Document:

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EXHIBIT 10.3

Capstone Turbine Corporation

Shares of Common Stock, par value $0.001

SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT (the “AGREEMENT”) by and between ASSET MANAGERS INTERNATIONAL LTD,
an international business company incorporated in the British Virgin Islands (the “INVESTOR”), and
CAPSTONE TURBINE CORPORATION, a corporation organized and existing under the laws of the State of
Delaware (the “COMPANY”) is dated the 7th day of October, 2005 and effective as of the execution of
the Escrow Agreement by and between the Company, the Investor and Mellon Investor Services, LLC
(the “COMMENCEMENT DATE”).

     WHEREAS, the parties desire that, upon the terms and subject to the conditions contained
herein, the Company shall issue and sell to the Investor, from time to time as provided herein, and
the Investor shall purchase from the Company shares of the Company’s common stock, par value $0.001
per share (the “COMMON STOCK”), with an aggregate purchase price of up to Thirty-four Million
Dollars ($34,000,000.00); and

     WHEREAS, the shares of Common Stock will be issued pursuant to a registration statement filed
with the Securities and Exchange Commission (the “SEC”) on Form S-3 (SEC File No. 333-128164) (the
“SHELF REGISTRATION STATEMENT”) with respect to, among other securities, the Company’s Common Stock
(such shares of Common Stock covered by the Shelf Registration Statement are referred to herein as
the “REGISTERED STOCK”).

     NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I

CERTAIN DEFINITIONS

     Section 1.1 “ADVANCE” shall mean the portion of the Commitment Amount advanced by or on behalf
of the Investor to or for the benefit of the Company on any Advance Date for the purchase of shares
of Registered Stock.

     Section 1.2 “ADVANCE DATE” shall mean each Trading Day during the Offering Period (other than
October 13, 2005) on which the Investor purchases, and the Company sells, Registered Stock during
the Offering Period in connection with an Advance.

     Section 1.3 “ADVANCE NOTICE” shall mean a written (including by electronic transmission)
notice in the form attached hereto as Exhibit A to the Investor setting forth the Daily
Advance Amount that the Company is requesting with respect to the Advance Date.

     Section 1.4 “AGREEMENT” shall have the meaning set forth in the preamble to this Agreement.

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     Section 1.5 “BID PRICE” shall mean, on any Trading Day, the closing bid price (as reported by
Bloomberg, L.P.) of the Common Stock on the Principal Market.

     Section 1.6 “COMMENCEMENT DATE” shall have the meaning set forth in the preamble to this
Agreement.

     Section 1.7 “COMMITMENT AMOUNT” shall mean the aggregate amount of up to Thirty-four Million
Dollars ($34,000,000) which the Investor has agreed to provide to the Company during the Offering
Period in order to purchase the Company’s Registered Stock pursuant to the terms and conditions of
this Agreement.

     Section 1.8 “COMMON STOCK” shall have the meaning set forth in the recitals to this Agreement.

     Section 1.9 “COMPANY” shall have the meaning set forth in the preamble to this Agreement.

     Section 1.10 “DAILY ADVANCE AMOUNT” shall mean, on the first Advance Date, $6,296,296.30, and
on each subsequent Advance Date $3,078,189.30, or such other amount advanced to or for the benefit
of the Company for the purchase of shares of Registered Stock as determined by the Company in
accordance with this Agreement (subject to the Maximum Daily Advance Amount).

     Section 1.11 “ESCROW AGENT” shall mean Mellon Investor Services LLC, and its successors and
assigns under the Escrow Agreement.

     Section 1.12 “ESCROW AGREEMENT” shall mean the escrow agreement among the Company, the
Investor, and Escrow Agent dated the date hereof.

     Section 1.13 “EXCHANGE ACT” shall mean the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.

     Section 1.14 “INVESTOR” shall have the meaning set forth in the preamble to this Agreement.

     Section 1.15 “MARKET PRICE” shall mean the VWAP of each share of Common Stock on the Trading
Date with respect to which an Advance Notice has been delivered.

     Section 1.16 “MAXIMUM DAILY ADVANCE AMOUNT” shall be $4,722,222.22 per any Advance Date (other
than the first Advance Date).

     Section 1.17 “NASD” shall mean the National Association of Securities Dealers, Inc.

     Section 1.18 “OFFERING PERIOD” shall mean the period commencing on the Trading Day immediately
following the Commencement Date and expiring on the tenth (10th) Trading Day after the
Commencement Date; provided, however, that the Offering Period shall not include October 13, 2005
as a Trading Day, and that the Offering Period shall be extended automatically by one Trading Day
for each Trading Day on which no Advance is made, up to a

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maximum of ten (10) additional Trading Days; and further provided that the Offering Period
shall automatically expire upon the first to occur of, in the aggregate, the purchase and sale of
17,000,000 shares of Common Stock or the purchase and sale of shares of Common Stock with an
aggregate purchase price of $54,000,000 pursuant to this Agreement and the Subscription Agreement
by and between the Company and Monarch Pointe Fund, Ltd., dated October 7, 2005.

     Section 1.19 “PERSON” shall mean an individual, a corporation, a partnership, an association,
a trust or other entity or organization, including a government or political subdivision or an
agency or instrumentality thereof.

     Section 1.20 “PRINCIPAL MARKET” shall mean the Nasdaq National Market.

     Section 1.21 “PURCHASE PRICE” shall be ninety-six percent (96%) of the Market Price, computed
to three decimal places, on the applicable Advance Date; provided however, that if the Company
offers Common Stock to one or more third parties during the Offering Period at a price lower than
the Purchase Price calculated in accordance with the foregoing, the Purchase Price shall be the
lowest price at which the Company offers such shares of Common Stock.

     Section 1.22 “REGISTERED STOCK” shall have the meaning set forth in the recitals to this
Agreement.

     Section 1.23 “SHELF REGISTRATION STATEMENT” shall have the meaning set forth in the recitals
to this Agreement.

     Section 1.24 “SEC” shall have the meaning set forth in the recitals to this Agreement.

     Section 1.25 “SECURITIES ACT” shall mean the Securities Act of 1933, as amended.

     Section 1.26 “TRADING DAY” shall mean any day during which the Principal Market shall be open
for business.

     Section 1.27 “VWAP” shall mean the volume weighted average price of the Company’s Common Stock
as quoted by Bloomberg, LP on the applicable Trading Day.

     Section 1.28 “WRITTEN DIRECTION TO DISBURSE” shall mean the written notice from the Investor
and the Company to the Escrow Agent in the form attached hereto as Exhibit B