratio is not less than 1.20 to 1.0,

(iii) on a Pro Forma Basis after giving effect to such Investment, the Secured Debt Ratio is not less than 1.5 to 1.0, and

(iv) with respect to any such Investment entered into pursuant to this clause (o) that is in excess of $50,000,000, the Administrative Agent shall have received an updated Liquidity Certificate and a reasonable demonstration of the Secured Debt Ratio reflecting compliance with the foregoing clauses (i) through (iii);

(p) with respect to the purchase price and/or construction costs expended by the Borrower and Guarantors for any real property of the Borrower and Guarantors, the portion of such purchase prices in excess of any mortgage related to such purchase price;

(q) Investments (x) made pursuant to investment commitments and Joint Ventures existing on the Closing Date and (y) in Joint Ventures formed for purposes of acquisition, production or distribution of items of Product in an amount, at any time outstanding, not to exceed $25,000,000;

(r) Investments in any Capital Stock of 3 Arts Entertainment, LLC (“3 Arts Entertainment”) (and any guarantee provided in connection with the acquisition thereof by Lions Gate Entertainment Inc.) or 42 M&P Ltd. (“42”) or any of their Subsidiaries that is not as of the Closing Date already held by a Credit Party; provided that any amounts invested in such acquisition of 3 Arts Entertainment or 42, as applicable, after the Closing Date shall count against the RP/Investments Basket unless 3 Arts Entertainment or 42, as applicable, becomes a Guarantor hereunder within 60 days (or such later date as the Administrative Agent may agree in its sole discretion) of the closing of such acquisition, after which time such Investments shall be deemed outstanding pursuant to clause (a) of this definition;

(s) Investments (including debt obligations) received in connection with the bankruptcy, insolvency or reorganization of suppliers, customers or other debtors or in settlement of delinquent obligations arising in the ordinary course of business;

 

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(t) Investments in or unsecured guarantees by a Credit Party of the obligations of Special Purpose Producers and ProdCos, including Negative Pick-up Obligations, Program Acquisition Guarantees, guarantees in connection with Permitted Slate Financings and other direct or indirect guarantees (including minimum guarantees) related to the acquisition, production or distribution of items of Product in the ordinary course of business; provided that, in each case upon repayment in full of any Indebtedness of such Special Purpose Producer or ProdCo, either (1) all rights (regardless of the state of completion of the relevant project) held by such Special Purpose Producer or ProdCo in such item of Product (excluding any right to receive production incentives) are assigned to a Credit Party or (2) such Special Purpose Producer or ProdCo becomes a Credit Party; provided, however, that the Administrative Agent may consent to any rights in such items of Product remaining with the applicable Special Purpose Producer or ProdCo on a case-by-case basis (such consent not to be unreasonably withheld, conditioned or delayed);

(u) Investments in and Guarantees of obligations of any Credit Party or Restricted Subsidiary or any of their respective direct or indirect Subsidiaries or Joint Ventures (which Subsidiaries or Joint Ventures may engage in business unrelated to such Investment to the extent otherwise permissible under this Credit Agreement) in connection with co-productions, co-ventures or co-financing arrangements related to the production, distribution and/or acquisition of Product or an interest therein, in each case (x) in the ordinary course of business and (y) which shall not constitute usage of the RP/Investments Basket so long as the item of Product being produced, distributed or acquired will become an asset of the Credit Parties after the Completion thereof and the payment of any associated production debt;

(v) the Transactions;

(w) any direct or indirect acquisition or production of Product in the ordinary course of business, to the extent that such action would be considered an Investment, including but not limited to Investments in stage plays, video games and location-based entertainment opportunities;

(x) Letters of credit as to which a Credit Party or Restricted Subsidiary is the beneficiary and which are issued for the account of third-party investors in Product of the Credit Parties or Restricted Subsidiaries;

(y) Investments in respect of (i) intercompany liabilities incurred in connection with payroll, cash management, purchasing, insurance, tax, licensing, management, technology and accounting operations of LGSC and its Subsidiaries and (ii) intercompany loans, advances or Indebtedness having a term not exceeding 364 days (inclusive of any roll-overs or extensions of terms) that, in the case of intercompany loans incurred by a Credit Party owing to a non-Credit Party, are expressly subordinated in right of payment to all obligations under this Credit Agreement, in each case of clause (i) and (ii), made in the ordinary course of business or consistent with industry practice;

(z) Investments in any ProdCo in accordance with the definition of “Permitted Slate Transaction”;

(aa) Guarantees made in accordance with Section 7.1 or Section 6.13;

 

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(bb) (i) any Investment in a Receivables Subsidiary or any Investment by a Receivables Subsidiary in any other Person in connection with a Qualified Receivables Financing, including Investments of funds held in accounts permitted or required by the arrangements governing such Qualified Receivables Financing or any related Indebtedness, and (ii) any Investment in an entity which is not a Restricted Subsidiary to which LGSC or a Restricted Subsidiary sells Receivables Financing Assets pursuant to a Receivables Financing so long as any net proceeds of the Qualified Receivables Financing are promptly directly or indirectly remitted to a Credit Party;

(cc) Investments in the form of loans, advances or other Indebtedness in Entertainment One Ltd. or any of its Subsidiaries made on an arm’s length basis in the ordinary course of business and consistent with past practice, so long as at the time any such Investment is made and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing; provided that Investments outstanding at any one time pursuant to this clause (cc) shall not exceed $50,000,000 in the aggregate (as such amount may be replenished by cash actually collected directly or indirectly by the Credit Parties from the proceeds of such loans, advances or other Indebtedness); and

(dd) any Investment in a non-Credit Party Restricted Subsidiary that is a U.S. Subsidiary or organized under the laws of Canada, the United Kingdom or Luxembourg or any province thereof; provided that if as a result of such Investment an Immaterial Subsidiary no longer meets the requirement of such definition, LGSC shall promptly cause such Subsidiary to become a Guarantor in accordance with Section 6.13 and for any Investment pursuant to this clause (dd) in excess of $50,000,000, the Administrative Agent shall have received an Officer’s Certificate of the Borrower certifying compliance with the foregoing.

“Permitted Liens” shall mean, with respect to any Person:

(1) Liens securing the Obligations, including without limitation the Loans and the Guarantees under Article 9 and any obligations owing to the Administrative Agent, Issuing Banks or Lenders under this Credit Agreement and the Collateral Documents (including Liens securing any Indebtedness pursuant to Section 2.13);

(2) pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(3) Liens imposed by law, including carriers’, warehousemen’s, mechanics’, materialmen’s and repairmen’s Liens;

(4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or that are being contested in good faith by appropriate proceedings, provided that any appropriate reserves required pursuant to GAAP have been made in respect thereof;

(5) Liens in favor of issuers of surety or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

 

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(6) encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions or agreements (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially impair their use in the operation of the business of such Person;

(7) Liens securing Hedging Obligations so long as the related Indebtedness is permitted under this Credit Agreement;

(8) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights or other general intangibles) that do not materially interfere with the ordinary conduct of the business of LGSC or any of the Restricted Subsidiaries;

(9) Liens arising out of attachments, judgments (to the extent not resulting in an Event of Default) or awards as to which an appeal or other appropriate proceedings for contest or review are timely commenced (and as to which foreclosure and other enforcement proceedings shall not have been commenced (unless fully bonded or otherwise effectively stayed)) and as to which any appropriate reserves have been established in accordance with GAAP;

(10) Liens for the purpose of securing the payment of all or a part of the purchase price of, or Finance Lease Obligations, mortgage financings, purchase money obligations or other payments Incurred to finance assets or property (other than Capital Stock or other Investments) acquired, constructed or improved; provided that:

(a) the aggregate principal amount of Indebtedness secured by such Liens is otherwise permitted to be Incurred under this Credit Agreement and does not exceed the cost of the assets or property so acquired, constructed or improved; and

(b) such Liens are created within 180 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of LGSC or any Restricted Subsidiary other than such assets or property and assets affixed or appurtenant thereto;

(11) Liens arising solely by virtue of any statutory or common law provisions relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depositary institution;

(12) Liens arising from any applicable UCC or PPSA financing statement filings, CCQ filings or other similar filings regarding operating leases entered into by LGSC and the Restricted Subsidiaries;

(13) Liens existing on the Closing Date (other than Liens permitted under clauses (1), (16) or (20) of this definition);

(14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary; provided, however, that such Liens are not created in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary; provided, further, however, that any such Lien may not extend to any other property owned by LGSC or any Restricted Subsidiary;

 

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(15) Liens on property at the time LGSC or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger, amalgamation or consolidation with or into, or plan of arrangement with, LGSC or any Restricted Subsidiary; provided, however, that such Liens are not created in connection with, or in contemplation of, such acquisition; provided, further, however, that such Liens may not extend to any other property owned by LGSC or any Restricted Subsidiary;

(16) Liens securing Indebtedness of a Restricted Subsidiary owing to LGSC or a Wholly-Owned Subsidiary that is permitted pursuant to Section 7.1, which are junior in priority to the Liens securing the Loans and the Guarantees under Article 9 pursuant to an Intercreditor Agreement;

(17) (a) Liens on assets of the type specified in the definition of “Receivables Financing” Incurred in connection with a Qualified Receivables Financing, and (b) Liens securing obligations under or in respect of any Qualified Receivables Financing;

(18) Liens securing Refinancing Indebtedness Incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (10), (13), (14), (15), (18), (25) and (40) of this definition, provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

(19) any interest or title of a lessor under any Finance Lease Obligation or operating lease;

(20) Liens in favor of LGSC or any Restricted Subsidiary, which are junior in priority to the Liens securing the Loans and the Guarantees under Article 9 pursuant to an Intercreditor Agreement;

(21) Liens to secure payment and performance obligations of the Borrower and Guarantors in connection with a revenue participation purchase agreement or similar arrangement for third-party investments in Product produced, acquired or distributed by the Borrower and such Guarantors in the ordinary course of business;

(22) Liens under industrial revenue, municipal or similar bonds permitted hereunder;

(23) Liens to secure Negative Pick-up Obligations, Program Acquisition Guarantees and other direct or indirect guarantees (including minimum guarantees) related to the acquisition, production or distribution of items of Product in the ordinary course of business to the extent such Lien is limited solely to such item of Product related to such Negative Pick-up Obligation, Program Acquisition Guarantee or other guarantee;

(24) Liens to secure Other Permitted Priority Indebtedness to the extent such Lien is limited solely to the item or items of Product or related Production Accounts relating to such Other Permitted Priority Indebtedness, which Liens may be prior to the Liens securing the Obligations pursuant to the Collateral Documents;

 

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(25) Liens in an aggregate principal amount outstanding at any one time not to exceed at the time of Incurrence thereof, together with all other outstanding (x) Indebtedness secured by liens pursuant to this clause (25) and (y) Refinancing Indebtedness secured by Liens incurred under clause (18) above in respect of Indebtedness previously secured by Liens under this clause (25), $25,000,000;

(26) Liens on assets of a Subsidiary that is not a Guarantor securing Indebtedness of a Subsidiary that is not a Guarantor permitted to be Incurred pursuant to Section 7.1;

(27) Liens in favor of guilds or unions (whether pursuant to written security agreements, any producer’s or distributor’s assumption agreements, or otherwise), in each case which are required in the ordinary course of business pursuant to collective bargaining agreements;

(28) Liens to secure distribution, exhibition and/or exploitation rights of licensees pursuant to Distribution Agreements or of licensors from whom any of LGSC or the Restricted Subsidiaries has (directly or indirectly) obtained any distribution rights or other exploitation rights to any item of Product (or of Persons providing financing to obtain such rights) or Liens to secure production advances on an item of Product, provided that such Liens are limited to such distribution, exhibition and/or exploitation rights and the applicable revenue therefrom;

(29) Liens customarily granted or incurred in the ordinary course of business with regard to services rendered by laboratories and post-production houses, record warehouses and suppliers of materials and equipment which secure outstanding trade payables;

(30) possessory Liens (other than those of laboratories and production houses) which (a) occur in the ordinary course of business, (b) secure normal trade debt which is not yet due and payable and (c) do not secure Indebtedness;

(31) customary Liens in favor of completion guarantors granted in connection with Completion Guarantees;

(32) Liens granted by Credit Party or any Restricted Subsidiary that is a Special Purpose Producer to secure Production Financings that are otherwise permitted under this Credit Agreement;

(33) Liens granted in connection with any Permitted Slate Financing in accordance with the definition thereof;

(34) Liens to secure Replication Advances permitted by Section 7.1(o);

(35) (A) Liens on tax credits to secure Indebtedness which is otherwise non-recourse to LGSC or any Restricted Subsidiary, other than customary representations and warranties and (B) Liens on LGSC or any Restricted Subsidiary’s rights and interests in any tax credit and any refund or similar receipt attributable to such tax credit to the extent such tax credit is owned by an Unrestricted Subsidiary or Special Purpose Producer and such Lien secures the obligation of LGSC or such Restricted Subsidiary, in its capacity as agent for such Unrestricted Subsidiary or Special Purpose Producer, to remit such refund or similar receipt attributable to such tax credit to such Unrestricted Subsidiary or Special Purpose Producer, as applicable;

 

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(36) Liens in favor of certain receivables subsidiaries and/or Comerica Bank as administrative agent under the Comerica Outside IP Debt Facility granted by certain Credit Parties that act as master distributors under the Comerica Outside IP Debt Facility in the rights that are licensed to such Credit Parties in connection with the Comerica Outside IP Debt Facility and the proceeds of such licensed rights; provided that no Borrowing Base value may be extended against any receivables derived from assets securing such Comerica Outside IP Debt Facility until such time if ever that such Liens securing the Comerica Outside IP Debt Facility have been released or terminated or subordinated to the Administrative Agent’s Liens in such assets pursuant to an Intercreditor Agreement;

(37) Liens in connection with reversion or turnaround rights with respect to a project in development;

(38) [reserved];

(39) Liens granted by LGSC or any Restricted Subsidiary on Capital Stock or other equity interests of any Unrestricted Subsidiary to secure Indebtedness that is otherwise non-recourse to any Credit Party and whose incurrence is not otherwise prohibited hereunder;

(40) Liens securing junior indebtedness to the extent such indebtedness is permitted to be secured pursuant to Sections 7.1(b) and 7.1(c); and

(41) Liens or quasi-Liens arising by virtue of standard terms and conditions of a credit institution in the ordinary course of normal and customary banking arrangements of a member of the group.

“Permitted Parent Holdco” shall have the meaning given to such term in the definition of “Permitted Holder”.

“Permitted Slate Financing” shall mean a financing arrangement in which two or more of the Borrower’s and/or Guarantor’s (as applicable) audio visual works (including motion pictures) are partially financed through an arrangement with a third party (“Permitted Financier”) who may be granted an interest in or share of the copyright, distribution rights, and/or certain financial proceeds from the subject audio visual works (collectively, “Permitted Financier Rights”) in connection with such financing arrangement, provided that

(i) the only recourse of the Permitted Financier in connection with such arrangement against the Borrower or such Guarantor shall be limited to the Permitted Financier Rights, interests in related Production Accounts (if any), and customary representations and warranties given by the Borrower and/or Guarantor in connection with such arrangement and

(ii) any such interest granted to the Permitted Financier in the Permitted Financier Rights and the other terms of such arrangement shall be reasonable and on an arm’s length basis and consistent with customary practice for transactions of such nature (as determined in good faith by the Borrower).

 

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The Borrower and/or Guarantors shall be entitled to grant any of the Permitted Financier Rights to a Permitted Financier and if a Lien is granted to the Permitted Financier in connection with such financing arrangement, such Lien shall be subject to an Intercreditor Agreement entered into by the Administrative Agent

(a) setting forth that: (x) the Permitted Financier shall maintain a first priority security interest over any of the Permitted Financier Rights and/or any related Production Account, and (y) the Administrative Agent’s rights, claims and security interests in any such Permitted Financier Rights and/or related Production Accounts with the Permitted Financier shall be subordinated to the rights, claims and security interests of the applicable Permitted Financier with respect to such Permitted Financier Rights and/or any related Production Accounts and

(b) otherwise on terms that are no less favorable, taken as a whole, to the Lenders than the terms of similar intercreditor arrangements entered into by LGSC and its Subsidiaries consistent with past and customary practice.

“Permitted Slate Transaction” shall mean a transaction which the Borrower and/or the Guarantors may at their option consummate and which satisfies all of the following criteria:

(i) the borrower or the issuer in such transaction (each, a “ProdCo”) will be a new corporation, limited liability company or limited partnership formed solely for the purpose of a Permitted Slate Transaction;

(ii) each ProdCo will not engage in any business other than producing, acquiring or funding the print and advertising expenses of items of Product to be distributed by the Borrower or one or more Guarantors;

(iii) the Borrower or any Guarantor and the other third-party investors or financiers in such transaction will acquire (1) shares, membership interests, limited partnership interests, or other Capital Stock in the applicable ProdCo and/or (2) revenue participations in the items of Product to be produced by such ProdCo;

(iv) the shares, membership interests, limited partnership interests, other Capital Stocks and/or revenue participations, in any ProdCo owned by the Borrower or one or more Guarantors will be Collateral but such ProdCo will not be a Guarantor;

(v) each ProdCo will acquire from the Borrower or the Guarantors ownership of items of Product;

(vi) each ProdCo will grant to the Borrower or any Guarantor distribution and exploitation rights in those items of Product acquired by such ProdCo;

(vii) nothing in the documentation and/or structure for a Permitted Slate Transaction shall permit ProdCo to distribute the contractually mandated revenue generated thereby except on a pro rata or a basis which is greater than pro rata in favor of the Borrower or a Guarantor, other than a customary production fee or interest return on the amount invested (provided, however, that if this condition is not satisfied, such transaction will qualify as a Permitted Slate Transaction, but the Investment in such transaction will be included in and subject to the Permitted Specified Slate Cap); and

(viii) ProdCo may not incur Indebtedness other than Subordinated Obligations (provided, however, that if this condition is not satisfied, such transaction will qualify as a Permitted Slate Transaction, but the Investment in such transaction will be included in and subject to the Permitted Specified Slate Cap).

 

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“Permitted Specified Slate Cap” shall mean, as of any date of determination, $75,000,000; provided that, after the incurrence of any amounts counting against the Permitted Specified Slate Cap, such amount may be replenished such that the Permitted Specified Slate Cap is increased to up to $75,000,000 with any returns of capital actually received by the Borrower and the Guarantors in respect of Investments made after the Closing Date by them in all Permitted Slate Transactions.

“Person” shall mean any natural person, corporation, division of a corporation, limited liability company, partnership, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

“Picture” shall mean any item of Product feature length non-episodic motion picture, film or videotape, whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device, whether now known or hereafter developed, with respect to which a Credit Party (i) has an ownership interest in the copyright under U.S. law; (ii) holds or acquires any distribution rights; or (iii) acquired a revenue participation in the case of a theatrical feature film. The term “Picture” shall include, without limitation, the scenario, screenplay or script upon which such Picture is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of a Credit Party, and all rights therein and thereto, of every kind and character. For the avoidance of doubt, the term “Picture” shall include Pictures contemplated to initially be made available to the public in the United States via OTT, TVOD, SVOD, or AVOD, or other streaming service, but shall not include any Program.

“Plan” shall mean at any time, an “employee benefit plan”, as defined in Section 3(3) of ERISA (other than a Multiemployer Plan), that any Credit Party or ERISA Affiliate maintains, contributes to or has an obligation to contribute to or has maintained, contributed to or had an obligation to contribute to at any time within the past seven (7) years and in respect of which any Credit Party or ERISA Affiliate is (or, if such Plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in section 3(5) of ERISA.

“Plan Asset Regulations” shall mean 29 CFR § 2510.3-101 et seq., as modified by Section 3(42) of ERISA, as amended from time to time.

“Pledge and Security Agreements” shall mean, collectively, (i) the U.S. Pledge and Security Agreement and (ii) the Canadian Pledge and Security Agreement, and “Pledge and Security Agreement” shall mean any one of them.

“Positive Variance Report” shall have the meaning given to such term in the definition of Eligible Unsold Rights Amount Advance Rate.

“PPSA” shall mean unless otherwise provided in this Credit Agreement, the Personal Property Security Act B.C. 1996 chapter 359 as heretofore and hereafter amended and in effect in the Province of British Columbia, or, where the context requires, the legislation of the other provinces or territories of Canada (other than Québec) relating to security in personal property generally, including accounts receivable, as adopted by and in effect from time to time in such provinces or territories of Canada, as applicable.

“Preferred Stock,” as applied to the Capital Stock of any corporation, shall mean Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends upon liquidation, dissolution or winding up.

 

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“Prime Rate” shall mean the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Federal Reserve Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.

“ProdCo” shall have the meaning given to such term in the definition of “Permitted Slate Transaction.”

“Product” shall mean any motion picture, television program, live event, film, music or video tape or other audio-visual work or episode thereof produced for theatrical, non-theatrical or television release or for exploitation in any other medium (including, without limitation, interactive media, multi-channel and digital platforms, stage plays, museum tours, theme parks, live shows and experiences or other location-based entertainment), in each case whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter devised, with respect to which any Credit Party or Restricted Subsidiary (1) has an ownership interest in the copyright under U.S. law or (2) acquires an equity interest or distribution or sales agency rights. The term “item of Product” shall include, without limitation, the scenario, screenplay or script upon which such item of Product is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of a Credit Party or Restricted Subsidiary, and all rights therein and thereto, of every kind and character.

“Production Account” shall mean any demand deposit account established by a Credit Party at a commercial bank for the sole purpose of paying the production costs of a particular item of Product (or, in connection with any Permitted Slate Financing, the audio-visual works (including motion pictures) to which such Permitted Slate Financing relates) in the ordinary course of business.

“Production Cost Reserve” shall mean, as of any date of determination, a reserve established on the date on which any credit for the applicable item of Product is included in the Borrowing Base, in an amount equal to

(a) if a Completion Guarantee has been delivered to the Administrative Agent for such item of Product, the remaining portion of the Budgeted Negative Cost of such item of Product necessary to reach the “strike price” of the applicable Completion Guarantee, or

(b) otherwise, the Credit Parties’ maximum commitment towards the Budgeted Negative Cost (including an unallocated contingency in an amount of not less than 10% of the Budgeted Negative Cost (excluding such contingency) of such item of Product) of such item of Product;

in each case net of (1) the portion of such Budgeted Negative Cost that is subject to a currently effective binding commitment from a non-Credit Party co-financier that is subject to an Intercreditor Agreement, and (2) non-refundable or bonded advances actually received by a Credit Party from a Distributor which have been applied towards the payment of items included in the Budgeted Negative Cost of such item of Product.

For the avoidance of doubt, the Production Cost Reserve shall be adjusted periodically to reflect any changes in the Credit Parties’ exposure with respect to the Budgeted Negative Cost of such Item of Product. The Production Cost Reserve for an item of Product shall be reduced to zero upon the earlier of (x) the date such item of Product is Completed and (y) the date such item of Product is actually or constructively abandoned.

 

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“Production Financing” shall have the meaning given to such term in Section 7.1(m).

“Pro Forma Basis” shall mean, as to any Person, for any events as described below that require calculation on a pro forma basis, such calculation as will give pro forma effect to such events as if such events occurred on the first day of such period (the “Reference Period”):

(a) the Transactions, any Asset Sale, any asset acquisition or Investment (or series of related Investments) permitted under this Credit Agreement, in each case, in excess of $15,000,000, any merger, amalgamation, consolidation (or any similar transaction or transactions) and any dividend, distribution or other similar payment,

(b) any operational changes or restructurings of the business of LGSC or any of its Restricted Subsidiaries that LGSC or any of its Restricted Subsidiaries has determined to make and/or made during or subsequent to the Reference Period (including in connection with an Asset Sale or asset acquisition described in clause (a) above) and which are expected to have a continuing impact and are factually supportable, which would include cost savings resulting from head count reduction, closure of facilities and other operational changes and other cost savings in connection therewith,

(c) the designation of any Subsidiary as an Unrestricted Subsidiary or of any Unrestricted Subsidiary as a Subsidiary,

(d) any incurrence, repayment, repurchase or redemption of Indebtedness (or any issuance, repurchase or redemption of Disqualified Stock or preferred stock), other than fluctuations in revolving borrowings in the ordinary course of business (and not resulting from a transaction as described in clause (a) above); and

(e) any other event, in each case that by the terms of the Fundamental Documents requires a test, financial ratio or covenant to be calculated on a “Pro Forma Basis”.

Pro forma calculations made pursuant to this definition shall be determined in good faith by LGSC. Any such pro forma calculation may include adjustments appropriate, in the reasonable good faith determination of LGSC to reflect operating expense reductions, other operating improvements, synergies or such operational changes or restructurings described in clause (b) of the immediately preceding paragraph reasonably expected to result from the applicable pro forma event in the 24 month period following the consummation of such pro forma event.

If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date on which the relevant calculation is being made had been the applicable rate for the entire period (taking into account any hedging obligations applicable to such Indebtedness if such hedging obligation has a remaining term in excess of 12 months). Interest on a Finance Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by LGSC to be the rate of interest implicit in such Finance Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period, except to the extent the outstanding borrowings thereunder are reasonably expected to increase as a result of any transactions described in clause (a) of the first paragraph of this definition of “Pro Forma Basis” which occurred during the respective period or

 

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thereafter and on or prior to the date of determination. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such applicable optional rate as LGSC may designate.

In the event that any financial ratio is being calculated for purposes of determining whether Indebtedness or any Lien relating thereto may be incurred, LGSC may elect, pursuant to an Officer’s Certificate thereof delivered to the Administrative Agent, to treat all or any portion of the commitment relating thereto as being incurred at the time of such commitment (such election to be consistently applied for all purposes under this Credit Agreement), in which case Indebtedness in an amount equal to such commitment shall be deemed to be outstanding for all financial calculations until such commitment is terminated, but any subsequent incurrence of Indebtedness under such commitment shall not be deemed, for purposes of this calculation, to be an incurrence at such subsequent time.

“Program” shall mean any item of Product that is an audio visual work which is intended for initial exploitation through any form of television or long-form digital programming now known or hereafter devised and intended for initial release on the internet, including, cable or free television (i.e., FVOD), free advertising-supported streaming television (i.e., FAST), transactional video on demand including via electronic rental and electronic sell-through (i.e., TVOD), subscription video on demand (i.e., SVOD), advertiser video on demand (i.e., AVOD), linear television including all forms of broadcast, basic cable, pay cable, satellite and syndicated television, physical home video (e.g. DVD/Blu-ray), and made-for-television product including movies of the week and mini-series or any episode thereof produced, with respect to which a Credit Party (a) has an ownership interest in the copyright under U.S. law, or (b) acquires any distribution rights or revenue participation interest; provided that all of the episodes of any television series packaged as a “season” or production cycle or all of the episodes or webisodes of any internet series for a “season” or production cycle, shall be collectively regarded as being one Program. The term “Program” includes, without limitation, the scenario, screenplay, teleplay or script upon which such Program is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of a Credit Party, and all rights therein and thereto, of every kind and character. For the avoidance of doubt, the term “Program” shall not include any Picture or any direct-to-video product or any short-form digital content, augmented reality, virtual reality and other similar content.

“Program Acquisition Guarantees” shall mean any commitment of LGSC or any Restricted Subsidiary to a producer or owner (including, for the avoidance of doubt, any Restricted Subsidiary, Unrestricted Subsidiary or third party) of Product in conjunction with the acquisition of Product, distribution rights or sales agency rights in Product by LGSC or such Restricted Subsidiary to the effect that (1) the gross revenues to be generated in the future from the exploitation of such Product or the net revenues to be received by such producer or owner from the exploitation of such Product are reasonably anticipated by LGSC to equal or exceed an amount specified in the acquisition agreement related to such Product or (2) otherwise requires payment by LGSC or such Restricted Subsidiary of a minimum amount for the acquisition of such Product (as distinguished from a minimum marketing commitment) specified in the acquisition agreement related to such Product regardless of actual performance of such Product.

“PTE” shall mean a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time.

“QFC” shall have the meaning given to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

“QFC Credit Support” shall have the meaning given to such term in Section 11.24.

 

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“Qualified Plan” shall mean a Pension Plan that is intended to be tax-qualified under Section 401(a) of the Code.

“Qualified Receivables Financing” shall mean any Receivables Financing that meets the following conditions:

(1) the Borrower shall have determined in good faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is in the aggregate economically fair and reasonable to LGSC or the applicable Subsidiary, as the case may be;

(2) all sales of Receivables Financing Assets and related assets by the applicable Credit Parties (other than a Receivables Subsidiary) either to the applicable Receivables Subsidiary or directly to the applicable third-party financing providers (as the case may be) are made at Fair Market Value (as determined in good faith by the Borrower); and

(3) the financing terms, covenants, termination events and other provisions thereof shall be market terms (as determined in good faith by the Borrower) and may include Standard Undertakings.

“Receivables Financing” shall mean any transaction or series of transactions that may be entered into by LGSC or any of its Subsidiaries pursuant to which LGSC or any of its Subsidiaries may sell, assign, convey or otherwise transfer to any other Person, or may grant a security interest in, any Receivables Financing Assets (whether now existing or arising in the future) of LGSC or any of its Subsidiaries, and any assets related thereto including, without limitation, all collateral securing such Receivables Financing Assets, all contracts and all guarantees or other obligations in respect of such Receivables Financing Assets, proceeds of such Receivables Financing Assets and other assets which are customarily sold, assigned, conveyed, or transferred or in respect of which security interests are customarily granted in connection with asset securitization transactions or factoring transactions involving Receivables Financing Assets and any Hedging Obligations entered into by LGSC or any such Subsidiary in connection with such Receivables Financing Assets, in each case so long as the proceeds of any such Receivables Financing are transferred directly or indirectly to a Credit Party.

“Receivables Financing Assets” shall mean any of the following assets (or interests therein) from time to time originated, acquired or otherwise owned by LGSC or any Restricted Subsidiary or in which LGSC or any Restricted Subsidiary has any rights or interests, in each case, without regard to where such assets or interest are located: (1) receivables, payment obligations, installment contracts, and similar rights, whether currently existing or arising or estimated to arise in the future, and whether in the form of accounts, chattel paper, general intangibles, instruments or otherwise (including any drafts, bills of exchange or similar notes and instruments), (2) royalty and other similar payments made related to the use of trade names and other intellectual property, business support, training and other services, including without limitation licensing fees, lease payments and similar revenue streams relating to Product, (3) revenues related to distribution and merchandising of the products of LGSC and its Restricted Subsidiaries, (4) intellectual property rights relating to the generation of any of the foregoing types of assets, and (5) any other assets and property to the extent customarily included in securitization transactions or factoring transactions of the relevant type in the applicable jurisdictions (as determined by the Borrower in good faith).

“Receivables Financing Fees” shall mean distributions or payments made directly or by means of discounts with respect to any participation interests issued or sold in connection with, and all other fees paid to a Person that is not a Restricted Subsidiary in connection with, any Receivables Financing.

 

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“Receivables Financing Repurchase Obligation” shall mean any obligation of a seller of Receivables Financing Assets in a Qualified Receivables Financing to repurchase Receivables Financing Assets arising solely as a result of a breach of a representation, warranty or covenant or otherwise, including as a result of a Receivables Financing Asset or portion thereof becoming subject to any asserted defense, dispute, dilution, off-set or counterclaim of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.

“Receivables Subsidiary” shall mean a Restricted Subsidiary that is a Wholly-Owned Subsidiary (or another Person formed for the purposes of engaging in Qualified Receivables Financing with LGSC or any of its Subsidiaries in which LGSC or any of its Subsidiaries make an Investment and to which LGSC or any of its Subsidiaries transfer Receivables Financing Assets and related assets) which engages in no activities other than in connection with the financing of Receivables Financing Assets of LGSC and its Subsidiaries, all proceeds thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or related to such business and:

(1) no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (A) is guaranteed by LGSC or any Restricted Subsidiary (excluding guarantees of obligations (other than the principal of and interest on, Indebtedness) pursuant to Standard Undertakings), (B) is recourse to or obligates LGSC or any Restricted Subsidiary in any way other than pursuant to Standard Undertakings, or (C) subjects any property or asset of LGSC or any Restricted Subsidiary, directly or indirectly, contingently or otherwise, to the satisfaction thereof, other than pursuant to Standard Undertakings;

(2) with which neither LGSC nor any Restricted Subsidiary has any material contract, agreement, arrangement or understanding other than on terms which LGSC reasonably believes to be no less favorable to LGSC or such Restricted Subsidiary than those that might be obtained at the time from Persons that are not Affiliates of LGSC (other than pursuant to Standard Undertakings); and

(3) to which neither LGSC nor any Restricted Subsidiary has any obligation to maintain or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating results (other than pursuant to Standard Undertakings).

“Reference Time” with respect to any setting of the then-current Benchmark shall mean (1) if such Benchmark is Term SOFR, 5:00 a.m. (Chicago time) on the day that is two U.S. Government Securities Business Days preceding the date of such setting; (2) if following a Benchmark Transition Event and a Benchmark Replacement Date with respect to the Term SOFR, such Benchmark is Daily Simple SOFR, then four U.S. Government Securities Business Days prior to such setting; or (3) if such Benchmark is neither of Term SOFR or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.

“Refinancing Indebtedness” shall mean Indebtedness that is Incurred in exchange for, or to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, to “refinance,” “refinances” and “refinanced” each having a correlative meaning) any Indebtedness being refinanced (or previous refinancing thereof), provided, however, that:

(1) the Refinancing Indebtedness has a Stated Maturity no earlier than the earlier of (a) the Stated Maturity of the Indebtedness being refinanced or (b) 91 days later than the Maturity Date;

 

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(2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the remaining Average Life of the Indebtedness being refinanced;

(3) such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, interest or premiums required by the instruments governing such existing Indebtedness, any tender premiums with respect thereto, and fees and expenses Incurred in connection therewith);

(4) if the Indebtedness being refinanced is subordinated in right of payment to the Loans or the Guarantees under Article 9, such Refinancing Indebtedness is subordinated in right of payment to the Loans or the Guarantees under Article 9 on terms in the aggregate not materially less favorable to the Lenders than those contained in the documentation governing the Indebtedness being refinanced (as determined by the Administrative Agent in its reasonable discretion); and

(5) Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor Subsidiary that refinances Indebtedness of the Borrower or a Guarantor.

“Register” shall have the meaning given such term in Section 11.3(c).

“Regulation D” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Regulation S-X” shall mean Regulation S-X (and the interpretations of the SEC) under the Securities Act.

“Regulations T, U and X” shall mean such regulation of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“Reimbursement Obligations” shall have the meaning given to such term in Section 2.3(c).

“Related Business” shall mean the (1) development, production, distribution, acquisition or disposition of intellectual properties including films, live event, television, interactive media, music and video product or any other audio-visual work and/or rights therein or thereto, (2) operation of physical production facilities, (3) acquisition and operation of television channels and internet or digital distribution platforms, (4) talent management business and (5) any business which is related, ancillary or complementary to any of the foregoing activities, including, without limitation, the acquisition and operation of theme parks, museum tours, stage plays, or other live shows or experiences or location-based entertainment.

“Related Parties” shall mean, with respect to any Person, such Person’s affiliates and the partners, directors, officers, employees, agents, trustees, administrators, managers, advisors and representatives of such Person and of such Person’s affiliates.

“Relevant Governmental Body” shall mean the Federal Reserve Board and/or the NYFRB, or a committee officially endorsed or convened by the Federal Reserve Board and/or the NYFRB or, in each case, any successor thereto.

 

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“Relevant Rate” shall mean (i) with respect to any Term Benchmark Borrowing, the Term SOFR or (ii) with respect to any RFR Borrowing, the Daily Simple SOFR, as applicable.

“Relevant Taxing Jurisdiction” shall have the meaning given to such term in the definition of “Excluded Taxes.”

“Replication Advances” shall mean advances incurred pursuant to DVD replication, tape duplication or film processing transactions which require repayment if certain volume commitments are not fulfilled, provided that repayment of such advances (1) may not be accelerated or be required to be paid on demand unless such repayment obligation is completely unsecured, (2) do not require cash payments of interest and (3) are on terms at least as favorable as LGSC’s or Restricted Subsidiaries’ current replication deals; provided that the granting of a Lien in respect of the related assets, which is junior in right to the Lien on such assets which secures the Loans, to secure any such Replication Advances will not be considered to be less favorable to LGSC.

“Required Lenders” shall mean, at any time, Lenders having Revolving Exposures and Unused Commitments representing more than 50% of the sum of the total Revolving Exposures and Unused Commitments at such time; provided that the Revolving Exposures and Unused Commitments held or deemed held by any Defaulting Lender (so long as such Lender is a Defaulting Lender) shall be excluded for purposes of making a determination of Required Lenders.

“Required Supermajority Lenders” shall mean, at any time, Lenders having Revolving Exposures and Unused Commitments representing more than 66.67% of the sum of the total Revolving Exposures and Unused Commitments at such time; provided that the Revolving Exposures and Unused Commitments held or deemed held by any Defaulting Lender (so long as such Lender is a Defaulting Lender) shall be excluded for purposes of making a determination of Required Supermajority Lenders.

“Resignation Effective Date” shall have the meaning given to such term in Section 10.10.

“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.

“Responsible Officer” shall mean, when used with respect to the Administrative Agent, any officer within the corporate trust department of the Administrative Agent having direct responsibility for the administration of this Credit Agreement, or any other officer to whom any corporate trust matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Restricted Investment” shall mean any Investment other than a Permitted Investment.

“Restricted Payment” shall have the meaning given to such term in Section 7.2(a).

“Restricted Subsidiary” shall mean any Subsidiary of LGSC other than an Unrestricted Subsidiary.

“Revolving Exposure” shall mean, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans plus its L/C Exposure at such time.

“RFR Borrowing” shall mean, as to any Borrowing, the RFR Loans comprising such Borrowing.

 

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“RFR Loan” shall mean a Loan that bears interest at a rate based on the Daily Simple SOFR.

“RP/Investments Basket” shall mean, as of any date of determination, an amount equal to the lesser of (a) 35% of the Eligible Unsold Rights Amount as reflected in the most recently-delivered Valuation Report and (b) $350,000,000.

“S&P” shall mean Standard & Poor’s Rating Services, a Standard & Poor’s Financial Services LLC business, and any successor-in-interest thereto.

“Sale/Leaseback Transaction” shall mean an arrangement relating to property now owned or hereafter acquired whereby LGSC or a Restricted Subsidiary transfers such property to a Person (other than LGSC or any of its Restricted Subsidiaries) and LGSC or a Restricted Subsidiary leases it from such Person.

“Seasoned Picture” shall mean a Picture that has been theatrically released in the United States for at least sixty (60) days and for which the required calculation of Net Remaining Ultimates has been delivered to the Administrative Agent.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“Secured Debt Ratio” shall mean the ratio of

(A) the sum of the Borrowing Base, plus unrestricted cash and Cash Equivalents of the Credit Parties to

(B) the sum of (x) the aggregate Revolving Exposure plus (y) all other secured Indebtedness of any Credit Party; provided that the foregoing clause (B) shall not take into account:

(i) permitted secured purchase money financings,

(ii) any obligation under the Tax Credit Facility that is not incurred at a Credit Party,

(iii) debt of Special Purpose Producers,

(iv) participations and residuals,

(v) Replication Advances,

(vi) debt secured by liens on tax credits,

(vii) Permitted Slate Financings not incurred at a Credit Party level,

(viii) the Backlog Facility,

(ix) the Outside IP Debt Facilities,

(x) Receivables Financings,

(xi) Production Financings,

 

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(xii) other similar film-related obligations and

(xiii) any guarantees in respect of the foregoing.

“Secured Parties” shall have the meaning given to such term in any Pledge and Security Agreement.

“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Senior Notes” shall mean the 5.500% Exchange Notes due 2029 issued by Lions Gate Capital Holdings 1, Inc. in an aggregate principal amount of $389,861,000 pursuant to the Senior Notes Indenture, which rate shall be 6.00% and maturity shall be 2030 from and after the consummation of the Separation Transaction.

“Senior Notes Indenture” shall mean the Indenture, dated as of May 8, 2024 (as amended, restated, supplemented or otherwise modified from time to time), among Lions Gate Capital Holdings 1, Inc., the guarantors named therein, and U.S. Bank Trust Company, National Association, as trustee, under which the Senior Notes were issued.

“Separation Transaction” shall mean the separation of LGSC and its Subsidiaries (including the Credit Parties), on the one hand, and the Starz business including Lions Gate Entertainment Corp. and its Subsidiaries that are a part of the Starz business, on the other hand.

“Significant Subsidiary” shall mean any Restricted Subsidiary that would be a “Significant Subsidiary” of LGSC within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“SOFR” shall mean a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.

“SOFR Administrator” shall mean the NYFRB (or a successor administrator of the secured overnight financing rate).

“SOFR Administrator’s Website” shall mean the NYFRB’s website, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.

“Solvency Certificate” shall mean the Solvency Certificate delivered pursuant to Section 5.1(g), substantially in the form of Exhibit E to this Credit Agreement.

“Special Purpose Producer” shall mean a special purpose corporation or limited liability company formed solely for the purpose of producing Product or any audio-visual product or live show or experience or location-based entertainment which, in each case, will be purchased or distributed in whole or in part by LGSC or any of its Restricted Subsidiaries.

“Specified Cash Management Agreement” shall mean any agreement providing for treasury, depositary, purchasing card or cash management services, including in connection with any automated clearing house transfers of funds or any similar transactions owing by any Credit Party to any entity that was a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent at the time such relevant agreement was entered into or, if later, as of the Closing Date (or, if later, who becomes a Lender or an Affiliate of a Lender within 30 days after the Closing Date); provided that LGSC

 

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may, subject to the Administrative Agent’s consent (not to be unreasonable withheld, conditioned or delayed), designate, by delivering a written designation by LGSC and such counterparty to the Administrative Agent, any agreement by a Restricted Subsidiary which is not a Credit Party which would constitute a “Specified Cash Management Agreement” if such Subsidiary were a Credit Party as (a) constituting a Specified Cash Management Agreement or (b) only partially constituting a Specified Cash Management Agreement.

“Specified Swap Agreement” shall mean any Interest Rate Agreement or Currency Agreement owing by any Credit Party to any entity that was a Lender, the Administrative Agent or an Affiliate of a Lender or the Administrative Agent at the time such relevant agreement was entered into or, if later, as of the Closing Date (or, if later, who becomes a Lender or an Affiliate of a Lender within 30 days after the Closing Date); provided that LGSC may, subject to the Administrative Agent’s consent (not to be unreasonable withheld, conditioned or delayed), designate, by delivering a written designation by LGSC and such counterparty to the Administrative Agent, any agreement by a Restricted Subsidiary which is not a Credit Party which would constitute a “Specified Swap Agreement” if such Subsidiary were a Credit Party as (a) constituting a Specified Swap Agreement or (b) only partially constituting a Specified Swap Agreement. Notwithstanding the foregoing, for all purposes of the Fundamental Documents, any Guarantee of, or grant of any Lien to secure, any obligations in respect of a Specified Swap Agreement by a Guarantor shall not include any Excluded Swap Obligations with respect to such Guarantors.

“Standard Undertakings” shall mean representations, warranties, covenants, indemnities, reimbursement obligations, performance undertakings, guarantees of performance, and similar customary payment obligations entered into by any Credit Party or any Subsidiaries, whether joint and several or otherwise, which LGSC has determined in good faith to be customary in a Receivables Financing including, without limitation, those relating to the servicing of the assets of a Receivables Subsidiary; provided that:

(a) any Receivables Financing Repurchase Obligation shall be deemed to be a Standard Undertaking;

(b) guarantees or other effective recourse for the repayment of debt for borrowed money shall only constitute a Standard Undertaking in the case of guarantees of scheduled amortization, expenses and interest payments;

(c) recourse to a Credit Party granted to an outside financier under a Receivables Financing that is substantively consistent with what is provided for in the Outside IP Debt Facilities executed prior to the Closing Date, in each case, shall constitute a Standard Undertaking and shall not require any further consent or notice to the Administrative Agent; and

(d) no guarantee of amortization payments under a Receivables Financing that is less favorable to the Credit Parties than what is provided for in the Outside IP Debt Facilities executed prior to the Closing Date shall constitute a Standard Undertaking without the Administrative Agent’s prior consent (not to be unreasonably withheld, conditioned or delayed).

“Stated Maturity” shall mean, with respect to any security, the date specified in the agreement governing or certificate relating to such Indebtedness as the fixed date on which the final payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not include any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

 

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“Statutory Plan” shall mean any statutory benefit plan which any Credit Party is required to participate in, contribute to, or comply with, pursuant to statute, including the Canada Pension Plan, Québec Pension Plan, Employment Insurance Program, Québec Parental Insurance Plan, and any other similar plans or programs administered pursuant to applicable health tax, workplace safety insurance, workers’ compensation or unemployment insurance legislation.

“Submitting Party” shall have the meaning given to such term in Section 11.12.

“Subordinated Obligation” shall mean any Indebtedness of the Borrower or any Guarantor (whether outstanding on the Closing Date or thereafter Incurred) that is subordinated or junior in right of payment to the Loans and the Guarantees under Article 9 pursuant to a written agreement. For the avoidance of doubt, such determination will be made without reference to the presence or absence of security in respect of any such Indebtedness.

“Subsidiary” of any Person shall mean (x) (1) any corporation, association or other business entity (other than a partnership, joint venture, limited liability company, unlimited liability company or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or Persons performing similar functions) or (2) any partnership, joint venture, limited liability company, unlimited liability company or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (1) and (2), at the time owned or controlled, directly or indirectly, by (a) such Person, (b) such Person and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of such Person, and (y) any corporation, association or other business entity (including any partnership, joint venture, limited liability company, unlimited liability company or similar entity) (1) as to which such Person possesses, directly or indirectly, the power to direct or cause the direction of the management or policies thereof, whether through the ownership of voting securities, by contract or otherwise and (2) which is consolidated with such Person pursuant to GAAP. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of LGSC.

“Successor Guarantor” shall have the meaning given to such term in Section 7.6(c).

“Successor Person” shall have the meaning given to such term in Section 7.6(a).

“Supported QFC” shall have the meaning given to such term in Section 11.24.

“Tax Credit Facility” shall mean that certain $260,000,000 senior secured credit, security, guaranty and pledge agreement dated as of January 27, 2021 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time) by and among LG TCM LLC, LGC TCM Holdings, LL, MUFG as administrative agent and such other lenders from time to time party thereto.

“Term Benchmark” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to Term SOFR.

“Term SOFR” shall mean, with respect to any Term Benchmark Borrowing and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the CME Term SOFR Administrator; provided that if Term SOFR as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Credit Agreement.

 

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“Term SOFR Determination Day” has the meaning assigned to it under the definition of Term SOFR Reference Rate.

“Term SOFR Reference Rate” shall mean, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Term Benchmark Borrowing denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum published by the CME Term SOFR Administrator and identified by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the CME Term SOFR Administrator and a Benchmark Transition Event and its related Benchmark Replacement Date with respect to the Term SOFR Rate has not occurred, then, so long as such day is otherwise a U.S. Government Securities Business Day, the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the CME Term SOFR Administrator, so long as such first preceding U.S. Government Securities Business Day is not more than five (5) U.S. Government Securities Business Days prior to such Term SOFR Determination Day.

“Termination Date” shall mean the date on which (a) all Commitments shall have been terminated, (b) the principal of and interest on each Loan, all fees and all other expenses or amounts payable under any Fundamental Document shall have been paid in full in cash (other than in respect of contingent indemnification and expense reimbursement claims not then due), and (c) all Letters of Credit (other than those subject to an L/C Backstop) have been cancelled or have expired and all amounts drawn or paid thereunder have been reimbursed in full in cash.

“Third Party Lien Reserve” shall mean an amount reserved for in the Borrowing Base in respect of liens in favor of guilds, distributors, completion guarantors, or other third parties that were granted in connection with the acquisition of the relevant Product.

“Title IV Plan” shall mean a Pension Plan (other than a Multiemployer Plan) that is covered by Title IV of ERISA or Section 412 of the Code that is maintained or contributed to by any Credit Party, or any ERISA Affiliate, or with respect to which any Credit Party could otherwise have any liability.

“Total Assets” shall mean the total assets of LGSC and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent balance sheet of LGSC.

“Total Commitments” shall mean the aggregate of the Commitments of all of the Lenders, as reduced or increased from time to time pursuant to the terms and conditions hereof. As of the Closing Date, the Total Commitments are $800,000,000.

“Total Debt Ratio” shall mean, as of the relevant date of determination, the ratio of

(x) the Gross Borrowing Base then in effect to

(y) the sum of (A) all Revolving Exposure plus (B) all outstanding Indebtedness of the Credit Parties; provided that the foregoing clause (B) shall not take into account

(i) permitted secured purchase money financings,

(ii) any obligation under the Tax Credit Facility that is not incurred at a Credit Party,

 

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(iii) debt of Special Purpose Producers,

(iv) participations and residuals,

(v) Replication Advances,

(vi) debt secured by liens on tax credits,

(vii) Permitted Slate Financings not incurred at a Credit Party level,

(viii) the Backlog Facility,

(ix) the Outside IP Debt Facilities,

(x) Receivables Financings,

(xi) Production Financings,

(xii) other similar film-related obligations and

(xiii) any guarantees in respect of the foregoing.

“Total Revenues” shall mean the total revenues of LGSC and its Restricted Subsidiaries on a consolidated basis, as shown on the most recent income statement of LGSC.

“Trademark Security Agreement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Trademark Security Agreement Supplement” shall have the meaning given to such term in any Pledge and Security Agreement.

“Transaction Expenses” shall mean any fees, costs or expenses incurred or paid by LGSC or its Restricted Subsidiaries in connection with the Transactions.

“Transactions” shall mean, collectively, (a) the transactions contemplated by this Credit Agreement and the other Fundamental Documents and the borrowing of Loans hereunder, (b) the Separation Transaction, (c) the termination of the Existing Credit Agreement, and (d) the payment of Transaction Expenses.

“UCC” shall mean the Uniform Commercial Code as in effect in the State of New York on the date of execution of this Credit Agreement.

“UK Financial Institutions” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.

“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.

 

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“Ultimates Advance Rate” shall mean, with respect to any date on which the Borrowing Base is to be determined, either (at the Borrower’s discretion as it may select at the date of determination depending on the manner in which it computes Net Remaining Ultimates at such time):

(x) if the Borrower elects to use different advance rates depending on the manner in which it computes Net Remaining Ultimates at such time, (i) 100% with respect to Net Remaining Contractual Ultimates and (ii) 80% with respect to estimated Net Remaining Ultimates, or

(y) otherwise, 85% with respect to all Net Remaining Ultimates;

provided that, if the Ultimates Percentage, calculated as of such date of determination, is less than 90%, the Ultimates Advance Rate in the case of the foregoing clause (x) with respect to estimated Net Remaining Ultimates (but not Net Remaining Contractual Ultimates) shall be 80% multiplied by such Ultimates Percentage and in the case of the foregoing clause (y) shall be 85% multiplied by such Ultimates Percentage.

“Ultimates Determination Date” shall have the meaning set forth in the definition of “Cumulative Ultimates.”

“Ultimates Percentage” shall mean, for any Ultimates Determination Date with respect to the greater number of items of Product comprising (i) the twelve most recent Seasoned Pictures with a Budgeted Negative Cost greater than or equal to $5,000,000, and (ii) all Seasoned Pictures released in the last two years with a Budgeted Negative Cost greater than or equal to $5,000,000, in each case, for which six (6) months has elapsed from the date upon which each such Seasoned Picture has become seasoned, a ratio (expressed as a percentage) of:

(x) the sum of Cumulative Ultimates for such Seasoned Pictures as of such Ultimates Determination Date to

(y) the sum of Cumulative Ultimates for such Seasoned Pictures determined for each such Seasoned Picture on the date it became a Seasoned Picture.

“Unadjusted Benchmark Replacement” shall mean the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.

“Unrestricted Subsidiary” shall mean:

(1) any Subsidiary of LGSC that at the time of determination shall be designated an Unrestricted Subsidiary by the Borrower or LGSC in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Borrower or LGSC may designate any Subsidiary of LGSC (other than the Borrower, but including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger, amalgamation or consolidation or Investment therein) to be an Unrestricted Subsidiary only if:

(1) such Subsidiary (or any of its Subsidiaries) does not own any Capital Stock of any Subsidiary which, following such designation, will remain a Restricted Subsidiary, or hold any Lien on any property of LGSC or any Subsidiary which, following such designation, will remain a Restricted Subsidiary of LGSC (and such Subsidiary will only remain an Unrestricted Subsidiary so long as it does not own any Capital Stock of any Subsidiary which, following such designation, will remain a Restricted Subsidiary, or hold any Lien on any property of LGSC or any Subsidiary which, following such designation, will remain a Restricted Subsidiary of LGSC);

 

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(2) any Guarantee by LGSC or any Restricted Subsidiary of any Indebtedness of such Subsidiary (or any of its Subsidiaries) shall be deemed an “Incurrence” of such Indebtedness and an “Investment” by LGSC or such Restricted Subsidiary and complies with Section 7.1;

(3) such designation and the Investment by LGSC or such Restricted Subsidiary in such Subsidiary complies with Section 7.2; and

(4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of LGSC and its Subsidiaries.

Any such designation by the Borrower shall be evidenced to the Administrative Agent by filing with the Administrative Agent an Officer’s Certificate giving effect to such designation and certifying that such designation complies with the foregoing conditions.

An Officer of the Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that immediately after giving effect to such designation, (x) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and (y) the Liquidity Ratio shall not be less than 1.1 to 1.0 on a Pro Forma Basis after giving effect to such designation.

For the avoidance of doubt, LGSC shall be permitted to designate any Subsidiary a Restricted Subsidiary or Unrestricted Subsidiary, in each case, in accordance with the terms of this Credit Agreement, notwithstanding the designation of such Subsidiary under any other agreement, provided that no Subsidiary may be designated as an Unrestricted Subsidiary or subsequently re-designated as a Restricted Subsidiary unless it is simultaneously so designated or re-designated, as applicable, under the Senior Notes (to the extent outstanding).

Notwithstanding the foregoing, as of the Closing Date, the Initial Unrestricted Subsidiaries and each of their Subsidiaries shall be Unrestricted Subsidiaries.

“Unused Commitments” shall mean, at any time, the difference between the Commitments then in effect and the aggregate outstanding principal amount of Loans and L/C Obligations.

“USA Patriot Act” shall mean the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) as amended, and the rules and regulations thereunder and any successors thereto.

“U.S. Government Securities Business Day” shall mean any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.

“U.S. Pledge and Security Agreement” shall mean the Pledge and Security Agreement, dated as of the Closing Date (as amended, restated, supplemented or otherwise modified from time to time), among the Credit Parties party thereto and the Administrative Agent.

 

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“U.S. Special Resolution Regime” shall have the meaning given to such term in Section 11.24.

“U.S. Subsidiary” shall mean any Subsidiary organized under the laws of the United States of America or any state thereof or the District of Columbia.

“Valuation Report” shall have the meaning given to such term in Section 6.2(g).

“Voting Stock” of a Person shall mean all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable, of such Person.

“Wholly-Owned Subsidiary” shall mean a Restricted Subsidiary, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by LGSC or another Wholly-Owned Subsidiary and including, for purposes of Section 6.13(b) and clause (b) of the definition of “Excluded Subsidiary”, a Restricted Subsidiary all of the Capital Stock of which (other than directors’ qualifying shares) is owned, directly or indirectly, by the Borrower.

“Withdrawal Liability” shall mean any liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are used in sections 4203 and 4205, respectively, of ERISA.

“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation of the United Kingdom to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.

SECTION 1.2. Other Interpretive Provisions.

(a) Interpretation. For the purposes hereof unless the context otherwise requires, all Section references herein shall be deemed to correspond with Sections herein, the above terms shall have the meanings indicated, all accounting terms not otherwise defined herein shall have the respective meanings accorded to them under GAAP and all terms defined in the UCC and not otherwise defined herein shall have the respective meanings accorded to them therein. For purposes hereof, all references herein to “the date hereof” shall mean May 6, 2025. Wherever herein any determination may be made for all purposes of this Credit Agreement by the Borrower or an Officer thereof, such determination may also be made, for purposes of this Credit Agreement, by LGSC or an Officer thereof; and wherever any determination may be made for purposes of this Credit Agreement by LGSC or an Officer thereof, such determination may also be made, for all purposes of this Credit Agreement, by the Borrower or an Officer thereof.

(b) GAAP; Change in Accounting Principles. Except as otherwise expressly provided herein (including, for the avoidance of doubt, the proviso in the definition of “Finance Lease Obligations”), all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that if at any time, any change in GAAP would affect the computation of any

 

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financial ratio or requirement in the Fundamental Documents and the Borrower notifies the Administrative Agent that the Borrower requests an amendment (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment), the Administrative Agent, the Lenders and the Borrower shall, at no cost to the Borrower, negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such financial ratio or requirement shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such provision is amended in accordance herewith. Notwithstanding any other provision contained herein, all terms of an accounting or financial nature used herein shall be construed, and all computations of amounts and ratios referred to herein shall be made (i) without giving effect to any election under Accounting Standards Codification 825-10-25 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any Indebtedness or other liabilities of any Credit Party at “fair value”, as defined therein, (ii) without giving effect to any treatment of Indebtedness in respect of convertible debt instruments under Accounting Standards Codification 470-20 (or any other Accounting Standards Codification or Financial Accounting Standard having a similar result or effect) to value any such Indebtedness in a reduced or bifurcated manner as described therein, and such Indebtedness shall at all times be valued at the full stated principal amount thereof and (iii) for the avoidance of doubt, without giving effect to the financial condition, results and performance of the Unrestricted Subsidiaries.

(c) Limited Condition Transactions.

(i) In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of determining compliance with any provision of this Credit Agreement which requires that no Default or Event of Default, as applicable, has occurred, is continuing or would result from any such action, as applicable, such condition shall, at the option of the Borrower, be deemed satisfied, so long as no Default or Event of Default, as applicable, exists on the date (I) the definitive agreement for such Limited Condition Transaction is entered into, (II) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (III) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7 announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction. For the avoidance of doubt, if the Borrower has exercised its option under the immediately preceding sentence, and any Default or Event of Default, as applicable, occurs following the date the (x) definitive agreement for the applicable Limited Condition Transaction is entered into, (y) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (z) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7 announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction, and, in each case, prior to the consummation of such Limited Condition Transaction, any such Default or Event of Default, as applicable, shall be deemed to not have occurred or be continuing for purposes of determining whether any action being taken in connection with such Limited Condition Transaction is permitted hereunder.

(ii) In connection with any action being taken in connection with a Limited Condition Transaction, for purposes of (I) determining compliance with any provision of this Credit Agreement which requires the calculation of the Liquidity Ratio, Secured Debt Ratio or Total Debt Ratio or (II) testing baskets set forth herein, in each case, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction,

 

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an “LCT Election”), the date of determination of whether any such action is permitted hereunder, shall be deemed to be the date (x) the definitive agreement for such Limited Condition Transaction is entered into, (y) irrevocable notice of redemption, purchase, repurchase, defeasance, satisfaction and discharge or repayment of Indebtedness, Disqualified Stock or Preferred Stock is given or (z) solely in connection with an acquisition to which the United Kingdom City Code on Takeovers and Mergers applies, the date on which a “Rule 2.7 announcement” of a firm intention to make an offer is published on a regulatory information service in respect of a target of a Limited Condition Transaction, as applicable (the “LCT Test Date”), and if, after giving pro forma effect to the Limited Condition Transaction and the other transactions to be entered into in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds of such incurrence) as if they had occurred at the beginning of the most recent four consecutive fiscal quarters ending prior to the LCT Test Date for which consolidated financial statements of the Borrower are available, the Borrower could have taken such action on the relevant LCT Test Date in compliance with such ratio, basket or amount, such ratio, basket or amount shall be deemed to have been complied with; provided that (a) if financial statements for one or more subsequent fiscal quarters shall have become available, the Borrower may elect, in its sole discretion, to redetermine all such ratios, baskets or amounts (including as to the absence of any continuing Default or Event of Default) on the basis of such financial statements, in which case, such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date for purposes of such ratios, baskets or amounts and (b) except as contemplated in the foregoing clause (a), compliance with such ratios, baskets or amounts (and any related requirements and conditions) (including as to the absence of any continuing Default or Event of Default) shall not be determined or tested at any time after the applicable LCT Test Date for such Limited Condition Transaction and any actions or transactions being taken in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds of such incurrence). For the avoidance of doubt, if the Borrower has made an LCT Election and any of the ratios, baskets or amounts for which compliance was determined or tested as of the LCT Test Date is exceeded as a result of fluctuations in any such ratio, basket or amount or any applicable currency exchange rate, at or prior to the consummation of the relevant transaction or action, such baskets, ratios or amounts will not be deemed to have been exceeded as a result of such fluctuations. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio, basket or amount on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction, any such ratio, basket or amount shall be calculated on a pro forma basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence or discharge of Indebtedness and the use of proceeds thereof) have been consummated.

(d) Certain Determinations. Notwithstanding anything to the contrary herein, with respect to any amounts incurred or transactions entered into (or consummated) in reliance on a provision of any covenant herein that does not require compliance with a financial ratio or test (including the Liquidity Ratio or Secured Debt Ratio) (any such amounts, the “Fixed Amounts”) substantially concurrently or in a series of related transactions with any amounts incurred or transactions entered into (or consummated) in reliance on a provision in such covenant that requires compliance with any such financial ratio or test (any such amounts, the “Incurrence Based Amounts”), it is understood and agreed that the Fixed Amounts (and any cash proceeds thereof) in such covenant shall be disregarded in the calculation of the financial ratio or test applicable to the Incurrence Based Amounts in such covenant in connection with such incurrence, but full pro forma effect shall be given to all applicable and related transactions (including the use of proceeds of all Indebtedness to be incurred and any repayments, repurchases and redemptions of Indebtedness) and all other permitted pro forma adjustments.

 

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(e) Interest Rates; Benchmark Notifications. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of any circumstance in which Term SOFR is no longer available or in certain other circumstances as set forth in Section 3.1 of this Credit Agreement, such Section 3.1 provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to any interest rate used in this Credit Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Credit Agreement or any alternative, successor or alternative rate and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Credit Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Credit Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.

(f) Québec Matters. For purposes of any assets, liabilities or entities located in the Province of Québec and for all other purposes pursuant to which the interpretation or construction of this Credit Agreement, any other Fundamental Document or any other credit documentation may be subject to the laws of the Province of Québec or a court or tribunal exercising jurisdiction in the Province of Québec, (a) “personal property” shall include “movable property”, (b) “real property” or “real estate” shall include “immovable property”, (c) “tangible property” shall include “corporeal property”, (d) “intangible property” shall include “incorporeal property”, (e) “security interest”, “mortgage” and “lien” shall include a “hypothec”, “right of retention”, “prior claim”, “reservation of ownership” and a resolutory clause, (f) all references to “perfection” of or “perfected” liens or security interest shall include a reference to an “opposable” or “set up” hypothec as against third parties, (g) any “right of offset”, “right of setoff” or similar expression shall include a “right of compensation”, (h) “goods” shall include “corporeal movable property” other than chattel paper, documents of title, instruments, money and securities, (i) an “agent” shall include a “mandatary”, (j) “construction liens” or “mechanics, materialmen, repairmen, construction contractors or other like Liens” shall include “legal hypothecs” and “legal hypothecs in favour of persons having taken part in the construction or renovation of an immovable”, (k) “joint and several” shall include “solidary”, (l) “gross negligence or willful misconduct” shall be deemed to be “intentional or gross fault”, (m) “beneficial ownership” shall include “ownership on behalf of another as mandatary”, (n) “easement” shall include “servitude”, (o) “priority” shall include “rank” or “prior claim”, as applicable (p) “survey” shall include “certificate of location and plan”, (q) “state” shall include “province”, (r) “fee simple title” shall include “absolute ownership” and “ownership” (including ownership under a right of superficies), (s) “accounts” shall include “claims”, (t) “legal title” shall be including “holding title on behalf of an owner as mandatary or prête-nom”, (u) “ground lease” shall include “emphyteusis” or a “lease with a right of superficies, as applicable, (v) “leasehold interest” shall include “rights resulting from a lease”, (w) “lease” shall include a “leasing contract” and (x) “foreclosure” shall include “the exercise of hypothecary recourse”, and (y) “guarantee” and “guarantor” shall include “suretyship” and “surety”, respectively. The parties hereto confirm that it is their wish that this Credit Agreement and any other document executed in connection with the transactions contemplated herein be drawn up in the English language only and that all other documents contemplated thereunder or relating thereto, including notices, may also be drawn up in

 

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the English language only. Les parties aux présentes confirment qu’elles souhaitent que cette convention de crédit et tout autre document signé dans le cadre des opérations envisagées par les présentes soient rédigés en langue anglaises uniquement et que tous les autres documents envisagés dans le cadre de cette convention de crédit, ou s’y rapportant, y compris tous avis, soient également rédigés en langue anglaise uniquement.

ARTICLE 2

THE LOANS

SECTION 2.1. [Intentionally omitted].

SECTION 2.2. Revolving Credit Loans. Subject to the terms and conditions hereof, each Lender severally and not jointly agrees to make revolving credit loans in Dollars (collectively, the “Loans” and individually, each a “Loan”) to the Borrower from time to time on any Business Day from the Closing Date to but excluding the Maturity Date, in the aggregate principal amount that will not result in (a) such Lender’s Revolving Exposure exceeding such Lender’s Commitment or (b) the sum of the total Revolving Exposure exceeding the lesser of (i) the Borrowing Base and (ii) the Total Commitment. Each Borrowing of Loans shall be made ratably by the Lenders in proportion to their respective Percentages. As provided in Section 2.5(a), and subject to the terms hereof, the Borrower may elect that each Borrowing of Loans be either Base Rate Loans or Term Benchmark Loans. Loans may be repaid and reborrowed before the Maturity Date, subject to the terms and conditions hereof.

SECTION 2.3. Letters of Credit.

(a) General Terms. Subject to the terms and conditions hereof, as part of the Facility, commencing with the Closing Date, the Issuing Banks shall issue standby and documentary letters of credit (each, a “Letter of Credit”) for the Borrower’s account and/or LGSC’s and its Subsidiaries’ account (provided that each shall be jointly and severally liable) in an aggregate undrawn face amount up to the L/C Sublimit; provided, however, that the sum of the Loans and L/C Obligations at any time outstanding shall not exceed either (x) the sum of all Commitments in effect at such time or (y) the Borrowing Base then in effect; and provided, further that no Issuing Bank shall have any obligation to issue any Letter of Credit if, after giving effect to such issuance, the aggregate L/C Obligations in respect of Letters of Credit issued by such Issuing Bank would exceed the amount stipulated for it in the definition of “Issuing Bank” (such amount, such Issuing Bank’s “Letter of Credit Commitment”). Each Lender shall be obligated to reimburse the Issuing Banks for such Lender’s Percentage of the amount of each drawing under a Letter of Credit and, accordingly, each Letter of Credit shall constitute usage of the Commitment of each Lender pro rata in an amount equal to its Percentage of the L/C Obligations then outstanding. The Borrower may, at any time and from time to time, reduce the Letter of Credit Commitment of any Issuing Bank with the consent of such Issuing Bank; provided that the Borrower shall not reduce the Letter of Credit Commitment of any Issuing Bank if, after giving effect of such reduction, the condition set forth in the last proviso in the first sentence of this Section 2.3(a) shall not be satisfied.

(b) Applications. At any time after the Closing Date and before the Maturity Date, the Issuing Banks shall, at the request of the Borrower, issue one or more Letters of Credit in Dollars, in form and substance acceptable to the applicable Issuing Bank, with expiration dates no later than the earlier of (i) 12 months from the date of issuance (or which are cancelable not later than 12 months from the date of issuance and each extension) or (ii) five (5) Business Days prior to the Maturity Date, in an aggregate face amount as requested by the Borrower subject to the limitations set forth in clause (a) of this Section 2.3, upon the receipt of a duly executed application for the relevant Letter of Credit in the form then customarily prescribed by the applicable Issuing Bank for the Letter of Credit requested (each an “Application”); provided that any Letter of Credit with a 12-month tenor may provide for the extension thereof for

 

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additional 12-month periods (which shall in no event extend beyond the date referred to in clause (ii) above), unless an L/C Backstop has been provided to the Issuing Bank thereof (it being understood that the Participating Interests of the Participating Lenders shall terminate on the Maturity Date). Notwithstanding anything contained in any Application to the contrary: (i) the Borrower shall pay fees in connection with each Letter of Credit as set forth in Section 2.12(b) hereof, and (ii) if the applicable Issuing Bank is not timely reimbursed for the amount of any drawing under a Letter of Credit as required pursuant to clause (c) of this Section 2.3, the Borrower’s obligation to reimburse such Issuing Bank for the amount of such drawing shall bear interest (which the Borrower hereby promises to pay) from and after the date such drawing is paid to but excluding the date of reimbursement by the Borrower at the rate applicable to Base Rate Loans (including, if then applicable, Section 2.4(c)).

(c) The Reimbursement Obligations. Subject to Section 2.3(b) hereof, the Borrower shall reimburse the applicable Issuing Bank for all drawings under a Letter of Credit (a “Reimbursement Obligation”) by no later than (x) 4:00 p.m. (New York time) on the Business Day after the date of such payment by such Issuing Bank under a Letter of Credit, if the Borrower has been informed of such drawing by the applicable Issuing Bank on or before 10:00 a.m. (New York time) on the date of the payment of such drawing, or (y) if notice of such drawing is given to the Borrower after 10:00 a.m. (New York time) on the date of the payment of such drawing, reimbursement shall be made within two Business Days following the date of the payment of such drawing, by the end of such day, in all instances in immediately available funds at the Administrative Agent’s principal office in New York, New York or such other office as the Administrative Agent may designate in writing to the Borrower, and the Administrative Agent shall thereafter cause to be distributed to the applicable Issuing Bank such amount(s) in like funds; provided that the Borrower may, subject to the conditions to borrowing set forth herein, request that such payment be financed with a Base Rate Loan and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting Borrowing (and with interest owing thereon from the date of the respective disbursement). If the Borrower does not make any such reimbursement payment on the date due and the Participating Lenders fund their participations in the manner set forth in Section 2.3(d) below, then all payments thereafter received by the Administrative Agent in discharge of any of the relevant Reimbursement Obligations shall be distributed in accordance with Section 2.3(d) below. In addition, for the benefit of the Administrative Agent, the Issuing Banks and each Lender, the Borrower agrees that, notwithstanding any provision of any Application, its obligations under this Section 2.3(c) and each Application shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Credit Agreement and the Applications, under all circumstances whatsoever, and irrespective of any claim or defense that the Borrower may otherwise have against the Administrative Agent, the Issuing Banks or any Lender, including without limitation (i) any lack of validity or enforceability of any Fundamental Document; (ii) any amendment or waiver of or any consent to departure from all or any of the provisions of any Fundamental Document; (iii) the existence of any claim of set-off the Borrower may have at any time against a beneficiary of a Letter of Credit (or any Person for whom a beneficiary may be acting), the Administrative Agent, the Issuing Banks, any Lender or any other Person, whether in connection with this Credit Agreement, another Fundamental Document, the transaction related to the Fundamental Document or any unrelated transaction; (iv) any statement or any other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (v) payment by the Administrative Agent or an Issuing Bank under a Letter of Credit against presentation to the Administrative Agent or an Issuing Bank of a draft or certificate that does not comply with the terms of the Letter of Credit; provided that the Administrative Agent’s or an Issuing Bank’s determination that documents presented under the Letter of Credit complied with the terms thereof did not constitute gross negligence, bad faith or willful misconduct of the Administrative Agent or an Issuing Bank (as determined by the final, non-appealable judgment of a court of competent jurisdiction); or (vi) any other act or omission to act or delay of any kind by the Administrative Agent or an Issuing Bank, any Lender or any other Person or any other event or circumstance whatsoever that might, but for the provisions of this Section 2.3(c), constitute a legal or equitable discharge of the Borrower’s obligations hereunder or under an Application.

 

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(d) The Participating Interests. Each Lender (other than the Lender acting as Issuing Bank) severally and not jointly agrees to purchase from the Issuing Banks, and each Issuing Bank hereby agrees to sell to each such Lender (a “Participating Lender”), an undivided participating interest (a “Participating Interest”) to the extent of its Percentage in each Letter of Credit issued by, and each Reimbursement Obligation owed to, the Issuing Banks. Upon the Borrower’s failure to pay any Reimbursement Obligation on the date and at the time required, or if an Issuing Bank is required at any time to return to the Borrower or to a trustee, receiver, liquidator, custodian or other Person any portion of any payment of any Reimbursement Obligation, each Participating Lender shall, not later than the Business Day it receives written notice from such Issuing Bank (with a copy to the Administrative Agent) to such effect, if such notice is received before 12:00 noon, or not later than 12:00 noon the following Business Day, if such notice is received after such time, pay to the Administrative Agent for the account of such Issuing Bank an amount equal to such Participating Lender’s Percentage of such unpaid Reimbursement Obligation together with interest on such amount accrued from the date such Issuing Bank made the related payment to the date of such payment by such Participating Lender at a rate per annum equal to: (i) from the date such Issuing Bank made the related payment to the date two (2) Business Days after payment by such Participating Lender is due hereunder, the Federal Funds Rate for each such day and (ii) from the date two (2) Business Days after the date such payment is due from such Participating Lender to the date such payment is made by such Participating Lender, the Base Rate in effect for each such day. Each such Participating Lender shall, after making its appropriate payment, be entitled to receive its Percentage of each payment received in respect of the relevant Reimbursement Obligation and of interest paid thereon, with each Issuing Bank retaining its Percentage thereof as a Lender hereunder.

The several obligations of the Participating Lenders to the Issuing Banks under this Section 2.3 shall be absolute, irrevocable and unconditional under any and all circumstances and shall not be subject to any set-off, counterclaim or defense to payment which any Participating Lender may have or has had against the Borrower, the Issuing Banks, the Administrative Agent, any Lender or any other Person. Without limiting the generality of the foregoing, such obligations shall not be affected by any Default or Event of Default or by any reduction or termination of the Commitment of any Lender, and each payment by a Participating Lender under this Section 2.3 shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Indemnification. The Participating Lenders shall, to the extent of their respective Percentages, indemnify the Issuing Banks (to the extent not reimbursed by the Borrower and without relieving the Borrower of its obligation to do so) against any cost, expense (including reasonable counsel fees and disbursements), claim, demand, action, loss or liability (except as a result from any Issuing Bank’s gross negligence or willful misconduct as determined by the final, non-appealable judgment of a court of competent jurisdiction) that such Issuing Bank may suffer or incur in connection with any Letter of Credit issued by it. The obligations of the Participating Lenders under this Section 2.3(e) and all other parts of this Section 2.3 shall survive termination of this Credit Agreement and of all Applications, Letters of Credit, and all drafts and other documents presented in connection with drawings thereunder.

(f) Manner of Requesting a Letter of Credit. The Borrower shall provide at least three (3) Business Days’ advance written notice to the Administrative Agent and the applicable Issuing Bank (or such lesser notice as the Administrative Agent and the Issuing Banks may agree in their sole discretion) of each request for the issuance of a Letter of Credit, each such notice to be accompanied by a properly completed and executed Application for the requested Letter of Credit and, in the case of an extension or amendment or an increase in the amount of a Letter of Credit, a written request therefor, in a form acceptable to the Administrative Agent and the applicable Issuing Bank, in each case, together with the fees called for by this Credit Agreement. The Issuing Banks shall promptly notify the Administrative Agent and the Lenders of the issuance, extension or amendment of a Letter of Credit.

 

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(g) Conflict with Application. In the event of any conflict or inconsistency between this Credit Agreement and the terms of any Application, the terms of this Credit Agreement shall control.

(h) Conflicts with Issuances. No Issuing Bank shall be under any obligation to issue any Letter of Credit if:

(i) any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain such Issuing Bank from issuing such Letter of Credit, or request that such Issuing Bank refrain from, or any Applicable Law applicable to such Issuing Bank shall prohibit the issuance of letters of credit generally or such Letter of Credit in particular, any such order, judgment or decree, or Applicable Law shall impose upon such Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital or liquidity requirement (for which such Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon such Issuing Bank any unreimbursed loss, cost or expense that was not applicable on the Closing Date and that such Issuing Bank in good faith deems material to it;

(ii) the issuance of such Letter of Credit would violate one or more policies of such Issuing Bank applicable to letters of credit generally; or

(iii) the proceeds of such Letter of Credit would be made available to any Person in violation of Section 4.22(c).

An Issuing Bank shall be under no obligation to issue any amendment to any Letter of Credit if such Issuing Bank would have no obligation at such time to issue the Letter of Credit in its amended form under the terms hereof.

(i) Replacement of Issuing Bank. An Issuing Bank may be replaced by another Lender at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of an Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.12(b). From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the replaced Issuing Bank under this Credit Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of such Issuing Bank under this Credit Agreement with respect to Letters of Credit issued by it prior to such replacement but shall not be required to issue additional Letters of Credit.

(j) Additional Issuing Banks. From time to time, the Borrower may by notice to the Administrative Agent designate one or more additional Lenders as an Issuing Bank, each of which agrees (in its sole discretion) to act in such capacity and is reasonably satisfactory to the Administrative Agent. Each such additional Issuing Bank shall execute a counterpart of this Credit Agreement upon the approval of the Administrative Agent (which approval shall not be unreasonably withheld) and shall thereafter be an Issuing Bank hereunder for all purposes.

 

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(k) Applicability of ISP. Unless otherwise expressly agreed by the applicable Issuing Bank and the Borrower when a Letter of Credit is issued, the rules of the ISP shall apply to each standby Letter of Credit.

SECTION 2.4. Applicable Interest Rates.

(a) Base Rate Loans. Each Loan that is a Base Rate Loan made or maintained by a Lender shall bear interest (computed on the basis of a year of 360 days (or, at times when the Base Rate is based on the Prime Rate, 365 or 366 days, as the case may be) and the actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced or created by conversion from a Term Benchmark Loan until, but excluding, the date of repayment thereof at a rate per annum equal to the sum of the Applicable Margin plus the Base Rate from time to time in effect for Loans, payable in arrears on each Interest Payment Date.

(b) Term Benchmark Loans. Each Loan that is a Term Benchmark Loan made or maintained by a Lender shall bear interest during each Interest Period it is outstanding (computed on the basis of a year of 360 days and actual days elapsed) on the unpaid principal amount thereof from the date such Loan is advanced, continued or created by conversion from a Base Rate Loan until, but excluding, the date of repayment thereof at a rate per annum equal to the sum of the Applicable Margin plus Term SOFR applicable for such Interest Period, payable in arrears on each Interest Payment Date. Unless otherwise approved by the Administrative Agent in its reasonable discretion, no Borrowing shall consist of Term Benchmark Loans if after giving effect thereto an aggregate of more than ten (10) separate Term Benchmark Loans would be outstanding hereunder.

(c) Default Rate. If the Borrower shall default in the payment of any principal of or interest or fees on any Loan or any other amount due hereunder, by acceleration or otherwise, or under any other Fundamental Document, then, until such defaulted amount shall have been paid in full, the Borrower shall on demand from time to time pay interest, to the extent permitted by Applicable Law, on any such overdue amount at a rate per annum at (i) in the case of Loans, 2% in excess of the rate then in effect for each such Loan and (ii) otherwise, 2% in excess of the rate applicable to Loans that are Base Rate Loans.

(d) Applicable Law. Anything in this Credit Agreement or the Notes to the contrary notwithstanding, the interest rate on the Loans shall in no event be in excess of the maximum rate permitted by Applicable Law.

(e) Notwithstanding any provision herein to the contrary and without limiting Section 2.4(d), if Canadian law applies to this Credit Agreement or any Fundamental Document or to any payment made hereunder or thereunder, then in no event will the aggregate “interest” (as defined in Section 347 of the Criminal Code (Canada)) payable by any Credit Party under this Credit Agreement or any Fundamental Document exceed the maximum effective annual rate of interest on the “credit advanced” (as defined in that Section 347) permitted under that Section and, if any payment, collection or demand pursuant to this Credit Agreement or any such Fundamental Document in respect of “interest” (as defined in that Section 347) is determined to be contrary to the provisions of such Section 347, such payment, collection or demand will be deemed to have been made by mutual mistake of such Credit Party, the Administrative Agent and the applicable Lender or Lenders and the amount of such payment or collection will be refunded to such Credit Party only to the extent of the amount which is greater than the maximum effective annual rate permitted by such laws.

(f) For the purposes of this Credit Agreement, whenever interest is to be calculated on the basis of a period of time other than a calendar year, the annual rate of interest to which each rate of interest determined pursuant to such calculation is equivalent for the purposes of the Interest Act (Canada) is such rate as so determined multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by the number of days used in the basis of such determination.

 

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(g) EACH OF THE CREDIT PARTIES CONFIRMS THAT IT FULLY UNDERSTANDS AND IS ABLE TO CALCULATE THE RATE OF INTEREST APPLICABLE TO EACH OF THE FACILITIES BASED ON THE METHODOLOGY FOR CALCULATING PER ANNUM RATES PROVIDED FOR IN SECTION 2.4(F) OF THIS CREDIT AGREEMENT. The Administrative Agent agrees that if requested in writing by the Borrower it shall calculate the nominal and effective per annum rate of interest on any Loan outstanding at any time and provide such information to the Borrower promptly following such request; provided that any error in any such calculation, or any failure to provide such information on request, shall not relieve the Borrower or any other Credit Party of any of its obligations under this Credit Agreement or any other Fundamental Document, nor result in any liability to the Administrative Agent or any Lender. EACH CREDIT PARTY HEREBY IRREVOCABLY AGREES NOT TO PLEAD OR ASSERT, WHETHER BY WAY OF DEFENCE OR OTHERWISE, IN ANY PROCEEDING RELATING TO THE FUNDAMENTAL DOCUMENTS, THAT THE INTEREST PAYABLE UNDER THE FUNDAMENTAL DOCUMENTS AND THE CALCULATION THEREOF HAS NOT BEEN ADEQUATELY DISCLOSED TO THE OBLIGORS, WHETHER PURSUANT TO SECTION 4 OF THE INTEREST ACT (CANADA) OR ANY OTHER APPLICABLE LAW OR LEGAL PRINCIPLE.

(h) Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan or other Obligation owing under this Credit Agreement, together with all fees, charges and other amounts that are treated as interest on such Loan or other Obligation under Applicable Law (collectively, “charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) that may be contracted for, charged, taken, received or reserved by the Lender or other Person holding such Loan or other Obligation in accordance with Applicable Law, the rate of interest payable in respect of such Loan or other Obligation hereunder, together with all charges payable in respect thereof, shall be limited to the Maximum Rate. To the extent lawful, the interest and charges that would have been paid in respect of such Loan or other Obligation but were not paid as a result of the operation of this Section shall be cumulated and the interest and charges payable to such Lender or other Person in respect of other Loans or Obligations or periods shall be increased (but not above the amount collectible at the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Rate for each day to the date of repayment, shall have been received by such Lender or other Person. Any amount collected by such Lender or other Person that exceeds the maximum amount collectible at the Maximum Rate shall be applied to the reduction of the principal balance of such Loan or other Obligation or refunded to the Borrower so that at no time shall the interest and charges paid or payable in respect of such Loan or other Obligation exceed the maximum amount collectible at the Maximum Rate.

SECTION 2.5. Manner of Borrowing Loans and Designating Applicable Interest Rates.

(a) Notice to the Administrative Agent. The Borrower shall give notice to the Administrative Agent by no later than: (i) 12:00 p.m. (New York time) at least three (3) U.S. Government Securities Business Days before the date on which the Borrower requests the Lenders to advance a Borrowing of Loans that are Term Benchmark Loans denominated in Dollars or, for a request that Lenders advance a Borrowing of Loans that are Term Benchmark Loans on the Closing Date, at least two (2) Business Days before the Closing Date and (ii) noon (New York time) on the date the Borrower requests the Lenders to advance a Borrowing of Loans that are Base Rate Loans. The Loans included in each Borrowing of Loans shall bear interest initially at the type of rate specified in such notice. Thereafter, with respect to Base Rate Loans and Term Benchmark Loans that are denominated in Dollars, the Borrower may from time to time elect to change or continue the type of interest rate borne by each Borrowing of Loans or, subject to Section 2.6 hereof, a portion thereof, as follows: (i) if such Borrowing of Loans is of Term

 

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Benchmark Loans, on the last day of the Interest Period applicable thereto, the Borrower may continue part or all of such Borrowing as Term Benchmark Loans or convert part or all of such Borrowing into Base Rate Loans or (ii) if such Borrowing of Loans is of Base Rate Loans, on any Business Day, the Borrower may convert all or part of such Borrowing into Term Benchmark Loans for an Interest Period or Interest Periods specified by the Borrower. The Borrower shall give all such notices requesting the advance, continuation or conversion of a Borrowing of Loans to the Administrative Agent by telephone or telecopy (which notice shall be irrevocable once given and, if by telephone, shall be promptly confirmed in writing), substantially in the form attached hereto as Exhibit A (Notice of Borrowing) or Exhibit B (Notice of Continuation/Conversion), as applicable, or in such other form acceptable to the Administrative Agent. Notice of the continuation of a Borrowing of Loans that are Term Benchmark Loans for an additional Interest Period or of the conversion of part or all of a Borrowing of Loans that are Base Rate Loans into Term Benchmark Loans must be given by no later than 12:00 p.m. (New York time) at least three U.S. Government Securities Business Days before the date of the requested continuation or conversion of a Borrowing of Loans that are denominated in Dollars. All notices concerning the advance, continuation or conversion of a Borrowing of Loans shall specify the date of the requested advance, continuation or conversion of a Borrowing of Loans (which shall be a Business Day), the amount of the requested Borrowing to be advanced, continued or converted, the type of Loans (Base Rate Loans or Term Benchmark Loans) to comprise such new, continued or converted Borrowing and, if such Borrowing is to be comprised of Term Benchmark Loans, the Interest Period applicable thereto. If no Interest Period is specified in any such notice with respect to any conversion to or continuation as a Borrowing of Term Benchmark Loans, the Borrower shall be deemed to have selected an Interest Period of one month’s duration.

(b) Notice to the Lenders. The Administrative Agent shall give prompt telephonic or telecopy notice to each Lender of any notice from the Borrower received pursuant to Section 2.5(a) above and, if such notice requests the Lenders to make Term Benchmark Loans, the Administrative Agent shall give notice to the Borrower and each Lender of the interest rate applicable thereto promptly after the Administrative Agent has made such determination.

(c) Borrower’s Failure to Notify; Automatic Continuations and Conversions. If the Borrower fails to give proper notice of the continuation or conversion of any outstanding Borrowing of Loans that are Term Benchmark Loans before the last day of its then current Interest Period within the period required by Section 2.5(a) and such Borrowing is not prepaid in accordance with Section 2.8(a) or (b), such Borrowing shall, at the end of the Interest Period applicable thereto, automatically be converted into a Borrowing of Base Rate Loans. In the event the Borrower fails to give notice pursuant to Section 2.5(a) of a Borrowing of Loans equal to the amount of a Reimbursement Obligation and has not notified the Administrative Agent by 1:00 p.m. (New York time) on the day such Reimbursement Obligation becomes due that it intends to repay such Reimbursement Obligation through funds not borrowed under this Credit Agreement, the Borrower shall be deemed to have requested a Borrowing of Loans that are Base Rate Loans on such day in the amount of the Reimbursement Obligation then due, which Borrowing, if otherwise available hereunder, shall be applied to pay the Reimbursement Obligation then due.

(d) Disbursement of Loans. Not later than 2:00 p.m., New York City time, on the date of any requested advance of a new Borrowing of Loans, subject to Article 5 hereof, each Lender shall make available its Loan comprising part of such Borrowing in funds immediately available at the principal office of the Administrative Agent in New York, New York. The Administrative Agent shall promptly credit or wire transfer the proceeds of each new Borrowing of Loans to an account designated by the Borrower in the applicable notice of borrowing; provided that Borrowings made to finance the reimbursement of a Reimbursement Obligation shall be remitted by the Administrative Agent to the applicable Issuing Bank.

 

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(e) Administrative Agent Reliance on Lender Funding. Unless the Administrative Agent shall have been notified by a Lender prior to the date (or, in the case of a Borrowing of Base Rate Loans, by 1:00 p.m. on such date) on which such Lender is scheduled to make payment to the Administrative Agent of the proceeds of a Loan (which notice shall be effective upon receipt) that such Lender does not intend to make such payment, the Administrative Agent may assume that such Lender has made such payment when due and the Administrative Agent, in reliance upon such assumption may (but shall not be required to) make available to the Borrower the proceeds of the Loan to be made by such Lender and, if any Lender has not in fact made such payment to the Administrative Agent, such Lender shall, on demand, pay to the Administrative Agent the amount made available to the Borrower attributable to such Lender together with interest thereon in respect of each day during the period commencing on the date such amount was made available to the Borrower and ending on (but excluding) the date such Lender pays such amount to the Administrative Agent at a rate per annum equal to: (i) from the date the related advance was made by the Administrative Agent to the date two (2) Business Days after payment by such Lender is due hereunder, the greater of, for each such day, (x) the Federal Funds Rate and (y) the Overnight Bank Funding Rate, plus any standard administrative or processing fees charged by the Administrative Agent in connection with such Lender’s non-payment and (ii) from the date two (2) Business Days after the date such payment is due from such Lender to the date such payment is made by such Lender, the Base Rate in effect for each such day. If such amount is not received from such Lender by the Administrative Agent immediately upon demand, the Borrower will, on demand, repay to the Administrative Agent the proceeds of the Loan attributable to such Lender with interest thereon at a rate per annum equal to the interest rate applicable to the relevant Loan, but without such payment being considered a payment or prepayment of a Loan under Section 3.6 hereof so that the Borrower will have no liability under such Section with respect to such payment.

SECTION 2.6. Minimum Borrowing Amounts; Maximum Term Benchmark Loans. Each Borrowing of Base Rate Loans advanced under the applicable Facility shall be in an amount not less than $1,000,000 or such greater amount that is an integral multiple of $500,000. Each Borrowing of Term Benchmark Loans advanced, continued or converted under the applicable Facility shall be in an amount equal to $1,000,000 or such greater amount that is an integral multiple of $250,000. Without the Administrative Agent’s consent, there shall not be more than twenty (20) Borrowings of Term Benchmark Loans outstanding at any one time.

SECTION 2.7. Maturity of Loans. Each Loan, both for principal and interest, shall mature and become due and payable by the Borrower on the Maturity Date.

SECTION 2.8. Prepayments.

(a) [Intentionally omitted].

(b) Voluntary Prepayments of Loans. The Borrower may prepay without premium or penalty (except as set forth in Section 3.6) and in whole or in part any Borrowing of (i) Loans that are Term Benchmark Loans at any time upon at least three (3) Business Days’ prior notice by the Borrower to the Administrative Agent or (ii) Loans that are Base Rate Loans at any time upon at least one Business Day’s prior notice by the Borrower to the Administrative Agent (in the case of each of clauses (i) and (ii), such notice must be in writing (or telephone notice promptly confirmed by written notice) and received by the Administrative Agent prior to 2:00 p.m. (New York time) on such date), in each case, such prepayment to be made by the payment of the principal amount to be prepaid and, in the case of any Term Benchmark Loans, accrued interest thereon to the date fixed for prepayment plus any amounts due the Lenders under Section 3.6; provided, however, that the Borrower may not partially repay a Borrowing (i) if such Borrowing is of Base Rate Loans, in a principal amount less than $250,000, and (ii) if such Borrowing is of Term Benchmark Loans, in a principal amount less than $500,000, except, in each case, in such lesser

 

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amount of the entire principal amount thereof then outstanding. Any such notice of prepayment may state that such notice is conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied.

(c) Mandatory Prepayments.

(i) If at any time the total Revolving Exposure exceeds the lesser of the Total Commitments and the Borrowing Base, the Borrower shall, within two (2) Business Days, prepay the Loans then outstanding on a pro rata basis among all Lenders by at least the amount that would cause the total Revolving Exposure to be less than or equal to the lesser of the Total Commitment and the Borrowing Base after giving effect to such prepayment.

(ii) The Borrower shall, on each date the Commitments are reduced pursuant to Section 2.10, prepay the Loans and, if necessary after such Loans have been repaid in full, replace or cause to be cancelled (or provide an L/C Backstop or make other arrangements reasonably satisfactory to the Issuing Banks) outstanding Letters of Credit by the amount, if any, necessary to reduce the sum of the aggregate principal amount of Loans and L/C Obligations then outstanding to the amount to which the Commitments have been so reduced.

(iii) Unless the Borrower otherwise directs, prepayments of Loans under this Section 2.8(c) shall be applied first to Borrowings of Base Rate Loans until payment in full thereof with any balance applied to Borrowings of Term Benchmark Loans in the order in which their Interest Periods expire. Each prepayment of Loans under this Section 2.8(c) shall be made by the payment of the principal amount to be prepaid and, in the case of any Term Benchmark Loans, accrued interest thereon to the date of prepayment together with any amounts due the Lenders under Section 3.6.

(d) Defaulting Lenders. Until such time as the Default Excess (as defined below) with respect to any Defaulting Lender has been reduced to zero, (i) any voluntary prepayment of the Loans pursuant to Section 2.8(b) shall, if the Borrower so directs at the time of making such voluntary prepayment, be applied to the Loans of other Lenders as if such Defaulting Lender had no loans outstanding and the Commitments of such Defaulting Lender were zero and (ii) any mandatory prepayment of the Loans pursuant to Section 2.8(c) shall, if the Borrower so directs at the time of making such mandatory prepayment, be applied to the Loans of other Lenders (but not to the Loans of such Defaulting Lender) as if such Defaulting Lender has funded all defaulted Loans of such Defaulting Lender, it being understood and agreed that the Borrower shall be entitled to retain any portion of any mandatory prepayment of the Loans that is not paid to such Defaulting Lender solely as a result of the operation of the provisions of this clause (d). “Default Excess” means, with respect to any Defaulting Lender, the excess, if any, of such Defaulting Lender’s Percentage of the aggregate outstanding principal amount of the applicable Loans of all the applicable Lenders (calculated as if all Defaulting Lenders (including such Defaulting Lender) had funded all of their respective defaulted Loans) over the aggregate outstanding principal amount of the applicable Loans of such Defaulting Lender.

(e) The Administrative Agent will promptly advise each Lender of any notice of prepayment it receives from the Borrower.

 

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SECTION 2.9. Place and Application of Payments.

(a) Each borrowing of Loans from the Lenders thereunder shall be made pro rata according to the Percentages of the Lenders in effect on the date of such borrowing. Except as otherwise provided in this Credit Agreement, each payment on account of any Commitment Fee shall be allocated by the Administrative Agent among the Lenders in accordance with their respective Percentages. Except as otherwise provided in this Credit Agreement, any reduction of Commitments shall be allocated by the Administrative Agent among the Lenders pro rata according to the Percentages of the Lenders. Except as otherwise provided in this Credit Agreement, each payment (including each prepayment) by the Borrower hereunder on account of principal, interest or commitment fees shall be allocated by the Administrative Agent pro rata to the Lenders according to the Percentages of the Lenders then in effect.

(b) All payments of principal of and interest on the Loans and the Reimbursement Obligations, and of all other fees and amounts payable by the Borrower under this Credit Agreement and the other Fundamental Documents, shall be made by the Borrower to the Administrative Agent by no later than 2:00 p.m. on the due date thereof at the office of the Administrative Agent in New York, New York (or such other location as the Administrative Agent may designate to the Borrower in writing) for the benefit of the Lender or Lenders entitled thereto. Any payments received after such time shall be deemed to have been received by the Administrative Agent on the next Business Day. All such payments shall be made in Dollars, in immediately available funds at the place of payment, in each case without set-off or counterclaim, except as provided in Section 10.2. The Administrative Agent will promptly thereafter cause to be distributed like funds relating to the payment of principal or interest on Loans and on Reimbursement Obligations in which the Lenders have purchased Participating Interests ratably to the Lenders and like funds relating to the payment of any other amount payable to any Lender to such Lender, in each case to be applied in accordance with the terms of this Credit Agreement.

(c) Anything contained herein to the contrary notwithstanding, (x) pursuant to the exercise of remedies under Section 8.2 and Section 8.3 hereof or (y) after written instruction by the Required Lenders, after the occurrence and during the continuation of an Event of Default, all payments and collections received in respect of the Obligations and all proceeds of the Collateral received, in each instance, by the Administrative Agent or any of the Lenders, shall be remitted to the Administrative Agent and distributed as follows:

(i) first, to the payment of any outstanding costs and expenses incurred by the Administrative Agent, and any security trustee therefor, in monitoring, verifying, protecting, preserving or enforcing the Liens on the Collateral, in protecting, preserving or enforcing rights under the Fundamental Documents, and in any event all costs and expenses of a character which the Borrower has agreed to pay the Administrative Agent under Section 11.4 hereof (such funds to be retained by the Administrative Agent for its own account unless it has previously been reimbursed for such costs and expenses by the Lenders, in which event such amounts shall be remitted to the Lenders to reimburse them for payments theretofore made to the Administrative Agent);

(ii) second, to the payment of any outstanding interest and fees due under the Fundamental Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

(iii) third, to the payment of principal on the Loans, unpaid Reimbursement Obligations (together with amounts to be held by the Administrative Agent as collateral security for any outstanding L/C Obligations pursuant to Section 8.4 hereof (until the Administrative Agent is holding an amount of cash equal to 103% of the then outstanding amount of all Letters of Credit), to the extent the same have not been replaced or cancelled or otherwise provided for to the reasonable satisfaction of the applicable Issuing Bank), any unpaid amounts in respect of Specified Swap Agreements and Specified Cash Management Agreements, the aggregate amount paid to (or held as collateral security for) the Lenders and, in the case of Specified Swap Agreements and Specified Cash Management Agreements, their Affiliates, to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof;

 

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(iv) fourth, to the payment of all other unpaid Obligations and all other indebtedness, obligations, and liabilities of the Credit Parties secured by the Collateral Documents to be allocated pro rata in accordance with the aggregate unpaid amounts owing to each holder thereof; and

(v) fifth, to the Borrower or whoever else may be lawfully entitled thereto.

Notwithstanding the foregoing, no amounts received from any Guarantor shall be applied to any Excluded Swap Obligations of such Guarantor.

SECTION 2.10. Commitment Terminations. The Borrower shall have the right at any time and from time to time, upon three Business Days’ prior written notice to the Administrative Agent (which notice may conditioned upon the effectiveness of other credit facilities, indentures or similar agreements or other transactions, in which case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied), to terminate the Commitments in whole or in part, any partial termination to be (i) in an amount not less than $500,000 or any greater amount that is an integral multiple of $100,000 and (ii) allocated ratably among the Lenders in proportion to their respective Percentages. Any termination of the Commitments below the L/C Sublimit then in effect shall reduce the L/C Sublimit by a like amount. The Administrative Agent shall give prompt notice to each Lender of any such termination (in whole or in part) of the Commitments. Any termination of the Commitments pursuant to this Section 2.10 may not be reinstated.

SECTION 2.11. Evidence of Indebtedness.

(a) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time hereunder.

(b) The Administrative Agent shall also maintain accounts in which it will record (i) the amount of each Loan made hereunder, the type thereof and, with respect to Term Benchmark Loans, the Interest Period with respect thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.

(c) The entries maintained in the accounts maintained pursuant to clauses (a) and (b) above shall be prima facie evidence of the existence and amounts of the Loans and interest therein recorded; provided, however, that the failure of the Administrative Agent or any Lender to maintain such accounts or any error therein shall not in any manner affect the obligation of the Borrower to repay such Loans in accordance with their terms.

(d) Any Lender may request that its Loans be evidenced by a promissory note or notes in the forms of Exhibit C (in the case of its Loans and referred to herein as a “Note”). In such event, the Borrower shall prepare, execute and deliver to such Lender a Note payable to such Lender in the amount of such Lender’s Percentage of the Total Commitment. Thereafter, the Loans evidenced by such Note or Notes and interest thereon shall at all times (including after any assignment pursuant to Section 11.3) be represented by one or more Notes, except to the extent that any such Lender or assignee subsequently returns any such Note for cancellation and requests that such Loans once again be evidenced as described in subsections (a) and (b) above.

 

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SECTION 2.12. Fees.

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the ratable account of the Lenders according to their Percentages a commitment fee at a rate per annum equal to 0.375% (computed on the basis of a year of 360 days and the actual number of days elapsed) multiplied by the average daily Unused Commitments (the “Commitment Fee”); provided, however, that no Commitment Fee shall accrue to the Unused Commitment of a Defaulting Lender, or be payable for the benefit of such Lender, so long as such Lender shall be a Defaulting Lender. Such Commitment Fee shall be payable quarterly in arrears on each Fee Payment Date (commencing on the first such date occurring after the Closing Date).

(b) Letter of Credit Fees. Quarterly in arrears, on each Fee Payment Date, commencing on the first such date occurring after the Closing Date, the Borrower shall pay to the Issuing Banks for their own account a fronting fee equal to 0.125% of the face amount of (or of the increase in the face amount of) each outstanding Letter of Credit. Quarterly in arrears, on each Fee Payment Date, commencing on the first such date occurring after the Closing Date, the Borrower shall pay to the Administrative Agent, for the ratable benefit of the Lenders according to their Percentages, a letter of credit fee at a rate per annum equal to the Applicable Margin then in effect with respect to Term Benchmark Loans under the Facility (computed on the basis of a year of 360 days and the actual number of days elapsed) during each day of such quarter applied to the daily average face amount of Letters of Credit outstanding during such quarter; provided that no letter of credit fee shall accrue to the Percentage of a Defaulting Lender, or be payable for the benefit of such Lender, so long as such Lender shall be a Defaulting Lender. In addition, the Borrower shall pay to the Issuing Banks for their own account the Issuing Banks’ standard drawing, negotiation, amendment, transfer and other administrative fees for each Letter of Credit. Such standard fees referred to in the preceding sentence may be established by the Issuing Banks from time to time.

(c) Administrative Agent Fees. The Borrower agrees to pay to the Administrative Agent the fees payable in the amounts and at the times separately agreed upon between Lionsgate Studios Corp. (on behalf of the Borrower) and the Administrative Agent pursuant to the Fee Letter.

(d) Fees Generally. All fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the applicable Lenders, except that the Borrower shall pay the fronting fees directly to the applicable Issuing Bank. Once paid when due and payable, none of the fees shall be refundable under any circumstances.

SECTION 2.13. Incremental Commitments.

(a) At any time and from time to time after the Closing Date, subject to the terms and conditions set forth herein, the Borrower may, by notice to the Administrative Agent (whereupon the Administrative Agent shall promptly make such notice available to each of the Lenders), pursuant to an Incremental Amendment (“Incremental Amendment”) request that the Total Commitments be increased by up to $400,000,000 in the aggregate (each such increase in the Total Commitments, a “Commitment Increase”) to be provided by Additional Lenders; provided that:

(A) the Loans under each Commitment Increase shall for all purposes be Loans borrowed pursuant to the terms of this Credit Agreement;

 

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(B) after giving effect to each Commitment Increase, the Total Commitments shall not exceed $1,200,000,000;

(C) the financial institutions providing such Commitment Increase shall be reasonably acceptable to the Administrative Agent and the Borrower (but shall not in any event include a Disqualified Lender);

(D) (i) no Default or Event of Default shall have occurred and be continuing or would exist after giving effect thereto, and (ii) the representations and warranties made by the Credit Parties pursuant to the Fundamental Documents shall be true and correct in all material respects (or in all respects, if qualified by materiality); provided that representations and warranties that are expressly stated to be as of an earlier date shall be accurate in all material respects as of such earlier date (or in all respects, if qualified by materiality) immediately prior to, and after giving effect to, the incurrence of such Commitment Increase,

(E) it shall be a condition to each Commitment Increase that the Borrower shall have delivered to the Administrative Agent a certificate of a financial officer certifying to the effect set forth in subclause (D).

(b) Each Commitment Increase shall be in a minimum principal amount of $10,000,000 and integral multiples of $1,000,000 million in excess thereof; provided that such amount may be less than $10,000,000 if such amount represents all the remaining availability under the aggregate principal amount of Commitment Increases set forth above. No Lender shall be obligated to provide any Commitment Increase unless it so agrees.

(c) Each notice from the Borrower pursuant to this Section 2.13 shall set forth the requested amount of the relevant Commitment Increase.

(d) Upon the implementation of any Commitment Increase pursuant to this Section 2.13, (A) each Lender immediately prior to such increase will automatically and without further act be deemed to have assigned to each relevant Additional Lender, and each relevant Additional Lender will automatically and without further act be deemed to have assumed a portion of such Lender’s Participating Interests such that, after giving effect to each deemed assignment and assumption of participations, all of the Lenders’ (including each Additional Lender’s) Participating Interests shall be held on a pro rata basis on the basis of their Percentage (after giving effect to any Commitment Increase) and (B) the existing Lenders shall assign Loans to certain other Lenders (including the Additional Lenders providing the relevant Commitment Increase), and such other Lenders (including the Additional Lenders providing the relevant Commitment Increase) shall purchase such Loans, in each case to the extent necessary so that all of the Lenders participate in each outstanding Borrowing of Loans pro rata on the basis of their Percentage (after giving effect to any Commitment Increase); it being understood and agreed that the minimum borrowing, pro rata borrowing and pro rata payment requirements contained elsewhere in this Credit Agreement shall not apply to the transactions effected pursuant to the immediately preceding sentence.

(e) Effective on the date of each Commitment Increase, the maximum amount of L/C Exposure permitted hereunder shall increase by an amount, if any, agreed upon by the Administrative Agent, the Issuing Banks and the Borrower; provided that the L/C Exposure shall not exceed 12.5% of the Commitments after giving effect to the Commitment Increase.

(f) An Incremental Amendment may, subject to Section 2.13(a), without the consent of any other Lenders, effect such amendments to this Credit Agreement and the other Fundamental Documents as may be necessary, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.13 (including, in connection with a Commitment Increase, to reallocate Revolving Exposure on a pro rata basis among the Lenders).

 

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SECTION 2.14. Provisions Relating to the Borrowing Base.

(a) The Administrative Agent or the Required Lenders may, following prior consultation with the Borrower, from time to time by written notice to the Borrower (i) delete any Person or Affiliated Group from the schedule of Acceptable Obligors or (ii) decrease the Allowable Amount for any Acceptable Obligor, in each case, as the Administrative Agent or the Required Lenders, as the case may be, acting in good faith may deem appropriate as a result of a change in the circumstances of such Person or Affiliated Group. Any such notice shall be prospective only, i.e., to the extent that giving effect to such notice would otherwise result in a mandatory prepayment by the Borrower under Section 2.8(c), such notice shall not be given effect for purposes of such mandatory prepayment, but shall nevertheless be effective for all other purposes under this Credit Agreement immediately upon the Borrower’s receipt of such notice.

(b) The Required Lenders may (either independently or after a request has been received from the Borrower, which the Lenders agree to consider in good faith) from time to time by written notice to the Borrower add or reinstate a Person or Affiliated Group to the schedule of Acceptable Obligors or increase the Allowable Amount for any Acceptable Obligor, as they may in their discretion deem appropriate.

(c) In the event the Administrative Agent or the Required Lenders notifies the Borrower that a Person or Affiliated Group is to be deleted as an Acceptable Obligor in accordance with Section 2.14(a), no additional Eligible Receivables from such Person or Affiliated Group may be included in the Borrowing Base subsequent to such notice unless the Required Lenders thereafter notify the Borrower that such Person or Affiliated Group is reinstated as an Acceptable Obligor in accordance with Section 2.14(b).

(d) In the event the Administrative Agent or the Required Lenders notifies the Borrower that the Allowable Amount with respect to an Acceptable Obligor is to be reduced in accordance with Section 2.14(a), no additional Eligible Receivables from such Acceptable Obligor may be included in the Borrowing Base subsequent to such notice if such inclusion would result in the aggregate amount of Eligible Receivables from such Acceptable Obligor being in excess of the Allowable Amount for such Acceptable Obligor after giving effect to such reduction unless the Required Lenders thereafter notify the Borrower that the Allowable Amount for such Acceptable Obligor is increased in accordance with Section 2.14(b); provided that the Allowable Amount for such Acceptable Obligor shall automatically be restored to its former amount upon request of the Borrower if the Administrative Agent is reasonably satisfied in good faith that the circumstances which caused the Administrative Agent or the Required Lenders, as the case may be, to reduce such Allowable Amount are no longer continuing.

SECTION 2.15. [Intentionally omitted].

SECTION 2.16. Defaulting Lenders. Notwithstanding any provision of this Credit Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:

(a) Fees shall cease to accrue for such Defaulting Lender pursuant to Section 2.12.

 

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(b) The Commitments, Loans and Revolving Exposure of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 11.12); provided that this Section 2.16(b) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification effecting (i) an increase or extension of such Defaulting Lender’s Commitment or (ii) the reduction or excuse of principal amount of, or interest or fees payable on, such Defaulting Lender’s Loans or the postponement of the scheduled date of payment of such principal amount, interest or fees to such Defaulting Lender.

(c) If any Letters of Credit exist at the time such Lender becomes a Defaulting Lender then:

(i) Such Defaulting Lender’s L/C Exposure shall be reallocated among the non-Defaulting Lenders in accordance with their respective Percentages (but excluding the Commitments of all the Defaulting Lenders from both the numerator and the denominator) but only to the extent (x) the sum of all the Revolving Exposure owed to all non-Defaulting Lenders does not exceed the total of all non-Defaulting Lenders’ Unused Commitments, (y) the Revolving Exposure owed to any non-Defaulting Lender does not exceed such non-Defaulting Lender’s Commitment, (z) the representations and warranties of each Credit Party set forth in the Fundamental Documents to which it is a party are true and correct at such time, except to the extent that any such representation and warranty relates to an earlier date (in which case such representation and warranty shall be true and correct as of such earlier date), and (z) no Default shall have occurred and be continuing at such time;

(ii) If the reallocation described in clause (i) above cannot, or can only partially, be effected, the Borrower shall, within two (2) Business Days following notice by the Administrative Agent, cash collateralize for the benefit of relevant Issuing Banks such Defaulting Lender’s L/C Exposure (after giving effect to any partial reallocation pursuant to clause (i) above) for so long as any Letters of Credit are outstanding;

(iii) If the Borrower cash collateralizes any portion of such Defaulting Lender’s L/C Exposure pursuant clause (ii) above, the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s L/C Exposure during the period such Defaulting Lender’s L/C Exposure is cash collateralized by the Borrower;

(iv) If L/C Exposures of the non-Defaulting Lenders are reallocated pursuant to clause (i) above, then the fees payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall be adjusted to reflect such non-Defaulting Lenders’ L/C Exposure as reallocated; and

(v) If any Defaulting Lender’s L/C Exposure is neither cash collateralized nor reallocated pursuant to clauses (i) or (ii) above, then, without prejudice to any rights or remedies of the Issuing Banks or any Lender hereunder, all letter of credit fees payable under Section 2.12(b) with respect to such Defaulting Lender’s L/C Exposure shall be payable to each applicable Issuing Bank until such L/C Exposure is cash collateralized and/or reallocated.

(d) So long as any Lender is a Defaulting Lender, the Issuing Banks shall not be required to issue, amend or increase any Letter of Credit, unless the related L/C Exposure will be 100% covered by the Unused Commitments of the non-Defaulting Lenders and/or cash collateral will be provided by the Borrower in accordance with Section 2.16(c)(ii), and the participating interests in any such newly issued or increased Letter of Credit shall be allocated among non-Defaulting Lenders in a manner consistent with Section 2.16(c)(i) (and such Defaulting Lender shall not participate therein).

 

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The rights and remedies against a Defaulting Lender under this Credit Agreement are in addition to other rights and remedies that Borrower may have against such Defaulting Lender with respect to any funding default and that the Administrative Agent or any Lender may have against such Defaulting Lender with respect to any funding default. In the event that the Administrative Agent, the Borrower and each applicable Issuing Bank agrees that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Revolving Exposure shall be readjusted to reflect the inclusion of such Lender’s unused Commitment and on such date such Lender shall purchase at par such of the Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause such outstanding Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders (including such Lender) in accordance with their applicable percentages, whereupon such Lender will cease to be a Defaulting Lender and will be a non-Defaulting Lender and any applicable cash collateral shall be promptly returned to the Borrower and any L/C Exposure of such Lender reallocated pursuant to the requirements above shall be reallocated back to such Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; provided that, subject to Section 11.22 and except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s having been a Defaulting Lender.

ARTICLE 3

CHANGES IN CIRCUMSTANCES, TAXES, INDEMNITY

SECTION 3.1. Inability to Determine Interest Rate.

(a) If prior to the first day of any Interest Period:

(i) the Administrative Agent shall have determined (which determination shall be conclusive and binding absent manifest error) that adequate and reasonable means do not exist for ascertaining Term SOFR, as applicable (including, without limitation, because the Term SOFR Reference Rate is not available or published on a current basis), for such Interest Period, or

(ii) the Administrative Agent shall have received notice from the Required Lenders that Term SOFR determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any Term Benchmark Loans under the relevant Facility requested to be made on the first day of such Interest Period shall be made as Base Rate Loans, (y) any Loans under the relevant Facility that were to have been converted on the first day of such Interest Period to Term Benchmark Loans shall be continued as Base Rate Loans and (z) any outstanding Term Benchmark Loans under the relevant Facility shall be converted, on the last day of the then-current Interest Period, to Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further Term Benchmark Loans under the relevant Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the relevant Facility to Term Benchmark Loans.

 

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Notwithstanding anything to the contrary herein or in any other Fundamental Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (1) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark (including any related adjustments) for all purposes hereunder and under any Fundamental Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Credit Agreement or any other Fundamental Document and (y) if a Benchmark Replacement is determined in accordance with clause (2) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Fundamental Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders without any amendment to, or further action or consent of any other party to, this Credit Agreement or any other Fundamental Document so long as the Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Required Lenders

(b) Notwithstanding anything to the contrary herein or in any other Fundamental Document, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Fundamental Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Credit Agreement or any other Fundamental Document.

(c) The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes, (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to clause (f) below and (v) the commencement or conclusion of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 3.1, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Credit Agreement or any other Fundamental Document, except, in each case, as expressly required pursuant to this Section 3.1.

(d) Notwithstanding anything to the contrary herein or in any other Fundamental Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is or will be no longer representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable or non-representative tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is or will no longer be representative for a Benchmark (including a Benchmark Replacement), then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.

 

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(e) Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any request for a Term Benchmark Borrowing, conversion to or continuation of Term Benchmark Loans to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any request for a Term Benchmark Borrowing into a request for a Borrowing of or conversion to (A) solely with respect to any such request for a Term Benchmark Borrowing, an RFR Borrowing so long as the Daily Simple SOFR is not the subject of a Benchmark Transition Event or (B) an Base Rate Borrowing if the Daily Simple SOFR is the subject of a Benchmark Transition Event. During any Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of the Base Rate based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of Base Rate. Furthermore, if any Term Benchmark Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to a Relevant Rate applicable to such Term Benchmark Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 3.1, any Term Benchmark Loan shall on the last day of the Interest Period applicable to such Loan, be converted by the Administrative Agent to, and shall constitute, (x) an RFR Borrowing so long as the Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) an Base Rate Loan if the Daily Simple SOFR is the subject of a Benchmark Transition Event, on such day.

SECTION 3.2. Change in Legality.

(a) Notwithstanding anything to the contrary contained elsewhere in this Credit Agreement, if any change after the date hereof in Applicable Law, guideline or order, or in the interpretation thereof by any Governmental Authority charged with the administration thereof, shall make it unlawful for any Lender to make or maintain any Term Benchmark Loan or to give effect to its obligations as contemplated hereby with respect to a Term Benchmark Loan, then, by written notice to the Borrower and the Administrative Agent such Lender may (i) declare that Term Benchmark Loans will not thereafter be made by such Lender hereunder and/or (ii) require that, subject to Section 3.6, all outstanding Term Benchmark Loans made by it be converted to Base Rate Loans whereupon all of such Term Benchmark Loans shall automatically be converted to Base Rate Loans as of the effective date of such notice as provided in paragraph (b) below. Such Lender’s Percentage of any subsequent Term Benchmark Loan shall, instead, be an Base Rate Loan unless such declaration is subsequently withdrawn.

(b) A notice to the Borrower by any Lender pursuant to paragraph (a) above shall be effective for purposes of clause (ii) thereof, if lawful, on the last day of the current Interest Period for each outstanding Term Benchmark Loan; and in all other cases, on the date of receipt of such notice by the Borrower.

SECTION 3.3. Change in Circumstances.

(a) In the event that any Change in Law shall occur or, with respect to clauses (iii) below, after the Closing Date, any changes in conditions shall occur, which in either case shall:

(i) subject any Lender to, or increase the net amount of, any tax, levy, impost, duty, charge, fee, deduction or withholding with respect to any Loan, or change the basis of taxation of any payment to any Lender of principal of or interest on any Loan or other fees and amounts payable to any Lender hereunder (except any such taxes that are (w) Other Connection Taxes, (x) imposed solely by reason of any Lender failing to make a declaration of, or otherwise to establish, nonresidence, or to make any other claim for exemption, or otherwise to comply with any certification, identification, information, documentation or reporting requirements prescribed under the laws of the relevant jurisdiction, in those cases where a Lender may properly make such declaration or claim or so establish nonresidence or otherwise comply, (y) imposed under FATCA, or (z) any other Excluded Taxes); or

 

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(ii) impose, modify or deem applicable any reserve (including pursuant to regulations issued from time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, special, supplemental or other marginal reserve requirement) with respect to eurocurrency funding (currently referred to as “Eurocurrency liabilities” in Regulation D)), deposit, compulsory loan, insurance charge, deposit or similar requirement against any assets held by, deposits with or for the account of, or loans or commitments by, an office of such Lender with respect to any Loan; or

(iii) impose upon such Lender or the London interbank market any other condition with respect to this Credit Agreement;

and the result of any of the foregoing shall be to increase the actual cost to such Lender of making or maintaining any Term Benchmark Loan hereunder or to reduce the amount of any payment (whether of principal, interest or otherwise) received or receivable by such Lender in connection with any Term Benchmark Loan hereunder, or to require such Lender to make any payment in connection with any Term Benchmark Loan hereunder, in each case by or in an amount which such Lender in its sole judgment shall deem material, then and in each case, the Borrower agrees to pay to the Administrative Agent for the account of such Lender, as provided in paragraph (c) below, such amounts as shall be necessary to compensate such Lender for such cost, reduction or payment.

(b) If any Lender or an Issuing Bank determines that any Change in Law regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender’s or the applicable Issuing Bank’s capital or on the capital of such Lender’s or such Issuing Bank holding company, if any, as a consequence of this Credit Agreement or the Loans made or Letters of Credit issued or participated in by such Lender or such Issuing Bank pursuant hereto to a level below that which such Lender or such Lender’s or such Issuing Bank’s holding company could have achieved but for such applicability, adoption, change or compliance (taking into consideration such Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or such Issuing Bank’s holding company with respect to capital adequacy or liquidity) by an amount deemed by such Lender or such Issuing Bank to be material, then from time to time the Borrower agrees to pay to the Administrative Agent for the account of such Lender, as provided in paragraph (c) below, such additional amount or amounts as will compensate such Lender or such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for any such reduction suffered to the extent attributable to this Credit Agreement or the Loans or Letters of Credit issued or participated in made pursuant hereto.

(c) Each Lender and Issuing Bank shall deliver to the Borrower and to the Administrative Agent from time to time one or more certificates setting forth the amounts due to such Lender or such Issuing Bank under paragraphs (a) or (b) above, the changes as a result of which such amounts are due and the manner of computing such amounts. Each such certificate shall be conclusive in the absence of manifest error. The Borrower shall pay to the Administrative Agent for the account of each such Lender or such Issuing Bank the amounts shown as due on any such certificate within fifteen (15) Business Days after the Borrower’s receipt of the same. Failure on the part of any Lender or such Issuing Bank to demand compensation under paragraphs (a) or (b) above on any one occasion shall not constitute a waiver of its right to demand such compensation on any other occasion, provided that the Borrower shall not be required to compensate a Lender or Issuing Bank pursuant to paragraphs (a) or (b) above for any increased costs incurred or reductions suffered more than 180 days prior to the date that such Lender or Issuing Bank, as the case may be, notifies the Borrower of the changes giving rise to such increased costs or reductions and of such Lender’s or Issuing Bank’s intention to claim compensation therefrom. The protection of this Section 3.3 shall be available to each Lender or such Issuing Bank regardless of any possible contention of the invalidity or inapplicability of any law, regulation or other condition which shall give rise to any demand by such Lender or such Issuing Bank for compensation hereunder.

 

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(d) Each Lender agrees that after it becomes aware of the occurrence of an event or the existence of a condition that (i) would cause it to incur any increased cost hereunder or render it unable to perform its agreements hereunder for the reasons specifically set forth in this Section 3.3 or Section 3.4 or (ii) would require the Borrower to pay an increased amount under this Section 3.3 or Section 3.4, to the extent not inconsistent with such Lender’s internal policies it will use reasonable efforts to make, fund or maintain the affected Loans of such Lender through another Lending Office of such Lender if as a result thereof the additional monies which would otherwise be required to be paid or the reduction of amounts receivable by such Lender thereunder in respect of such Loans would be materially reduced, or such inability to perform would cease to exist, or the increased costs which would otherwise be required to be paid in respect of such Loans pursuant to this Section 3.3 or Section 3.4 would be materially reduced or the taxes or other amounts otherwise payable under this Section 3.3 or Section 3.4 would be materially reduced, and if, as determined by such Lender, in its sole discretion, the making, funding or maintaining of such Loans through such other Lending Office would not otherwise materially adversely affect such Loans or such Lender.

(e) Each Lender will use reasonable efforts to notify the Borrower, through the Administrative Agent, of any event of which it has knowledge that will entitle such Lender to compensation pursuant to this Section 3.3 or Section 3.4. Other than as set forth in this Section 3.3, no inadvertent failure by any Lender to give (or delay in giving) such notice shall adversely affect such Lender’s rights to such compensation.

(f) If the Borrower shall receive notice from any Lender that amounts are due to such Lender pursuant to paragraph (c) hereof or that any of the events designated in paragraph (d) hereof have occurred, the Borrower may (but subject in any such case to the payments required by Section 3.1 and Section 3.6), upon at least five (5) Business Days’ prior written or telecopier notice to such Lender and the Administrative Agent, identify to the Administrative Agent a lending institution acceptable to the Borrower and the Administrative Agent, which will purchase the Commitments, the amount of outstanding Loans and any participations in Letters of Credit from the Lender providing such notice, and such Lender shall thereupon assign its Commitment, any Loans owing to such Lender, any participations in Letters of Credit and the Notes held by such Lender to such replacement lending institution pursuant to Section 11.3.

(g) This Section shall survive the termination of this Credit Agreement and the payment of the Loans and/or the expiration of any Letter of Credit.

SECTION 3.4. Withholding Taxes.

(a) Prior to the date of the initial Loans hereunder, and prior to the effective date set forth in the Assignment and Assumption with respect to any Lender becoming a Lender after the date hereof, and from time to time thereafter if requested by the Borrower or the Administrative Agent or required because, as a result of a Change in Law or a change in circumstances or otherwise, a previously delivered form or statement becomes incomplete or incorrect in any material respect, each Lender shall provide, if applicable and to the extent a Lender is legally entitled to do so, the Administrative Agent and the Borrower with complete, accurate and duly executed forms or other statements prescribed by the Canada Revenue Agency or the Internal Revenue Service of the United States, as applicable, certifying such Lender’s exemption from, or entitlement to a reduced rate of, Canadian or United States withholding taxes (including backup withholding taxes) with respect to all payments to be made to such Lender hereunder and under any other Fundamental Document. The forms or other statements referred to in the preceding sentence shall include, but are not limited to, IRS Form W-9 for United States persons (e.g., entities or individuals subject to United States taxation), or the appropriate version of IRS Form W-8 for non-U.S. persons (e.g., Form W-8BEN, W-8BEN-E, W-8ECI, or W-8IMY), based on the Lender’s tax classification. Where a payment made to a Lender organized under the laws of a jurisdiction outside the United States

 

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would be subject to U.S. federal withholding tax imposed by FATCA if such Lender fails to comply with the applicable reporting requirements of FATCA, such Lender shall deliver to the Administrative Agent and the Borrower at the time or times prescribed by Applicable Law and at such time or times reasonably requested by the Borrower or the Administrative Agent, such documentation under any Applicable Law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) or reasonably requested by the Administrative Agent or the Borrower sufficient for the Administrative Agent or the Borrower to comply with their respective obligations under FATCA and to determine that such Lender has complied with such applicable reporting requirements, or to determine the amount to deduct and withhold, if any, from such payment. Solely for purposes of the preceding sentence, “FATCA” shall include any amendments made to FATCA after the date of this Credit Agreement.

(b) The Borrower and the Administrative Agent shall be entitled to deduct and withhold any and all present or future taxes or withholdings, and all liabilities with respect thereto, from payments to a Lender hereunder or under any other Fundamental Document, if and to the extent that the Borrower or the Administrative Agent in good faith determines that such deduction or withholding is required by the law of Canada or the United States, including, without limitation, any applicable treaty of Canada or the United States. In the event the Borrower or the Administrative Agent shall so determine that deduction or withholding of taxes is required, they shall advise the affected Lender as to the basis of such determination prior to actually deducting and withholding such taxes. In the event the Borrower or the Administrative Agent shall so deduct or withhold taxes from amounts payable hereunder, they (i) shall pay to, or deposit with, the appropriate taxing authority in a timely manner the full amount of taxes it has deducted or withheld; (ii) shall provide to each Lender from whom taxes were deducted or withheld, evidence of payment of such taxes to, or the deposit thereof with, the appropriate taxing authority and a statement setting forth the amount of taxes deducted or withheld, the applicable rate, and any other information or documentation reasonably requested by such Lender; and (iii) shall forward to each such Lender any official tax receipts or other documentation with respect to the payment or deposit of the deducted or withheld taxes as may be issued from time to time by the appropriate taxing authority. Unless the Borrower and the Administrative Agent have received forms or other documents satisfactory to them indicating that payments hereunder or under any Note are not subject to Canadian or United States withholding tax (as applicable) or are subject to such tax at a rate reduced by an applicable tax treaty, the Borrower or the Administrative Agent may withhold taxes from such payments at the applicable statutory rate in the case of payments to or for any Lender organized under the laws of a jurisdiction outside Canada or the United States, as the case may be.

(c) Each Lender agrees (i) to the extent required by Applicable Law, that as between it and the Borrower or the Administrative Agent, such Lender shall be the Person to deduct and withhold taxes, and shall deduct and withhold taxes on amounts that such Lender may remit to any other Person(s) by reason of any undisclosed transfer or assignment of an interest in this Credit Agreement to such other Person(s) pursuant to Section 11.3; and (ii) to indemnify the Administrative Agent and any Related Party of the Administrative Agent against, and to hold them harmless from, any tax, interest, additions to tax, penalties, reasonable counsel and accountants’ fees, disbursements or payments arising from (a) the assertion by any appropriate taxing authority of any claim against them relating to a failure to withhold taxes as required by law with respect to such Lender or (b) the failure of such Lender to comply with the provisions of Section 11.3(d) relating to the maintenance of a Participant Register.

(d) Each assignee of a Lender’s interest in this Credit Agreement in conformity with Section 11.3 shall be bound by this Section 3.4, so that such assignee will have all of the obligations and provide all of the forms and statements and all indemnities, representations and warranties required to be given under this Section 3.4.

 

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(e) Notwithstanding the foregoing, in the event that either (A) any withholding taxes or additional withholding taxes required by the law of the United States (other than, for the avoidance of doubt, any such taxes that are Excluded Taxes) shall become payable in respect of any sum payable hereunder or under any other Fundamental Document to any Lender or the Administrative Agent solely as a result of any change in any statute, treaty, ruling, determination or regulation occurring after the Closing Date or, if later, the date on which such Lender becomes a Lender hereunder (pursuant to an assignment under Section 3.7(i)) or changes its applicable Lending Office pursuant to Section 3.3(d)(ii) or Section 3.4(g), or (B) any withholding taxes or additional withholding taxes required by the law of Canada (other than, for the avoidance of doubt, any such taxes that are Excluded Taxes) shall become payable in respect of any sum payable hereunder or under any other Fundamental Document to any Lender or the Administrative Agent, (i) the sum payable by the Borrower or any Guarantor shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 3.4) such Lender or the Administrative Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the applicable withholding agent, shall make such deductions, (iii) the applicable withholding agent shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with Applicable Law and (iv) the applicable withholding agent shall forward to such Lender or the Administrative Agent (as the case may be) the official tax receipts or other documentation pursuant to Section 3.4(b). In addition, the Borrower shall indemnify each Lender, the Issuing Bank and the Administrative Agent, within ten (10) Business Days after written demand, for any Indemnified Taxes paid by such Lender, Issuing Bank or the Administrative Agent, as the case may be, or any liability (including penalties and interest) arising therefrom or with respect thereto, whether or not such additional Indemnified Taxes were correctly or legally asserted by the relevant Governmental Authority. Notwithstanding anything to the contrary in this Credit Agreement, the Borrower will not be required to pay any increased amounts or indemnify any Person for Excluded Taxes.

(f) In the event that a Lender receives a refund of taxes withheld or paid pursuant to clause (e) of this Section, which refund is identified by such Lender as being a result of taxes withheld or paid in connection with sums payable hereunder or under any other Fundamental Document, which refunded taxes were the subject of an additional payment of indemnification pursuant to Section 3.4(e) of this Credit Agreement, such Lender shall promptly notify the Administrative Agent and the Borrower and shall, if no Default or Event of Default has occurred and is continuing, remit to the Borrower or the Guarantors the amount of such refund allocable to payments made hereunder or under any other Fundamental Document, net of any reasonable out-of-pocket expenses (including taxes) incurred in obtaining such refund. Notwithstanding anything to the contrary in this paragraph (f), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this paragraph (f) the payment of which would place the indemnified party in a less favorable net after-tax position than the indemnified party would have been in if the tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the indemnifying party or any other Person.

(g) Each Lender agrees that after it becomes aware of the occurrence of an event that would cause the Borrower or any Guarantor to pay any amount pursuant to clause (e) of this Section 3.4, it will use reasonable efforts to notify the Borrower or the Guarantors of such event and, to the extent not inconsistent with such Lender’s internal policies, will use its reasonable efforts to make, fund or maintain the affected Loans of such Lender through another Lending Office of such Lender if as a result thereof the additional monies which would otherwise be required to be paid by reason of Section 3.4(e) in respect of such Loans would be materially reduced, and if, as determined by such Lender, in its discretion, the making, funding or maintaining of such Loans through such other Lending Office would not otherwise materially adversely affect such Loans or such Lender.

 

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(h) This Section shall survive the termination of this Credit Agreement and the payment of the Loans.

For purposes of this Section 3.4, the term “Lender” includes the Issuing Banks.

SECTION 3.5. Foreign Currency Conversion. If the net amount of any payment received by the Administrative Agent hereunder, after such amount has (in the case of an amount received in a currency other than Dollars and/or received outside of the United States) been converted into Dollars and transferred to New York in accordance with normal banking procedures, is less than the amount otherwise then due and owing by the Borrower to the Lenders hereunder, or if the Administrative Agent is unable to immediately convert and transfer any such amount as aforesaid, then the Borrower agrees as a separate obligation to the Lenders to indemnify the Lenders against the loss incurred by reason of such shortfall or delay to the extent but only to the extent such shortfall or delay is due to (i) the application of any exchange controls or similar laws and regulations or (ii) the fact that such amount was received in a currency other than Dollars; and if the amount of Dollars thus received by the Administrative Agent, after such conversion, exceeds the amount otherwise then due and owing, the Administrative Agent shall remit such excess to the Borrower.

SECTION 3.6. Indemnity. The Borrower shall reimburse each Lender on demand for any loss (excluding any loss of the Applicable Margin) incurred or to be incurred by it in the reemployment of the funds released (i) by any prepayment or conversion (for any reason) of any Term Benchmark Loan if such Loan is repaid other than on its last day of the Interest Period for such Loan or (ii) in the event that after the Borrower delivers a notice of advance, continuation or conversion of a Borrowing under Section 2.5 in respect of Term Benchmark Loans, such Loan is not made on the first day of the Interest Period specified in such notice of borrowing for any reason other than (I) a suspension or limitation under Section 3.3(b) of the right of the Borrower to select a Term Benchmark Loan or (II) a breach by the Lenders of their obligation hereunder. Such loss shall be the amount as reasonably determined by such Lender as the excess, if any, of (A) the amount of interest which would have accrued to such Lender on the amount so paid or not borrowed, continued or converted at a rate of interest equal to the interest rate applicable to such Loan pursuant to Section 2.4 hereof (but excluding the Applicable Margin) over (B) the amount realized by such Lender in reemploying the funds not advanced or the funds received in prepayment or realized from the Loan so continued or converted during the period referred to above. Each Lender shall deliver to the Borrower from time to time one or more certificates setting forth the amount of such loss (and in reasonable detail the manner of computation thereof) as determined by such Lender, which certificates shall be conclusive absent manifest error. The Borrower shall pay the Administrative Agent for the account of such Lender the amount shown or such certificate within ten (10) days of the Borrower’s receipt of such certificate.

SECTION 3.7. Replacement of Lenders. If any Lender (i) requests compensation under Section 3.3 or Section 3.4, (ii) becomes a Defaulting Lender, (iii) does not consent to any waiver, consent or modification requested by the Borrower (but only where the consent of all the Lenders or all Lenders directly affected thereby is required for such waiver, consent or modification and the Borrower obtains approval for the waiver, consent or modification from the Required Lenders or all Lenders, as the case may be, directly affected thereby have otherwise consented), or (iv) refuses to provide or requires the conversion of its Term Benchmark Loans pursuant to Section 3.2, then the Borrower may, at its sole expense and effort and upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.3), all of its interests, rights and obligations under this Credit Agreement and the other Fundamental Documents to an

 

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assignee which shall assume such obligations and which accepts such assignment; provided that (x) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon, accrued fees, and all other amounts then payable to it hereunder from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and a release of its liability with regard to its Percentage of the L/C Exposure, and (y) in the case of any such assignment resulting from a claim for compensation under Section 3.3 or payments required to be made pursuant to Section 3.4, such assignment will result in a reduction in such compensation or payment on an ongoing basis. No Lender shall be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. Each party hereto agrees that an assignment required pursuant to this Section 3.7 may be effected pursuant to an Assignment and Assumption executed by the Borrower, the Administrative Agent and the assignee and that the affected Lender required to make such assignment need not be a party thereto.

SECTION 3.8. Interest Adjustments. If the provisions of this Credit Agreement or any Note would at any time require payment by the Borrower to a Lender of any amount of interest in excess of the maximum amount then permitted by Applicable Law with respect to any Loan, the interest payments to that Lender shall be reduced to the extent necessary in order that such Lender shall not receive interest in excess of such maximum amount. If, as a result of the foregoing, a Lender shall receive interest payments hereunder or under a Note in an amount less than the amount otherwise provided hereunder, such deficit (hereinafter called the “Interest Deficit”) will, to the fullest extent permitted by Applicable Law, cumulate and will be carried forward (without interest) until the termination of this Credit Agreement. Interest otherwise payable to a Lender hereunder and under a Note for any subsequent period shall be increased by the maximum amount of the Interest Deficit that may be so added without causing such Lender to receive interest in excess of the maximum amount then permitted by Applicable Law with respect to the Loans.

The amount of any Interest Deficit relating to a Loan and any Note shall be treated as a prepayment penalty and shall, to the fullest extent permitted by Applicable Law, be paid in full at the time of any optional prepayment by the Borrower to the Lenders of all the Loans under the relevant Facility at that time outstanding pursuant to Section 2.8(a) or Section 2.8(b). The amount of any Interest Deficit relating to a particular Loan and Note at the time of any complete payment of the Loans at that time outstanding (other than an optional prepayment thereof pursuant to Section 2.8(a) or Section 2.8(b) hereof and a termination of the Commitments under Section 2.10) shall be canceled and not paid.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF CREDIT PARTIES

In order to induce the Administrative Agent, the Issuing Banks and the Lenders to enter into this Credit Agreement and to make the Loans and issue the Letters of Credit provided for herein, the Credit Parties, jointly and severally, make the following representations and warranties to, and agreements with, the Administrative Agent, the Issuing Banks and the Lenders on the date hereof and on the dates to the extent required pursuant to Section 5.1 and Section 5.2, as applicable, all of which shall survive the execution and delivery of this Credit Agreement, the issuance of the Notes and the making of the Loans and issuance of the Letters of Credit:

SECTION 4.1. Existence and Power.

(a) Each of the Credit Parties is a corporation, limited liability company or partnership duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation and is qualified to do business and in good standing in all jurisdictions where the nature of its properties or business so requires, except where the failure to be so qualified and in good standing would not, individually or in the aggregate, have a Material Adverse Effect.

 

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(b) Each of the Credit Parties has the power and authority (i) to own its respective properties and carry on its respective business as now being conducted, except where the failure to have such power or authority would not, individually or in the aggregate, have a Material Adverse Effect, (ii) to execute, deliver and perform, as applicable, its obligations under the Fundamental Documents, (iii) in the case of the Borrower, to borrow the Loans hereunder, (iv) to grant to the Administrative Agent, for the benefit of itself and the Secured Parties, a security interest in the Collateral, as contemplated by this Credit Agreement and the other Fundamental Documents to which it is a party; and (v) in the case of the Guarantors, to guarantee the Obligations as contemplated by Article 9 hereof.

SECTION 4.2. Authority and No Violation. The execution, delivery and performance of this Credit Agreement and the other Fundamental Documents to which it is a party, by each Credit Party, the grant to the Administrative Agent for the benefit of the Administrative Agent and the Secured Parties of the security interest in the Collateral as contemplated herein and by the other Fundamental Documents and, in the case of the Borrower, the Borrowings hereunder and the execution, delivery and performance of the Notes and, in the case of each Guarantor, the Guarantee of the Obligations as contemplated in Article 9 hereof, (i) have been duly authorized by all necessary corporate or company (as applicable) action on the part of each such Credit Party, (ii) will not constitute a violation of any provision of Applicable Law or any order of any Governmental Authority applicable to such Credit Party, or any of its properties or assets, (iii) will not violate any provision of the Certificate of Incorporation, By-Laws, limited liability company agreement or any other organizational document of any Credit Party, (iv) will not violate any provision of any Distribution Agreement, indenture, agreement, bond, note or other similar instrument to which such Credit Party is a party or by which such Credit Party or any of its properties or assets are bound, or any Outside IP Debt Facility, (v) will not be in conflict with, result in a breach of, or constitute (with due notice or lapse of time or both) a default under, or create any right to terminate, any such Distribution Agreement, indenture, agreement, bond, note, other instrument, or any Outside IP Debt Facility, and (vi) will not result in the creation or imposition of any Lien, charge or encumbrance of any nature whatsoever, other than any Permitted Lien, upon any of the properties or assets of any of the Credit Parties other than pursuant to this Credit Agreement or the other Fundamental Documents, except, in the case of clauses (ii), (iv) and (v) above, for any such conflict, breach, violation or default that would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 4.3. Governmental Approval. All material authorizations, approvals, registrations or filings from or with any Governmental Authority (other than filings with the UK Companies House, and any other filings necessary for granting any lien or obtaining perfection, in each case which will be delivered to the Administrative Agent on or prior to the Closing Date or otherwise in accordance with the Fundamental Documents, in form suitable for recording or filing with the appropriate filing office) required for the execution, delivery and performance by any Credit Party of this Credit Agreement and the other Fundamental Documents to which it is a party, and the execution and delivery by the Borrower of the Notes, have been duly obtained or made, and are in full force and effect, except for such authorizations, approvals, registrations or filings as would not adversely affect the ability of the Borrower or the Guarantors to enter into or perform their obligations under the Fundamental Documents or have a Material Adverse Effect.

SECTION 4.4. Binding Agreements. This Credit Agreement and the other Fundamental Documents when executed, will constitute the legal, valid and binding obligations of each Credit Party that is a party thereto, enforceable against such Credit Party in accordance with their respective terms, subject, as to the enforcement of remedies, to applicable bankruptcy, insolvency, reorganization and similar laws affecting creditors’ rights generally and to general principles of equity.

 

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SECTION 4.5. Financial Statements.

(a) The audited combined balance sheets of LGSC and its Subsidiaries as of March 31, 2023 and March 31, 2024, together with the related statements of income, equity and cash flows and the related notes and supplemental information for the fiscal years then ended, have been prepared in accordance with GAAP in effect as of such date consistently applied, except as otherwise indicated in the notes to such financial statements. Such financial statements fairly present the financial position or the results of operations of LGSC and its Subsidiaries on a consolidated basis at the dates or for the periods indicated and reflect all known liabilities, contingent or otherwise, that GAAP require, as of such dates, to be shown or reserved against.

(b) The unaudited condensed balance sheet of LGSC and its Subsidiaries at December 31, 2024, together with the related statements of income, equity and cash flows and the related notes and supplemental information for the fiscal quarter then ended, have been prepared in accordance with GAAP in effect as of such date consistently applied, except as otherwise indicated in the notes to such financial statements. Such financial statements fairly present the financial position or the results of operations of LGSC and its Subsidiaries on a consolidated basis at the date or for the period indicated and reflect all known liabilities, contingent or otherwise, that GAAP require, as of such dates, to be shown or reserved against.

SECTION 4.6. No Material Adverse Change; No Default; Solvency.

(a) There has been no material adverse change with respect to the business, assets, properties, management, operations, or financial condition of the Credit Parties taken as a whole since March 31, 2024.

(b) No Default or Event of Default has occurred and is continuing or would result from the consummation of the transactions contemplated by this Credit Agreement or any other Fundamental Document.

(c) As of the Closing Date, immediately after giving effect to the consummation of the Transactions, and as of any date on which a Credit Extension is made hereunder (i) the fair value of the assets of the Credit Parties on a consolidated basis, at a fair valuation, will exceed the debts and liabilities, direct, subordinated, contingent or otherwise, of Credit Parties on a consolidated basis; (ii) the present fair saleable value of the property of Credit Parties on a consolidated basis will be greater than the amount that will be required to pay the probable liability of Credit Parties on a consolidated basis on their debts and other liabilities, direct, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (iii) the Credit Parties on a consolidated basis will be able to pay their debts and liabilities, direct, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) the Credit Parties on a consolidated basis will not have unreasonably small capital with which to conduct the businesses in which they are engaged as such businesses are now conducted and are proposed to be conducted following the Closing Date. As of the Closing Date, immediately after giving effect to the consummation of the Transactions, and as of any date on which a Credit Extension is made hereunder, the Borrower does not intend to, and the Borrower does not believe that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts as they mature, taking into account the timing and amounts of cash to be received by it or any such Subsidiary and the timing and amounts of cash to be payable on or in respect of its debts or the debts of any such Subsidiary.

 

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SECTION 4.7. Ownership of Subsidiaries, etc.

(a) The outstanding shares or other equity interests of the Restricted Subsidiaries have been duly and validly authorized and issued, are fully paid and non-assessable, except as would not reasonably be expected to have a Material Adverse Effect. The outstanding shares or other Capital Stock of each Restricted Subsidiary that are owned directly or indirectly by LGSC are owned free and clear of any lien, charge, encumbrance, hypothec, security interest, restriction on voting or transfer or any other claim of any third party, other than (i) Permitted Liens or (ii) any restrictions on transfer under applicable securities laws.

(b) Annexed hereto as Schedule 4.7(b) is a correct and complete list of all Unrestricted Subsidiaries as of the Closing Date.

SECTION 4.8. Title to Properties.

(a) Except as would not reasonably be expected to result in a Material Adverse Effect, the Credit Parties have good title to each of the properties and assets owned thereby and all such properties and assets are free and clear of Liens, except Permitted Liens.

(b) LGSC and its Restricted Subsidiaries possess all licenses, certificates, permits and other authorizations issued by, and have made all declarations and filings with, the appropriate federal, state, provincial, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of their respective properties or the conduct of their respective businesses, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and neither LGSC nor any Restricted Subsidiary has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course, except as would not have a Material Adverse Effect.

(c) LGSC and its Restricted Subsidiaries own or possess adequate rights to use all material patents, patent applications, trademarks, service marks, trade names, trademark registrations, service mark registrations, copyrights, licenses and know-how (including trade secrets and other unpatented and/or unpatentable proprietary or confidential information, systems or procedures) necessary for the conduct of their respective businesses, except for the lack of which would not have, individually or in the aggregate, a Material Adverse Effect; and, to the knowledge of LGSC and its Restricted Subsidiaries, the conduct of their respective businesses does not conflict in any material respect with any such rights of others, and LGSC and its Restricted Subsidiaries have not received any notice of any claim of infringement of or conflict with any such rights of others that, if determined adversely to LGSC or any of its Restricted Subsidiaries, would individually or in the aggregate have a Material Adverse Effect.

SECTION 4.9. Litigation. Except as set forth on Schedule 4.9, there are no actions, suits or other proceedings at law or in equity by or before any arbitrator or arbitration panel, or any Governmental Authority (including, but not limited to, matters relating to environmental liability) or any investigation by any Governmental Authority of the affairs of, or to the best of each Credit Party’s knowledge, threatened action, suit or other proceeding against any Credit Party or of any of their respective properties or rights which either (A) if adversely determined, would reasonably be expected to have a Material Adverse Effect or (B) exists on the Closing Date (or on the date of any Credit Extension after the Closing Date to the extent that the applicable action, suit, proceeding or investigation is brought by any Credit Party) and challenges any Credit Party’s (or any Affiliate of a Credit Party’s) right or power to enter into or perform any of its obligations under the Fundamental Documents to which it is a party, or the validity or enforceability of any Fundamental Document or any action taken thereunder. No Credit Party is in default with respect to any order, writ, injunction, decree, rule or regulation of any Governmental Authority binding upon such Person, which default would reasonably be expected to have a Material Adverse Effect.

 

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SECTION 4.10. Federal Reserve Regulations. No part of the proceeds of the Loans will be used, directly or indirectly, for any other purpose violative of Regulations T, U and X of the Board.

SECTION 4.11. Investment Company Act. No Credit Party is, or will be after giving effect to the making of the Loans on the Closing Date, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

SECTION 4.12. Taxes. Each Credit Party has filed or caused to be filed all federal, state, provincial, local and foreign tax returns which are required to be filed with any Governmental Authority after giving effect to applicable extensions, and has paid or has caused to be paid all taxes as shown on said returns or on any assessment received by them in writing, to the extent that such taxes have become due, except in any case in which the failure to so pay or file would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 4.13. Compliance with ERISA; Labor Disputes.

(a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) except with respect to Multiemployer Plans, each Qualified Plan has either received a favorable determination letter from the Internal Revenue Service or may rely on a favorable opinion letter issued by the Internal Revenue Service, and nothing has occurred that would cause the loss of such qualification or tax-exempt status; (ii) each Pension Plan is in compliance in all respects with the applicable provisions of ERISA, the Code and its terms, including the timely filing of all reports required under the Code or ERISA; (iii) neither any Credit Party nor ERISA Affiliate has failed to make any contribution or pay any amount due as required by either Section 412 of the Code or Section 302 of ERISA or the terms of any such Pension Plan; and (iv) no “prohibited transaction,” as defined in Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to any Plan that would subject any Credit Party to a tax on prohibited transactions imposed by Section 502(i) of ERISA or Section 4975 of the Code.

(b) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) no Title IV Plan is or is reasonably expected to be in “at risk” status (within the meaning of Section 430 of the Code or Section 303 of ERISA); (ii) no ERISA Event has occurred or to the knowledge of any Credit Party is reasonably expected to occur; (iii) there are no pending, or to the knowledge of any Credit Party, threatened material claims (other than claims for benefits in the normal course), sanctions, actions or lawsuits, asserted or instituted against any Plan or any Person as fiduciary or sponsor of any Plan; (iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to incur any liability as a result of a complete or partial withdrawal from a Multiemployer Plan; and (v) within the last five years no Title IV Plan of any Credit Party or ERISA Affiliate has been terminated, whether or not in a “standard termination” as that term is used in Section 4041 of ERISA, nor has any Title IV Plan of any Credit Party or any ERISA Affiliate (determined at any time within the last five years) with unfunded pension liabilities been transferred outside of the “controlled group” (within the meaning of Section 4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate (determined at such time).

(c) Except as disclosed to the Lenders on or prior to the Closing Date, no labor disturbance by or dispute with employees of LGSC or any of its Subsidiaries exists or, to the knowledge of the Borrower and each of the Guarantors, is contemplated or threatened and neither the Borrower nor any Guarantor is aware of any existing or imminent labor disturbance by, or dispute with, the employees of any of LGSC’s or any of LGSC’s Subsidiaries’ principal suppliers, contractors or customers, except as would not have a Material Adverse Effect. Neither LGSC nor any of its Subsidiaries has received any notice of cancellation or termination with respect to any collective bargaining agreement to which it is a party.

 

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SECTION 4.14. Non-U.S. Plan Compliance. Except as would not reasonably be expected to result in a Material Adverse Effect, each Non-U.S. Plan has been maintained in compliance with its terms and with the requirements of any and all Applicable Laws, statutes, rules, regulations and orders and has been maintained, where required, in good standing with applicable regulatory authorities. Except for Canadian Pension Plans, all contributions required to be made with respect to a Non-U.S. Plan have been timely made, except as would not reasonably be expected to result in a Material Adverse Effect. With respect to each Non-U.S. Plan, neither any Credit Party nor any Restricted Subsidiaries or any of their respective directors, officers, employees or agents has engaged in a transaction which would subject any Credit Party or any Restricted Subsidiary, directly or indirectly, to a tax or civil penalty which would reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect. Except as would not reasonably be expected to result in a Material Adverse Effect, the present value of the accrued benefit liabilities (whether or not vested) under each Non-U.S. Plan, determined as of the end of the Credit Party’s most recently ended fiscal year on the basis of actuarial assumptions, each of which is reasonable, did not materially exceed the current value of the assets of such Non-U.S. Plan allocable to such benefit liabilities. All material contributions and payments required to be paid or remitted to each Canadian Pension Plan and all material contributions and payments required to be paid or remitted by any Credit Party to any Guild Pension Plan have been timely made in accordance with the terms of the applicable plan and applicable law. None of the Non-U.S. Plans is a Canadian DB Plan. The only obligations and liability of the Credit Parties with respect to the Guild Pension Plans is to make the contributions specified in the applicable collective bargaining agreements. No employees, directors, officers or agents of any Credit Party are responsible for or involved in the governance of any Guild Pension Plan.

SECTION 4.15. Agreements. There exists no default by any Credit Party in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument (including, without limitation, any Distribution Agreement) to which it is a party which would reasonably be expected to result in a Material Adverse Effect.

SECTION 4.16. Creation, Validity and Perfection of Security Interest. The execution and delivery of the Collateral Documents is effective to create and grant to the Administrative Agent for the benefit of itself and the other Secured Parties, a valid and enforceable security interest in the Collateral. Upon (i) the filing or recording, as applicable, of UCC-1 and PPSA financing statements and the publication/registration with respect to any hypothec pursuant to the CCQ, any Copyright Security Agreement(s), any Trademark Security Agreement(s) and any Patent Security Agreement(s), in the appropriate filing offices, (ii) the delivery of the Pledged Collateral (as defined in any Pledge and Security Agreement) with appropriate stock powers and instruments of endorsement to the Administrative Agent and (iii) with respect to the Initial Lux/UK Guarantors, the completion of the actions referred to in Section 6.17 (including for the avoidance of doubt, upon completion of any perfection formalities applicable), the Collateral Documents shall be effective to create a fully perfected (to the extent that perfection can be achieved by the actions described in the foregoing clauses (i), (ii) or (iii), as applicable) and continuing Lien on, and security interest in, all right, title and interest of the Credit Parties in the Collateral as security for the Obligations, in each case prior and superior in right to any other Person (except for Permitted Liens), subject, as to the enforcement of remedies, to applicable bankruptcy, insolvency or reorganization or similar laws affecting creditors’ rights generally and to principles of equity.

 

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SECTION 4.17. Disclosure. All information furnished in writing to the Administrative Agent for the benefit of the Administrative Agent, the Issuing Banks and the Lenders by any Credit Party in connection with the transactions contemplated hereby (other than any projections, forward-looking information and information of a general economic or industry nature), at the time it was furnished or delivered, did not contain any untrue statement of a material fact regarding the Credit Parties or, when taken together with all such other agreements, documents, certificates and statements, omit to state a material fact necessary under the circumstances under which it was made in order to make the statements contained herein or therein not misleading.

SECTION 4.18. Distribution Rights. Except as would not reasonably be expected to result in a Material Adverse Effect, each Credit Party has sufficient right, title and interest in each item of Product to enable it (i) to enter into and perform all of the Distribution Agreements to which it is a party and other agreements generating accounts receivable reflected on the most recent balance sheet delivered to the Lenders pursuant hereto, and (ii) to charge, earn, realize and retain all fees and profits to which such Credit Party is entitled thereunder. Each Credit Party is not in breach of any of its obligations under any such agreements, nor does any Credit Party have any knowledge of any breach or anticipated breach by any other parties thereto, which breach in either case either individually or when aggregated with all other such breaches would reasonably be expected to have a Material Adverse Effect.

SECTION 4.19. Environmental Liabilities.

(a) Except as would not reasonably be expected to have a Material Adverse Effect, (i) no Credit Party has used, stored, treated, transported, manufactured, refined, handled, produced or disposed of any Hazardous Materials on, under, at, from or in any way affecting, any of its properties or assets owned or leased by a Credit Party, in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials and (ii) to the best of each Credit Party’s knowledge, no prior owner of such property or asset or any tenant, subtenant, prior tenant or prior subtenant thereof has used Hazardous Materials on or affecting such property or asset, or otherwise, in any manner which at the time of the action in question violated any Environmental Law governing the use, storage, treatment, transportation, manufacture, refinement, handling, production or disposal of Hazardous Materials.

(b) To the best of each Credit Party’s knowledge (i) no Credit Party has any obligations or liabilities, known or unknown, matured or not matured, absolute or contingent, assessed or unassessed, which would reasonably be expected to have a Material Adverse Effect and (ii) no claims have been made against any of the Credit Parties in the past five years and no presently outstanding citations or notices have been issued against any of the Credit Parties, which would reasonably be expected to have a Material Adverse Effect, which in the case of clauses (i) or (ii) have been or are imposed by reason of or based upon any provision of any Environmental Law, including, without limitation, any such obligations or liabilities relating to or arising out of or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any Hazardous Materials by any Credit Party, or any of its employees, agents, representatives or predecessors in interest in connection with or in any way arising from or relating to any of the Credit Parties or any of their respective owned or leased properties, or relating to or arising from or attributable, in whole or in part, to the manufacture, processing, distribution, use, treatment, storage, disposal, transportation or handling of any such substance, by any other Person at or on or under any of the real properties owned or used by any of the Credit Parties or any other location where such would reasonably be expected to have a Material Adverse Effect.

SECTION 4.20. Compliance with Laws. No Credit Party is in violation of any Applicable Law except for such violations in the aggregate which would not have a Material Adverse Effect.

SECTION 4.21. Real Property. Except as set forth on Schedule 4.21, as of the Closing Date, each Credit Party does not have any ownership interest in real property.

 

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SECTION 4.22. OFAC, FCPA, etc.

(a) None of the Credit Parties or any of their Subsidiaries (i) is a person whose property or interest in property is blocked or subject to blocking pursuant to Section 1 and Annex A of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages, in any dealings or transactions prohibited by executive order, or is otherwise associated with any such person in any manner violative of such executive order, (iii) appears on any list maintained by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) of persons with whom U.S. persons are prohibited from dealing, including OFAC’s Specially Designated Nationals and Blocked Persons List and Foreign Sanctions Evaders List, or is subject to the limitations or prohibitions under any other OFAC regulation or executive order, (iv) is a person subject to the limitations or prohibitions under any other economic or trade sanctions issued by regulation or executive order of the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury or the Canadian federal government (including the Special Economic Measures Act (SEMA)), or (v) is a person that is controlled by one or more persons referred to in paragraphs (i), (ii), (iii) or (iv) of this Section 4.22(a).

(b) Each Credit Party and its Subsidiaries is in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, (ii) the USA Patriot Act, and (iii) the PCML Act.

(c) No part of the proceeds of the Loans will be used, directly or, to the knowledge of the Borrower, indirectly, (i) for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to improperly obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended; (ii) for the purpose of financing the activities of any person currently the subject of sanctions administered by OFAC, the U.S. Department of State, the U.S. Department of Commerce, the U.S. Department of the Treasury or the Canadian federal government; or (iii) for the purpose of financing any transactions or dealings with the governments of, or with any person resident in, Cuba, Iran, North Korea, Sudan, Syria, the so-called Donetsk People’s Republic, the so-called Luhansk People’s Republic or the Crimea, Kherson or Zaporizhzhia regions of Ukraine.

SECTION 4.23. Borrowing Base. The inclusion of value in respect of any item of Product in each Borrowing Base Certificate shall and hereby does constitute a representation of the Credit Parties under this Credit Agreement that, as of the date of such Borrowing Base Certificate and with respect to each item of Product then included in the Borrowing Base, (i) all value included in such Borrowing Base Certificate meets all requirements set forth in this Credit Agreement, (ii) there are no material chain of title issues and (iii) there are no Liens with respect to such item of Product other than (1) the categories of Liens identified in clauses (27), (28), (29) and (31) of the definition of “Permitted Liens” or such other Liens as the Required Lenders may reasonably agree and (2) Liens granted in connection with the acquisition of the applicable item of Product so long as any Indebtedness relating to such third party Lien is either (x) reserved for in the Borrowing Base by a Third Party Lien Reserve or (y) paid in full with the initial Borrowing Base value attributable to such acquired Product.

SECTION 4.24. Participations and Residuals. To the knowledge of LGSC, no default exists with respect to the payment of any participation, deferment, residual and box office bonus obligations of the Credit Parties, whether owed to talent, producers, co-financiers or other third parties, in excess of $25,000,000 in the aggregate when due, except to the extent any such payment is being contested in good faith by the Credit Parties by appropriate proceedings.

 

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ARTICLE 5

CONDITIONS PRECEDENT

SECTION 5.1. Conditions to Initial Credit Extension. The obligation of each Lender to make its initial Loan and each Lender to participate in the initial Letter of Credit, and the obligation of the Issuing Banks to issue the initial Letter of Credit, is subject to the satisfaction in full (or waiver by each of the initial Lenders) of the following conditions precedent:

(a) Credit Agreement. The Administrative Agent shall have received executed counterparts of this Credit Agreement, which, when taken together, bear the signatures of the Administrative Agent, all of the Credit Parties and all of the Lenders.

(b) Opinion of Counsel. The Administrative Agent shall have received the written opinions of (i) Dentons Canada LLP, Canadian counsel to the Credit Parties, (ii) Wachtell, Lipton, Rosen & Katz, special New York counsel to the Credit Parties and (iii) in-house counsel to the Credit Parties and addressed to the Administrative Agent and the Lenders which opinions shall be in form and substance satisfactory to the Administrative Agent.

(c) Security and Other Documentation. The Administrative Agent shall have received fully executed copies of the following:

(i) the Pledge and Security Agreement executed by each Credit Party party thereto;

(ii) the Copyright Security Agreement executed by each Credit Party party thereto;

(iii) the Trademark Security Agreement executed by each Credit Party party thereto;

(iv) the Patent Security Agreement executed by each Credit Party party thereto; and

(v) appropriate UCC-1 and PPSA financing statements (or filings under the CCQ, if and as applicable) relating to the Collateral.

(d) Corporate Documents. The Administrative Agent shall have received:

(i) a copy of the articles or certificate of incorporation or other organizational document of each Credit Party, duly certified by an Officer of such Credit Party;

(ii) to the extent available, a certificate of the Secretary of State or other appropriate governmental official of each Credit Party’s jurisdiction of incorporation or organization, dated as of a recent date as to the good standing of each Credit Party;

(iii) a certificate of an Officer of each Credit Party, dated the Closing Date and certifying:

(A) that attached thereto is a true and complete copy of the by-laws, articles or limited liability company agreement, as the case may be, of such party as in effect on the date of such certification;

 

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(B) that attached thereto is a true and complete copy of the resolutions adopted by the board of directors or equivalent body of such party authorizing the execution, delivery and performance in accordance with their respective terms of the Fundamental Documents executed by such Credit Party and any other documents required or contemplated hereunder or thereunder, the grant of the security interests in the Collateral, and in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been amended, rescinded, supplemented or otherwise modified and are currently in effect;

(C) either (I) that the certificate of incorporation or organization or other similar organizational document of such party has not been amended since the date of the last amendment thereto indicated on the certificates of the Secretary of State or other appropriate governmental official furnished pursuant to clause (i) above or (II) that attached thereto is a true and complete copy of such certificate or other organizational document including all amendments thereto; and

(D) as to the incumbency and specimen signature of each officer of such party executing any Fundamental Document;

(iv) without prejudice to paragraph (iii) above, a certificate of an Officer of each Credit Party incorporated in Luxembourg (including, but not limited to, the Luxembourg Guarantors), dated the Closing Date and certifying:

(A) that attached thereto are true and complete copies of (i) an excerpt (extrait) from the Luxembourg Trade and Companies Register (Registre de commerce et des sociétés Luxembourg) and (ii) a certificate of non-registration of a judicial or administrative decision (certificat de noninscription d’une décision judiciaire ou administrative) from the Register of Insolvency of Luxembourg (Registre de L’Insolvabilité, Luxembourg), in respect of such Credit Party incorporated in Luxembourg dated 1 Business Day prior to the Closing Date;

(B) that borrowing, guaranteeing or securing, as appropriate, the Obligations would not cause any borrowing, guaranteeing, securing or similar limit binding on that Credit Party incorporated in Luxembourg to be exceeded; and

(C) that, in respect of such Credit Party incorporated in Luxembourg, (i) no corporate action, legal proceeding or other procedure or step is taken in relation to (a) bankruptcy (faillite), suspension of payments (sursis de paiement), voluntary or judicial liquidation (liquidation volontaire ou judiciaire) or administrative dissolution without liquidation (dissolution administrative sans liquidation) proceedings, any judicial reorganisation (réoganisation judiciaire), reorganisation by amicable agreement (réorganisation par accord amiable), general settlement with creditors, reorganisation or any other similar proceedings, measures and regimes affecting the rights of creditors generally, and/or (b) no application has been made by it or, as far as it is aware by any other entitled person for the appointment of a administrateur provisoire, administrateur ad hoc, juge délégué, expertvérificateur, commissaire, juge-commissaire, liquidateur, curateur, mandataire de justice, conciliateur d’entreprise or similar officer pursuant to any insolvency or similar proceedings and/or (ii) it is not in a state of cessation of payments (cessation de paiements), and has not lost its creditworthiness (ébranlement de crédit) (the “Lux Insolvency Proceedings”).

 

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(e) Officer’s Certificate. The Administrative Agent shall have received a certificate of an Officer of LGSC certifying that the conditions in Section 5.2(a) and Section 5.2(b) are satisfied.

(f) Financial Statements. The Administrative Agent shall have received all financial statements referred to in Section 4.5.

(g) Solvency Certificate. The Administrative Agent shall have received a Solvency Certificate signed by a principal financial officer of LGSC.

(h) Payment of Fees. All fees required to be paid on the Closing Date pursuant to the Fee Letters and reasonable and invoiced out-of-pocket expenses required to be paid on the Closing Date, in the case of expenses, to the extent invoiced at least three business days prior to the Closing Date shall, upon the initial Credit Extension, have been paid (which amounts may be offset against the proceeds of the initial Credit Extension).

(i) UCC/PPSA Searches. The Administrative Agent shall have received UCC, PPSA, copyright office and other searches satisfactory to it indicating that no other filings, encumbrances or transfers (other than in connection with Permitted Liens) with regard to the Collateral are of record in any jurisdiction in which it shall be necessary or desirable for the Administrative Agent to make a UCC or PPSA filing in order to provide the Administrative Agent (for the benefit of the Secured Parties) with a perfected security interest in the Collateral.

(j) USA Patriot Act and Beneficial Ownership Certification. (i) The Administrative Agent shall have received at least three Business Days prior to the Closing Date any information requested at least ten Business Days prior to the Closing Date by the Administrative Agent that such Administrative Agent reasonably determines is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation the USA Patriot Act and the PCML Act and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, at least five days prior to the Closing Date, any Lender that has requested, in a written notice to the Borrower at least 10 days prior to the Closing Date, a Beneficial Ownership Certification in relation to the Borrower shall have received such Beneficial Ownership Certification (provided that, upon the execution and delivery by such Lender of its signature page to this Credit Agreement, the condition set forth in this clause (ii) shall be deemed to be satisfied).

(k) Notice. The Administrative Agent shall have received a notice with respect to the Credit Extension to be made on the Closing Date as required by Section 2.5 hereof.

(l) Notes. The Administrative Agent shall have received Notes executed by the Borrower in favor of each Lender that has requested such a Note.

(m) Separation Transaction. The Administrative Agent shall have received an officer’s certificate certifying that the Separation Transaction has been consummated or substantially simultaneously with the initial Credit Extension to be made on the Closing Date shall be consummated.

(n) Closing Date Refinancing. All Obligations of the Credit Parties under the Existing Credit Agreement shall have been or are substantially simultaneously terminated, and all liens relating thereto shall have been released and terminated pursuant to a release acknowledgement or other documentation reasonably acceptable to the Administrative Agent and the Borrower.

 

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(o) Borrowing Base. The Administrative Agent shall have received a duly executed Borrowing Base Certificate demonstrating that, as of the Closing Date, after giving effect to any Borrowings or issuances of Letters of Credit, the total Revolving Exposure will not exceed the Borrowing Base.

(p) Liquidity Certificate. The Administrative Agent shall have received a duly executed Liquidity Certificate demonstrating a pro forma Liquidity Ratio as of the Closing Date of not less than 1.10 to 1.00.

(q) Valuation Report. The Administrative Agent shall have received an initial Valuation Report in form and substance reasonably acceptable to the Administrative Agent.

(r) No Material Adverse Effect. Since March 31, 2024, no change or development shall have occurred that either individually or in the aggregate would reasonably be expected to have a Material Adverse Effect.

Notwithstanding the foregoing or anything to the contrary in this Credit Agreement or any other Fundamental Document, to the extent any lien search, guaranty or any Collateral (or the creation or perfection of any security interest therein) is not or cannot be provided and/or perfected on the Closing Date (other than (x) execution and delivery of a customary guaranty (in the case of Guarantors organized in the United States or Canada or any state or province thereof) and personal property security agreement (in the case of the Borrower and all Guarantors organized in the United States or Canada or any state or province thereof), (y) delivery of stock or other equity certificates of subsidiaries of the Borrower or a Guarantor organized in the United States or Canada or any state or province thereof that are Guarantors to the extent such equity securities are owned by the Borrower or any Guarantor organized in the United States, Canada or any state or province thereof and (z) the perfection of security interests in assets with respect to which a lien may be perfected by the filing of a financing statement under the Uniform Commercial Code (or, with respect to Canada, the Personal Property Security Act or the Civil Code of Québec)) after the Borrower’s use of commercially reasonable efforts to do so, then the provision of such lien search, guaranty or Collateral (or the creation or perfection of any security interest therein) shall not constitute a condition precedent to the availability of any Credit Extension on the Closing Date, but instead shall be required to be delivered within 60 days after the Closing Date (or such later date as may be agreed by the applicable Administrative Agent, in its sole discretion).

For purposes of determining compliance with the conditions specified in this Section 5.1, each Lender that has signed this Credit Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless an officer of the Administrative Agent responsible for the transactions contemplated by this Credit Agreement shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto in reasonable detail. The Administrative Agent shall promptly notify the Lenders and the Borrower in writing of the occurrence of the Closing Date.

SECTION 5.2. Conditions to Each Subsequent Credit Extension. The obligation of each Lender to make a Credit Extension hereunder after the Closing Date is subject to satisfaction in full of the following conditions precedent:

(a) Representations and Warranties. Each of the representations and warranties made by any Credit Party in or pursuant to the Fundamental Documents shall be true and correct in all material respects (or in all respects, if qualified by a materiality threshold) on and as of such date as if made on and as of such date (except to the extent that such representations and warranties expressly relate to an earlier date).

 

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(b) No Default. No Default or Event of Default shall have occurred and be continuing on such date or after giving effect to the extensions of credit requested to be made on such date.

(c) Revolving Credit Availability. After giving effect to any requested extension of credit, the aggregate principal amount of all Loans and L/C Obligations under this Credit Agreement shall not exceed the aggregate Commitments.

(d) Borrowing Base. Each Notice of Borrowing shall include a certification from an Officer that, as of such date, after giving effect to any Borrowings or issuances of Letters of Credit, the total Revolving Exposure will not exceed the amount of the Borrowing Base set forth in the most recent Borrowing Base Certificate delivered pursuant to Section 6.2(c).

(e) Other Facilities. No event of default shall have occurred and be continuing under any Outside IP Debt Facility, the Backlog Facility or the Tax Credit Facility that has not been remedied, cured, waived or otherwise consented to within any applicable grace period.

(f) Other.

(i) In the case of Loans, the Administrative Agent shall have received the Notice of Borrowing required by Section 2.5 hereof,

(ii) in the case of the issuance of any Letter of Credit the applicable Issuing Bank shall have received a duly completed Application, and/or

(iii) in the case of an extension or increase in the amount of a Letter of Credit, the applicable Issuing Bank shall have received a written request therefor in a form reasonably acceptable to the applicable Issuing Bank.

Each Borrowing by and issuance of a Letter of Credit on behalf of the Borrower hereunder shall constitute a representation and warranty by the Borrower as of the date of such extension of credit that the conditions contained in this Section 5.2 have been satisfied.

SECTION 5.3. Conditions to Initial Inclusion of Each Item of Product in the Borrowing Base. The ability of the Borrower to obtain initial Borrowing Base credit for an item of Product is subject to satisfaction of the following conditions to the extent applicable on an item of Product by item of Product basis:

(a) Uncompleted Items of Product. With respect to any item of Product which has not been Completed at the time of initial inclusion of value thereof in the Borrowing Base, the Administrative Agent shall have received:

(i) certificates or binders of insurance for such item of Product as required by Section 6.5, together with endorsements naming the Administrative Agent as an “additional insured” and “loss payee,” as applicable, together with, to the extent any value in the Borrowing Base is subject to essential element qualifications, an “Essential Element” endorsement for such item of Product;

(ii) [reserved];

(iii) (in satisfactory form for filing) any financing statements or other security documents or filings necessary or reasonably requested by the Administrative Agent to provide to the Administrative Agent a perfected first-priority security interest (subject to any Permitted Liens) in the applicable Credit Party’s interest in such item of Product;

 

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(iv) an Account Control Agreement for each account of a Credit Party that will be a collection account for receivables for such item of Product (which, prior to the occurrence and continuation of an Event of Default, need only be delivered with respect to Eligible Receivables that will be included in the Borrowing Base);

(v) a notice of assignment in form and substance reasonably satisfactory to the Administrative Agent and the Borrower (which will, if the account obligor has a lien, include customary intercreditor provisions regarding lien priorities) for each individual receivable for each such item of Product that has a Budgeted Negative Cost or an acquisition cost that is greater than $100,000,000 and that is included in the Borrowing Base.

(b) Completed Items of Product. With respect to any item of Product which has been Completed at the time of initial inclusion of value thereof in the Borrowing Base, the Administrative Agent shall have received:

(i) a Copyright Security Agreement Supplement and a Trademark Security Agreement for such item of Product, in each case to the extent the Credit Parties own registered copyrights or registered or applied-for trademarks with respect to such item of Product, in each case, that are included in the Collateral; provided for the avoidance of doubt that

(A) this Section 5.3(b)(i) will not prevent the Borrower from including Eligible Receivables in the Borrowing Base for items of Product that have been pledged under Outside IP Debt Facilities so long as such Eligible Receivables are transferred to the Credit Parties free and clear of any liens (other than the categories of Liens identified in clauses (27), (28), (29) and (31) of the definition of “Permitted Liens” or such other Liens as the Required Lenders may reasonably agree) incurred under the Outside IP Debt Facilities, notwithstanding that the Administrative Agent would in such event not have a lien on the underlying copyright in such item of Product; and

(B) this Section 5.3(b)(i) will be deemed satisfied so long as the Credit Parties are in compliance with the obligations to register the Intellectual Property (as defined in any Pledge and Security Agreement) relating to an item of Product and to periodically deliver Copyright Security Agreement Supplements, Trademark Security Agreement Supplements, and/or Patent Security Agreement Supplements (as applicable), in each case in accordance with Section 4.5 of such Pledge and Security Agreement; and

(ii) (in satisfactory form for filing) any financing statements or other security documents or filings necessary or reasonably requested by the Administrative Agent to provide to the Administrative Agent a perfected first-priority security interest in the applicable Credit Party’s interest in such item of Product or Borrowing Base value.

 

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ARTICLE 6

AFFIRMATIVE COVENANTS

From the date hereof and for so long as the Commitments shall be in effect, any Loan shall remain outstanding, or L/C Exposure shall remain outstanding or any monetary Obligation then due and payable shall remain unpaid or unsatisfied (other than with respect to a Specified Swap Agreement or Specified Cash Management Agreement):

SECTION 6.1. Financial Statements and Other Information.

(a) Within 45 days after the end of each fiscal quarter of LGSC not corresponding with the fiscal year end of LGSC, commencing with the first fiscal quarter ending after the Closing Date, the Borrower shall deliver to the Administrative Agent (for delivery to the Lenders) LGSC’s consolidated balance sheet as at the end of such fiscal quarter and the related consolidated statements of income, and cash flows for such fiscal quarter and for the elapsed portion of the fiscal year-to-date period then ended, each in reasonable detail, prepared by LGSC in accordance with GAAP, and setting forth comparative figures for the corresponding fiscal quarter in the prior fiscal year, all of which shall be certified by the chief financial officer or other financial or accounting officer of LGSC that they fairly present in all material respects in accordance with GAAP the financial condition of LGSC and its Subsidiaries as of the dates indicated and the results of their operations and changes in their cash flows for the periods indicated, subject to normal year-end audit adjustments and the absence of footnotes.

(b) Within 90 days after the close of each fiscal year of LGSC (commencing with the fiscal year of LGSC ending March 31, 2025), the Borrower shall deliver to the Administrative Agent (for delivery to the Lenders) a copy of LGSC’s consolidated balance sheet as of the last day of the fiscal year then ended and LGSC’s consolidated statements of income, cash flows and shareholders’ equity for the fiscal year then ended, and accompanying notes thereto, each in reasonable detail and showing in comparative form the figures for the previous fiscal year, accompanied by a report thereon of Ernst & Young LLP or another firm of independent public accountants of recognized national standing, selected by LGSC, to the effect that the consolidated financial statements have been prepared in accordance with GAAP and present fairly in accordance with GAAP the consolidated financial condition of LGSC and its Subsidiaries as of the close of such fiscal year and the results of their operations and cash flows for the fiscal year then ended and that an examination of such accounts in connection with such financial statements has been made in accordance with generally accepted auditing standards (which report shall be unqualified as to scope of such audit and shall not contain any “going concern”, other than solely with respect to, or resulting solely from, an upcoming maturity date under any Indebtedness incurred under this Credit Agreement occurring within one year from the time such opinion is delivered).

(c) Within 90 days after the commencement of each fiscal year of LGSC, the Borrower shall deliver to the Administrative Agent (for delivery to the Lenders) an annual budget for LGSC and its Subsidiaries for such fiscal year in a form customarily prepared by management of LGSC for its internal use (including a projected consolidated balance sheet and consolidated statements of income and capital expenditures as of the end of and for such fiscal year).

(d) The Borrower shall deliver to the Administrative Agent (for delivery to the Lenders) (i) within 45 days after the close of each of the first three (3) fiscal quarters of LGSC, a customary management discussion and analysis of LGSC’s and its Subsidiaries’ financial performance for that fiscal quarter and a comparison of financial performance for that financial quarter to the corresponding fiscal quarter of the previous fiscal year and (ii) within 90 days after the close of each fiscal year, a management discussion and analysis of LGSC’s and its Subsidiaries’ financial performance for that fiscal year and a comparison of financial performance for that fiscal year to the prior year.

(e) For purposes of this Section 6.1, the Borrower and the Guarantors will be deemed to have furnished the reports and other information to the Lenders as required by this Section 6.1 if LGSC has filed such reports with the SEC via the EDGAR or any successor filing system and such reports are publicly available.

 

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(f) The Borrower will also hold a conference call each quarter to discuss such results of operations for the relevant reporting period, which conference call may be with Lenders only or may be with investors generally.

(g) Promptly upon written request therefor, any information required by the Administrative Agent, the Issuing Banks or any Lender for purposes of compliance with applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act, the PCML Act and the Beneficial Ownership Regulation.

SECTION 6.2. Compliance Certificate; Borrowing Base Certificate and Other Information.

(a) On or prior to the tenth Business Day following the delivery or making available of the annual and quarterly financial statements pursuant to Section 6.1(a) and Section 6.1(b), the Borrower shall deliver to the Administrative Agent (for delivery to the Lenders) a Compliance Certificate signed by the chief financial officer or other financial or accounting Officer of the Borrower stating no Default or Event of Default has occurred and is then continuing or, if a Default or Event of Default exists, a detailed description of the Default or Event of Default and all actions the Borrower is taking with respect to such Default or Event of Default.

(b) Concurrently with the delivery of a Compliance Certificate pursuant to Section 6.2(a), the Borrower shall deliver to the Administrative Agent a Liquidity Certificate indicating that the ratio of

(i) projected unrestricted cash sources of the Credit Parties (including, without limitation, cash on hand, cash equity contributed to the Credit Parties by LGSC prior to the date of delivery of the applicable Liquidity Certificate, Borrowing Base availability (taking into account projected Borrowing Base availability for each period reflected in the calculation), and cash receipts from operations); provided that, in projecting the performance of any unreleased item of Product, the Credit Parties will share performance assumptions and projections with the Administrative Agent and the Administrative Agent will have the discretion to deduct a reserve from such projected cash sources if (x) such projections and assumptions reflect greater than breakeven performance, (y) the Administrative Agent reasonably believes the performance assumptions and projections are not adequately supported and (z) the Administrative Agent delivers a notice in detail reasonably satisfactory to the Borrower stating the quantum and rationale for such reserve (such notice, a “Reserve Notice”); to

(ii) projected cash uses of the Credit Parties (including debt service, overhead expenses, development, production or acquisition of items of Product, payments anticipated to be made by Credit Parties in support of Outside IP Debt Facilities, and all other projected cash expenditures) (the “Liquidity Ratio”),

all as projected by the Borrower in good faith for each of the ensuing twelve (12) months, is not less than 1.10 to 1.00, substantially in the form attached hereto as Exhibit I with sufficient supporting detail as reasonably required by the Administrative Agent.

(c) On or before the forty-fifth (45th) day after the end of each March, June, September, and December, and on or before the thirtieth (30th) day after the end of each other month, commencing with the end of the first full month after the Closing Date (provided that the Borrowing Base Certificate for the month ending April 30, 2025 shall be delivered on or before the forty-fifth (45th) day after April 30, 2025), the Borrower shall deliver to the Administrative Agent a Borrowing Base Certificate, computed as of the last day of the prior month, setting forth the amount of each component included in the Borrowing Base substantially in the form attached hereto as Exhibit H, which for the avoidance of doubt shall include reasonable and customary calculations of each component of the Borrowing Base.

 

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(d) The Borrower shall provide to the Administrative Agent, within 10 days after receiving knowledge of the occurrence thereof,

(i) written notice of any events which would constitute a Default, their status and what action the Borrower is taking or proposing to take in respect thereof,

(ii) written notice of the commencement of, or threat in writing of, any action, suit or proceeding, whether at law or in equity or by or before any Governmental Authority or in arbitration, against LGSC or any of the Restricted Subsidiaries as to which an adverse determination is reasonably probable and which would reasonably be expected to result in a Material Adverse Effect, and

(iii) any other event which would reasonably be expected to result in a Material Adverse Effect.

(e) The Borrower shall provide to the Administrative Agent, from time to time, such other information or documents (financial or otherwise) as the Administrative Agent may reasonably request (for itself or on behalf of Lenders); provided that the Administrative Agent may request such information in its capacity as Administrative Agent or on behalf of the Lenders only and may not use such information for any purpose other than a purpose reasonably related to its capacity as Administrative Agent, Lender or Issuing Bank thereunder.

(f) So long as the Eligible Unsold Rights Amount is included in the Borrowing Base, not later than July 31st (or such later date as the Administrative Agent may agree) of each year, the Borrower shall deliver to the Administrative Agent a calculation of the Eligible Unsold Rights Amount computed as of the last Business Day of March of such calendar year together with a variance analysis setting forth the actual net receipts received during the prior year with respect to items of Product included in the prior year’s valuation versus the net receipts projected to have been received for such items of Product during the prior year as reported in the valuation (the “Valuation Report”). If the Borrower intends to deliver a Valuation Report by an Agreed Independent Appraiser other than the Agreed Independent Appraiser who delivered the previous Valuation Report, the Borrower will provide notice to the Lenders prior to engaging such Agreed Independent Appraiser.

Information and documents required to be delivered pursuant to Section 6.1 or this Section 6.2 may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which LGSC posts such documents, or provides a link thereto on LGSC’s website on the Internet at the website address provided to the Administrative Agent or on an Intralinks or similar site to which the Lenders have been granted access; or (ii) on which such documents are transmitted by electronic mail to the Administrative Agent.

SECTION 6.3. Taxes. LGSC shall pay, and shall cause each of its Restricted Subsidiaries to pay, prior to delinquency, all taxes, assessments and governmental levies except such as are contested in good faith and by appropriate negotiations or proceedings (and for which an adequate reserve is maintained in accordance with GAAP) or where the failure to make payment could not reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

 

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SECTION 6.4. Corporate Existence. Except (i) as permitted by Section 7.6 or (ii) with respect to clause (a) (other than LGSC or the Borrower but, for the avoidance of doubt, not the Restricted Subsidiaries thereof, other than the Borrower) or (b), would not reasonably be expected to result in a Material Adverse Effect, LGSC and each Credit Party shall do or cause to be done all things necessary to preserve and keep in full force and effect (a) its corporate existence and the corporate, partnership, limited liability company, unlimited liability company or other existence of each of its Restricted Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of such Credit Party or any such Restricted Subsidiary and (b) the rights (charter and statutory), licenses and franchises of the Credit Parties necessary to the conduct of its business or the business of any of its Restricted Subsidiaries.

SECTION 6.5. Maintenance of Properties and Insurance. The Borrower shall:

(a) cause all properties used or useful in the conduct of its business or the business of any Credit Party or any Restricted Subsidiary to be maintained and kept in good condition, repair and working order as in the judgment of the Borrower may be necessary so that the business of the Credit Parties or the Restricted Subsidiaries may be properly conducted at all times; provided that nothing in this Section 6.5 prevents any Credit Party or Restricted Subsidiary from discontinuing the use, operation or maintenance of any of such properties or disposing of any of them, if such discontinuance or disposal (i) is, in the judgment of the Borrower, desirable in the conduct of the business of LGSC and the Restricted Subsidiaries taken as a whole or (ii) would not reasonably be expected to have a Material Adverse Effect;

(b) provide or cause to be provided, for itself and the Credit Parties, insurance (including appropriate self-insurance) against loss or damage of the kinds that, in the good faith opinion of the Borrower, is adequate and appropriate for the conduct of the business of the Credit Parties and the Restricted Subsidiaries;

(c) maintain, or cause to be maintained, for each material Picture or Program produced by any Credit Party or acquired by any Credit Party a so-called “Errors and Omissions” policy covering such Picture or Program for at least a three-year period, and cause such Errors and Omissions policy to provide coverage to the extent and in such manner as is customary for Pictures or Programs of a like type but at a minimum to the extent and in such manner as is required under all applicable material Distribution Agreements;

(d) maintain, or cause to be maintained, in effect during the period from the commencement of principal photography of each material Picture or Program produced by a Credit Party, or from the date of acquisition of each such Picture or Program acquired by a Credit Party solely in the event that a Credit Party pays for a material portion of the production costs or acquisition costs, as applicable, prior to completion and delivery of each such Picture or Program to a Credit Party (i) insurance on the original digital materials, negatives and sound tracks or master tapes of such Picture or Program in an amount not less than the cost of re-shooting the principal photography of such Picture or Program and otherwise re-creating such Picture or Program and (ii) until principal photography of such Picture or Program has been concluded, (A) a cast insurance policy with respect to Picture or Program, which provides coverage to the extent and in such manner as is customary for Pictures or Programs of a like type, but at minimum to the extent and in such manner as is required under all applicable material Distribution Agreements and other contracts relating thereto and (B) (if any cast or crew member for Picture or Program is designated as an essential element under any Distribution Agreement that supports any Borrowing Base credit) essential element coverage with respect to each cast and/or crew member(s) who are subject to essential element risk in an amount at least equal to the aggregate production-cost related portion of the Borrowing Base credit afforded to such Picture or Program;

 

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(e) cause all such above-described insurance (excluding worker’s compensation insurance) to: (i) provide for the benefit of the Lenders that thirty (30) days’ prior written notice of cancellation, termination, non-renewal or lapse or material change of coverage shall be given to the Administrative Agent; (ii) name the Administrative Agent for the benefit of the Secured Parties as a loss payee (except for “Errors and Omissions” insurance and other third party liability insurance); provided, however that so long as no Event of Default shall have occurred and be continuing, property insurance recoveries received prior to Completion or abandonment of a Picture or Program may be utilized to finance the production of such Picture or Program, and; provided, further, that so long as no Event of Default shall have occurred and be continuing, property insurance proceeds may be used to repair damage in respect of which such proceeds were received; and (iii) to the extent that none of the Secured Parties shall be liable for premiums or calls, name the Administrative Agent (for the benefit of the Secured Parties) as an additional insured, including, without limitation, under any “Errors and Omissions” policy; and

(f) render to the Administrative Agent upon the reasonable request of the Administrative Agent a broker’s report in form and substance reasonably satisfactory to the Administrative Agent as to all such insurance coverage including such detail as the Administrative Agent may reasonably request.

SECTION 6.6. Books and Records. The Borrower will, and will cause each Credit Party to, maintain proper books of record and account in which entries that are full, true and correct in all material respects and are in conformity with GAAP consistently applied shall be made of all material financial transactions and matters involving the assets and business the Credit Parties.

SECTION 6.7. Inspection and Third Party Audit Rights.

(a) The Borrower will, and will cause each Credit Party to, permit officers, designated representatives and agents of the Administrative Agent (or during the occurrence and continuation of any Event of Default, any Lender solely if accompanying the Administrative Agent), to visit and inspect any tangible property of such Credit Parties or such Restricted Subsidiaries, and to examine the books of account of such Credit Parties or such Restricted Subsidiaries and discuss the affairs, finances and accounts of such Credit Parties or such Restricted Subsidiaries with its and their officers and independent accountants, all at such reasonable times during normal business hours as the Administrative Agent may request; provided that (i) reasonable prior written notice of any such visit, inspection or examination shall be provided to the Borrower and such visit, inspection or examination shall be performed at reasonable times to be agreed to by the Borrower, which agreement will not be unreasonably withheld, (ii) excluding any such visits and inspections during the continuation of an Event of Default, the Administrative Agent shall not exercise its rights under this Section 6.7 more often than one time during any such fiscal year, the Borrower is not obligated to compensate the Administrative Agent for more than one inspection and examination by the Administrative Agent during any calendar year, and (iii) the Administrative Agent may conduct inspections pursuant to this Section 6.7 in capacity as Administrative Agent only and may not conduct inspections or utilize information from such inspections for any purpose other than a purpose reasonably related to its capacity as Administrative Agent. The Administrative Agent shall give the Borrower a reasonable opportunity to participate in any discussions with the Borrower’s independent public accountants.

(b) If, following the occurrence and during the continuance of an Event of Default, the Administrative Agent wishes to confirm with account debtors and other payors the amounts and terms of any or all Eligible Receivables included in the Borrowing Base, the Administrative Agent may make such confirmations directly with account debtors and other payors.

 

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SECTION 6.8. Compliance with Laws. LGSC shall, and shall cause each Restricted Subsidiary to, comply in all respects with all Applicable Laws, where any such non-compliance, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

SECTION 6.9. Compliance with Agreements. Except as would not reasonably be expected to result in a Material Adverse Effect, the Borrower shall, and shall cause each Restricted Subsidiary to duly observe and perform all material terms and conditions of all agreements with respect to the production, distribution and/or exploitation of items of Product and diligently protect and enforce the rights of the Credit Parties under all such agreements in a manner consistent with prudent business judgment and subject to the terms and conditions of such agreements.

SECTION 6.10. ERISA Event Notice. Promptly following receipt thereof, LGSC shall furnish copies of (i) any documents described in Sections 101(k) or 101(l) of ERISA that any Credit Party or any ERISA Affiliate may request with respect to any Multiemployer Plan or any documents described in Section 101(f) of ERISA with respect to any Title IV Plan or any Multiemployer Plan provided to or received by any Credit Party or any ERISA Affiliate; provided that if the relevant Credit Parties or ERISA Affiliates have not requested or received such documents or notices, as applicable, from the administrator or sponsor of the applicable Multiemployer Plan, then, upon reasonable request of the Administrative Agent, such Credit Party or the ERISA Affiliate shall promptly make a request for such documents or notices from such administrator or sponsor and LGSC shall provide copies of such documents and notices to the Administrative Agent promptly after receipt thereof. As soon as possible upon becoming aware of the occurrence of any ERISA Event that has resulted or would reasonably be expected to result in material liability to any Credit Party, LGSC shall furnish Administrative Agent a written notice specifying the nature thereof, what action the Credit Party or any of their respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when known, any action taken or threatened by the Internal Revenue Service, the U.S. Department of Labor or the Pension Benefit Guarantee Corporation with respect thereto; and (ii) with reasonable promptness, and upon the Administrative Agent’s request, furnish copies of each Schedule SB (Actuarial Information) to the annual report (Form 5500 Series) filed by any of the Credit Parties or any of their respective ERISA Affiliates with the Internal Revenue Service with respect to each Title IV Plan.

SECTION 6.11. Non-U.S. Plan Compliance and Reports.

(a) Each Credit Party and each of their applicable Subsidiaries shall cause all Non-U.S. Plans administered by it, or into which it is required to make payments, to obtain or retain (as applicable) registered status under and as required by Applicable Law and to be administered in a timely manner in all respects in compliance with all Applicable Laws, except where the failure to do so would not result in a Material Adverse Effect.

(b) The Borrower shall furnish to the Administrative Agent as soon as possible, and in any event within twenty (20) Business Days after receipt, copies of any notices received by any Credit Party or any of their Subsidiaries with respect to any Non-U.S. Plan with respect to which there would reasonably be expected to result in a Material Adverse Effect.

SECTION 6.12. Environmental Laws.

(a) The Borrower shall promptly notify the Administrative Agent upon any Credit Party becoming aware of any violation or potential violation or non-compliance with, or liability or potential liability under any Environmental Laws which, when taken together with all other actual or pending violations or liabilities under any Environmental Laws would reasonably be expected to have a Material Adverse Effect, and promptly furnish to the Administrative Agent all notices of any nature which any Credit Party may receive from any Governmental Authority or other Person with respect to any violation, or potential violation or non-compliance with, or liability or potential liability under any Environmental Laws which, in any case or when taken together with all such other notices, could reasonably be expected to have a Material Adverse Effect.

 

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SECTION 6.13. Additional Guarantors.

(a) The Borrower shall not, as of the last day of each fiscal quarter of LGSC, to the extent that as of such date the Total Debt Ratio is less than 1.25 to 1.00, permit the Credit Parties, taken as a whole, to represent less than 80 % of the consolidated revenue (calculated on a pro forma basis) of LGSC and its Restricted Subsidiaries for the then-ended four fiscal quarter period.

(b) Promptly (i) after the formation or acquisition of any Wholly-Owned Subsidiary of a Credit Party other than an Excluded Subsidiary after the Closing Date, (ii) to the extent required to comply with the provisions of Section 6.13(a), after the delivery of the most recent financial statements delivered or required to be delivered pursuant to Section 6.1, or (iii) after any Restricted Subsidiary that is not a Credit Party guarantees any Material Indebtedness of the Borrower, the Credit Parties shall cause such new or additional Subsidiary (and, without limiting the foregoing, LGSC may, in its sole discretion, cause any other Restricted Subsidiary including any Excluded Subsidiary which is organized in an Approved Jurisdiction), to deliver to the Administrative Agent (x) a Joinder Agreement to this Credit Agreement duly executed by such Restricted Subsidiary, or such other document as the Administrative Agent shall reasonably deem appropriate for such purpose pursuant to which such Restricted Subsidiary will agree to be a Guarantor under this Credit Agreement and be bound by the terms of this Credit Agreement applicable to Guarantors, including, but not limited to, Article 9; and (y) organizational documents for such Subsidiary of the type described in Section 5.1(d).

SECTION 6.14. Further Assurances.

(a) If (i)(A) property (other than Excluded Assets ) is acquired by the Borrower or a Guarantor (other than property acquired by a Guarantor which is organized outside of the United States or Canada and which is not of the type covered by the Collateral Documents governed by the law of such Guarantor’s jurisdiction then outstanding), or (B) property that is owned by the Borrower or a Guarantor which had been an Excluded Asset ceases to be an Excluded Asset, and in either case such property is not automatically subject to a perfected security interest under the Collateral Documents or (ii) a Subsidiary of the Borrower becomes a Guarantor under this Credit Agreement, then the Borrower or such Guarantor will, as soon as reasonably practical (and in any event within 20 Business Days, or such longer period as provided in the last sentence of this Section 6.14(a)) after such property’s acquisition or it no longer being an Excluded Asset or such Subsidiary becoming a Guarantor, as applicable, provide security over such property or the assets of such Guarantor in favor of the Administrative Agent on a basis that would provide a perfected Lien on such terms, in each case, consistent with the Collateral Documents, and take such additional actions (including any of the actions described in this Section 6.14) as the Administrative Agent may deem reasonable and appropriate or advisable to create and fully perfect in favor of the secured parties under the Collateral Documents a valid and enforceable security interest in such Collateral. To the extent that any Collateral Document provides that, as to any property or asset, the Borrower or the Guarantors shall have greater than 60 days to grant or perfect a security interest, or that the Borrower or the Guarantors need only use commercially reasonable efforts to grant or perfect a security interest, or otherwise limits the obligations of the Borrower or the Guarantors to comply with this Section 6.14(a), the provisions of such Collateral Document shall control.

 

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(b) Upon the reasonable request of the Administrative Agent, the Borrower and each of the Guarantors will make, execute, endorse, notify, acknowledge, file, record, register and/or deliver such agreements, documents, instruments, and further assurances (including, without limitation, UCC and PPSA financing statements, filings under the CCQ, mortgages, hypothecs, deeds of trust, vouchers, invoices, schedules, confirmatory assignments, conveyances, transfer endorsements, powers of attorney, certificates, real property surveys and reports), and take such other actions (including, without limitation, using commercially reasonable efforts to obtain countersigned acknowledgement in accordance with any relevant Collateral Document), as may be required under Applicable Law or as the Administrative Agent may deem reasonably appropriate or advisable to create, perfect, preserve or protect the security interest in the Collateral of the secured parties under the Collateral Documents, all at the Borrower’s expense. Additionally, notwithstanding anything in this Credit Agreement or in any other Fundamental Document to the contrary, under no circumstances will the Borrower or any Guarantor be obligated to (i) enter into security agreements or pledge agreements or similar agreements governed under the laws of any non-U.S., non-UK, non-Luxembourg or non-Canadian jurisdiction, (ii) make any filings or take any other actions to perfect any intellectual property except for intellectual property included in the Collateral that is registered or applied-for in the U.S., UK, Luxembourg or Canada, or (iii) take any other actions in any non-U.S., non-UK, non-Luxembourg or non-Canadian jurisdiction to create or perfect any security interests, except in each case to the extent the Borrower elects to add any Guarantor organized outside of the U.S., the United Kingdom, Luxembourg or Canada, or any Borrowing Base value attributable to any non-U.S., non-UK, non-Luxembourg or non-Canadian entities, in which case the Borrower will cause such Guarantor to enter into customary security and pledge agreements consistent with the terms of this Credit Agreement governed by the law of such jurisdiction, and the Administrative Agent (with the cooperation of such Guarantor) may take customary actions to create and perfect security interests on the assets of such Guarantor in such jurisdiction.

(c) Within 90 days of the purchase by the Borrower or the Guarantors of any owned real property which is not an Excluded Asset, the Borrower shall (i) furnish and deliver to the Administrative Agent an executed mortgage with respect to such real property and (ii) use commercially reasonable efforts to furnish and deliver to the Administrative Agent a title insurance policy for the benefit of the Administrative Agent in the amount of 120% of the Fair Market Value of such real property with extended coverage covering the real property as well as a current ALTA survey thereof, together with a surveyor’s certificate unless the title insurance policy referred to above shall not contain an exception for any matter shown by a survey (except to the extent an existing survey has been provided and specifically incorporated into such title insurance policy), each in form and substance reasonably satisfactory to the Administrative Agent. If any portion of any mortgaged property is at any time located in an area identified by the Federal Emergency Management Agency (or any successor agency) as a special flood hazard area with respect to which flood insurance has been made available under the Flood Insurance Laws, then the Borrower shall, or shall cause each Guarantor to (A) prior to the delivery of any such executed mortgage for such property, deliver to the Administrative Agent (for further distribution to the Lenders) advance notice of the location of any such property as required to permit the Administrative Agent and the Lenders to determine whether such property is located in any such special flood hazard area, (B) maintain, or cause to be maintained, with a financially sound and reputable insurer, flood insurance in an amount and other-wise sufficient to comply with all applicable rules and regulations promulgated pursuant to the Flood Insurance Laws and (C) cooperate with the Administrative Agent and provide information reasonably required by the Administrative Agent to comply with the Flood Insurance Laws and (iii) deliver to the Administrative Agent evidence of such compliance in form and substance reasonably acceptable to the Administrative Agent, including, without limitation, evidence of annual renewals of such insurance, provided that, notwithstanding this clause (c), (i) no such security interest shall be granted by the applicable Credit Party nor accepted by the Administrative Agent until the Administrative Agent has received confirmation that each Lender has completed its flood insurance due diligence to its reasonable satisfaction (it being understood that such satisfactory due diligence of such Lenders shall be deemed completed to the extent the Administrative Agent has not received written notice to the contrary within ten (10) Business Days after notice of location of such property has been made available to the Lenders), and (ii) to the extent

 

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real property which is not an Excluded Asset is acquired by any Guarantor organized outside of the United States or Canada, such Guarantor may (I) comply with this clause (c), (II) provide security over such real property pursuant to documentation and procedures customary in its jurisdiction as reasonably agreed between the Borrower and the Administrative Agent or (III) if agreed to by the Administrative Agent in its sole discretion, not provide any security over such real property.

SECTION 6.15. OFAC, FCPA.

(a) The Borrower will use the proceeds of each Credit Extension in accordance with Section 4.22(c) and Section 6.22.

(b) The Borrower will maintain in effect and enforce policies and procedures designed to promote compliance by the Credit Parties and their respective directors, officers and employees with the provisions of Section 4.22.

SECTION 6.16. [Reserved].

SECTION 6.17. Post-Closing Actions.

The Borrower and each other Credit Party shall take each action set forth on Schedule 6.17 within the period set forth on such Schedule 6.17 for such action; provided that, in each case, the Administrative Agent may, in its sole reasonable discretion, grant extensions of the time periods set forth on such Schedule 6.17 and, each representation or warranty which would be true, each covenant or agreement which would be complied with, and each condition which would be satisfied, in each case as set forth in any Fundamental Document, but for an action set forth on Schedule 6.17 not having been completed, will be deemed true, complied with, or satisfied, as the case may be, unless such action is not completed within the period set forth in Schedule 6.17 for such action (as such period may be extended by the Administrative Agent).

SECTION 6.18. ERISA Matters. No Credit Party shall, or shall cause or permit any ERISA Affiliate to, cause or permit to occur (i) an event that would result in the imposition of an ERISA Lien or (ii) an ERISA Event to the extent such ERISA Event or ERISA Lien, either alone or together with all such other ERISA Events, would reasonably be expected to have a Material Adverse Effect.

SECTION 6.19. Payment Instructions. With respect to items of Product that have been Completed at the time of initial inclusion in the Borrowing Base, the Credit Parties will use commercially reasonable efforts to instruct obligors in respect of receivables included in the Borrowing Base with respect to such items of Product to direct funds owing to a Credit Party bank account that is subject to an Account Control Agreement or to an account of a special purpose vehicle with an independent manager pursuant to arrangements as in effect on the Closing Date or are otherwise reasonably satisfactory to the Administrative Agent; provided that this Section 6.19 shall not apply with respect to funds that will be directed to a third-party financing provider in connection with a Qualified Receivables Financing so long as (x) any such receivables are not included in the Borrowing Base and (y) no Default or Event of Default has occurred and is continuing at the time such receivables are directed to be paid to a third party.

SECTION 6.20. Pledgeholder Agreements and Laboratory Access Letters. After the occurrence and continuance of an Event of Default, the Credit Parties shall promptly execute any laboratory pledgeholder agreement or access letter as may be reasonably requested by the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent, with respect to any item of Product included in the Borrowing Base at such time.

 

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SECTION 6.21. Account Control Agreements. LGSC shall, within the time periods set forth on Schedule 6.17 or, with respect to any deposit account of (i) a Credit Party established after the Closing Date or (ii) any Person who becomes a Credit Party after the Closing Date, within 180 days (or such later period may be extended by the Administrative Agent in its sole discretion, provided that such deadline shall be decreased to 30 days following the occurrence and during the continuance of an Event of Default) of such deposit account being established or such person becoming a Credit Party, as the case may be, cause each of the following accounts of the Credit Parties to be subject to an Account Control Agreement in favor of the Administrative Agent:

(a) any operating account of the Credit Parties with an average daily balance in excess of $25,000,000; provided that the Administrative Agent may elect to waive the foregoing requirement with respect to any operating account that is maintained with JPMorgan Chase Bank; and

(b) any cash collection account (including any foreign account) of the Credit Parties that is not maintained with JPMorgan Chase Bank and with an average daily balance in excess of $25,000,000 (or the Dollar equivalent thereof),

provided that (x) with respect to foreign accounts captured under clause (b) above, the foregoing requirement to enter into an Account Control Agreement shall be with respect to the equivalent document under local laws governing security interests applicable to such accounts (including notice of charge, if applicable); (y) notwithstanding anything herein or in any other Fundamental Document to the contrary, in no event shall a Credit Party be required to enter into an Account Control Agreement with respect to an Excluded Account and (z) after the occurrence and during the continuance of an Event of Default, each Credit Party shall promptly (and in any event within 30 days) execute an Account Control Agreement for any account of such Credit Party (other than any Excluded Account) as may be reasonably requested by the Administrative Agent, in form and substance reasonably satisfactory to the Administrative Agent.

SECTION 6.22. Use of Proceeds. The Credit Parties shall use the proceeds of the Loans, and Letters of Credit to be issued, in accordance with Section 4.22 and (i) for settlement of existing intercompany obligations (if any) on the Closing Date in connection with the Separation Transaction; (ii) to pay Transaction Expenses; and (iii) for working capital needs and for other general corporate purposes of the Credit Parties, including the financing of acquisitions and Investments permitted hereunder, to fund the development, production and acquisition costs of motion pictures and episodic series of Credit Parties and other transactions not prohibited by this Credit Agreement.

ARTICLE 7

NEGATIVE COVENANTS

From the date hereof and for so long as the Commitments shall be in effect, any Loan shall remain outstanding, or L/C Exposure shall remain outstanding or any monetary Obligation then due and payable shall remain unpaid or unsatisfied (other than with respect to a Specified Swap Agreement or Specified Cash Management Agreement):

SECTION 7.1. Limitations on Indebtedness. LGSC shall not, and shall not permit any of its Restricted Subsidiaries to Incur any Indebtedness other than:

(a) Indebtedness Incurred under this Credit Agreement (including any Guarantee under Article 9 of this Credit Agreement), including Indebtedness Incurred pursuant to Section 2.13;

 

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(b) Indebtedness of the Credit Parties and the Restricted Subsidiaries in existence on the Closing Date, and Refinancing Indebtedness pursuant to Section 7.1(l) in respect thereof, including without limitation the Senior Notes in an aggregate principal amount not to exceed $390,000,000; provided that Refinancing Indebtedness of the Senior Notes shall (so long as it meets the requirements of the definition of Refinancing Indebtedness other than those relating to liens or priority) be permitted to be secured on a silent junior basis so long as such Indebtedness is subject to an Intercreditor Agreement;

(c) unsecured Indebtedness (or, solely in the case of any acquisition permitted under Section 7.2, Indebtedness secured on a silent junior basis so long as such Indebtedness is subject to an Intercreditor Agreement) Incurred after the Closing Date; provided that:

(i) the terms of such Indebtedness provide for no cash payment of interest or principal on such debt prior to six (6) months after Maturity Date of the Facility; provided that unsecured (but not junior secured) Indebtedness outstanding pursuant to this clause (c) in an aggregate principal amount of up to $300,000,000 may be subject to cash payments of interest during the term of the Facility, so long as (x) the applicable cash interest rate of such Indebtedness is not greater than 10% per annum, (y) any such cash interest payable during the term of the Facility is reserved from each calculation of the Borrowing Base after the Incurrence thereof, and (z) except in the case of Indebtedness Incurred in connection with an acquisition, the Credit Parties receive the net proceeds of such Indebtedness;

(ii) after giving effect thereto and to the application of the proceeds thereof on a Pro Forma Basis, the Liquidity Ratio is not less than 1.10 to 1.00;

(iii) after giving effect thereto and to the application of the proceeds thereof on a Pro Forma Basis, the Total Debt Ratio is not less than 1.00 to 1.00;

(iv) with respect to any such Indebtedness that is secured on a junior silent basis as permitted in this Section 7.2(c), after giving effect thereto and to the application of the proceeds thereof on a Pro Forma Basis, the Secured Debt Ratio is not less than 1.00 to 1.00; and

(v) solely with respect to Indebtedness Incurred pursuant to this Section 7.2(c) in excess of $50,000,000 in any one transaction, the Administrative Agent has received an updated Liquidity Certificate and reasonable demonstrations of the Total Debt Ratio and, if applicable, Secured Debt Ratio, in each case confirming the foregoing;

(d) Guarantees by (a) the Borrower or the Guarantors of Indebtedness permitted to be Incurred by the Borrower or a Guarantor in accordance with the terms of this Credit Agreement, provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to the Loans or the Guarantees under Article 9 of this Credit Agreement, as the case may be, substantially to the same extent as such Indebtedness is subordinated to the Loans or the Guarantees under Article 9 of this Credit Agreement, as applicable, and (b) Non-Guarantor Subsidiaries of Indebtedness Incurred by Non-Guarantor Subsidiaries in accordance with the terms of this Credit Agreement;

(e) Indebtedness of any Credit Party owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by LGSC or any Restricted Subsidiary; provided, however,

 

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(i) if the Borrower is the obligor on Indebtedness owing to a Non-Guarantor Subsidiary, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations under this Credit Agreement;

(ii) if a Guarantor is the obligor on such Indebtedness and the Borrower or a Guarantor is not the obligee, such Indebtedness is expressly subordinated in right of payment to the Guarantee of such Guarantor under Article 9 of this Credit Agreement; and

(iii) (1) any subsequent issuance or transfer of Capital Stock or any other event which results in any such Indebtedness being held by a Person other than LGSC or a Restricted Subsidiary of LGSC and (2) any sale, assignment, transfer, conveyance, exchange or other disposition of any such Indebtedness of any such Indebtedness to a Person other than LGSC or a Restricted Subsidiary of LGSC, shall be deemed, in each case, to constitute an Incurrence of such Indebtedness by LGSC or such Subsidiary, as the case may be.

(f) [reserved];

(g) Indebtedness under Hedging Obligations that are Incurred (A) for the purpose of fixing or hedging interest rate risk with respect to any Indebtedness not prohibited by this Credit Agreement; (B) for the purpose of fixing or hedging currency exchange rate risk; or (C) for the purpose of fixing or hedging commodity price risk;

(h) Indebtedness (including Finance Lease Obligations) of any Credit Party or Restricted Subsidiary Incurred to finance the purchase, lease, construction or improvement of any property, plant or equipment used or to be used in the business of the Credit Parties or Restricted Subsidiaries, whether through the direct purchase of such property, plant or equipment or the purchase of Capital Stock of any Person owning such property, plant or equipment (but no other material assets), in a principal amount outstanding not to exceed, at the time of Incurrence thereof, together with all other outstanding Indebtedness incurred under this clause (h), $100,000,000;

(i) Indebtedness Incurred by a Credit Party or Restricted Subsidiary in respect of workers’ compensation claims, health, disability or other employee benefits or property, casualty or liability insurance, self-insurance obligations, performance, bid surety and similar bonds and Completion Guarantees (not for borrowed money) provided by a Credit Party or Restricted Subsidiary in the ordinary course of business;

(j) Indebtedness arising from agreements of a Credit Party or Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business or assets of a Credit Party or Restricted Subsidiary or any business, assets or Capital Stock of a Credit Party or Restricted Subsidiary that is not restricted hereunder, other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition, provided that the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to subsequent changes in value) actually received by the Credit Parties or Restricted Subsidiaries in connection with such disposition;

(k) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business, provided, however, that such Indebtedness is extinguished within five Business Days of Incurrence;

 

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(l) the Incurrence or issuance by a Credit Party or Restricted Subsidiary of Refinancing Indebtedness that serves to refund, refinance or defease any Indebtedness Incurred as permitted under Sections 7.1(a), (b), (c), (d), (h) and this Section 7.1(l) or any Indebtedness issued to so refund, refinance or defease such Indebtedness, including additional Indebtedness Incurred to pay premiums (including reasonable, as determined in good faith by the Borrower, tender premiums), defeasance costs, accrued interest and fees and expenses in connection therewith prior to its respective maturity;

(m) Indebtedness incurred by a Credit Party or a Subsidiary of a Credit Party that in any case is a Special Purpose Producer which is non-recourse to the Credit Parties other than any Special Purpose Producer, except to the extent that a Negative Pick-up Obligation, Program Acquisition Guarantee or short-fall guarantee, or any other guarantee permitted by Section 7.1(s) below, would be considered recourse Indebtedness of the Credit Parties (such Indebtedness, “Production Financing”); provided that (x) any Lien securing such Indebtedness shall be limited to the projects being financed by such Production Financing, and (y) any such Production Financing shall not be cross-collateralized with respect to more than five (5) separate items of Product (for the avoidance of doubt, for purposes of this limitation on cross-collateralization, all episodes comprising a single season of a series shall be treated as a single item of Product) at any one time without the Administrative Agent’s prior consent;

(n) (A) to the extent constituting Indebtedness pursuant to the definition thereof, any Permitted Slate Financing and (B) any Indebtedness incurred by any ProdCo to the extent not prohibited by the definition of “Permitted Slate Transaction”, in each case solely to the extent that (x) no Default or Event of Default shall have occurred and be continuing as of the date of Incurrence of such Indebtedness (unless the Administrative Agent agrees to the contrary) and (y) the distribution rights of the Product being financed under such Permitted Slate Transaction continue to be licensed to a Credit Party and the assets held by the obligors of such Indebtedness are transferred to the Credit Parties following the termination of such Indebtedness;

(o) Replication Advances not to exceed $10,000,000 outstanding in the aggregate at the time of Incurrence thereof, which are otherwise entered into in the ordinary course of business and on terms and conditions substantially no less favorable in any material respect, taken as a whole, to the Credit Parties as similar transactions entered into by LGSC or its Subsidiaries prior to the Closing Date; provided that, the granting of a Lien in respect of the related assets, which is junior in right to the Lien on such assets which secures the Loans, to secure any such Replication Advances will not be considered to be less favorable to the Credit Parties;

(p) Indebtedness secured solely by liens on tax credits which is otherwise non-recourse to the Credit Parties or Restricted Subsidiaries, other than customary representations and warranties;

(q) liabilities relating to profit participations, revenue participations, talent participations, deferments and guild residuals, and music royalties, collection agencies and tribunals (e.g., ASCAP), arising in the ordinary course of business in connection with the production, acquisition and/or distribution of Product;

(r) unsecured liabilities (including without limitation Guarantees) or liabilities (including without limitation Guarantees) secured solely by the related rights related to the acquisition, production or distribution of Product or acquisitions of rights incurred in the ordinary course of business (including co-productions, co-ventures and other co-financing arrangements), which are not otherwise prohibited hereunder, in an amount no greater than $100,000,000 or such higher amount as may be agreed by the Administrative Agent outstanding in the aggregate at the time of Incurrence thereof;

 

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(s) Negative Pick-up Obligations, Program Acquisition Guarantees and direct or indirect guarantees (including minimum guarantees) related to the acquisition or production of items of Product in the ordinary course of business; provided that no such Negative Pick-Up Obligation, Program Acquisition Guarantee, or other guarantee shall be cross-collateralized with respect to more than five (5) separate items of Product (for the avoidance of doubt, for purposes of this limitation on cross-collateralization, all episodes comprising a single season of a series shall be treated as a single item of Product) at any one time without the Administrative Agent’s prior consent;

(t) (1) Indebtedness outstanding under the Outside IP Debt Facilities as of the date hereof, plus any Indebtedness incurred from time to time pursuant to accordions provided for thereunder as in effect on the Closing Date, plus any additional Indebtedness incurred pursuant to any Outside IP Debt Facility on the basis of assets supporting such facility and (2) any Refinancing Indebtedness in respect thereof;

(u) (1) Indebtedness outstanding under the Tax Credit Facility, the Backlog Facility, any Production Financing, any Receivables Financing, any Permitted Slate Financing, and similar financings plus any additional Indebtedness incurred on the basis of assets supporting such facility and (2) any Refinancing Indebtedness in respect thereof; provided that any Production Financing (and similar financings) permitted hereunder shall not be cross-collateralized with respect to more than five (5) separate items of Product (for the avoidance of doubt, for purposes of this limitation on cross-collateralization, all episodes comprising a single season of a series shall be treated as a single item of Product) at any one time without the Administrative Agent’s prior consent; and

(v) unsecured notes issued pursuant to any production payment extension agreement or payment services agreement or similar agreements outstanding from time to time.

For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness Incurred pursuant to and in compliance with, this Section 7.1:

(i) [reserved];

(ii) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included (i.e., no double-counting);

(iii) if obligations in respect of letters of credit are Incurred pursuant to a credit facility and are being treated as Incurred pursuant to Section 7.1(a) or (b) above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

(iv) the principal amount of any Disqualified Stock of a Credit Party or Restricted Subsidiary, or Preferred Stock of a Restricted Subsidiary that is not a Guarantor, will be, subject to the next succeeding paragraph, equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(v) Indebtedness permitted by this Section 7.1 need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this Section 7.1 permitting such Indebtedness;

(vi) [reserved]; and

 

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(vii) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with GAAP.

Accrual of interest, accrual of dividends, the accretion of accreted value or the amortization of debt discount, the payment of interest in the form of additional Indebtedness and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for purposes of this Section 7.1. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount or the aggregate principal amount outstanding in the case of Indebtedness issued with interest payable in kind and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted Subsidiary as of such date (and, if such Indebtedness is not permitted to be Incurred as of such date under this Section 7.1, the Borrower shall be on such date in Default under this Section 7.1).

For purposes of determining compliance with any Dollar denominated restriction on the Incurrence of Indebtedness, the Dollar equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is Incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Dollar denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Dollar denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 7.1, the maximum amount of Indebtedness that the Credit Parties may Incur pursuant to this Section 7.1 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

SECTION 7.2. Limitations on Restricted Payments.

(a) LGSC shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly:

(i) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of a Credit Party’s or Restricted Subsidiary’s Capital Stock (including any payment in connection with any merger, amalgamation or consolidation involving any Credit Party or Restricted Subsidiary) other than:

(A) dividends or distributions by a Credit Party or Restricted Subsidiary payable solely in Capital Stock (other than Disqualified Stock) of such Credit Party or Restricted Subsidiary;

(B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any Capital Stock issued by a Restricted Subsidiary that is not a Wholly-Owned Subsidiary, a Credit Party or Restricted Subsidiary holding such Capital Stock receives at least its pro rata share of such dividend or distribution; or

 

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(C) cash payments made to (or on behalf of) current and former officers, directors and employees of LGSC and its Subsidiaries to pay tax liabilities incurred by such Persons upon the vesting of equity interests of any kind held thereby, including restricted stock units;

(ii) purchase, redeem, retire or otherwise acquire for value any Capital Stock of LGSC or any direct or indirect parent of LGSC held by Persons other than LGSC or a Restricted Subsidiary (other than in exchange for Capital Stock of LGSC (other than Disqualified Stock)), including in connection with any merger, amalgamation or consolidation;

(iii) make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, prior to any scheduled repayment, scheduled sinking fund payment, or scheduled maturity, any Subordinated Obligations, other than:

(A) Indebtedness permitted under Section 7.1(e); or

(B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement;

(iv) make any Restricted Investment in any Person; or

(v) make any payment in respect of any obligation owing under an Outside IP Debt Facility, Tax Credit Facility or Backlog Facility, including without limitation any payment of any principal, amortization, fees, interest, or reserves in respect of such Outside IP Debt Facility, Tax Credit Facility or Backlog Facility;

(all such payments and other actions referred to in the foregoing clauses (i) through (v) (other than any exception thereto) shall be collectively referred to as a “Restricted Payment”), unless, at the time of and after giving effect to such Restricted Payment, either:

(A) such Restricted Payment is made pursuant to the RP/Investments Basket (as calculated on the date of such Restricted Payment after giving effect to all Restricted Payments and/or Investments then outstanding pursuant to the RP/Investments Basket), provided that on a Pro Forma Basis after giving effect to such Restricted Payment,

(1) no Default or Event of Default shall have occurred and be continuing (or would result therefrom);

(2) to the extent an amount equal to the relevant Restricted Payment will either (x) be applied to pay down obligations under an Outside IP Debt Facility or (y) be made to a Restricted Subsidiary (or an Affiliate thereof) that is an obligor under an Outside IP Debt Facility, no event of default has occurred and is continuing under such Outside IP Debt Facility which has not been remedied, cured, waived or consented to within any applicable grace period; and

 

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(3) with respect to any Restricted Payment made pursuant to this clause (A) in excess of $50,000,000, the Administrative Agent shall have received an Officer’s Certificate confirming the foregoing clause (1) and shall have the right to reasonably request pro forma computations of the Liquidity Ratio and utilization of the RP/Investments Basket;

(B) other Restricted Payments per fiscal year in an aggregate amount not to exceed $100,000,000, so long as, in each case on a Pro Forma Basis after giving effect to such Restricted Payment,

(1) no Default or Event of Default shall have occurred and be continuing (or would result therefrom);

(2) to the extent an amount equal to the relevant Restricted Payment will either (x) be applied to pay down obligations under an Outside IP Debt Facility or (y) be made to a Restricted Subsidiary (or an Affiliate thereof) that is an obligor under an Outside IP Debt Facility, no event of default has occurred and is continuing under such Outside IP Debt Facility which has not been remedied, cured, waived or consented to within any applicable grace period;

(3) the Secured Debt Ratio is at least 1.75 to 1.00;

(4) the Liquidity Ratio is be at least 1.20 to 1.00; and

(5) with respect to any Restricted Payment made pursuant to this clause (B) in excess of $50,000,000, the Administrative Agent shall have received an updated Liquidity Certificate and a reasonable demonstration of the Secured Debt Ratio reflecting the foregoing; or

(C) other Restricted Payments so long as, in each case on a Pro Forma Basis after giving effect to such Restricted Payment,

(1) no Default or Event of Default shall have occurred and be continuing (or would result therefrom);

(2) to the extent an amount equal to the relevant Restricted Payment will either (x) be applied to pay down obligations under an Outside IP Debt Facility or (y) be made to a Restricted Subsidiary (or an Affiliate thereof) that is an obligor under an Outside IP Debt Facility, no event of default has occurred and is continuing under such Outside IP Debt Facility which has not been remedied, cured, waived or consented to within any applicable grace period;

(3) the Secured Debt Ratio is at least 1.75 to 1.00;

(4) the Liquidity Ratio is be at least 1.30 to 1.00; and

(5) with respect to any Restricted Payment made pursuant to this clause (C) in excess of $50,000,000, the Administrative Agent shall have received an updated Liquidity Certificate and a reasonable demonstration of the Secured Debt Ratio reflecting the foregoing.

 

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(b) The foregoing Section 7.2(a) will not prohibit:

(i) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Capital Stock, Disqualified Stock or Subordinated Obligations of the Borrower or any Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of LGSC or contributions to the equity capital of LGSC (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of LGSC or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by LGSC or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination);

(ii) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations of the Borrower or any Guarantor made by exchange for, or out of the proceeds of the substantially concurrent sale of, Subordinated Obligations of the Borrower or any Guarantor that, in each case, is permitted to be Incurred under Section 7.1 and that, in each case, constitutes Refinancing Indebtedness;

(iii) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Disqualified Stock of a Credit Party or Restricted Subsidiary made by exchange for or out of the proceeds of the substantially concurrent sale of Disqualified Stock of such Credit Party or Restricted Subsidiary, as the case may be, that, in each case, is permitted to be Incurred under Section 7.1 and that, in each case, constitutes Refinancing Indebtedness;

(iv) dividends or distributions paid within 60 days after the date of declaration if at such date of declaration such dividends or distributions would have complied with this provision;

(v) so long as no Default or Event of Default shall have occurred and be continuing (or would result therefrom) at the time any such purchase or redemption is announced, (a) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock of LGSC or any direct or indirect parent of LGSC, (b) options, warrants, equity appreciation rights or other rights to purchase or acquire Capital Stock of LGSC or any direct or indirect parent of LGSC or (c) cash dividends distributed to any direct or indirect parent of LGSC for the purpose of consummating such purchase, redemption or other acquisition, cancellation or retirement for value; provided that such redemptions or repurchases pursuant to this clause (v) will not exceed $75,000,000 in the aggregate during any fiscal year;

(vi) [reserved];

(vii) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants, other rights to purchase Capital Stock or other convertible securities if such Capital Stock represents a portion of the exercise price thereof;

(viii) the declaration and payment of cash dividends, distributions, loans or other transfers by any Subsidiaries of LGSC to LGSC or any direct or indirect parent of the Subsidiaries, directly or indirectly, in amounts required for LGSC or such parent entity to pay, in each case without duplication:

 

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(A) federal, provincial, state, local or foreign income taxes payable to the extent that such income taxes are directly attributable to the income of LGSC and/or its Subsidiaries (rather than the income of LGSC or such parent entity resulting from distributions of property from the Subsidiaries) and only to the extent such taxes are not actually offset by applicable tax credits, tax losses or other assets; provided that in each case the amount of such payments in any fiscal year does not exceed the amount that LGSC and/or its Subsidiaries would be required to pay in respect of foreign, federal, provincial, state and local taxes for such fiscal year were LGSC and/or its Subsidiaries to pay such taxes separately from any such parent entity;

(B) franchise taxes and other fees required to maintain such parent entity’s legal existence; and

(C) corporate overhead expenses of LGSC and its Subsidiaries Incurred in the ordinary course of business;

(ix) purchases of Receivables Financing Assets pursuant to a Receivables Financing Repurchase Obligation in connection with a Qualified Receivables Financing and the payment or distribution of Receivables Financing Fees, so long as the acquired Receivables Financing Assets become Collateral;

(x) so long as (x) no Default or Event of Default has occurred and is continuing and (y) no event of default has occurred and is continuing under any Outside IP Debt Facility that has not been remedied, cured, waived or consented to within any applicable grace period, Restricted Payments in respect of obligations (including mandatory prepayments required for financial covenant compliance) owing under the Outside IP Debt Facilities in an aggregate amount not to exceed, as of any date of determination, the sum of (1) $50,000,000 plus (2) the remainder, if any, of (A) actual cash receipts collected directly or indirectly by the Restricted Subsidiaries and attributable to the collateral supporting the Outside IP Debt Facilities during the most recently-completed 12-month period minus (B) the actual amount of payments made by or on behalf of the Restricted Subsidiaries in respect of amortization, interest, and/or mandatory prepayments required for financial covenant compliance, in each case under an Outside IP Debt Facility and during the most recently-completed 12-month period; provided that anything to the contrary herein notwithstanding, and regardless of whether a Default or Event of Default (or event of default under an Outside IP Debt Facility) exists, there shall be no restriction on the ability of the Credit Parties or Restricted Subsidiaries to make payments is respect of obligations owing under an Outside IP Debt Facility from current net receipts of the Credit Parties or Restricted Subsidiaries generated from the collateral supporting such Outside IP Debt Facility;

(xi) any Restricted Payments made in connection with or pursuant to the Separation Transaction and the payment any fees, costs and expenses (including all legal, accounting and other professional fees, costs and expenses) related thereto to the extent constituting a Restricted Payment and described in Schedule 7.2(b);

(xii) any Restricted Payments made in respect of any Tax Credit Facility by Restricted Subsidiaries that are the primary obligors under such Tax Credit Facility in amounts equal to proceeds generated by assets supporting such Tax Credit Facility; and

(xiii) any Restricted Payments made in respect of any Backlog Facility by Restricted Subsidiaries that are the primary obligors under such Backlog Facility in amounts equal to proceeds generated by assets supporting such Backlog Facility.

 

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(c) The amount of all Restricted Payments (other than cash) shall be the Fair Market Value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by a Credit Party or Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.

(d) All of LGSC’s Subsidiaries will be Restricted Subsidiaries, except for the Initial Unrestricted Subsidiaries and any other Subsidiaries designated as Unrestricted Subsidiaries in accordance with the terms hereof from time to time. The Borrower shall not be permitted to be designated as an Unrestricted Subsidiary. The Borrower will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except in accordance with the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by LGSC and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments and/or, in the discretion of LGSC, Investments, and will count as usage of the RP/Investments Basket unless and until such time it could have been made pursuant to Section 7.2(a)(C); provided that LGSC may from time to time designate any Special Purpose Producer as an Unrestricted Subsidiary. Such designation will be permitted only if a Restricted Payment (and/or Permitted Investment) in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in this Credit Agreement.

SECTION 7.3. Limitation on Liens. LGSC shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, Incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Subsidiaries), or income or profits therefrom, whether owned on the Closing Date or acquired after that date.

SECTION 7.4. Limitation on Restrictions on Distribution from Restricted Subsidiaries.

(a) LGSC shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:

(i) pay dividends or make any other distributions on its Capital Stock to LGSC or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on any other Capital Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock); or

(ii) make any loans or advances to the Borrower or any Restricted Subsidiary (it being understood that the subordination of loans or advances made to the Borrower or any Restricted Subsidiary to other Indebtedness Incurred by the Borrower or any Restricted Subsidiary shall not be deemed a restriction on the ability to make loans or advances).

(b) The foregoing Section 7.4(a) will not apply to encumbrances or restrictions existing under or by reason of:

(i) contractual encumbrances or restrictions pursuant to an agreement in effect on the Closing Date;

(ii) this Credit Agreement and the Collateral Documents;

 

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(iii) any agreement or other instrument of a Person acquired by the Borrower or any Restricted Subsidiaries in existence at the time of such acquisition (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired (including after acquired property);

(iv) any amendment, restatement, modification, renewal, supplement, refunding, replacement or refinancing of an agreement or arrangement referred to in Section 7.4(a)(ii); provided, however, that any encumbrances or restrictions contained in any such amendments, restatements, modifications, renewals, supplements, refundings, replacements, or refinancings are, in the good faith judgment of the Borrower, no less favorable in any material respect, taken as a whole, to the Lenders than the encumbrances and restrictions contained in the agreements or arrangement so amended, restated, modified, renewed, supplemented, refunded, replaced or refinanced;

(v) purchase money obligations and Finance Lease Obligations permitted under this Credit Agreement;

(vi) customary restrictions on cash or other deposits or net worth imposed by customers or by co-production partners, Joint Venture partners or similar parties under contracts;

(vii) any customary provisions in Joint Venture agreements and other similar agreements;

(viii) any customary provisions in leases, subleases or licenses and other agreements entered into by the Borrower or any Restricted Subsidiary;

(ix) encumbrances or restrictions arising or existing by reason of Applicable Law or any applicable rule, regulation or order;

(x) any restriction with respect to the Borrower or a Restricted Subsidiary or any asset or line of business thereof imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of the Borrower or such Restricted Subsidiary or any asset or line of business thereof pending the closing of such sale or disposition;

(xi) imposed by any agreement relating to Indebtedness or Investments, as applicable, permitted to be Incurred in accordance with Section 7.1, 7.2 or the definition of “Permitted Investment,” in each case, if such restrictions or conditions apply only to the property or assets securing such Indebtedness or Investments and/or only to the Restricted Subsidiary incurring such Indebtedness or in which such Investments are made, or its Subsidiaries;

(xii) other Indebtedness, Disqualified Stock or Preferred Stock of the Borrower or any Restricted Subsidiary so long as such encumbrances and restrictions contained in any agreement or instrument will not materially affect Borrower’s or any Guarantor’s ability to make anticipated principal or interest payments on the Loans (in each case, as determined in good faith by Borrower), provided that such Indebtedness, Disqualified Stock or Preferred Stock is permitted to be Incurred pursuant to Section 7.1;

(xiii) any restrictions or encumbrances imposed on Special Purpose Producers or ProdCos, or otherwise in connection with any Permitted Slate Financing or Permitted Slate Transaction, in each case which are customary for slate or production financing or similar transactions; and

 

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(xiv) any encumbrance or restriction of a Receivables Subsidiary effected in connection with a Qualified Receivables Financing; provided, however, that such restrictions apply only to such Receivables Subsidiary.

SECTION 7.5. Limitation on Affiliate Transactions.

(a) LGSC shall not, and shall not permit any Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease, exchange or other disposition of any property or asset or the rendering of any service) with any Affiliate of LGSC (an “Affiliate Transaction”) involving consideration in excess of $30,000,000 unless:

(i) the terms of such Affiliate Transaction are not materially less favorable to the Credit Parties taken as a whole than those that could have been obtained by the Credit Parties in a comparable transaction with a Person that is not an Affiliate; and

(ii) in the event such Affiliate Transaction involves an aggregate consideration in excess of $60,000,000 (or with respect to transactions involving any item of Product, $90,000,000), the terms of such transaction have been approved by a majority of the members of the Board of Directors of LGSC and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (i) above).

(b) The preceding Section 7.5(a) will not apply to:

(i) (A) transactions between or among LGSC and any of its Restricted Subsidiaries, and (B) any merger, amalgamation, or consolidation of LGSC and any direct parent of LGSC, provided, however, that such parent shall have no Indebtedness other than Indebtedness that would be permitted to be Incurred by the Borrower at the time of such merger, amalgamation, or consolidation and such merger, amalgamation, or consolidation is otherwise not prohibited by the terms of this Credit Agreement and such parent shall join this Facility as a Credit Party;

(ii) any Restricted Payment permitted to be made under Section 7.2 or any Permitted Investments;

(iii) any loan or issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment agreements and other compensation arrangements, options to purchase Capital Stock of LGSC, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans and/or indemnity provided on behalf of Officers and employees;

(iv) the payment of reasonable and customary fees and reimbursement of expenses paid to and indemnity provided on behalf of, directors of LGSC or any Restricted Subsidiary;

(v) any agreement as in effect as of the Closing Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time, so long as any such amendment, modification, supplement, extension or renewal is not more disadvantageous to the Lenders in any material respect in the good faith judgment of LGSC when taken as a whole than the terms of the agreements in effect on the Closing Date;

 

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(vi) any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by or merged, amalgamated or consolidated into a Credit Party or a Restricted Subsidiary; provided that such agreement was not entered into in contemplation of such acquisition or merger, amalgamation, or consolidation, or any amendment thereto (so long as any such agreement is not disadvantageous to the Lenders in the good faith judgment of the Borrower when taken as a whole as compared to the applicable agreement as in effect on the date of such acquisition or merger, amalgamation, or consolidation);

(vii) transactions with customers, clients, suppliers, Joint Venture partners or purchasers or sellers of goods or services (including, without limitation, licensing, production, co-production, services (e.g., shared services agreements), advertising, distribution, promotional or delivery agreements), in each case in the ordinary course of the business of the Credit Parties and the Restricted Subsidiaries and otherwise in compliance with the terms of this Credit Agreement; provided that in the reasonable determination of the Borrower, such transactions are on terms that are no less favorable to the Credit Parties than those that could reasonably have been obtained at the time of such transactions in a comparable transaction by the Credit Parties and the Restricted Subsidiaries with an unrelated Person;

(viii) any issuance or sale of Capital Stock (other than Disqualified Stock) to affiliates of LGSC and the granting of registration and other customary rights in connection therewith;

(ix) the entering into of any tax sharing agreement or arrangement and the performance thereunder;

(x) any contribution to the capital of LGSC, or any sale of Capital Stock of LGSC (other than Disqualified Stock);

(xi) transactions permitted by, and complying with, the provisions of Section 7.6;

(xii) pledges of Capital Stock of Unrestricted Subsidiaries;

(xiii) any employment agreements entered into by the Credit Parties or Restricted Subsidiaries in the ordinary course of business;

(xiv) any distribution, license, participation, sale, lease, production, reproduction or co-financing agreement, guarantee, negative pick-up or other acquisition agreement, or other similar agreement to any of the foregoing, entered into in the ordinary course of business and on an arm’s length basis;

(xv) any Permitted Slate Transaction;

(xvi) any transaction effected as part of a Qualified Receivables Financing; and

(xvii) for the avoidance of doubt, transactions with Persons that cease to be Affiliates upon the consummation of the Separation Transaction (including, for the avoidance of doubt, any amendments, renewals or extensions entered into after the consummation of the Separation Transaction of agreements originally entered into with such Persons prior to the consummation of the Separation Transaction).

 

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SECTION 7.6. Limitation on Mergers and Consolidations.

(a) Neither LGSC nor the Borrower will merge, amalgamate or consolidate with or into (whether or not LGSC or the Borrower is the surviving corporation), or convey, transfer or lease all or substantially all of its assets to, any Person, unless:

(i) LGSC or the Borrower, as applicable, is the surviving person or the resulting, surviving or transferee Person (the “Successor Person”) is a corporation organized and existing under the laws of Canada, any Province of Canada, the United States of America, any State of the United States or the District of Columbia;

(ii) the Successor Person (if not LGSC or the Borrower) will expressly assume, by documentation executed and delivered to the Administrative Agent, in form reasonably satisfactory to the Administrative Agent, all the obligations of LGSC or the Borrower, as applicable, under this Credit Agreement and the Collateral Documents (as applicable) and shall cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by Applicable Law to preserve and protect the Lien on the Collateral owned by or transferred to the Successor Person, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the applicable PPSA, the CCQ, the UCC or other similar statute or regulation of the relevant states or jurisdictions;

(iii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the Successor Person or any Subsidiary of the Successor Person as a result of such transaction as having been Incurred by the Successor Person or such Subsidiary at the time of such transaction), no Default or Event of Default shall have occurred and be continuing;

(iv) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four quarter period, the Credit Parties shall have a pro forma Liquidity Ratio for the next 12 months of not less than 1.1 to 1.0;

(v) each Guarantor (unless it is the other party to the transactions above, in which case the next succeeding paragraph shall apply) shall have by documentation in form and substance reasonably satisfactory to the Administrative Agent, confirmed that its Guarantee under Article 9 of this Credit Agreement shall apply to such Person’s obligations in respect of this Credit Agreement and shall have by written agreement confirmed that its obligations under the Collateral Documents Agreement shall continue to be in effect and shall cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by Applicable Law to preserve and protect the Lien on the Collateral owned by such Guarantor, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the applicable PPSA, the CCQ, the UCC or other similar statute or regulation of the relevant provinces, states or jurisdictions; and

 

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(vi) the Borrower shall have delivered to the Administrative Agent an Officer’s Certificate stating that such merger, amalgamation, consolidation, conveyance or transfer and such supplemental documentation (if any) comply with the terms of this Credit Agreement and any other documentation and other information about the Successor Person as shall have been reasonably required by any Lender through the Administrative Agent that such Lender shall have reasonably determined is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulation, including the Patriot Act and the PCML Act.

(b) Notwithstanding clause (iii) and (iv) of the preceding Section 7.6(a):

(i) any Restricted Subsidiary may merge with, amalgamate with, consolidate with or into or transfer all or part of its properties and assets to LGSC or the Borrower so long as no Capital Stock of the Restricted Subsidiary is distributed to any Person other than LGSC or the Borrower or another Restricted Subsidiary; and

(ii) the Borrower may merge with, amalgamate with or consolidate with an Affiliate of LGSC solely for the purpose of reincorporating, reorganizing, continuing or otherwise causing the Borrower to become an entity governed by the federal laws of Canada, a Province or territory of Canada or a State or territory of the United States or the District of Columbia, so long as the amount of Indebtedness of LGSC and its Restricted Subsidiaries is not increased thereby; provided that, in the case of a Restricted Subsidiary that merges, amalgamates or consolidates into the Borrower, the Borrower will not be required to comply with Section 7.6(a)(iv); provided, further, that, in the event the Borrower is reincorporated, reorganized, continued or is otherwise caused to become an entity governed by the federal laws of Canada or a Province or territory of Canada, the Administrative Agent shall have received any documentation reasonably requested by it to (x) to preserve and protect the Lien on the Collateral pledged by or transferred to the surviving entity and (y) satisfy any applicable “know your customer” and anti-money laundering rules and regulations and other regulatory requirements applicable to Canadian borrowers, including the PCML Act.

(c) The Borrower and LGSC will not, and will not permit any Guarantor to, merge, amalgamate or consolidate with or into (whether or not the Borrower or such Guarantor is the surviving corporation), or convey, transfer or lease all or substantially all of its properties to any Person (other than with or into, or to, the Borrower or a Guarantor) unless:

(i) if such entity remains a Guarantor, the resulting, surviving or transferee Person (the “Successor Guarantor”) will be a corporation, partnership, trust or limited liability company organized and existing under the laws of Luxembourg, any country within the United Kingdom, Canada, a Province of Canada, the United States of America, any State of the United States or the District of Columbia or the jurisdiction of organization of such Guarantor and shall assume by written agreement all the obligations of such Guarantor under the Collateral Documents (as applicable) and shall cause such amendments, supplements or other instruments to be executed, filed and recorded in such jurisdictions as may be required by Applicable Law to preserve and protect the Lien on the Collateral pledged by or transferred to the surviving entity, together with such financing statements or comparable documents as may be required to perfect any security interest in such Collateral which may be perfected by the filing of a financing statement or similar document under the applicable PPSA, the CCQ, the UCC or other similar statute or regulation of the relevant states, provinces or jurisdictions in each case in a form reasonably satisfactory to the Administrative Agent;

 

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(ii) the Successor Guarantor, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under this Credit Agreement and its Guarantee under Article 9 hereof pursuant to an Instrument of Assumption and Joinder and supporting documentation in form and substance reasonably satisfactory to the Administrative Agent;

(iii) immediately after giving effect to such transaction (and treating any Indebtedness that becomes an obligation of the resulting, surviving or transferee Person or any Restricted Subsidiary as a result of such transaction as having been Incurred by such Person or such Restricted Subsidiary at the time of such transaction), no Event of Default shall have occurred and be continuing; and

(iv) the Borrower will have delivered to the Administrative Agent an Officer’s Certificate stating that such consolidation, merger, winding up or disposition and such supplemental documentation (if any) comply with the terms of this Credit Agreement.

Except as otherwise described in this Credit Agreement, the Successor Guarantor shall succeed to, and be substituted for, such Guarantor under this Credit Agreement and the Guarantee of such Guarantor.

Notwithstanding this Section 7.6(c), without complying with any of clauses (i)-(iv) of this Section 7.6(c), any Guarantor (other than LGSC) may merge, amalgamate or consolidate with or into or transfer all or part of its properties and assets (A) to another Guarantor or the Borrower or (B) to any other Person in a transaction permitted by Section 7.8 or by the definition of the term “Asset Sale”.

Additionally, notwithstanding this Section 7.6(c), any Guarantor (other than LGSC) may merge, amalgamate or consolidate with a Restricted Subsidiary solely for the purpose of reincorporating, reorganizing, continuing or otherwise causing such Guarantor to become an entity governed by the federal laws of Canada, a Province or territory of Canada or a State of the United States or the District of Columbia, as long as the amount of Indebtedness of such Guarantor and its Restricted Subsidiaries is not increased thereby.

(d) The Borrower or a Guarantor (other than LGSC), as the case may be, will be released from its obligations under this Credit Agreement and its Guarantee under Article 9 hereof, as the case may be, and the Successor Person or Successor Guarantor, as the case may be, will succeed to, and be substituted for, and may exercise every right and power of, the Borrower or a Guarantor, as the case may be, under this Credit Agreement, the Guarantee under Article 9 hereof and the Collateral Documents; provided that, in the case of a lease of all or substantially all its assets, the Borrower will not be released from the obligation to pay the principal of and interest on the Loans and a Guarantor will not be released from its obligations under Article 9 hereof.

SECTION 7.7. Limitation on Lines of Business. LGSC shall not, and shall not permit any of its Restricted Subsidiaries to, engage in any material respect in any business other than a Related Business.

SECTION 7.8. Limitation on Sales of Assets. LGSC shall not, and shall not permit any of its Restricted Subsidiaries to, cause or make any Asset Sale of an item of Collateral, except:

(a) outright sales of items of Product (which for the avoidance of doubt may include Collateral) outside the ordinary course of business (other than in connection with transferring assets to Outside IP Debt Facilities and, for the avoidance of doubt, other than any transfers in connection with a Receivables Financing) so long as:

(i) no Default or Event of Default shall have occurred and be continuing on a Pro Forma Basis after giving effect to such Asset Sale;

 

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(ii) the net cash proceeds of such Asset Sale are received directly or indirectly by a Credit Party and are applied either to repay the Obligations or reinvested into the business of the Credit Parties within ninety (90) days following receipt thereof; and

(iii) if the aggregate value of Asset Sales made pursuant to this Section 7.8(a) exceeds $400,000,000, (A) the Liquidity Ratio shall not be less than 1.25 to 1.0 and (B) the Secured Debt Ratio shall not be less than 1.25 to 1.0, in each case on a Pro Forma Basis after giving effect to such Asset Sale;

(b) transfers of assets to an Affiliate in connection with an Outside IP Debt Facility (including, without limitation, assets that previously constituted Borrowing Base assets) pursuant to this Section 7.8(b) not to exceed $200,000,000 (which, for the avoidance of doubt, the Credit Parties may complete without any Administrative Agent or Lender approval), which amount may be replenished, after usage thereof, to up to no greater than $200,000,000 with the net value subsequently received by the Credit Parties from such Outside IP Debt Facility, in each case, so long as:

(i) no Event of Default shall have occurred and be continuing on a Pro Forma Basis;

(ii) no event of default has occurred and is continuing under any Outside IP Debt Facility that has not been remedied, cured, waived or consented to within any applicable grace period;

(iii) such transfer of assets shall be structured in a manner as determined by the Borrower in good faith that so long as no event of default or breach exists under the applicable Outside IP Debt Facility and to extent such Credit Party has been granted the right to exploit such assets either (1) cash amounts equal to any receivables derived from the assets being so transferred following the license thereof shall constitute assets of the Credit Parties or (2) cash amounts equal to any proceeds from such Outside IP Debt Facility attributable to such transferred assets are received directly or indirectly by a Credit Party and, following the occurrence and during the continuation of a Default or Event of Default, applied to repay outstanding Obligations (if any); and

(iv) with respect to any transfer of assets pursuant to this Section 7.8(b) with a value in excess of $50,000,000, the Administrative Agent shall have received (1) a schedule of the assets being transferred and (2) pro forma computations of the Borrowing Base and the Liquidity Ratio, in each case to the extent impacted by such transfer.

(c) additional transfers of assets to an Affiliate in connection with an Outside IP Debt Facility (including, without limitation, assets that previously constituted Borrowing Base assets) not to exceed, together with the value of assets transferred to an Affiliate in connection with an Outside IP Debt Facility pursuant to clause (16) of the definition of “Asset Sale”, $300,000,000 of additional value (not to exceed, together with the value of assets transferred pursuant to the foregoing Section 7.8(b), $500,000,000 in the aggregate), in each case with the Administrative Agent’s prior approval (not to be unreasonably withheld), which amount may be replenished, after usage thereof, to up to no greater than $300,000,000, with the net value subsequently received by the Credit Parties from such Outside IP Debt Facilities (excluding for these purposes the proceeds of the distribution rights licensed to a Credit Party which are received by the Credit Parties free and clear of the Liens supporting the relevant Outside IP Debt Facility)

 

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from the assets that were previously contributed to the relevant Affiliate in reliance of this Section 7.8(c) (the aggregate $500,000,000 amount available to be transferred pursuant to Sections 7.8(b) and (c) is collectively referred to as the “Outside IP Debt Facilities Transfer Basket”); provided that in the event that the Credit Parties receive a transfer of assets previously pledged (excluding for these purposes the proceeds of the distribution rights licensed to a Credit Party which are received by the Credit Parties free and clear of the Liens supporting the relevant Outside IP Debt Facility) to an Outside IP Debt Facility (the value of such incoming assets, the “Hold Value”), then the Credit Parties shall be entitled to transfer assets of a similar nature to those representing the Hold Value (as determined by the Borrower in its reasonable discretion and in consultation with the Administrative Agent) to an Outside IP Debt Facility within 120 calendar days of receipt of such incoming assets, with the value of such outgoing assets (not to exceed the Hold Value) not counting against the Outside IP Debt Facilities Transfer Basket; provided, further, that, any Asset Sale pursuant to this clause (c) shall be permitted so long as:

(i) no Default or Event of Default shall have occurred and be continuing on a Pro Forma Basis;

(ii) no event of default has occurred and is continuing under any Outside IP Debt Facility that has not been remedied, cured, waived or consented to within any applicable grace period;

(iii) such transfer of assets shall be structured in a manner as determined by the Borrower in good faith that so long as no event of default or breach exists under the applicable Outside IP Debt Facility and to extent such Credit Party has been granted the right to exploit such assets either (1) cash amounts equal to any receivables derived from the assets being so transferred following the license thereof shall constitute assets of the Credit Parties, or (2) cash amounts equal to any proceeds from such Outside IP Debt Facility attributable to such transferred assets are received directly or indirectly by a Credit Party and, following the occurrence and during the continuation of a Default or Event of Default, applied to repay outstanding Obligations (if any); and

(iv) with respect to any transfer of assets pursuant to this Section 7.8(c) with a value in excess of $50,000,000, the Administrative Agent shall have received (1) a schedule of the assets being transferred and (2) pro forma computations of the Borrowing Base and the Liquidity Ratio, in each case to the extent impacted by such transfer.

(d) further transfers of assets to an Affiliate in connection with an Outside IP Debt Facility (which shall not, for the avoidance of doubt, constitute usage of the Outside IP Debt Facilities Transfer Basket) solely of intellectual property acquired (as opposed to produced or developed) by the Credit Parties after the Closing Date, so long as:

(i) no Default or Event of Default shall have occurred and be continuing after giving pro forma effect to such transfers of assets,

(ii) no event of default has occurred and is continuing under any Outside IP Debt Facility that has not been remedied, cured, waived or consented to within any applicable grace period,

(iii) any Loans used to finance the acquisition of such transferred assets are repaid prior to or substantially simultaneous with such transfer of assets, and

 

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(iv) the difference between the initial purchase price of such assets and the amount so repaid constitutes usage of one of the RP/Investments Basket or any other applicable Investments basket herein;

(e) [reserved];

(f) other Asset Sales of Collateral that are not items of Product so long as an amount equal to the amount of the net cash proceeds from such Asset Sale are invested or reinvested within twelve (12) months of the receipt of such net cash proceeds in Additional Assets of the Credit Parties or used to make capital expenditures that are used or useful in a Related Business of a Credit Party or that replace the business, properties and/or assets that are the subject of such Asset Sale; provided that in the event after such twelve (12) month period such amount of net cash proceeds are not invested or reinvested, as applicable, the Borrower shall promptly repay Loans outstanding, if any, in an amount equal to such amount of net proceeds not so invested or reinvested.

References to the value of assets under this Section 7.8 shall be to the value applicable to such assets in the most recent Valuation Report or, if not discernible therefrom, the Fair Market Value thereof.

Anything to the contrary herein notwithstanding, no Asset Sales to an Affiliate (outside of the Credit Parties) (other than with respect to the licensing of distribution rights in the ordinary course) in connection with an Outside IP Debt Facility will be permitted with respect to (x) items of Product that are produced by the Credit Parties and which are initially released on or after the Closing Date or (y) items of Product relating to the franchises The Hunger Games, Twilight, Saw, or Now You See Me; provided that notwithstanding the foregoing or anything herein or otherwise to the contrary, derivative productions of titles already pledged under Outside IP Debt Facilities as of the Closing Date are excluded from this provision.

SECTION 7.9. Limitation on Receivables Financing. LGSC shall not, and shall not permit any of its Restricted Subsidiaries to, enter into any Receivables Financing except for Qualified Receivables Financings, in each case so long as (1) no Event of Default has occurred and is continuing, (2) the net proceeds of such Qualified Receivables Financing are received directly or indirectly by a Credit Party, and (3) the removal of the relevant receivables relating to such Qualified Receivables Financing from the Borrowing Base shall not result in the Revolving Exposure exceeding the amount of the pro forma Borrowing Base.

SECTION 7.10. Canadian Pension Plans. Without the consent of the Administrative Agent (each such consent not to be unreasonably withheld or delayed), neither the Parent nor the Borrower will permit any Credit Party or any Restricted Subsidiaries to (i) maintain, sponsor, administer, contribute to, participate in or assume or incur any liability under or in respect of any Canadian DB Plan; (ii) fail to pay or remit any material contribution or payment required to be paid or remitted to any Canadian Pension Plan or Guild Pension Plan in a timely manner in accordance with the terms of the applicable plan and applicable law; (iii) assume any obligations or liability in respect of any Guild Pension Plan other than to make the contributions specified in the applicable collective bargaining agreements; or (iv) allow any employee, director, officer or agent of any Credit Party to become responsible for or involved in the governance of any Guild Pension Plan.

 

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ARTICLE 8

EVENTS OF DEFAULT

SECTION 8.1. Events of Default. Any one or more of the following shall constitute an “Event of Default”:

(a) default (i) in the payment when due (whether at the stated maturity thereof or at any other time provided for in this Credit Agreement) of all or any part of the principal of any Loan or Reimbursement Obligation or (ii) in the payment when due of interest on any Loan, any fee, or any other amount payable hereunder or under any other Fundamental Document and such default shall continue unremedied for a period of five (5) Business Days; or

(b) default in the observance or performance of any covenant set forth in Section 6.2(b), Section 6.4 (with respect to LGSC or the Borrower) or Article 7 hereof; provided that the failure of the Borrower to comply with Section 6.2(b) as a result of the Administrative Agent taking a reserve in accordance with the proviso thereof shall not constitute an Event of Default under this clause (b) unless and until the Borrower fails to deliver a Liquidity Certificate in compliance with such Section within 30 days (which may in the Administrative Agent’s discretion may be extended to up to 45 days) following receipt of a Reserve Notice, or

(c) failure by the Borrower or any Guarantor to comply for 30 days after notice as provided below with any of its other agreements contained in the Fundamental Documents; or

(d) any representation or warranty made by the Borrower or any Guarantor herein or in any other Fundamental Document or that is contained in any certificate or other document furnished by it at any time under or in connection with this Credit Agreement or any other Fundamental Document shall prove to have been inaccurate in any material respect on or as of the date made; or

(e) default under any mortgage, indenture, agreement or instrument, in each case governing Indebtedness for money borrowed by any Guarantor or the Borrower or any of the Restricted Subsidiaries (or the payment of which is guaranteed by any Guarantor or the Borrower or any of the Restricted Subsidiaries), other than Indebtedness owed to any Guarantor or the Borrower or a Restricted Subsidiary, and other than Indebtedness incurred by a Special Purpose Producer that is non-recourse to LGSC or any Restricted Subsidiary other than such Special Purpose Producer (for the avoidance of doubt, an outstanding Negative Pick-up Obligation of LGSC or a Restricted Subsidiary shall be considered recourse Indebtedness of LGSC or such Restricted Subsidiary), whether such indebtedness or guarantee now exists, or is created after the Closing Date, which default:

(i) is caused by a failure to pay principal of such Indebtedness prior to the expiration of the final maturity date provided in such Indebtedness unless such Indebtedness is discharged (“payment default”); or

(ii) results in the acceleration of such Indebtedness prior to its maturity; or

(iii) which default causes, or permits the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders), with all applicable grace or cure periods having expired, to cause any such Indebtedness to become due or required to be prepaid, repurchased, defeased or redeemed prior to its stated maturity; or

 

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and, in each case, the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or such other default or the maturity of which has been so accelerated, aggregates $75,000,000 or its foreign currency equivalent or more;

(f) LGSC, the Borrower or any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law:

(i) commences proceedings to be adjudicated bankrupt or insolvent;

(ii) consents to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer or consent seeking an arrangement of debt, reorganization, dissolution, winding up or relief under applicable Bankruptcy Law (including, for the avoidance of doubt, the filing of a notice of intention under the Bankruptcy and Insolvency Act (Canada) or of an application under the Companies’ Creditors Arrangement Act (Canada) or any proposal to compromise, arrange or reorganize any of its debts or obligations under Section 192 of the Canada Business Corporations Act or any similar provision of Canadian federal or provincial corporate law, or any applicable Bankruptcy Law in Luxembourg or the United Kingdom);

(iii) consents to the appointment of a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of it or for all or substantially all of its property;

(iv) makes a general assignment for the benefit of its creditors; or

(v) admits in writing its inability to pay its debts as they become due;

(g) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) is for relief against LGSC, the Borrower, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary, in a proceeding in which LGSC, the Borrower, any such Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary, is to be adjudicated bankrupt or insolvent;

(ii) appoints a receiver, interim receiver, receiver and manager, liquidator, assignee, trustee, sequestrator or other similar official of LGSC, the Borrower, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary, or for all or substantially all of the property of LGSC, the Borrower, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary;

 

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(iii) orders the liquidation, dissolution or winding up of LGSC, the Borrower, any Restricted Subsidiary that is a Significant Subsidiary or any group of Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary; or

(iv) orders the presentation of any plan or arrangement, compromise or reorganization of LGSC, the Borrower, any Restricted Subsidiary that is a Significant Subsidiary or any group of Restricted Subsidiaries that, taken together (as of the most recent audited consolidated financial statements of LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days; or

(h) failure by LGSC, the Borrower or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial statements for LGSC and the Restricted Subsidiaries), would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $75,000,000 or its foreign currency equivalent (net of any amounts that a reputable and creditworthy insurance company has acknowledged liability for in writing), which judgments are not paid, discharged or stayed for a period of 60 days; or

(i) (i) an ERISA Event shall have occurred; (ii) a trustee shall be appointed by a United States district court to administer any Plan; (iii) the PBGC shall institute proceedings to terminate any Plan; (iv) any Credit Party or any of their respective ERISA Affiliates shall have been notified by the sponsor of a Multiemployer Plan that it has incurred or will be assessed Withdrawal Liability to such Multiemployer Plan and such entity does not have reasonable grounds for contesting such Withdrawal Liability or is not contesting such Withdrawal Liability in a timely and appropriate manner; or (v) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (v) above, such event or condition, together with all other such events or conditions, if any, would reasonably be expected to result in a Material Adverse Effect;

(j) (i) any of the Fundamental Documents shall, for any reason, not be or shall cease to be in full force and effect or shall be declared null and void or (ii) the validity or enforceability of the Liens granted or purported to be granted by any Collateral Document on any material portion of the Collateral shall cease to be valid and perfected, or shall be contested by any Credit Party, except to the extent that any such loss of perfection results from the limitations of foreign laws, rules and regulations as they apply to pledges of Capital Stock in Foreign Subsidiaries or the application thereof, or from failure of the Administrative Agent to maintain possession of certificates actually delivered to it representing securities pledged under the Collateral Documents, or to file Uniform Commercial Code continuation statements or other similar statements (so long as such failure does not result from the breach or non-compliance with the Fundamental Documents by any Credit Party); or

(k) a Change of Control shall occur.

Notwithstanding anything in this Credit Agreement or any other Fundamental Document to the contrary, a notice of Default may not be given by the Administrative Agent or by any Secured Party (or any other action taken on the assertion of any Default) with respect to any action taken, and reported publicly or to the Lenders, more than two years prior to such notice of Default (or other action) other than with respect to an Event of Default under clause (a), (f) or (g) of Section 8.1; provided that such two-year period shall not commence if a Credit Party has knowledge of such Default until a notice of such Default has been provided to the Administrative Agent and the Lenders.

 

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SECTION 8.2. Non-Bankruptcy Defaults. When any Event of Default other than those described in subsection (f) or (g) of Section 8.1 hereof has occurred and is continuing, the Administrative Agent shall, by written notice to the Borrower: (a) if so directed by the Required Lenders, terminate the remaining Commitments and all other obligations of the Lenders hereunder on the date stated in such notice (which may be the date thereof); (b) if so directed by the Required Lenders, declare the principal of and the accrued interest on all outstanding Loans to be forthwith due and payable and thereupon all outstanding Loans, including both principal and interest thereon, shall be and become immediately due and payable together with all other amounts payable under the Fundamental Documents without further demand, presentment, protest or notice of any kind; and (c) if so directed by the Required Lenders, demand that the Borrower immediately pay to the Administrative Agent, as cash collateral, the full amount then available for drawing under each or any Letter of Credit, whether or not any drawings or other demands for payment have been made under any Letter of Credit.

SECTION 8.3. Bankruptcy Defaults. When any Event of Default described in subsections (f) or (g) of Section 8.1 hereof has occurred and is continuing, then all outstanding Loans shall immediately become due and payable together with all other amounts payable under the Fundamental Documents without presentment, demand, protest or notice of any kind, the Commitments and any and all other obligations of the Lenders to extend further credit pursuant to any of the terms hereof shall immediately terminate and the Borrower shall immediately pay to the Administrative Agent, as cash collateral, the full amount then available for drawing under all outstanding Letters of Credit, whether or not any draws or other demands for payment have been made under any of the Letters of Credit.

SECTION 8.4. Collateral for Undrawn Letters of Credit.

(a) If the prepayment of the amount available for drawing under any or all outstanding Letters of Credit is required under Section 2.8(c)(ii) or under Section 8.2 or Section 8.3 above, the Borrower shall forthwith pay the amount required to be so prepaid, to be held by the Administrative Agent as provided in subsection (b) below.

(b) All amounts prepaid pursuant to clause (a) above shall be held by the Administrative Agent in one or more separate collateral accounts (each such account, and the credit balances, properties, and any investments from time to time held therein, and any substitutions for such account, any certificate of deposit or other instrument evidencing any of the foregoing and all proceeds of and earnings on any of the foregoing being collectively called the “Collateral Account”) as security for, and for application by the Administrative Agent (to the extent available) to, the reimbursement of any payment under any Letter of Credit then or thereafter made by the Issuing Banks, and to the payment of the unpaid balance of any other Obligations in respect of any Letter of Credit. The Collateral Account shall be held in the name of and subject to the exclusive dominion and control of the Administrative Agent for the benefit of the Administrative Agent, the Lenders and the Issuing Banks. If and when requested by the Borrower, the Administrative Agent shall invest funds held in the Collateral Account from time to time in direct obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America with a remaining maturity of one year or less; provided that the Administrative Agent is irrevocably authorized to sell investments held in the Collateral Account when and as required to make payments out of the Collateral Account for application to amounts due and owing from the Borrower to the Issuing Banks, the Administrative Agent or the Lenders in respect of any Letter of Credit; provided, however, that if (i) the Borrower shall have made payment of all such obligations referred to in clause (a) above and (ii) no Letters of Credit remain outstanding hereunder, then the Administrative Agent shall release to the Borrower any remaining amounts held in the Collateral Account.

 

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SECTION 8.5. Right to Realize on Collateral and Enforce Guarantees. Anything contained in any of the Fundamental Documents to the contrary notwithstanding, the Borrower, the Administrative Agent and each Secured Party hereby agree that (a) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee set forth in any Fundamental Document, it being understood and agreed that all powers, rights and remedies hereunder may be exercised solely by the Administrative Agent, on behalf of the Secured Parties in accordance with the terms hereof and all powers, rights and remedies under the Collateral Documents may be exercised solely by the Administrative Agent; provided that, notwithstanding the foregoing, the Lenders may exercise the set-off rights contained in Section 11.6 in the manner set forth therein, and (b) in the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Administrative Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless the Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent at such sale or other disposition.

ARTICLE 9

GUARANTEE

SECTION 9.1. Guarantee. Each Guarantor, jointly and severally, unconditionally and irrevocably guarantees to the Administrative Agent, the Issuing Banks and the other Secured Parties the due and punctual payment by, and performance of, the Obligations (including interest accruing on and after the filing of any petition in bankruptcy or of reorganization of the obligor whether or not post filing interest is allowed in such proceeding). Each Guarantor further agrees that the Obligations may be increased, extended or renewed, in whole or in part, without notice or further assent from it (except as may be otherwise required herein), and it will remain bound upon this Guarantee notwithstanding any extension or renewal of any Obligation.

(a) Each Guarantor waives presentation to, demand for payment from and protest to, as the case may be, any Credit Party or any other guarantor of any of the Obligations, and also waives notice of protest for nonpayment, notice of acceleration and notice of intent to accelerate. The obligations of each Guarantor hereunder shall not be affected by (i) the failure of the Administrative Agent, the Issuing Banks or any Secured Party to assert any claim or demand or to enforce any right or remedy against the Borrower or any Guarantor or any other guarantor under the provisions of this Credit Agreement or any other agreement or otherwise; (ii) any extension or renewal of any provision hereof or thereof; (iii) the failure of the Administrative Agent, the Issuing Banks or any Secured Party to obtain the consent of the Guarantor with respect to any rescission, waiver, compromise, acceleration, amendment or modification of any of the terms or provisions of this Credit Agreement, the Notes or of any other agreement; (iv) the release, exchange, waiver or foreclosure of any security held by the Administrative Agent for the Obligations or any of them; (v) the failure of the Administrative Agent, the Issuing Banks or any Secured Party to exercise any right or remedy against any other Guarantor or any other guarantor of the Obligations; (vi) any bankruptcy, reorganization, liquidation, dissolution or receivership proceeding or case by or against either Borrower or other Credit Party, any change in the corporate existence, structure, ownership or control of either Borrower or other Credit Party (including any of the foregoing arising from any merger, consolidation, amalgamation, reorganization or similar transaction); or (vii) the release or substitution of any Guarantor or any other guarantor of the Obligations. Without limiting the generality of the foregoing or any other provision hereof (including, without limitation, Section 11.7 hereof), to the extent permitted by Applicable Law, each Guarantor hereby expressly waives any and all benefits which might otherwise be available to it under California Civil Code Sections 2799, 2809, 2810, 2815, 2819, 2820, 2821, 2822, 2838, 2839, 2845, 2848, 2849, 2850, 2899 and 3433.

 

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(b) Each Guarantor further agrees that this Guarantee is a continuing guarantee, shall secure the Obligations and any ultimate balance thereof, notwithstanding that the Borrower or others may from time to time satisfy the Obligations in whole or in part and thereafter incur further Obligations, and that this Guarantee constitutes a guarantee of performance and of payment when due and not just of collection, and waives any right to require that any resort be had by the Administrative Agent, the Issuing Banks or any Secured Party to any security held for payment of the Obligations or to any balance of any deposit, account or credit on the books of the Administrative Agent, the Issuing Banks or any Secured Party in favor of the Borrower or any Guarantor, or to any other Person.

(c) Each Guarantor hereby expressly assumes all responsibilities to remain informed of the financial condition of the Borrower, the Guarantors and any other guarantors of the Obligations and any circumstances affecting the Collateral or the ability of the Borrower to perform under this Credit Agreement.

(d) Each Guarantor’s obligations under the Guarantee shall not be affected by the genuineness, validity, regularity or enforceability of the Obligations, the Notes or any other instrument evidencing any Obligations, or by the existence, validity, enforceability, perfection, or extent of any collateral therefor or by any other circumstance relating to the Obligations which might otherwise constitute a defense to this Guarantee. The Administrative Agent, the Issuing Banks and the Secured Parties make no representation or warranty with respect to any such circumstances and have no duty or responsibility whatsoever to any Guarantor in respect to the management and maintenance of the Obligations or any collateral security for the Obligations.

SECTION 9.2. No Impairment of Guarantee, etc. The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason (except payment and performance in full of the Obligations), including, without limitation, any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of the Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor hereunder shall not be discharged or impaired or otherwise affected by the failure of the Administrative Agent, the Issuing Banks or any Secured Party to assert any claim or demand or to enforce any remedy under this Credit Agreement or any other agreement, by any waiver or modification of any provision hereof or thereof, by any default, failure or delay, willful or otherwise, in the performance of the Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of such Guarantor or would otherwise operate as a discharge of such Guarantor as a matter of law, unless and until the Obligations are paid in full.

SECTION 9.3. Continuation and Reinstatement, etc.

(a) Each Guarantor further agrees that its Guarantee hereunder shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of any Obligation is rescinded or must otherwise be restored by the Administrative Agent, the Issuing Banks or the Secured Parties upon the bankruptcy or reorganization of the Borrower or a Guarantor, or otherwise. In furtherance of the provisions of this Article 9, and not in limitation of any other right which the Administrative Agent, the Issuing Banks or the Secured Parties may have at law or in equity against the Borrower, a Guarantor or any other Person by virtue hereof, upon failure of the Borrower to pay any Obligation when and as the same shall become due, whether at maturity, by acceleration, after notice or otherwise, each Guarantor hereby promises to and will, upon receipt of written demand by the Administrative Agent on behalf of itself, the Issuing Banks and/or the Secured Parties, forthwith pay or cause to be paid to the Administrative Agent for the benefit of itself, the Issuing Banks and/or the Lenders (as applicable) in cash an amount equal to the unpaid amount of all the Obligations with interest thereon at a rate of interest equal to the rate specified in

 

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Section 2.4 hereof, and thereupon the Administrative Agent shall assign such Obligation, together with all security interests, if any, then held by the Administrative Agent in respect of such Obligation, to the Guarantors making such payment; such assignment to be subordinate and junior to the rights of the Administrative Agent on behalf of itself, the Issuing Banks and the Secured Parties with regard to amounts payable by the Borrower in connection with the remaining unpaid Obligations and to be pro tanto to the extent to which the Obligation in question was discharged by the Guarantor or Guarantors making such payments.

(b) All rights of a Guarantor against the Borrower, arising as a result of the payment by such Guarantor of any sums to the Administrative Agent for the benefit of the Administrative Agent, the Issuing Banks and/or the Secured Parties or directly to the Lenders hereunder by way of right of subrogation or otherwise, shall in all respects be subordinated and junior in right of payment to, and shall not be exercised by such Guarantor until and unless, the prior final and indefeasible payment in full of all the Obligations. If any amount shall be paid to such Guarantor (other than a Luxembourg Guarantor) for the account of the Borrower, such amount shall be held in trust for the benefit of the Administrative Agent, segregated from such Guarantor’s own assets, and shall forthwith be paid to the Administrative Agent on behalf of the Administrative Agent, the Issuing Banks and/or the Secured Parties to be credited and applied to the Obligations, whether matured or unmatured. If any amount shall be paid to a Luxembourg Guarantor for the account of the Borrower, such Luxembourg Guarantor will hold such amount for and on behalf of the Administrative Agent.

SECTION 9.4. Limitation on Guaranteed Amount, etc. Notwithstanding any other provision of this Article 9, the amount guaranteed by each Guarantor hereunder shall be limited to the extent, if any, required so that its obligations under this Article 9 shall not be subject to avoidance under Section 548 of the Bankruptcy Code or to being set aside or annulled under any Applicable Law relating to fraud on creditors. In determining the limitations, if any, on the amount of any Guarantor’s obligations hereunder pursuant to the preceding sentence, it is the intention of the parties hereto that any rights of subrogation or contribution which such Guarantor may have under this Article 9, any other agreement or Applicable Law shall be taken into account. In addition, to the extent that any Person becomes a Guarantor of this Credit Agreement and such Person is organized outside of the United States or Canada, the Guarantee by such Person of the Obligations hereunder may be subject to such other limitations as are customary in such Guarantor’s jurisdiction as reasonably agreed by the Administrative Agent and the Borrower.

SECTION 9.5. Voluntary Arrangements.

(a) Without prejudice to the Administrative Agent’s, the Issuing Banks’ and the Secured Parties’ rights to recover such sums under the Guarantee and indemnity under Section 9.1, on the approval of any company voluntary arrangement in respect of the Borrower (or the implementation of any compromise or scheme of arrangement or any analogous procedure to any of the foregoing in any other jurisdiction) under which the Borrower’s obligations to the Administrative Agent, the Issuing Banks and the Secured Parties are compromised in any way, each Guarantor shall as principal obligor be liable to the Administrative Agent, the Issuing Banks and the Secured Parties for, and hereby undertakes to the Administrative Agent, the Issuing Banks and the Secured Parties (as a separate and additional covenant) immediately on demand from time to time to pay to the Administrative Agent, the Issuing Banks and the Secured Parties, amounts equal to the sums that would have been payable to the Administrative Agent, the Issuing Banks and the Secured Parties by the Borrower, or any guarantor of the Borrower, had such compromise not occurred, and so that payment shall be made by a Guarantor to the Administrative Agent, the Issuing Banks and the Secured Parties under this Section in the amounts and at the times at which but for the said compromise the Borrower would have been obliged to make payment to the Administrative Agent, the Issuing Banks and the Secured Parties. Each Guarantor’s liability under Section 9.1 and this Section 9.5 shall not be affected in any way by the Administrative Agent and the Lenders voting in favor of (if the Administrative Agent, the Issuing Banks and the Secured Parties chooses to do so) any company voluntary arrangement, compromise, scheme of arrangement or analogous procedure proposed by or in respect of the Borrower.

 

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(b) If and to the extent that any right is or may be held by a Guarantor as against the Borrower, the existence or exercise of which may affect the right or ability of the Administrative Agent, the Issuing Banks and the Secured Parties to obtain the full benefit of this Guarantee and indemnity from a Guarantor if a company voluntary arrangement, compromise, scheme of arrangement or analogous procedure proposed by or in respect of the Borrower is approved, each Guarantor hereby waives such right. In the event of any inconsistency between this Section and any other provision of the Credit Agreement this Section shall prevail.

SECTION 9.6. Release of Guarantees.

(a) A Guarantor shall be automatically and unconditionally released and discharged from its obligations under its Guarantee, this Credit Agreement and the Fundamental Documents to which it is a party, and no further action by such Guarantor, the Borrower or the Administrative Agent shall be required for the release of such Guarantor’s Guarantee, upon:

(i) any sale, assignment, transfer, conveyance, exchange or other disposition (by merger, amalgamation, consolidation or otherwise) of the Capital Stock of such Guarantor, after which the applicable Guarantor is no longer a Restricted Subsidiary or any sale, assignment, transfer, conveyance, exchange or other disposition of all or substantially all the assets of such Guarantor (other than by lease); provided that, in each of the foregoing cases, such sale, assignment, transfer, conveyance, exchange or other disposition is made in compliance with this Credit Agreement, including Section 7.6 and 7.7;

(ii) the proper designation of any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary;

(iii) the removal of all assets attributable to such Guarantor from the Borrowing Base (unless such assets are transferred to another Credit Party) and notice from the Borrower to the Administrative Agent of its election to release such Guarantor from its Guarantee;

(iv) upon any Guarantor becoming an Excluded Subsidiary as a result of a transaction or designation not prohibited by this Credit Agreement;

(v) in the case of any Guarantor which has provided a Guarantee in LGSC’s discretion and which does not or, substantially contemporaneously with the release, will not Guarantee any Material Indebtedness of the Borrower, LGSC’s delivering notice to the Administrative Agent of its election to release such Guarantor from its Guarantee; or

(vi) the Termination Date.

SECTION 9.7. Indemnity and Subrogation. In addition to all such rights of indemnity and subrogation as the Guarantors may have under Applicable Law (but subject to Section 9.9), the Borrower agrees that (a) in the event a payment shall be made by any Guarantor under this Credit Agreement or any other Fundamental Document or related agreement, the Borrower shall indemnify such Guarantor for the full amount of such payment and such Guarantor shall be subrogated to the rights of the person to whom such payment shall have been made to the extent of such payment and (b) in the event any assets of any Guarantor shall be sold pursuant to any Collateral Document to satisfy in whole or in part a claim of any Secured Party, the Borrower shall indemnify such Guarantor in an amount equal to the greater of the book value or the fair market value of the assets so sold.

 

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SECTION 9.8. Contribution and Subrogation. Each Guarantor (a “Contributing Guarantor”) agrees (subject to Section 9.9) that, in the event a payment shall be made by any other Guarantor hereunder or under any other Fundamental Document or related agreement, in respect of any Obligation, or assets of any other Guarantor shall be sold pursuant to any Collateral Document to satisfy any Obligation owed to any Secured Party, and such other Guarantor (the “Claiming Guarantor”) shall not have been fully indemnified by the Borrower as provided in Section 9.7, the Contributing Guarantor shall indemnify the Claiming Guarantor in an amount equal to (i) the amount of such payment or (ii) the greater of the book value or the Fair Market Value of such assets, as the case may be, in each case multiplied by a fraction of which the numerator shall be the net worth of the Contributing Guarantor on the date hereof and the denominator shall be the aggregate net worth of all the Guarantors on the date hereof (or, in the case of any Guarantor becoming a party hereto after the date hereof, the date such Guarantor becomes a party). Any Contributing Guarantor making any payment to a Claiming Guarantor pursuant to this Section 9.8 shall be subrogated to the rights of such Claiming Guarantor under Section 9.7 to the extent of such payment.

SECTION 9.9. Subordination.

(a) Notwithstanding any provision of this Credit Agreement to the contrary, all rights of the Guarantors under Section 9.7 and 9.8 and all other rights of indemnity, contribution or subrogation under Applicable Law or otherwise shall be fully subordinated to the indefeasible payment in full in cash of the Obligations. No failure on the part of the Borrower or any Guarantor to make the payments required by Sections 9.7 and 9.8 (or any other payments required under Applicable Law or otherwise) shall in any respect limit the obligations and liabilities of any Guarantor with respect to its obligations hereunder, and each Guarantor shall remain liable for the full amount of its obligations hereunder.

(b) The Borrower and each Guarantor hereby agree that all Indebtedness and other monetary obligations owed by it to any Credit Party shall be fully subordinated to the indefeasible payment in full in cash of the Obligations.

SECTION 9.10. Luxembourg Guarantors. Notwithstanding any other provision of any Fundamental Document, the maximum liability of any Guarantor incorporated under the laws of Luxembourg (a “Luxembourg Guarantor”) under this Section 9.10 for the Obligations of any obligor (including, but not limited to, the Borrower) which is not a direct or indirect Subsidiary of such Luxembourg Guarantor shall be limited to the sum of:

(i) an amount equal to the aggregate (without double-counting) of (A) all moneys received by the Luxembourg Guarantor or its direct or indirect present of future Subsidiaries under this Credit Agreement and (B) the aggregate amount directly or indirectly made available to the Luxembourg Guarantor or its direct or indirect present or future Subsidiaries by other members of the Group that has been financed by a borrowing under the Fundamental Documents;

plus

(ii) an amount equal to 95% of the greater of (a) the Luxembourg Guarantor’s own funds (capitaux propres), as referred to in annex I to the grand ducal regulation dated December 18, 2015 defining the form and content of the presentation of balance sheet and profit and loss account implementing the Luxembourg law dated December 19, 2002 concerning the trade and companies register and the accounting and annual accounts of undertakings as amended (the “Regulation”) as increased by the amount of any Intra Group Liabilities, each as reflected in the

 

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Luxembourg Guarantor’s latest duly approved annual accounts and other relevant documents available to the Administrative Agent at the date of this Credit Agreement or (B) the Luxembourg Guarantor’s own funds (capitaux propres), as referred to in the Regulation as increased by the amount of any Intra Group Liabilities, each as reflected in the Luxembourg Guarantor’s latest duly approved annual accounts and other relevant documents available to the Administrative Agent at the time the Guarantee is called.

For the purposes of this paragraph, “Intra Group Liabilities” means all existing liabilities owed by the Luxembourg Guarantor to the Borrower or any Guarantor that have not been financed, directly or indirectly, by a borrowing under the Fundamental Documents.

Where for the purpose of the determination of the Luxembourg Guarantor’s own funds under paragraph (ii) above, no duly established and approved annual accounts are available for the relevant reference period (which, for the avoidance of doubt, includes a situation where, in respect of the determination to be made under (ii) above, no final annual accounts have been established in due time in respect of the then most recently ended financial year) the relevant Luxembourg Guarantor shall, promptly, establish unaudited interim accounts (as of the date of the end of the then most recent financial quarter) or annual accounts (as applicable) duly established in accordance with applicable accounting rules, pursuant to which the relevant Luxembourg Guarantor’s own funds and Intra Group Liabilities will be determined.

The limitation set out in this Section 9.10 does not apply to any security granted by any Luxembourg Guarantors under the Collateral Documents (excluding any personal or corporate guarantee).

Notwithstanding any other provision of this Credit Agreement to the contrary, in this Credit Agreement where it relates to the Borrower (to the extent incorporated under the laws of Luxembourg), any Guarantor incorporated under the laws of Luxembourg, or any other party which is incorporated under the laws of Luxembourg, a reference to:

(iii) a winding-up, administration, liquidation, bankruptcy, general assignment for the benefit of creditors, receivership, insolvency, reorganization or dissolution includes bankruptcy (faillite), insolvency, voluntary or judicial liquidation (liquidation voluntaire ou judiciare), moratorium or reprieve from payment (sursis de paiement), administrative dissolution without liquidation (dissolution administrative sans liquidation), judicial reorganization (réorganisation judiciaire), reorganization by amicable agreement (réorganisation par accord amiable), fraudulent conveyance (action paulienne), general settlement with creditors, reorganization or similar laws affecting the rights of creditors generally;

(iv) a receiver, receiver and manager, liquidator, administrator, trustee, custodian, sequestrator, conservator or similar officer includes a juge délégué, commissaire, juge-commissaire, mandataire ad hoc, administrateur provisoire, mandataire de justice, conciliateur d’enterprise, liquidateur, expert vérificateur or curateur;

(v) a person being unable to pay its debts includes that person being in a state of cessation of payments (cessation de paiements);

(vi) a lien or security interest includes any hypothèque, nantissement, gage, privilège, sûreté réelle, droit de rétention, and any type of security in rem (sûreté réelle) or agreement or arrangement having a similar effect and any transfer of title by way of security;

(vii) attachments or similar creditors process means an executory attachment (saisie exécutoire) or conservatory attachment (saisie arrêt);

 

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(viii) a director, manager or officer includes an administrateur, gérant or dirigeant;

(ix) by-laws or organizational documents includes its up-to-date articles of association (statuts);

(x) gross negligence means faute lourde and wilful misconduct means faute dolosive; and

(xi) a “set-off” includes, for purposes of Luxembourg law, legal set-off.

ARTICLE 10

THE ADMINISTRATIVE AGENT AND THE ISSUING BANKS

SECTION 10.1. Administration by the Administrative Agent.

(a) The general administration of the Fundamental Documents and any other documents contemplated by this Credit Agreement or any other Fundamental Document shall be by the Administrative Agent or its designees. Except as otherwise expressly provided herein (including by way of an express instruction given to the Administrative Agent by the Required Lenders), each of the Lenders and the Issuing Banks hereby irrevocably authorizes the Administrative Agent, at its discretion, to take or refrain from taking such actions as agent on its behalf and to exercise or refrain from exercising such powers under the Fundamental Documents, the Notes and any other documents contemplated by this Credit Agreement or any other Fundamental Document as are expressly delegated by the terms hereof or thereof, as appropriate, together with all powers reasonably incidental thereto. The Administrative Agent shall have no duties or responsibilities except as set forth in the Fundamental Documents.

(b) The Lenders and the Issuing Banks hereby authorize the Administrative Agent (without the consent of any Lender or Issuing Bank, who hereby irrevocably authorize any such action pursuant to this clause (b)):

(i) to release any Lien on the Collateral or any Guarantor from its guarantee in accordance with the terms of this Credit Agreement or any other applicable Fundamental Document;

(ii) to determine that the cost to the Borrower or another Credit Party is disproportionate to the benefit to be realized by the Administrative Agent, the Issuing Banks and the Lenders by perfecting a Lien in a given asset or group of assets included in the Collateral and that the Borrower or other Credit Party should not be required to perfect such Lien in favor of the Administrative Agent (for the benefit of itself, the Issuing Banks and the Lenders);

(iii) to appoint subagents to be the holder of record of a Lien to be granted to the Administrative Agent (for the benefit of the Administrative Agent, the Issuing Banks and the Lenders);

(iv) in connection with an item of Product being produced by a Credit Party, the principal photography of which is being done outside the United States, to approve arrangements with such Credit Party as shall be reasonably satisfactory to the Administrative Agent with respect to the temporary storage of the original negative film, the original sound track materials or other Physical Materials (as defined in any Pledge and Security Agreement) of such item of Product in a production laboratory located outside the United States;

 

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(v) to enter into and perform its obligations under the other Fundamental Documents;

(vi) to (and upon reasonable request of the Borrower, the Administrative Agent shall) enter into customary intercreditor, subordination, non-disturbance and/or attornment agreements, or any similar or comparable agreement, with (A) any union and/or guild with respect to the security interests in favor of such unions and/or guilds required pursuant to the terms of collective bargaining agreements, (B) Persons who have been granted Liens which are permitted pursuant to this Credit Agreement, (C) any licensee, licensor, co-financier or co-producer having any rights to any item of Product, (D) Persons providing any services in connection with any item of Product, or (E) any other lessor to or lessee of any Credit Party, or any other counterparty of any Credit Party, at the request of the Borrower;

(vii) upon the request of the Borrower, if any additional Indebtedness permitted to be incurred under this Credit Agreement is secured by first priority Liens or junior Liens on the Collateral and permitted to be incurred under this Credit Agreement (including any Permitted Slate Financing or Permitted Slate Transaction), the Administrative Agent shall, at the request of the Borrower, enter into an (or amend any existing) Intercreditor Agreement with such other secured creditor(s), as necessary to accommodate the additional Indebtedness; and

(viii) upon the request of the Borrower, to enter into amendments, replacements, extensions, restatements, modifications and supplements of or to any Intercreditor Agreements then in existence.

(c) It is understood and agreed that the use of the term “agent” herein or in any other Fundamental Documents (or any other similar term) with reference to the Administrative Agent is not intended to connote any fiduciary or other implied (or express) obligations arising under agency doctrine of any Applicable Law. Instead such term is used as a matter of market custom, and is intended to create or reflect only an administrative relationship between contracting parties.

SECTION 10.2. Sharing of Setoffs. Each of the Lenders agrees that if it shall, through the exercise of a right of banker’s lien, setoff or counterclaim against any Credit Party (including, but not limited to, a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim and received by such Lender under any applicable bankruptcy, insolvency or other similar law) or otherwise, obtain payment in respect of its Obligations (which term, for purposes of this Section 10.2 only, shall refer solely to those Obligations referred to in clause (a) of the definition of “Obligations”) as a result of which the unpaid portion of its Obligations is proportionately less than the unpaid portion of Obligations of any of the other Lenders (a) it shall promptly purchase at par (and shall be deemed to have thereupon purchased) from such other Lenders a participation in the Obligations of such other Lenders, so that the aggregate unpaid principal amount of each of the Lender’s Obligations and its participation in Obligations of the other Lenders shall be in the same proportion to the aggregate unpaid amount of all remaining Obligations as the amount of its Obligations prior to the obtaining of such payment was to the amount of all Obligations prior to the obtaining of such payment and (b) such other adjustments shall be made from time to time as shall be equitable to ensure that the Lenders share such payment pro rata. If all or any portion of such excess payment is thereafter recovered from the Lender which originally received such excess payment, such purchase (or portion thereof) shall be canceled and the purchase price restored to the extent of such recovery. The Credit Parties expressly consent to the foregoing arrangements and agree that any Lender or Lenders holding (or deemed to be holding) a participation in a Note or Letter of Credit may exercise any and all rights of banker’s lien, setoff or counterclaim with respect to any and all moneys owing by the Borrower to such Lender or Lenders as fully as if such Lender or Lenders held a Note and was the original obligee thereon or was the issuer of the Letter

 

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of Credit, in the amount of such participation. Notwithstanding the foregoing, a Defaulting Lender shall not be entitled to share in any benefit contemplated by this Section 10.2 realized by a non-Defaulting Lender until all the Obligations owed to the non-Defaulting Lenders have been paid in full and the Commitments have been terminated. Notwithstanding the foregoing, the provisions of this Section 10.2 shall not be construed to apply to any payment made by or on behalf of any Credit Party pursuant to and in accordance with the express terms of this Credit Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in L/C Disbursements to any assignee or participant.

SECTION 10.3. Notice to the Lenders.

(a) Upon receipt by the Administrative Agent or the Issuing Banks from any of the Credit Parties of any communication calling for an action on the part of the Lenders, or upon notice to the Administrative Agent or an Issuing Bank of any Event of Default, the Administrative Agent or such Issuing Bank will in turn immediately inform the other Lenders in writing (which shall include facsimile communications) of the nature of such communication or of the Event of Default, as the case may be.

(b) The Administrative Agent or the Issuing Banks shall not be deemed to know of any Default or Event of Default unless a Responsible Officer of the Administrative Agent or the Issuing Banks has actual knowledge thereof or unless written notice of any event which is in fact such a Default or Event of Default is received by the Administrative Agent or the Issuing Banks at its address for notices set forth in Section 11.1, and such notice references the existence of a Default or Event of Default and this Credit Agreement.

SECTION 10.4. Liability of the Administrative Agent, Issuing Banks.

(a) The Administrative Agent, or the Issuing Banks, when acting on behalf of the Lenders, may execute any of its duties under this Credit Agreement or the other Fundamental Documents by or through its officers, agents, or employees and neither the Administrative Agent, the Issuing Banks nor their respective officers, agents or employees shall be liable to the Lenders or any of them for any action taken or omitted to be taken in good faith, nor be responsible to the Lenders or to any of them for the consequences of any oversight or error of judgment, or for any loss, unless the same shall happen through its gross negligence or willful misconduct. The Administrative Agent, the Issuing Banks and their Related Parties shall in no event be liable to the Lenders or to any of them for any action taken or omitted to be taken by it pursuant to: (i) instructions received by it from the Required Lenders or (ii) in reliance upon the advice of counsel selected by it with reasonable care. Without limiting the foregoing, neither the Administrative Agent, the Issuing Banks, nor any of its Related Parties shall be responsible to any of the Lenders for the due execution, validity, genuineness, effectiveness, sufficiency, or enforceability of, or for any statement, warranty, or representation in, or for the perfection of any security interest contemplated by, this Credit Agreement, any other Fundamental Document or any related agreement, document or order, or for freedom of any of the Collateral from prior Liens or security interests, or shall be required to ascertain or to make any inquiry concerning the performance or observance by the Borrower or any other Credit Party of any of the terms, conditions, covenants, or agreements of this Credit Agreement, any other Fundamental Document, or any related agreement or document.

(b) None of the Administrative Agent (in its capacity as agent for the Lenders), the Issuing Banks or any of their Related Parties shall have any responsibility to the Borrower or any other Credit Party on account of the failure or delay in performance or breach by any of the Lenders of any of such Lender’s obligations under this Credit Agreement, the other Fundamental Documents or any related agreement or document or in connection herewith or therewith. No Lender nor any of its Related Parties shall have any responsibility to the Borrower or any other Credit Party on account of the failure or delay in performance or breach by any other Lender of such other Lender’s obligations under this Credit Agreement, the other Fundamental Documents or any related agreement or document or in connection herewith or therewith.

 

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(c) The Administrative Agent, as agent for the Lenders hereunder and the Issuing Banks in such capacity, shall be entitled to rely on any communication, instrument, or document believed by it to be genuine or correct and to have been signed or sent by a Person or Persons believed by it to be the proper Person or Persons (including, for the avoidance of doubt, in connection with the Administrative Agent’s reliance on any Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), and it shall be entitled to rely on advice of legal counsel, independent public accountants, and other professional advisers and experts selected by it.

(d) The Administrative Agent may perform any and all of its duties and exercise its rights and powers by or through one or more sub-agents. The exculpatory provisions of this Article shall apply to any such sub-agent and to any respective Related Parties of the Administrative Agent or the Issuing Banks and any such sub-agent, and shall apply to their respective activities in connection with the syndication of this Credit Agreement as well as activities as Administrative Agent or the Issuing Banks. The Administrative Agent and the Issuing Banks shall not be responsible for the negligence or misconduct of any sub-agents except to the extent that a court of competent jurisdiction determines in a final and nonappealable judgment that the Administrative Agent or the Issuing Bank, as applicable, acted with gross negligence or willful misconduct in the selection of such sub-agents.

(e) None of the provisions of this Credit Agreement shall require the Administrative Agent or the Issuing Banks to expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers if it shall have reasonable grounds for believing that repayment of such funds or indemnity reasonably satisfactory to it against such risk or liability is not assured to it.

SECTION 10.5. Reimbursement and Indemnification.

(a) Each of the Lenders agrees (i) to reimburse the Administrative Agent and the Issuing Banks for such Lender’s applicable Percentage of any expenses and fees incurred for the benefit of the Lenders under the Fundamental Documents, including, without limitation, counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders, and any other expense incurred in connection with the operations or enforcement thereof not reimbursed by or on behalf of the Borrower and (ii) to indemnify and hold harmless the Administrative Agent, any of its Related Parties and the Issuing Banks, on demand, in accordance with such Lender’s Percentage, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses, or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against, any of them in any way relating to or arising out of any Fundamental Documents or any related agreement or document, or any action taken or omitted by it or any of them under the Fundamental Documents or any related agreement or document, to the extent not reimbursed by or on behalf of the Borrower or any other Credit Party (except such as shall result from their gross negligence or willful misconduct). To the extent indemnification payments made by the Lenders pursuant to this Section 10.5 are subsequently recovered by the Administrative Agent, or the Issuing Banks from a Credit Party, the Administrative Agent will promptly refund such previously paid indemnity payments to the Lenders. Notwithstanding the foregoing, if there are at the time of computation of a reimbursement and/or indemnity obligation one or more Defaulting Lenders which have not fulfilled their obligations under this Section 10.5, the obligations of such non-performing Defaulting Lenders shall be reallocated among the other Lenders (including performing Defaulting Lenders), in proportion to the percentage of such Lender to the aggregate percentage of all Lenders (other than that of the non-performing Defaulting Lender or Defaulting Lenders).

 

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(b) The provisions of Section 10.5(a) are agreements among the Administrative Agent and the Lenders and are not for the benefit of any of the Credit Parties and may not be asserted by any of the Credit Parties as a defense to, or a limitation of, their respective Obligations under this Credit Agreement.

(c) Each Lender (including, for purposes of this Section 10.5(c), each Issuing Bank) hereby agrees that (x) if the Administrative Agent notifies such Lender that the Administrative Agent has determined in its sole discretion that any funds received by such Lender from the Administrative Agent or any of its Affiliates (whether as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, a “Payment”) were erroneously transmitted to such Lender (whether or not known to such Lender), and demands the return of such Payment (or a portion thereof), such Lender shall promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect, and (y) to the extent permitted by applicable law, such Lender shall not assert, and hereby waives, as to the Administrative Agent, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Payments received, including without limitation any defense based on “discharge for value” or any similar doctrine. A notice of the Administrative Agent to any Lender under this Section 10.5(c) shall be conclusive, absent manifest error.

(i) Each Lender hereby further agrees that if it receives a Payment from the Administrative Agent or any of its Affiliates (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such Payment (a “Payment Notice”) or (y) that was not preceded or accompanied by a Payment Notice, it shall be on notice, in each such case, that an error has been made with respect to such Payment. Each Lender agrees that, in each such case, or if it otherwise becomes aware a Payment (or portion thereof) may have been sent in error, such Lender shall promptly notify the Administrative Agent of such occurrence and, upon demand from the Administrative Agent, it shall promptly, but in no event later than two Business Days thereafter, return to the Administrative Agent the amount of any such Payment (or portion thereof) as to which such a demand was made in same day funds, together with interest thereon in respect of each day from and including the date such Payment (or portion thereof) was received by such Lender to the date such amount is repaid to the Administrative Agent at the greater of the NYFRB Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.

(ii) The Borrower and each other Credit Party hereby agrees that (x) in the event an erroneous Payment (or portion thereof) is not recovered from any Lender that has received such Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender with respect to such amount and (y) an erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Credit Party.

 

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(iii) Each party’s obligations under this Section 10.5(c) shall survive the resignation or replacement of the Administrative Agent or any transfer of rights or obligations by, or the replacement of, a Lender, the termination of the Commitments or the repayment, satisfaction or discharge of all Obligations under any Fundamental Document.

SECTION 10.6. Rights of Administrative Agent.

(a) It is understood and agreed that the Administrative Agent shall have the same duties, rights and powers as a Lender hereunder (including the right to give such instructions) as any of the other Lenders and may exercise such rights and powers, as well as its rights and powers under other agreements and instruments to which it is or may be party, and engage in other transactions with any Credit Party or Affiliate thereof, as though it were not the Administrative Agent, of the Lenders under this Credit Agreement and the other Fundamental Documents.

(b) The Administrative Agent may consult with counsel of its selection and the written advice of such counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

SECTION 10.7. Independent Investigation by Lenders.

(a) Each of the Lenders acknowledges that it has decided to enter into this Credit Agreement and the other Fundamental Documents and to make the Loans and participate in the Letters of Credit hereunder based on its own analysis of the transactions contemplated hereby and of the creditworthiness of the Credit Parties and agrees that neither the Administrative Agent nor the Issuing Banks shall bear any responsibility therefor.

(b) Each Lender and each Issuing Bank represents and warrants that (i) the Fundamental Documents set forth the terms of a commercial lending facility, (ii) in participating as a Lender, it is engaged in making, acquiring or holding commercial loans and in providing other facilities set forth herein as may be applicable to such Lender or Issuing Bank, in each case in the ordinary course of business, and not for the purpose of investing in the general performance or operations of the Borrower, or for the purpose of purchasing, acquiring or holding any other type of financial instrument such as a security (and each Lender and each Issuing Bank agrees not to assert a claim in contravention of the foregoing, such as a claim under the federal or state securities laws), (iii) it has, independently and without reliance upon the Administrative Agent, any Arranger, or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Credit Agreement as a Lender, and to make, acquire or hold Loans hereunder and (iv) it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to provide other facilities set forth herein, as may be applicable to such Lender or such Issuing Bank, and either it, or the Person exercising discretion in making its decision to make, acquire and/or hold such commercial loans or to provide such other facilities, is experienced in making, acquiring or holding such commercial loans or providing such other facilities. Each Lender and each Issuing Bank also acknowledges that it will, independently and without reliance upon the Administrative Agent, any Arranger or any other Lender or Issuing Bank, or any of the Related Parties of any of the foregoing, and based on such documents and information (which may contain material, non-public information within the meaning of the United States securities laws concerning the Borrower and its Affiliates) as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Credit Agreement, any other Fundamental Document or any related agreement or any document furnished hereunder or thereunder.

 

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SECTION 10.8. Agreement of Required Lenders. Except as otherwise expressly stated herein, upon any occasion requiring or permitting an approval, consent, waiver, election or other action on the part of the Required Lenders, as required under this Credit Agreement, action shall be taken by the Administrative Agent for and on behalf of, or for the benefit of, all Lenders upon the direction of such Required Lenders, and any such action shall be binding on all Lenders. No amendment, modification, consent or waiver shall be effective except in accordance with the provisions of Section 11.12 hereof.

SECTION 10.9. Notice of Transfer. The Administrative Agent and the Issuing Banks may deem and treat any Lender which is a party to this Credit Agreement as the owner of such Lender’s respective portions of the Loans and participations in Letters of Credit for all purposes, unless and until a written notice of the assignment or transfer thereof executed by any such Lender shall have been received by the Administrative Agent and become effective in accordance with Section 11.3 hereof.

SECTION 10.10. Successor Administrative Agent. The Administrative Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower. Such resignation shall become effective upon the earlier to occur of (i) 30 days from the date of such notice and (ii) acceptance by a successor agent of its appointment pursuant hereto (the “Resignation Effective Date”). Upon the Resignation Effective Date, the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Fundamental Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders under any of the Fundamental Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed). Upon any such resignation, the Required Lenders shall promptly appoint a successor agent from among the Lenders which successor shall be experienced and sophisticated in entertainment industry lending, provided that such replacement is reasonably acceptable (as evidenced in writing) to the Borrower; provided, however, that such approval by the Borrower shall not be required at any time when an Event of Default is continuing. If no successor agent shall have been so appointed by the Required Lenders and shall have accepted such appointment, within thirty (30) days after the retiring agent’s giving of notice of resignation, the Borrower may appoint a successor agent (which successor may be replaced by the Required Lenders; provided that such successor is experienced and sophisticated in entertainment industry lending and reasonably acceptable to the Borrower), which shall be either a Lender or a commercial bank organized, licensed, carrying on business under the laws of the United States of America or of any State thereof and shall have a combined capital and surplus of at least $500,000,000 and shall be experienced and sophisticated in entertainment industry lending. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor agent, such successor agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent under this Credit Agreement, the other Fundamental Documents and any other credit documentation. After any retiring Administrative Agent’s resignation hereunder as Administrative Agent, the provisions of this Article 10 and Article 11 shall inure to such retiring Administrative Agent, its sub-agents and their respective Related Parties’ benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement.

SECTION 10.11. Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding under any bankruptcy or insolvency proceeding or any other judicial proceeding relative to any Credit Party, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered (but not obligated) by intervention in such proceeding or otherwise:

(a) to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations under the Fundamental Documents that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent allowed in such judicial proceeding; and

 

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(b) to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel.

SECTION 10.12. Québec Security. For the purposes of the grant of security which may now or in the future be required to be provided by any of the Credit Parties pursuant to the laws of the Province of Québec, each of the parties hereto hereby irrevocably authorizes and appoints the Administrative Agent as the hypothecary representative (within the meaning of Article 2692 of the CCQ) for the Issuing Banks, and all present and future Lenders and their Affiliates and the other Secured Parties (in such capacity, the “Hypothecary Representative”) in order to hold any hypothec granted under the laws of the Province of Québec and to exercise such rights and duties as are conferred upon the Hypothecary Representative under the relevant deed of hypothec and applicable Laws (with the power to delegate any such rights or duties). By executing an Assignment and Assumption, any future Lender (and their Affiliates) shall be deemed to have consented to and ratified the foregoing appointment of the Administrative Agent as Hypothecary Representative hereunder for and on behalf of the Issuing Banks, all present and future Lenders and their Affiliates and the other Secured Parties. The Administrative Agent agrees to act in such capacity. The execution prior to the date hereof by the Administrative Agent in its capacity as Hypothecary Representative of any deed of hypothec or other security documents pursuant to the laws of the Province of Québec is hereby ratified and confirmed. For greater certainty, the Administrative Agent, acting as Hypothecary Representative, shall have the same rights, powers, immunities, indemnities and exclusions from liability as prescribed in favour of the Administrative Agent in this Credit Agreement, which shall apply mutatis mutandis. In the event of the resignation or replacement and appointment of a successor Administrative Agent, such successor Administrative Agent shall also act as the Hypothecary Representative, as contemplated above, unless a hypothecary representative is otherwise appointed.

SECTION 10.13. Other Agent Titles. Other than the title “Administrative Agent,” any title accorded to any Person on the cover page hereof including Sole Bookrunner, Joint Bookrunner, Sole Lead Arranger, Joint Lead Arranger or any other title containing the word “Agent,” is granted for recognition only and any such Person granted such a title shall not have any right, power, obligation, liability, responsibility or duty under this Credit Agreement other than those applicable to all such Persons as such. Without limiting the foregoing, no such Person shall have or be deemed to have any fiduciary relationship with any other Lender or the Credit Parties. Each Lender acknowledges that it has not relied, and will not rely, on any Person having any such title in deciding to enter into this Credit Agreement or in taking or not taking action hereunder. In the event of any claim against any such Person in any capacity or purported capacity inferred from any such title, such Person shall have the benefit of Section 11.5 to the same extent as the Administrative Agent.

SECTION 10.14. Certain ERISA Matters.

(a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent, each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that at least one of the following is and will be true:

(i) such Lender is not using “plan assets” (within the meaning of the Plan Asset Regulations) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments,

 

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(ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Credit Agreement,

(iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Credit Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Credit Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Credit Agreement, or

(iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.

(b) In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent, each Arranger and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party, that none of the Administrative Agent or any Arranger or any of their respective Affiliates is a fiduciary with respect to the Collateral or the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Credit Agreement, any Fundamental Document or any documents related to hereto or thereto).

(c) The Administrative Agent, and each Arranger hereby informs the Lenders that each such Person is not undertaking to provide investment advice or to give advice in a fiduciary capacity, in connection with the transactions contemplated hereby, and that such Person has a financial interest in the transactions contemplated hereby in that such Person or an Affiliate thereof (i) may receive interest or other payments with respect to the Loans, the Letters of Credit, the Commitments, this Credit Agreement and any other Fundamental Documents (ii) may recognize a gain if it extended the Loans, the Letters of Credit or the Commitments for an amount less than the amount being paid for an interest in the Loans, the Letters of

 

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Credit or the Commitments by such Lender or (iii) may receive fees or other payments in connection with the transactions contemplated hereby, the Fundamental Documents or otherwise, including structuring fees, commitment fees, arrangement fees, facility fees, upfront fees, underwriting fees, ticking fees, agency fees, administrative agent or collateral agent fees, utilization fees, minimum usage fees, letter of credit fees, fronting fees, deal-away or alternate transaction fees, amendment fees, processing fees, term out premiums, banker’s acceptance fees, breakage or other early termination fees or fees similar to the foregoing.

SECTION 10.15. Collateral Matters.

(a) Except with respect to the exercise of setoff rights in accordance with Section 11.6 or with respect to a Secured Party’s right to file a proof of claim in an insolvency proceeding, no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Obligations, it being understood and agreed that all powers, rights and remedies under the Fundamental Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance with the terms thereof.

(b) In furtherance of the foregoing and not in limitation thereof, no arrangements in respect of any Specified Swap Agreement or any Specified Cash Management Agreement will create (or be deemed to create) in favor of any Secured Party that is a party thereto any rights in connection with the management or release of any Collateral or of the obligations of any Credit Party under any Fundamental Document. By accepting the benefits of the Collateral, each Secured Party that is a party to any such arrangement in respect of any Specified Swap Agreement or any Specified Cash Management Agreement, as applicable, shall be deemed to have appointed the Administrative Agent to serve as administrative agent and collateral agent under the Fundamental Documents and agreed to be bound by the Fundamental Documents as a Secured Party thereunder, subject to the limitations set forth in this paragraph.

(c) The Secured Parties irrevocably authorize the Administrative Agent, at its option and in its discretion, to subordinate any Lien on any property granted to or held by the Administrative Agent under any Fundamental Document to the holder of any Lien on such property that is permitted by Section 7.3. The Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence, value or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent’s Lien thereon or any certificate prepared by any Credit Party in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders or any other Secured Party for any failure to monitor or maintain any portion of the Collateral.

SECTION 10.16. Credit Bidding. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including by accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code, including under Section 363, 1123 or 1129 of the Bankruptcy Code, or any similar laws in any other jurisdictions to which a Credit Party is subject, or (b) at any other sale, foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid by the Administrative Agent at the direction of the Required Lenders on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that shall vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) for the asset or assets so purchased (or for the equity interests or debt instruments of the acquisition vehicle or vehicles that are issued in connection with such purchase).

 

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In connection with any such bid,

(i) the Administrative Agent shall be authorized to form one or more acquisition vehicles and to assign any successful credit bid to such acquisition vehicle or vehicles,

(ii) each of the Secured Parties’ ratable interests in the Obligations which were credit bid shall be deemed without any further action under this Credit Agreement to be assigned to such vehicle or vehicles for the purpose of closing such sale,

(iii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or equity interests thereof, shall be governed, directly or indirectly, by, and the governing documents shall provide for, control by the vote of the Required Lenders or their permitted assignees under the terms of this Credit Agreement or the governing documents of the applicable acquisition vehicle or vehicles, as the case may be, irrespective of the termination of this Credit Agreement and without giving effect to the limitations on actions by the Required Lenders contained in Section 11.12 of this Credit Agreement),

(iv) the Administrative Agent on behalf of such acquisition vehicle or vehicles shall be authorized to issue to each of the Secured Parties, ratably on account of the relevant Obligations which were credit bid, interests, whether as equity, partnership interests, limited partnership interests or membership interests, in any such acquisition vehicle and/or debt instruments issued by such acquisition vehicle, all without the need for any Secured Party or acquisition vehicle to take any further action, and

(v) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of Obligations credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Secured Parties pro rata with their original interest in such Obligations and the equity interests and/or debt instruments issued by any acquisition vehicle on account of such Obligations shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.

Notwithstanding that the ratable portion of the Obligations of each Secured Party are deemed assigned to the acquisition vehicle or vehicles as set forth in clause (ii) above, each Secured Party shall execute such documents and provide such information regarding the Secured Party (and/or any designee of the Secured Party which will receive interests in or debt instruments issued by such acquisition vehicle) as the Administrative Agent may reasonably request in connection with the formation of any acquisition vehicle, the formulation or submission of any credit bid or the consummation of the transactions contemplated by such credit bid.

SECTION 10.17. Borrower Communications.

(a) The Administrative Agent, the Lenders and the Issuing Banks agree that the Borrower may, but shall not be obligated to, make any Borrower Communications to the Administrative Agent through an electronic platform chosen by the Administrative Agent to be its electronic transmission system (the “Approved Borrower Portal”).

 

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(b) Although the Approved Borrower Portal and its primary web portal are secured with generally-applicable security procedures and policies implemented or modified by the Administrative Agent from time to time (including, as of the Closing Date, a user ID/password authorization system), each of the Lenders, each of the Issuing Banks and the Borrower acknowledges and agrees that the distribution of material through an electronic medium is not necessarily secure, that the Administrative Agent is not responsible for approving or vetting the representatives or contacts of the Borrower that are added to the Approved Borrower Portal, and that there may be confidentiality and other risks associated with such distribution. Each of the Lenders, each of the Issuing Banks and the Borrower hereby approves distribution of Borrower Communications through the Approved Borrower Portal and understands and assumes the risks of such distribution.

(c) THE APPROVED BORROWER PORTAL IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE APPLICABLE PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER COMMUNICATION, OR THE ADEQUACY OF THE APPROVED BORROWER PORTAL AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS OR OMISSIONS IN THE APPROVED BORROWER PORTAL AND THE BORROWER COMMUNICATIONS. NO WARRANTY OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY THE APPLICABLE PARTIES IN CONNECTION WITH THE BORROWER COMMUNICATIONS OR THE APPROVED BORROWER PORTAL. IN NO EVENT SHALL THE ADMINISTRATIVE AGENT, ANY ARRANGER OR ANY OF THEIR RESPECTIVE RELATED PARTIES (COLLECTIVELY, “APPLICABLE PARTIES”) HAVE ANY LIABILITY TO ANY LOAN PARTY, ANY LENDER, ANY ISSUING BANK OR ANY OTHER PERSON OR ENTITY FOR DAMAGES OF ANY KIND, INCLUDING DIRECT OR INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, LOSSES OR EXPENSES (WHETHER IN TORT, CONTRACT OR OTHERWISE) ARISING OUT OF THE BORROWER’S TRANSMISSION OF BORROWER COMMUNICATIONS THROUGH THE INTERNET OR THE APPROVED BORROWER PORTAL.

As used herein, “Borrower Communications” shall mean, collectively, any Notice of Borrowing, notice of prepayment, notice requesting the issuance, amendment or extension of a Letter of Credit or other notice, demand, communication, information, document or other material provided by or on behalf of any Credit Party pursuant to any Fundamental Document or the transactions contemplated therein which is distributed by the Borrower to the Administrative Agent through an Approved Borrower Portal.

(d) Each of the Lenders, each of the Issuing Banks and the Borrower agrees that the Administrative Agent may, but (except as may be required by applicable law) shall not be obligated to, store the Borrower Communications on the Approved Borrower Portal in accordance with the Administrative Agent’s generally applicable document retention procedures and policies.

 

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ARTICLE 11

MISCELLANEOUS

SECTION 11.1. Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic photocopy (i.e., “PDF” or “TIFF”) format sent by electronic mail, as follows,

(a) if to the Administrative Agent or JPMorgan Chase Bank, N.A., to it at (i) JPMorgan Chase Bank, N.A., 2029 Century Park East, 38th Floor, Los Angeles, CA, 90067, Attention: Patrick J. Minnick, Phone No.: 310-860-7280, Email: patrick.j.minnick@jpmorgan.com, or

(b) if to any Credit Party to it at Lions Gate Entertainment Inc., 2700 Colorado Avenue, Santa Monica, CA, 90404, Attn: James W. Barge, Chief Financial Officer, Facsimile No.: 310-255-3801, E-mail: jbarge@lionsgate.com, or

(c) if to a Lender or an Issuing Bank, to it at its address set forth on the signature pages hereto, or such other address as such party may from time to time designate by giving written notice to the other parties hereunder.

Notwithstanding the foregoing, any notification made by the Borrower to the Administrative Agent from time to time with respect to the identity of the Disqualified Lenders shall be sent by electronic mail to: JPMDQ_Contact@jpmorgan.com. Any failure of the Administrative Agent, an Issuing Bank or a Lender giving notice pursuant to this Section 11.1, to provide a courtesy copy to a party as provided herein, shall not affect the validity of such notice. All notices and other communications given to any party hereto in accordance with the provisions of this Credit Agreement shall be deemed to have been given on the fifth (5th) Business Day after the date when sent by registered or certified mail, postage prepaid, return receipt requested, if by mail, or upon receipt by such party, if by any telegraphic or facsimile communications equipment or electronic mail, in each case addressed to such party as provided in this Section 11.1 or in accordance with the latest unrevoked written direction from such party.

SECTION 11.2. Termination, Survival of Agreement, Representations and Warranties, etc. All warranties, representations and covenants made by any of the Credit Parties herein, in any other Fundamental Document or in any certificate or other instrument delivered by it or on its behalf in connection with this Credit Agreement or any other Fundamental Document shall be considered to have been relied upon by the Administrative Agent, Issuing Banks and the Lenders and, except for any terminations, amendments, modifications or waivers thereof in accordance with the terms hereof, shall survive the making of the Loans and the issuance of the Letters of Credit herein contemplated and the execution and delivery to the Administrative Agent of the Notes regardless of any investigation made by the Administrative Agent, the Issuing Banks or the Lenders or on their behalf and shall continue in full force and effect until the Termination Date. This Credit Agreement and each other Fundamental Document will terminate and be of no further force and effect on the Termination Date, except with respect to those sections hereof or thereof which expressly survive.

SECTION 11.3. Successors and Assigns; Syndications; Loan Sales; Participations.

(a) Successors and Assigns Generally. The provisions of this Credit Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that, other than as permitted by Section 7.6 of this Credit Agreement, the Borrower may not assign or otherwise transfer any of its rights or obligations under any Fundamental Document without the prior written consent of the Administrative Agent and each Lender, and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the provisions of clause (b) of this Section 11.3, (ii) by way of participation in accordance with the provisions of clause (d) of this Section or (iii) by way of pledge or assignment of a security interest subject to the restrictions of clause (f) of this Section 11.3. Nothing in this Credit Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in clause (d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Credit Agreement.

 

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(b) Assignments by Lenders.

(i) Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Credit Agreement with respect to all or a portion of its Commitment(s) and the Loans at the time owing to it.

(ii) Assignments shall be subject to the following additional conditions:

(A) except in the case of an assignment of the entire remaining amount of the assigning Lender’s Commitment(s) and the Loans at the time owing to it or in the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitment(s) (which for this purpose includes Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption, as of such Trade Date) shall not be less than $5,000,000, in the case of any assignment in respect of the Facility (calculated, in each case, in the aggregate with respect to multiple, simultaneous assignments by two (2) or more Approved Funds) unless each of the Administrative Agent and the Borrower otherwise consent (each such consent not to be unreasonably withheld or delayed, and the Borrower will be deemed to have consented if it has not responded within five (5) Business Days);

(B) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations under this Credit Agreement with respect to the Facility or the Commitment assigned, except that this clause (B) shall not prohibit any Lender from assigning all or a portion of its rights and obligations among separate Facilities on a non-pro rata basis;

(C) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of $3,500 (unless otherwise waived or reduced by the Administrative Agent in its sole discretion), and the Eligible Assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an administrative questionnaire in a form supplied by the Administrative Agent and completed by such Eligible Assignee; and

(D) the Eligible Assignee provides the Borrower and the Administrative Agent the forms required by Section 3.4(a) prior to the assignment.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to clause (c) of this Section 11.3, from and after the effective date specified in each Assignment and Assumption, the Eligible Assignee thereunder shall be a party to this Credit Agreement and, to the extent of the interest assigned by such Assignment and Assumption, shall become a Lender hereunder and have the rights and obligations of a Lender under this Credit Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Credit Agreement (and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this Credit Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Section 3.3, Section 3.4, 11.4 and 11.5 and subject to any obligations hereunder with respect to facts and circumstances occurring prior to the effective date of such assignment.

 

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(c) Register.

(i) The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, the Commitment(s) of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time, and each repayment in respect of the principal amount (and any interest thereon) (the “Register”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Credit Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and any Lender (as to its own interest, but not the interest of any other Lender), at any reasonable time and from time to time upon reasonable prior notice.

(ii) The Administrative Agent shall (A) accept the Assignment and Assumption and (B) promptly record the information contained therein in the Register once all the requirements of clause (a) and (b) above have been met. No assignment shall be effective unless it has been recorded in the Register.

(d) Participations. Any Lender may at any time, without the consent of, or notice to, the Borrower, the Administrative Agent or any Issuing Bank, sell participations to any Person (other than a natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person) or a Disqualified Lender) (each, a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Credit Agreement (including all or a portion of its Commitment(s) and/or the Loans owing to it); provided that (i) such Lender’s obligations under this Credit Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Credit Agreement.

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Credit Agreement and to approve any amendment, modification, supplement or waiver of any provision of this Credit Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification, supplement or waiver described in subclause (A) (to the extent that such Participant is directly affected) or (B) of Section 11.12. Subject to clause (e) of this Section 11.3, the Borrower agrees that each Participant shall be entitled to the benefits of Section 3.3, Section 3.4 and Section 3.6 (subject to the requirements and limitations therein (including the requirements under Section 3.4, it being understood that the documentation required to be provided under Section 3.4 shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to clause (b) of this Section 11.3. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 10.2 as though it were a Lender; provided that such Participant agrees to be subject to Section 10.2 as though it were a Lender.

Each Lender that sells a participation pursuant to this Section 11.3(d), acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain a register for the recordation of the names and addresses of the Participants, the commitments of, and principal amounts (and stated interest) of the Loans owing to, each Participant pursuant to the terms hereof from time to time, and each repayment in respect of the principal amount (and any interest thereon) (each, a “Participant Register”). The entries in the Participant Register shall be conclusive absent manifest error, and such Lender and the Borrower shall treat each Person whose name is recorded in the Participant Register pursuant to the terms hereof as the

 

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owner of a participation for all purposes of this Credit Agreement, notwithstanding notice to the contrary; provided that no Lender shall have the obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant’s interest in any Loan or other Obligations under any Fundamental Document) to any Person other than the Borrower and the Administrative Agent.

(e) Limitations upon Participant Rights. A Participant shall not be entitled to receive any greater payment under Section 3.3 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant shall not be entitled to receive any greater payment under Section 3.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, except to the extent such entitlement to a greater payment results from a Change in Law after the sale of the participation.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Credit Agreement (other than to any Disqualified Lender) to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or other central bank having jurisdiction over such Lender, and this Section 11.3 shall not apply to any pledge or assignment of a security interest; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Electronic Execution of Assignments. The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any Applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act, the Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

(h) [Intentionally omitted].

(i) If the Borrower wishes to replace the Loans and Commitments under the Facility in their entirety at par with a replacement facility having different terms, it shall have the option, with the consent of the Administrative Agent and subject to at least three (3) Business Days’ advance notice to the Lenders under such Facility, instead of prepaying all such Loans and terminating such Commitments, to (i) require the Lenders under such Facility to assign all such Loans and Commitments under such Facility (without recourse, representation or warranty of any kind) to the Administrative Agent or its designees and (ii) amend the terms thereof in accordance with Section 11.12; provided that JPMorgan Chase Bank shall not be required to continue to function as administrative agent for the amended facility or otherwise have any role in any respect for such amended facility. Pursuant to any such assignment, all such Loans and Commitments shall be purchased at par (allocated among the Lenders under such Facility in the same manner as would be required if such Loans were being optionally prepaid or such Commitments were being optionally terminated by the Borrower), accompanied by payment by the Borrower of any accrued interest and fees thereon and any amounts owing pursuant to Section 11.4 to the extent demanded in writing prior to the date of such assignment. By receiving such purchase price, the Lenders under such Facility shall automatically be deemed to have assigned the Loans or Revolving Credit Commitments under such Facility pursuant to the terms of the form of Assignment and Assumption attached hereto as Exhibit F and accordingly no other action by such Lenders shall be required in connection therewith. The provisions of this clause (i) are intended to facilitate the maintenance of the perfection and priority of existing security interests in the Collateral during any such replacement.

 

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(j) In the case of any assignment, transfer or novation by a Lender to a new lender of all or any part of its rights and obligations under this Credit Agreement and the other Fundamental Documents, the Lender and the new lender agree that, for the purposes of Article 1278 of the Luxembourg civil code (to the extent applicable), the pledge created under the Luxembourg law governed Collateral Documents and securing the rights assigned, transferred or novated thereby will be preserved for the benefit of the new lender.

SECTION 11.4. Expenses; Documentary Taxes. The Borrower agrees to pay (other than, for the avoidance of doubt, any such taxes that are Excluded Taxes) (a) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent in connection with the performance of due diligence, the syndication of the credit facility contemplated hereby, the negotiation, preparation, execution, delivery, waiver or modification and administration of this Credit Agreement and any other documentation contemplated hereby, the making of the Loans and the issuance of the Letters of Credit, the Collateral or any Fundamental Document, including but not limited to, the verification of financial data and the transactions contemplated hereby, including the reasonable fees and disbursements of one firm of outside counsel to the Administrative Agent and, if reasonably necessary, one firm of special or local counsel in each applicable jurisdiction, and (b) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent, the Issuing Banks or the Lenders in the enforcement or protection (as distinguished from administration) of the rights and remedies thereof in connection with this Credit Agreement, the other Fundamental Documents, the Letters of Credit or the Notes, or as a result of any transaction, action or non-action arising from any of the foregoing, including but not limited to, the reasonable fees and disbursements of one firm of outside counsel for the Administrative Agent, the Issuing Banks or the Lenders and, if reasonably necessary, one firm of special or local counsel in each applicable jurisdiction. Such payments shall be made on the date this Credit Agreement is executed by the Borrower and thereafter promptly upon on demand. The Borrower agrees that it shall indemnify the Administrative Agent, the Issuing Banks and the Lenders from and hold them harmless against any documentary taxes, assessments or charges made by any Governmental Authority by reason of the execution and delivery of this Credit Agreement or the Notes or the issuance of the Letters of Credit, but, in each case, only if and to the extent that the Administrative Agent, the Issuing Banks and the Lenders comply with all reasonable requests of the Borrower to comply with applicable reporting requirements (which requirements would not subject the Administrative Agent, the Issuing Banks or Lenders to any unreimbursed cost or expense and would not otherwise be materially disadvantageous to the Administrative Agent, Issuing Banks or Lenders, as applicable) as may be necessary to reduce or eliminate such documentary taxes, assessments or charges. The obligations of the Borrower under this Section shall survive the termination of this Credit Agreement and the payment of the Loans and/or the expiration of any Letter of Credit.

SECTION 11.5. Indemnification of the Administrative Agent, the Issuing Banks and the Lenders. The Borrower agrees (a) to indemnify and hold harmless the Administrative Agent, the Issuing Banks and the Lenders and their respective Related Parties (each, an “Indemnified Party”) (to the full extent permitted by Applicable Law) from and against any and all claims, demands, losses, judgments and liabilities (including liabilities for penalties) of whatsoever nature, and (b) to pay to the Indemnified Parties an amount equal to the amount of all reasonable and documented out-of-pocket costs and expenses of investigation or defense, including reasonable legal fees of one firm of outside counsel for all Indemnified Parties taken as a whole, and, if reasonably necessary, one firm of special or local counsel in each applicable jurisdiction (or, in the event of an actual or perceived conflict of interest, one additional firm of counsel for such Indemnified Parties so conflicted) and disbursements, and with regard to both (a) and (b) in connection with or resulting from any claim, demand, litigation, investigation or other proceedings relating to the Collateral, this Credit Agreement and the other Fundamental Documents and the Letters of Credit, the making of the Loans or any other Transaction (regardless of whether such Indemnified Party is a party thereto, and whether or not such proceedings are brought by a Credit Party, their equity holders, Affiliates, creditors or any other third Person) but excluding therefrom all claims, demands, losses, judgments,

 

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liabilities, costs and expenses arising out of or resulting from (i) the gross negligence, willful misconduct, or material breach of its obligations under this Credit Agreement or any Fundamental Document by an Indemnified Party, as determined by a court of competent jurisdiction in a final and non-appealable decision, (ii) litigation or claims among Indemnified Parties in connection with the Fundamental Documents or in any way relating to the transactions contemplated hereby not involving an act or omission by a Credit Party (other than disputes involving claims against the Administrative Agent or Arranger or any Person with another titled capacity or similar role in its capacity as such), (iii) claims asserted or litigation commenced against any Indemnified Party by a Credit Party in which the Credit Party is the prevailing party, and (iv) an act or omission that does not involve a Credit Party and is not a claim against an Indemnified Party. The foregoing indemnity agreement includes any reasonable out-of-pocket costs incurred by any Indemnified Party in connection with any action or proceeding which may be instituted in respect of the foregoing by any Indemnified Party, or by any other Person either against the Lenders or in connection with which any officer, director, agent or employee of any Indemnified Party is called as a witness or deponent, including, but not limited to, the reasonable fees and disbursements of outside counsel to the Administrative Agent (subject to the limitations described in this clause (b) on number and type of counsel), and any out-of-pocket costs incurred by any Indemnified Party in appearing as a witness or in otherwise complying with legal process served upon them.

All indemnities contained in this Section 11.5 shall survive the expiration or earlier termination of this Credit Agreement and shall inure to the benefit of any Person who was a Lender notwithstanding such Person’s assignment of all its Loans and Commitments as to any actions taken or omitted to be taken by it while it was a Lender.

SECTION 11.6. Set-Off. In addition to any rights now or hereafter granted under Applicable Law and not by way of limitation of any such rights, upon the occurrence and during the continuation of any Event of Default, each Lender and each subsequent holder of any Obligation is hereby authorized by the Borrower at any time or from time to time, without prior notice to the Borrower or to any other Person, any such notice being hereby expressly waived, to set-off and to appropriate and to apply any and all deposits (general or special, including, but not limited to, indebtedness evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts, and in whatever currency denominated) and any other indebtedness at any time held or owing by that Lender or that subsequent holder to or for the credit or the account of the Borrower, whether or not matured, against and on account of any amount due and payable by the Borrower hereunder. Each Lender or any such subsequent holder of any Obligations agrees to promptly notify the Borrower and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.

SECTION 11.7. CHOICE OF LAW. THIS CREDIT AGREEMENT AND THE NOTES SHALL IN ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF NEW YORK.

SECTION 11.8. WAIVER OF JURY TRIAL.

(a) TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT OR THE SUBJECT MATTER THEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO

 

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ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTIES HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTIES HAVE RELIED, ARE RELYING AND WILL RELY IN ENTERING INTO THIS CREDIT AGREEMENT AND ANY OTHER FUNDAMENTAL DOCUMENT. ANY PARTY MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION 11.8 WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF ANY OTHER PARTY TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.

(b) The parties to this Credit Agreement prefer that any dispute between or among them be resolved in litigation subject to a jury trial waiver as set forth in Section 11.8(a). If, and only if, a pre-dispute jury trial waiver of the type provided for in Section 11.8(a) is unenforceable in litigation to resolve any dispute, claim, cause of action or controversy under this Credit Agreement or any other Fundamental Document (each, a “Claim”) in the venue where the Claim is being brought pursuant to the terms of this Credit Agreement, then, upon the written request of any party, such Claim, including any and all questions of law or fact relating thereto, shall be determined exclusively by a judicial reference proceeding. Except as otherwise provided in Section 11.8, venue for any such reference proceeding shall be in the state or federal court in the county or district where venue is appropriate under applicable law (the “Court”). The parties shall select a single neutral referee, who shall be a retired state or federal judge from the relevant venue. If the parties cannot agree upon a referee within ten (10) days, the Court shall appoint the referee. The referee shall report a statement of decision to the Court. The referee also shall determine all issues relating to the applicability, interpretation, and enforceability of this Section 11.8(b). The parties acknowledge that any Claim determined by reference pursuant to this Section 11.8(b) shall not be adjudicated by a jury.

SECTION 11.9. WAIVER WITH RESPECT TO DAMAGES. EACH CREDIT PARTY ACKNOWLEDGES THAT NEITHER THE ADMINISTRATIVE AGENT, THE ISSUING BANKS NOR ANY LENDER HAS ANY FIDUCIARY RELATIONSHIP WITH, OR FIDUCIARY DUTY TO, ANY CREDIT PARTY ARISING OUT OF OR IN CONNECTION WITH THIS CREDIT AGREEMENT OR ANY OTHER FUNDAMENTAL DOCUMENT AND THE RELATIONSHIP BETWEEN THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS, ON THE ONE HAND, AND THE CREDIT PARTIES, ON THE OTHER HAND, IN CONNECTION THEREWITH IS SOLELY THAT OF DEBTOR AND CREDITOR. TO THE EXTENT PERMITTED BY APPLICABLE LAW, NO CREDIT PARTY SHALL ASSERT, AND EACH CREDIT PARTY HEREBY WAIVES, ANY CLAIMS AGAINST THE ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS ON ANY THEORY OF LIABILITY, FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, THIS CREDIT AGREEMENT, ANY FUNDAMENTAL DOCUMENT, ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

SECTION 11.10. No Waiver. No failure on the part of the Administrative Agent or any Lender or the Issuing Banks to exercise, and no delay in exercising, any right, power or remedy hereunder, under the Notes or any other Fundamental Document or with regard to any Letter of Credit shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. All remedies hereunder are cumulative and are not exclusive of any other remedies provided by law.

SECTION 11.11. Extension of Payment Date. Except as otherwise specifically provided in Article 2 hereof, should any payment or prepayment of principal of or interest on the Notes or any other amount due hereunder, become due and payable on a day other than a Business Day, the due date of such payment or prepayment shall be extended to the next succeeding Business Day and, in the case of a payment or prepayment of principal, interest shall be payable thereon at the rate herein specified during such extension.

 

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SECTION 11.12. Amendments, etc.

(a) Except as provided (W) in Section 2.13 with respect to any Incremental Amendment, (X) in Section 3.1(b), (Y) in Section 10.1 or (Z) as otherwise expressly provided herein or in any Fundamental Document, (a) no provision of this Credit Agreement or the other Fundamental Documents may be amended, modified, supplemented or waived unless such amendment, modification, supplement or waiver is in writing and is signed by (i) the Borrower, (ii) the Required Lenders, (iii) if the rights or duties of the Administrative Agent are adversely affected thereby, the Administrative Agent, and (iv) if the rights or duties of the Issuing Banks are affected thereby, the Issuing Banks; provided that:

(A) no amendment, modification, supplement or waiver pursuant to this Section 11.12 shall:

(1) increase the Commitments or extend the expiry date of any Commitment of any Lender without the consent of such Lender (it being understood that a waiver of any condition precedent or the waiver of any Default or Event of Default or mandatory prepayment shall not constitute an extension or increase of any Commitment);

(2) reduce the amount of, postpone the date for any scheduled payment of any principal of or interest or fee on, or other amounts owed hereunder to a Lender, or extend the final maturity of any Loan or of any Reimbursement Obligation or of any fee or other amount payable hereunder (other than with respect to a waiver of default interest and it being understood that any change in the definitions of any ratio used in the calculation of such rate of interest or fees (or the component definitions) shall not constitute a reduction in any rate of interest or fees) without the consent of each Lender (but not the Required Lenders) to which such payment is owing or which has committed to make such Loan or Letter of Credit (or participate therein) hereunder; or

(3) change the application of payments set forth in Section 2.9 hereof or any other provision governing the pro rata sharing of payments under this Credit Agreement, without the consent of each Lender adversely affected thereby;

(B) no amendment, modification, supplement or waiver pursuant to this Section 11.12 shall, unless signed by each Lender:

(1) change the definition of “Required Lenders” or “Required Supermajority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or make any determination or grant any consent hereunder in a manner that reduces the voting percentages set forth therein;

(2) change the provisions of this Section 11.12;

 

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(3) release all or substantially all of the Collateral (except as expressly provided in the Fundamental Documents) or all or substantially all of the value of the guarantees provided by the Guarantors (except as expressly provided in the Fundamental Documents); or

(4) subordinate any material portion of the Obligations hereunder to other Indebtedness or subordinate any material portion of the Liens of the Administrative Agent in the Collateral, provided that this clause (4) shall not override the Administrative Agent’s authority to enter into Intercreditor Agreements pursuant to Section 10.1(b);

(5) change or waive Section 10.2;

(C) no amendment, modification, supplement or waiver pursuant to this Section 11.12 shall, unless signed by the Required Supermajority Lenders:

(1) add a new component to the Borrowing Base,

(2) increase the advance rates embedded (directly or indirectly) in the definitions used to compute the Borrowing Base,

(3) reduce the amount of the deductions in the Borrowing Base, or

(4) reduce the minimum required amount of Borrowing Base to be less than the Revolving Exposure; and

(D) no amendment, modification, supplement or waiver pursuant to this Section 11.12 shall amend or modify the provisions of Section 2.3 or any letter of credit application and any bilateral agreement between the Borrower and an Issuing Bank regarding such Issuing Bank’s Letter of Credit Commitment or the respective rights and obligations between the Borrower and such Issuing Bank in connection with the issuance of Letters of Credit without the prior written consent of the Administrative Agent and such Issuing Bank, respectively.

Notwithstanding anything to the contrary herein:

(v) except as set forth in clause (A) above, no Defaulting Lender shall have any right to approve or disapprove any amendment, modification, supplement, waiver or consent hereunder or otherwise give any direction to the Administrative Agent;

(w) the Borrower and the Administrative Agent may, without the input or consent of any other Lender, effect amendments to this Credit Agreement and the other Fundamental Documents as may be necessary in the reasonable opinion of the Borrower and the Administrative Agent to effect the provisions of Section 2.8(d), 2.13, Section 7.6 or as contemplated by Section 10.1;

(x) intercreditor agreements, guarantees, collateral or security documents and other related documents executed by Credit Parties in connection with this Credit Agreement may be in a form reasonably determined by the Administrative Agent and may be amended, restated, supplemented or waived without the consent of any Lender;

 

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(y) the Administrative Agent may, with the consent of Borrower only, amend, modify or supplement this Credit Agreement or any other Fundamental Document to cure any ambiguity, omission, defect or inconsistency, so long as such amendment, modification or supplement does not adversely affect the rights of any Lender and the Lenders shall have received, at least five (5) Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five (5) Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment;

(z) in connection with the addition of any Guarantor from an Approved Jurisdiction, the Borrower and the Administrative Agent may, without the consent of any Lender, amend, modify or supplement any Fundamental Documents, in order to include provisions which are reasonably required as to Guarantors organized in the applicable jurisdiction, including customary limitation language for such jurisdictions.

(b) Each waiver, amendment, modification, supplement or consent made or given pursuant to this Section 11.12 shall be effective only in the specific instance and for the specific purpose for which given, and such waiver, amendment, modification or supplement shall apply equally to each of the Lenders and shall be binding on the Credit Parties, the Lenders, the Administrative Agent and all future holders of the Loans and Commitments.

SECTION 11.13. Severability. Any provision of this Credit Agreement or of the Notes which is invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without invalidating the remaining provisions hereof, and any such invalidity, illegality or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 11.14. SERVICE OF PROCESS; SUBMISSION TO JURISDICTION. EACH PARTY HERETO (EACH, A “SUBMITTING PARTY”) HEREBY IRREVOCABLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN (OR IF SUCH COURT LACKS SUBJECT MATTER JURISDICTION, THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN THE BOROUGH OF MANHATTAN), AND ANY APPELLATE COURT FROM ANY THEREOF, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING (WHETHER IN TORT, LAW, OR IN EQUITY) ARISING OUT OF OR BASED UPON THIS CREDIT AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE LETTERS OF CREDIT), THE SUBJECT MATTER HEREOF, ANY OTHER FUNDAMENTAL DOCUMENT AND THE SUBJECT MATTER THEREOF. EACH SUBMITTING PARTY TO THE EXTENT PERMITTED BY APPLICABLE LAW (A) HEREBY WAIVES, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN THE ABOVE-NAMED COURTS, ANY CLAIM THAT IT IS NOT SUBJECT PERSONALLY TO THE JURISDICTION OF SUCH COURTS, THAT ITS PROPERTY IS EXEMPT OR IMMUNE FROM ATTACHMENT OR EXECUTION, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THIS CREDIT AGREEMENT, THE SUBJECT MATTER HEREOF, THE OTHER FUNDAMENTAL DOCUMENTS OR THE SUBJECT MATTER THEREOF (AS APPLICABLE) MAY NOT BE ENFORCED IN OR BY SUCH COURT, (B) HEREBY WAIVES THE RIGHT TO REMOVE ANY SUCH ACTION, SUIT OR PROCEEDING INSTITUTED BY THE ADMINISTRATIVE AGENT, AN ISSUING BANK OR A LENDER IN STATE COURT TO FEDERAL COURT, AND (C) HEREBY WAIVES THE RIGHT TO ASSERT IN ANY SUCH ACTION, SUIT OR PROCEEDING ANY

 

170

OFFSETS OR COUNTERCLAIMS EXCEPT COUNTERCLAIMS THAT ARE COMPULSORY OR OTHERWISE ARISE FROM THE SAME SUBJECT MATTER. EACH SUBMITTING PARTY HEREBY CONSENTS TO SERVICE OF PROCESS BY MAIL AT THE ADDRESS TO WHICH NOTICES ARE TO BE GIVEN TO IT PURSUANT TO SECTION 11.1 HEREOF. EACH SUBMITTING PARTY AGREES THAT ITS SUBMISSION TO JURISDICTION AND CONSENT TO SERVICE OF PROCESS BY MAIL IS MADE FOR THE EXPRESS BENEFIT OF EACH OF THE OTHER SUBMITTING PARTIES. FINAL JUDGMENT AGAINST ANY SUBMITTING PARTY IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE CONCLUSIVE, AND MAY BE ENFORCED IN ANY OTHER JURISDICTION (X) BY SUIT, ACTION OR PROCEEDING ON THE JUDGMENT, A CERTIFIED OR TRUE COPY OF WHICH SHALL BE CONCLUSIVE EVIDENCE OF THE FACT AND OF THE AMOUNT OF INDEBTEDNESS OR LIABILITY OF THE SUBMITTING PARTY THEREIN DESCRIBED OR (Y) IN ANY OTHER MANNER PROVIDED BY OR PURSUANT TO THE LAWS OF SUCH OTHER JURISDICTION, PROVIDED, HOWEVER, THAT THE ADMINISTRATIVE AGENT, THE ISSUING BANKS OR A LENDER MAY AT ITS OPTION BRING SUIT, OR INSTITUTE OTHER JUDICIAL PROCEEDINGS AGAINST A SUBMITTING PARTY OR ANY OF ITS ASSETS IN ANY STATE OR FEDERAL COURT OF THE UNITED STATES OF AMERICA OR OF ANY COUNTRY OR PLACE WHERE THE SUBMITTING PARTY OR SUCH ASSETS MAY BE FOUND.

SECTION 11.15. Headings. Section headings used herein and the Table of Contents are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Credit Agreement.

SECTION 11.16. Execution in Counterparts; Electronic Execution. This Credit Agreement may be executed in any number of counterparts, each of which shall constitute an original, but all of which taken together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page of (x) this Credit Agreement, (y) any other Fundamental Document and/or (z) any document, amendment, approval, consent, information, notice (including, for the avoidance of doubt, any notice delivered pursuant to Section 11.1), certificate, request, statement, disclosure or authorization related to this Credit Agreement, any other Fundamental Document and/or the transactions contemplated hereby and/or thereby (each an “Ancillary Document”) that is an Electronic Signature transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page shall be effective as delivery of a manually executed counterpart of this Credit Agreement, such other Fundamental Document or such Ancillary Document, as applicable. The words “execution,” “signed,” “signature,” “delivery,” and words of like import in or relating to this Credit Agreement, any other Fundamental Document and/or any Ancillary Document shall be deemed to include Electronic Signatures, deliveries or the keeping of records in any electronic form (including deliveries by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page), each of which shall be of the same legal effect, validity or enforceability as a manually executed signature, physical delivery thereof or the use of a paper-based recordkeeping system, as the case may be; provided that nothing herein shall require the Administrative Agent to accept Electronic Signatures in any form or format without its prior written consent and pursuant to procedures approved by it; provided, further, without limiting the foregoing, (i) to the extent the Administrative Agent has agreed to accept any Electronic Signature, the Administrative Agent and each of the Lenders shall be entitled to rely on such Electronic Signature purportedly given by or on behalf of the Borrower or any other Credit Party without further verification thereof and without any obligation to review the appearance or form of any such Electronic signature and (ii) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by a manually executed counterpart. Without limiting the generality of the foregoing, the Borrower and each Credit Party hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders, the Borrower and the Credit Parties,

 

171

Electronic Signatures transmitted by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page and/or any electronic images of this Credit Agreement, any other Fundamental Document and/or any Ancillary Document shall have the same legal effect, validity and enforceability as any paper original, (ii) agrees that the Administrative Agent and each of the Lenders may, at its option, create one or more copies of this Credit Agreement, any other Fundamental Document and/or any Ancillary Document in the form of an imaged electronic record in any format, which shall be deemed created in the ordinary course of such Person’s business, and destroy the original paper document (and all such electronic records shall be considered an original for all purposes and shall have the same legal effect, validity and enforceability as a paper record), (iii) waives any argument, defense or right to contest the legal effect, validity or enforceability of this Credit Agreement, any other Fundamental Document and/or any Ancillary Document based solely on the lack of paper original copies of this Credit Agreement, such other Fundamental Document and/or such Ancillary Document, respectively, including with respect to any signature pages thereto and (iv) waives any claim against any Indemnified Party for any losses, claims (including intraparty claims), demands, damages or liabilities of any kind (collectively, and solely for purposes of this Section 11.16, “Liabilities”) arising solely from the Administrative Agent’s and/or any Lender’s reliance on or use of Electronic Signatures and/or transmissions by telecopy, emailed pdf. or any other electronic means that reproduces an image of an actual executed signature page, including any Liabilities arising as a result of the failure of the Borrower and/or any Credit Party to use any available security measures in connection with the execution, delivery or transmission of any Electronic Signature.

SECTION 11.17. USA Patriot Act, Beneficial Ownership Regulation, and PCML Act. Each Lender hereby notifies each of the Credit Parties that, pursuant to the requirements of the USA Patriot Act, Beneficial Ownership Regulation, and the PCML Act, it is required to obtain, verify and record information that identifies the Credit Parties and their investors, which information includes the name and address of each such Person and other information that will allow such Lender to identify such Person in accordance with the USA Patriot Act, Beneficial Ownership Regulation, and the PCML Act.

SECTION 11.18. Entire Agreement. This Credit Agreement (including the Exhibits and Schedules hereto) represents the entire agreement of the parties with regard to the subject matter hereof and the terms of any letters and other documentation entered into between any of the parties hereto prior to the execution of this Credit Agreement which relate to Loans to be made hereunder shall be replaced by the terms of this Credit Agreement.

SECTION 11.19. Confidentiality. Each of the Administrative Agent, the Issuing Banks and each Lender agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to it and its affiliates’ Related Parties (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential), (b) to the extent requested by any Governmental Authority (including any self-regulatory authority), (c) to the extent required by Applicable Law or by any subpoena or similar legal process, (d) to any other party to this Credit Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Credit Agreement or the enforcement of rights hereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 11.19, to (i) any assignee of or participant in, or any prospective assignee of or participant in, any of its rights or obligations under this Credit Agreement, (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to the Borrower and its obligations and (iii) to any credit insurance provider relating to the Borrower and the Obligations (it being understood that the list of Disqualified Lenders may be disclosed to any assignee or participant, prospective assignee or prospective participant, or actual or prospective counterparty (or its advisors) in reliance on this clause (f)), (g) with the consent of the Borrower, or (h) to the extent such Information (x) becomes publicly available other than as a result of a breach of this Section 11.19, or (y) becomes available to the Administrative Agent, the Issuing Banks or any Lender on a non-confidential basis from a source other

 

172

than a Credit Party that is not actually known by the recipient to have breached a binding confidentiality agreement by having remitted such Information. For the purposes of this Section 11.19, “Information” means all information received from any Credit Party relating to any Credit Party or its business, other than any such information that is available to the Administrative Agent, the Issuing Banks or any Lender on a non-confidential basis prior to disclosure by such Credit Party and other than information pertaining to this Credit Agreement routinely provided by arrangers to data service providers, including league table providers, that serve the lending industry; provided that in the case of information received from a Credit Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

SECTION 11.20. Judgment Currency.

(a) If for the purpose of obtaining or enforcing judgment against the Borrower or any other Credit Party which is incorporated or organized under the laws of Canada or any province thereof in any court in any jurisdiction, it becomes necessary to convert into Canadian currency an amount due in United States Dollars under this Credit Agreement or any other Fundamental Document, the conversion shall be made at the rate of exchange prevailing on the Business Day immediately preceding:

(i) the date of actual payment of the amount due, in the case of any proceeding in the courts of the Province of British Columbia or in the courts of any other jurisdiction that will give effect to such conversion being made on such date; or

(ii) the date on which the judgment is given, in the case of any proceeding in the courts of any other jurisdiction (the date as of which such conversion is made pursuant to this Section 11.20(a)(ii) being hereinafter in this Section 11.20 referred to as the “Judgment Conversion Date”).

(b) If, in the case of any proceeding in the court of any jurisdiction referred to in Section 11.20(a)(ii), there is a change in the rate of exchange prevailing between the Judgment Conversion Date and the date of actual payment of the amount due, the Borrower shall pay such additional or lesser amount as may be necessary to ensure that the amount paid in Canadian currency, when converted at the rate of exchange prevailing on the date of payment, will produce the amount of United States dollars which could have been purchased with the amount of Canadian dollars stipulated in the judgment or judicial order at the rate of exchange prevailing on the Judgment Conversion Date.

(c) Any amount due from the Borrower or any other Credit Party under the provisions of Section 11.20(b) shall be due as a separate debt and shall not be affected by judgment being obtained for any other amounts due under or in respect of this Credit Agreement or any other Fundamental Document.

(d) The term “rate of exchange” in this Section 11.20 means the noon rate of exchange based on Canadian interbank transactions in United States dollars and Canadian dollars published or quoted by the Bank of Canada for the day in question.

SECTION 11.21. Lender Obligations Several. The respective obligations of the Lenders under this Credit Agreement and the other Fundamental Documents are several and not joint, and no Lender shall be responsible for the failure of any other Lender to satisfy its obligations hereunder and thereunder.

 

173

SECTION 11.22. Acknowledgement and Consent to Bail-In of Affected Financial Institutions. Notwithstanding anything to the contrary in any Fundamental Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Fundamental Document may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:

(a) the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and

(b) the effects of any Bail-In Action on any such liability, including, if applicable:

(i) a reduction in full or in part or cancellation of any such liability;

(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Credit Agreement or any other Fundamental Document; or

(iii) the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the applicable Resolution Authority.

SECTION 11.23. Taxes(a) . The term “tax” or “taxes” in this Credit Agreement (including the Exhibits and Schedules hereto), except when used in the context of a tax credit, shall also include any interest, additions to tax or penalties applicable thereto.

SECTION 11.24. Acknowledgement Regarding Any Supported QFCs. To the extent that the Fundamental Documents provide support, through a guarantee or otherwise, for Specified Swap Agreements or any other agreement or instrument that is a QFC (such support “QFC Credit Support” and each such QFC a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Fundamental Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):

In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Fundamental Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the

 

174

Fundamental Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

[Signature Pages Follow]

 

175

IN WITNESS WHEREOF, the parties hereto have caused this Credit and Guarantee Agreement to be duly executed as of the day and the year first written.

 

BORROWER:

LIONS GATE TELEVISION INC.

By:

  

/s/ James W. Barge

Name:

  

James W. Barge

Title:

  

Chief Financial Officer and Treasurer

GUARANTORS:

ANCHOR BAY ENTERTAINMENT, LLC

DEBMAR/MERCURY (WW) PRODUCTIONS LLC

By:

  

/s/ Michael Hainkel

Name:

  

Michael Hainkel

Title:

  

Assistant Treasurer

THE ENTITIES LISTED ON SCHEDULE A HERETO

By:

  

/s/ James W. Barge

Name:

  

James W. Barge

Title:

  

Chief Financial Officer and Treasurer

 

Signature Page to Credit Agreement

SCHEDULE A

 

3F PRODUCTIONS, INC.

   

ENTERTAINMENT ONE HOLDINGS USA INC.

ALTERNATE UNIVERSE, LLC

   

ENTERTAINMENT ONE REALITY PRODUCTIONS LLC

ANTLER QUEEN PRODUCTIONS, INC.

   

ENTERTAINMENT ONE REALITY PRODUCTIONS LLC

ARTISAN ENTERTAINMENT INC.

   

ENTERTAINMENT ONE TELEVISION USA LLC

ARTISAN HOME ENTERTAINMENT

   

EONE FEATURES (DEVELOPMENT) LLC

ARTISAN HOME ENTERTAINMENT INC.

   

EONE FEATURES LLC

ARTISAN PICTURES LLC

   

FILM HOLDINGS CO.

ARTISAN RECEIVABLES HOLDINGS, LLC

   

FOXBURG FINANCING 2 LLC

AYD PRODUCTIONS, INC.

   

FOXBURG FINANCING 3, LLC

BALANCED POST, INC.

   

FOXBURG FINANCING 4, LLC

BEEN THERE DONE THAT PRODUCTIONS, INC.

   

FOXBURG FINANCING, LLC

CANDY CANE LANE PRODUCTIONS, INC.

   

FRIENDS FINANCING, INC.

CASUAL PRODUCTIONS, INC.

   

GC FILMS, INC.

CATX EXORCISM 12 PRODUCTIONS, INC.

   

GOOD BOYS PRODUCTIONS, LLC

CATX TWO EYES 12 PRODUCTIONS, INC.

   

GOOD EVEL PRODUCTIONS, INC.

CATX WEE 12 PRODUCTIONS, INC.

   

GOOD UNIVERSE DEVELOPMENT, LLC

CB DEVELOPMENT, LLC

   

GRINDSTONE DEVELOPMENT, LLC

CB DIRECT, LLC

   

GRINDSTONE ENTERTAINMENT

CBLG PRODUCTIONS, LLC

   

GROUP, LLC

CBNU PRODUCTIONS, LLC

   

GUILT PRODUCTIONS, INC.

CHAINS PRODUCTIONS, INC.

   

HIGHER POST LLC

CHAIRMAN OF THE BOARD

   

HOME EC PRODUCTIONS, INC.

PRODUCTIONS, INC.

   

HOUDINI PRODUCTIONS, INC.

CONDEMNED PRODUCTIONS, INC.

   

HSKL PRODUCTIONS, INC.

CONFIDENTIAL PRODUCTIONS, INC.

   

INFLUENCE PRODUCTIONS, INC.

D30 PRODUCTIONS, INC.

   

INVISIBLE CASTING INC.

DB2 PRODUCTIONS, LLC

   

JUST REWARDS PRODUCTIONS, INC.

DD1 PRODUCTIONS, LLC

   

LANDSCAPE ENTERTAINMENT CORP.

DD2 ACQUISITION CORP.

   

LEP REBOOT, LLC

DEBMAR STUDIOS, INC.

   

LG BDRIGHTS HOLDINGS LLC

DEBMAR/MERCURY, LLC

   

LG CAPITAL HOLDINGS INC.

DELUXE PICTURES LLC

   

LG CRRIGHTS HOLDINGS LLC

DESPERADO UNIVERSE

   

LG JV SERVICING COMPANY, LLC

 

Signature Page to Credit Agreement

PRODUCTIONS, LLC

   

LG LUX BDRIGHTS HOLDINGS LLC

DESPERADOS, LLC

   

LGAC 1, LLC

DEVIL’S MOUTH PRODUCTIONS, INC.

   

LGAC 3, LLC

EARL STREET CAPITAL LLC

   

LGAC INTERNATIONAL LLC

ENTERTAINMENT ONE FILM USA LLC

   

LGAC IPF, LLC

LGTV ANIMATION, INC.

   

LGDG FILMS INC.

LGTV C103 PRODUCTIONS, INC.

   

LG-MAX LLC

LIONS GATE ANCILLARY LLC

   

MOTHERHOOD PRODUCTIONS, INC.

LIONS GATE DIGITAL PROJECTS, INC.

   

MQP, LLC

LIONS GATE ENTERTAINMENT INC.

   

MSP PRODUCTIONS, LLC

LIONS GATE EXHIBITION, INC.

   

NGC FILMS, INC.

LIONS GATE FILMS HOLDINGS

   

NTF PRODUCTIONS, INC.

COMPANY #2, INC.

   

OLD HICKORY PRODUCTIONS, INC.

LIONS GATE FILMS INC.

   

PIPELINE CASTING, INC.

LIONS GATE INDIA INC.

   

POWER MONGERING DESPOT, INC.

LIONS GATE INTERACTIVE, INC.

   

P-VALLEY PRODUCTIONS, INC.

LIONS GATE INTERNATIONAL SALES, LLC

   

RAINMAKER PRODUCTIONS, INC.

LIONS GATE MUSIC PUBLISHING LLC

   

RENEGADE 83, LLC

LIONS GATE MUSIC, INC.

   

RENEGADE ENTERTAINMENT, LLC

LIONS GATE ONLINE SHOP INC.

   

ROOKIE PRODUCTIONS, INC.

LIONS GATE PRODUCTIONS, LLC

   

RRR PRODUCTIONS, LLC

LIONS GATE RECORDS, INC.

   

SCREENING ROOM, INC.

LIONS GATE RELEASING LLC

   

SEE ME LOUISIANA, L.L.C.

LIONS GATE SPIRIT HOLDINGS, LLC

   

SELP, LLC

LIONS GATE TELEVISION

   

SERPENT QUEEN PRODUCTIONS, INC.

DEVELOPMENT LLC

   

SF1 PRODUCTIONS, INC.

LIONS GATE TELEVISION INC.

   

SF2 PRODUCTIONS, INC

LIONS GATE TELEVISION

   

SHARK IN A CAVE PRODUCTIONS, INC.

INTERNATIONAL - LATIN AMERICA, INC.

   

SILENT DEVELOPMENT CORP.

LIONS GATE TRUE NORTH CORP.

   

SOUTH SHORE PRODUCTIONS, INC.

LIONS GATE TRUE NORTH MEDIA, LLC

   

SPACE CAMP PRODUCTIONS, LLC

LIONS GATE X PRODUCTIONS, LLC

   

STARZ MEDIA, LLC

LIONSGATE LBE, INC.

   

STUDIO PRODUCTIONS INC.

LIONSGATE LIMITED, LLC

   

SUMMIT DISTRIBUTION, LLC

LIONSGATE STUDIOS HOLDING, INC.

   

SUMMIT ENTERTAINMENT

LOVE LESSONS PRODUCTIONS, INC.

   

DEVELOPMENT SERVICES

LOVE LIFE PRODUCTIONS, INC.

   

SUMMIT ENTERTAINMENT, LLC

MACARTHUR PARK PRODUCTIONS, INC

   

SUMMIT GUARANTY SERVICES, LLC

MANDATE FILMS, LLC

   

SUMMIT INTERNATIONAL

MANDATE PICTURES, LLC

   

DISTRIBUTION, INC.

MANHUNT PRODUCTIONS, INC.

   

SUMMIT PRODUCTIONS, LLC

 

Signature Page to Credit Agreement

MARRY ME? PRODUCTIONS, INC.

   

SUMMIT SIGNATURE, LLC

MERE MORTALS PRODUCTIONS, INC.

   

SWS PRODUCTIONS, INC.

MIDDLE WEST PRODUCTIONS, INC.

   

THE SCORE PRODUCTIONS, INC.

MIDNIGHT SUN PRODUCTIONS, INC.

   

TOUCHDOWN PRODUCTIONS, INC.

MILLERS GIRL PRODUCTIONS, LLC

   

TRUE NORTH MEDIA, LLC

MONOGAMISH PRODUCTIONS, INC.

   

TWEED PRODUCTIONS, LLC

WM LG PRODUCTIONS, INC.

   

TWILIGHT DOMESTIC RIGHTS, LLC

WOMEN IN COMEDY

   

TWILIGHT PRODUCTIONS, LLC

DOCUMENTARY, LLC

   

UC PRODUCTIONS, LLC

YKM PRODUCTIONS, INC.

   

UNITED FANDOM, LLC

LIONS GATE PENNSYLVANIA, INC.

   

VESTRON INC.

WM LG PRODUCTIONS, INC.

   

WOMEN IN COMEDY

   

DOCUMENTARY, LLC

   

 

Signature Page to Credit Agreement

ROCK ACQUISITION, LLC

By: Lions Gate Entertainment, Inc., as Class A Member

By:

  

/s/ James W. Barge

Name:

  

James W. Barge

Title:

  

Chief Financial Officer & Treasurer

1620 MEDIA, LLC

EXTREME LOGGING, LLC

FIBBY, LLC

GHOST HUNTERS PRODUCTIONS, LLC

LAUREL CHANDLER, LLC

OVERTURE FILMS, LLC

PILGRIM ENTERTAINMENT, LLC

PILGRIM FILMS AND TELEVISION, LLC

PILGRIM PICTURES, LLC

PILGRIM PRODUCTION, LLC

PILGRIM PUBLISHING, LLC

PILGRIM TAPS, LLC

PROJECT X PRODUCTIONS, LLC

ROCKHOUSE IMAGES, LLC

SIX MILE PRODUCTS & LICENSING, LLC

TUFGUY PRODUCTIONS, LLC

VANDALAY ENTERTAINMENT, LLC

MUSICX PUBLISHING, LLC

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzycz

Title:

  

Executive Vice President

 

Signature Page to Credit Agreement

A LOT PRODUCTIONS, INC.

ANGEL PRODUCTIONS, INC.

BLACKFIN INC.

BOTTOM DOLLAR PRODUCTIONS, INC.

CRUSHED PRODUCTIONS, INC.

EMPIRE PRODUCTIONS, INC.

LGTV PRODUCTIONS, INC.

ONE RESILIENCE PRODUCTIONS, INC.

PARADISE PRODUCTIONS, INC.

QUEST PRODUCTIONS, INC.

ROAD TO TINUE PRODUCTIONS, INC.

ROYALS PRODUCTIONS, INC.

WHITE FAMOUS PRODUCTIONS, INC.

By:

  

/s/ James W. Barge

Name:

  

James W. Barge

Title:

  

Chief Financial Officer & Treasurer

BLIND MAN PRODUCTIONS, LLC

CHERRIES PRODUCTIONS, LLC

DISASTER ARTIST, LLC

DJ LOVE PRODUCTIONS, LLC

EXTINCT SHADOW PRODUCTIONS, LLC

FOUR FELLAS PRODUCTIONS, LLC

GOOD UNIVERSE FILMS, LLC

GOOD UNIVERSE INTERNATIONAL, LLC

GOOD UNIVERSE MEDIA, LLC

TOWNIES 2 PRODUCTIONS, LLC

TOWNIES PRODUCTIONS, LLC

By:

  

/s/ Dan Freedman

Name:

  

Dan Freedman

Title:

  

Vice President

XMAS PRODUCTIONS, LLC

By:

  

/s/ Dan Freedman

Name:

  

Dan Freedman

Title:

  

Vice President, as Officer of Sole Member

 

Signature Page to Credit Agreement

PLAYLIST PRODUCTIONS, INC.

PLLG LEGAL, INC.

PSGM, INC..

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzycz

Title:

  

Executive Vice President & Secretary

WHIRLWIND ENTERTAINMENT GROUP, LLC

By:

  

/s/ Craig Piligian

Name:

  

Craig Piligian

Title:

  

President and Chief Executive Officer

J & C ENTERTAINMENT, INC.

By:

  

/s/ Michael Hainkel

Name:

  

Michael Hainkel

Title:

  

Sole Member

 

Signature Page to Credit Agreement

LIONSGATE STUDIOS CORP.

By:

  

/s/ James W. Barge

Name:

  

James W. Barge

Title:

  

Chief Financial Officer

LIONSGATE STUDIOS HOLDING CORP.

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzcyz

Title:

  

President

CENTBOMB PRODUCTIONS CORP.

LG VISUAL PRODUCTIONS ULC

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzcyz

Title:

  

Executive Vice President and Secretary

LIONS GATE MUSIC CORP.

LIONSGATE PLAYCO HOLDINGS ULC

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzcyz

Title:

  

President and Secretary

LIONS GATE X PRODUCTIONS CORP.

By:

  

/s/ Adrian Kuzcyz

Name:

  

Adrian Kuzcyz

Title:

  

Vice President and Secretary

 

Signature Page to Credit Agreement

LG UK BDRIGHTS HOLDINGS LIMITED

By:

  

/s/ Sandra Benoit

Name:

  

Sandra Benoit

Title:

  

Director

LIONS GATE INTERNATIONAL MEDIA LIMITED

By:

  

/s/ Sandra Benoit

Name:

  

Sandra Benoit

Title:

  

Director

LIONS GATE INTERNATIONAL (UK) LIMITED

By:

  

/s/ Sandra Benoit

Name:

  

Sandra Benoit

Title:

  

Director

 

Signature Page to Credit Agreement

LIONS GATE INTERNATIONAL SLATE

INVESTMENT S.A.

as Luxembourg Guarantor

By:

  

/s/ George Scheuer

Name:

  

George Scheuer

Title:

  

Authorized Signatory

LIONS GATE INDIA SARL

as Luxembourg Guarantor

By:

  

/s/ George Scheuer

Name:

  

George Scheuer

Title:

  

Authorized Signatory

LIONS GATE INTERNATIONAL MOTION

PICTURES SARL

as Luxembourg Guarantor

By:

  

/s/ George Scheuer

Name:

  

George Scheuer

Title:

  

Authorized Signatory

ENTERTAINMENT CAPITAL HOLDINGS

INTERNATIONAL SARL

as Luxembourg Guarantor

By:

  

/s/ George Scheuer

Name:

  

George Scheuer

Title:

  

Authorized Signatory

 

Signature Page to Credit Agreement

JPMORGAN CHASE BANK, N.A.

individually as a Lender, as Administrative Agent and as an Issuing Bank

By:

  

/s/ Patrick J. Minnick

Name:

  

Patrick J. Minnick

Title:

  

Executive Director

[Lender signature pages on file with the Administrative Agent]

SCHEDULE 1.1

Schedule of Commitments

 

Lender

       

Total Commitments

    $ 800,000,000.00  

ANNEX A

BORROWING BASE

“Borrowing Base” shall mean, at any date for which the amount thereof is to be determined, an amount equal to the aggregate (without double counting) of the following:

(i) 100% of Eligible Receivables from Acceptable Major Account Debtors, plus

(ii) 100% of Eligible L/C Receivables, plus

(iii) 90% of Eligible Receivables from Acceptable Domestic Account Debtors, plus

(iv) 85% of Eligible Receivables from Acceptable Foreign Account Debtors, plus

(v) 65% of Eligible Receivables from Other Acceptable Foreign Account Debtors, plus

(vi) 50% of Other Receivables, plus

(vii) 90% of Acceptable Tax Credits, plus

(viii) the product of the Eligible Unsold Rights Amount Advance Rate multiplied by the Eligible Unsold Rights Amount, plus

(ix) subject to clause m. of the proviso below, 100% of amounts held in the Cash Collateral Account(s), plus

(x) the product of the Ultimates Advance Rate multiplied by the Net Remaining Ultimates for all Seasoned Pictures, minus

(xi) the aggregate Production Cost Reserves, minus

(xii) any Conditional Outside IP Debt Reserve, minus

(xiii) any Third Party Lien Reserve;

provided, however, that

a. the amount included in the Borrowing Base at any time for Other Receivables (other than theatrical receivables) shall not exceed U.S.$50,000,000 in the aggregate for all such receivables or U.S.$5,000,000 for any obligor;

b. the portion of the Borrowing Base attributable at any time to each item of Product which has not yet been Completed shall not exceed (x) in the case of an item of Product for which the Credit Party elects to deliver a Completion Guarantee, the amount which the Credit Party is obligated to fund to pay production costs of such item of Product as a condition to the obligation of the counterparty to such Completion Guarantee (e.g. the strike price under the relevant Completion Guarantee) and (y) in the case of an Item of Product for which the Credit Party does not elect to deliver a Completion Guarantee, the Credit Parties’ share of the Budgeted Negative Cost of such item of Product;

c. the portion of the Borrowing Base attributable at any time to each item of Product which has been Completed but has not yet become a Seasoned Picture shall not exceed the Credit Parties’ share of the Budgeted Negative Cost of such item of Product (inclusive of capitalized overhead as provided in the GAAP financial statements) plus any Eligible Receivables from domestic Acceptable Obligors related to the applicable item of Product;

d. the portion of the Borrowing Base attributable to Acceptable Tax Credits shall not exceed 30% of the total Borrowing Base (prior to the deduction of any Production Cost Reserves);

e. no amounts shall be included in the Borrowing Base which are attributable to an item of Product or right in which a Credit Party cannot warrant sufficient title to the underlying rights;

f. no amount shall be included in the Borrowing Base unless the Borrowing Base value represents assets of a Credit Party in which the Administrative Agent (for the benefit of itself, the Issuing Banks and the Lenders) has a first priority perfected security interest, including in the case of any item of Product the copyright and physical materials relating to such item of Product other than with respect to items of Product that are pledged under an Outside IP Debt Facility (and in each case subject only to the categories of Liens identified in clauses (27), (28), (29) and (31) of the definition of “Permitted Liens”, Liens on a Product in connection with financing arrangements so long as the amount necessary to release such Lien has been reserved as part of a Third Party Lien Reserve or paid in full with the initial Borrowing Base value attributable to such acquired Product, or such other Liens as the Required Lenders may reasonably agree);

g. no additional amounts attributable to tax credits shall be included in the Borrowing Base if they are to be collected more than twelve (12) months after the scheduled Maturity Date;

h. the portion of the Borrowing Base attributable to the Eligible Unsold Rights Amount shall not exceed 50% of the Borrowing Base prior to the deduction of any Production Cost Reserves; provided, however, that, subject to the Administrative Agent’s approval (which is not to be unreasonably withheld), the foregoing cap can be increased to up to (x) 55% of the Borrowing Base prior to the deduction of any Production Cost Reserves for up to one year following an acquisition by the Credit Parties of new library assets for a purchase price of at least $50,000,000 but less than $100,000,000; and (y) 60% of the Borrowing Base prior to the deduction of any Production Cost Reserves for up to one year following an acquisition by the Credit Parties of new library assets for a purchase price of at least $100,000,000; provided in each case that following any such acquisition, any further increase of the cap to 55% or 60%, as applicable, hereunder that occurs within 12 months of a prior increase beyond 50% shall not be available for a subsequent acquisition unless the Borrower has delivered to the Administrative Agent an Officer’s Certificate demonstrating in reasonable detail that no Borrowing Base overadvance would exist if immediately prior to giving effect to any such subsequent acquisition (for these purposes without including any value to be derived from the subsequent acquisition) the cap applicable to the portion of the Borrowing Base attributable to Eligible Unsold Rights Amount is 50% of the Borrowing Base prior to the deduction of any Production Cost Reserve;

i. no value shall be included in the Borrowing Base in respect of any asset or relating to any item of Product which has been pledged as collateral for an Outside IP Debt Facility unless the Administrative Agent is reasonably satisfied that (a) it has the senior-ranking first priority lien in the tax credit or other applicable portion of any such asset (including the senior claim on the right to collect proceeds relating to such applicable portion of the asset to be included in the Borrowing Base), (b) no

 

A-2

revocation or estoppel notice has been given by any lender or agent under the Outside IP Debt Facility that would prevent the transfer of the relevant assets to a Credit Party and (c) the transfer of the relevant assets to a Credit Party and the granting to the Administrative Agent of a senior lien in the relevant assets would not result in a default or event of default under an Outside IP Debt Facility. Additionally, if any value is included in the Borrowing Base for any asset which has been pledged as collateral for an Outside IP Debt Facility, the Borrowing Base will also include a reserve (the “Conditional Outside IP Debt Reserve”) in an amount not less than the sum of the amortization payments due and payable for the next 3 months for the relevant Outside IP Debt Facility.

j. Without duplication of any deductions contained within any of the components of the Borrowing Base, the amount of credit provided under any component of the Borrowing Base shall be reduced by the amount of any payments which the Credit Parties are required to pay to any third party in respect of such receivable or credit (e.g., royalties, residuals, fees, commissions, participations and amounts owed to co-financiers and any amounts owed to providers of Replication Advances entitled to a portion of such value) and any other projected expenses of a Credit Party arising in connection with such amounts.

k. For purposes of calculating the Production Cost Reserve for an item of Product, (x) in calculating a 10% contingency factor, there will be no double counting if a contingency is already included in the budget of such Product; and (y) any premium license fee payable by an Acceptable Obligor under a Distribution Agreement for such item of Product that constitutes an Eligible Receivable can be borrowed against at the advance rate applicable to such Acceptable Obligor set forth on Schedule 1.3 to make expenditures that would be included in the contingency factor, if any, included in the Production Cost Reserve for such item of Product.

l. The portion of the Borrowing Base attributable to receivables which are subject to a morality provision that in the Administrative Agent’s reasonable discretion entitles the obligor to terminate its obligation with respect to such payment shall not exceed 15% of the Borrowing Base.

m. No value attributable to cash on deposit in Cash Collateral Accounts will be included in the Borrowing Base unless such cash is either maintained in:

i. segregated accounts with JPMorgan Chase Bank, which accounts are subject to a springing control Account Control Agreement, and which cash shall not be removed from such accounts other than for repaying the Obligations without (x) prior written notice (which may be by email) to the Administrative Agent and (y) if requested by the Administrative Agent, an updated Borrowing Base Certificate giving pro forma effect to the removal of such cash from the Borrowing Base; or

ii. accounts with JPMorgan Chase Bank or other banks, which accounts are subject to a springing control Account Control Agreement, which need not be segregated accounts so long as the Administrative Agent has received prior written notice (which may be by email) from an Officer of the Borrower (x) identifying the relevant accounts, (y) specifying the amount on deposit in such accounts which is being held in reserve to pay down outstanding Obligations (and also the entire balance of the accounts, if greater than such reserved amount), and (z) confirming that the amount held in reserve to pay down outstanding Obligations are expected to be so applied to pay down Obligations within 90 days of the “as of” date of the applicable notice; provided that no value attributable to cash on deposit in a Cash Collateral Account pursuant to this clause ii. may be included in the Borrowing Base at a time when there are no outstanding Obligations.

 

A-3

n. The amount for an Eligible Receivable or Other Receivable that is the result of a sale to an Acceptable Obligor or other obligor, respectively, of a receivable which would have qualified as an Acceptable Tax Credit if it had been a refundable tax credit shall be the product of

(I) the sale price for such receivable as set forth in the relevant purchase agreement, times

(II) 90% (i.e. the advance rate that generally applies to Acceptable Tax Credits pursuant to clause (vii) of the definition of the term “Borrowing Base”), times

(III) (A) in the case of an Acceptable Obligor, the advance rate applicable to such Acceptable Obligor set forth on Schedule 1.3, or (B) in the case of an obligor of an Other Receivable, 50% (but subject to the individual and aggregate caps applicable to Other Receivables).

 

A-4

Exhibit 21.1

 

Name           

   

Jurisdiction of Incorporation

3 Arts Entertainment, LLC

    Delaware

Artisan Entertainment Inc.

    Delaware

Artisan Home Entertainment Inc.

    Delaware

Artisan Library Financing LLC

    Delaware

Artisan Pictures, LLC

    Delaware

Blackfin, Inc.

    New York

BMP Funding II LLC

    Delaware

Deluxe Pictures LLC (d/b/a The Mark Gordon Company)

    California

Entertainment Capital Holdings International S.a.r.l.

    Luxembourg

Entertainment One Canada Television Holdings ULC

    Canada (British Columbia)

Entertainment One Holdings USA, Inc.

    Delaware

Entertainment One Reality Productions LLC

    California

Entertainment One Television Copyrights Ltd.

    Canada (Ontario)

Entertainment One Television Productions Ltd.

    Canada (Ontario)

Entertainment One Television International Ltd.

    Canada (Ontario)

Entertainment One Film USA LLC

    Delaware

Entertainment One Television USA LLC

    California

eOne Features LLC

    California

eOne Features (Development) LLC

    California

Film Holdings Co.

    Delaware

Foxburg Financing, LLC

    California

Foxburg Financing 2, LLC

    California

Foxburg Financing 3, LLC

    California

Foxburg Financing 4, LLC

    California

Foxburg Financing 5, LLC

    California

Foxburg Financing 6, LLC

    California

Foxburg Financing 7, LLC

    California

Foxburg Financing 8, LLC

    California

For Our Kids Entertainment, LLC

    Delaware

IPF Library Holdings LLC

    Delaware

LG Bdrights Holdings LLC

    California

LG Crrights Holdings LLC

    California

LG Rights Holdings, LLC

    Delaware

LG Library Financing LLC

    Delaware

LGAC 1, LLC

    Delaware

LGAC 3, LLC

    Delaware

LGAC International LLC

    Delaware

LGTV Library Financing LLC

    Delaware

Lionsgate Studios Holding Corp.

    British Columbia

Lionsgate Studios Holding Inc.

    Delaware

Lions Gate Entertainment Inc.

   

Delaware

Lions Gate Films Inc.

   

Delaware

Lions Gate International (UK) Limited

   

Delaware

Lions Gate International Media Limited

   

United Kingdom

Lions Gate International Motion Pictures S.a.r.l.

   

United Kingdom

Lions Gate International Slate Investment S.a.r.l.

   

Luxembourg

Lions Gate Media Canada GP Inc.

   

Luxembourg

Lions Gate Media Canada Limited Partnership

   

British Columbia

Lions Gate Television Inc.

   

British Columbia

Lions Gate UK Limited

   

Delaware

Momentum Pictures USA, Inc.

   

United Kingdom

Pilgrim Entertainment, LLC

   

Delaware

Pilgrim Media Group, LLC

   

California

Renegade 83, LLC

   

California

Renegade Entertainment, LLC

   

California

Sierra Affinity LLC

   

Delaware

Summit Distribution, LLC

   

Delaware

Summit Entertainment, LLC

   

Delaware

Summit Library Financing LLC

   

Delaware

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 30, 2025, with respect to the consolidated financial statements of Lions Gate Entertainment Corp. included in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-286041) and related Prospectus of Lionsgate Studios Corp. for the registration of 208,122 shares of its common stock.

 

/s/ Ernst & Young LLP

Los Angeles, California

July 24, 2025

Exhibit 23.2

Consent of Independent Registered Public Accounting Firm

We consent to the reference to our firm under the caption “Experts” and to the use of our report dated May 30, 2025, with respect to the consolidated financial statements of Lionsgate Studios Corp. included in Amendment No. 2 to the Registration Statement (Form S-1 No. 333-286041) and related Prospectus of Lionsgate Studios Corp. for the registration of 208,122 shares of its common stock.

 

/s/ Ernst & Young LLP

Los Angeles, California

July 24, 2025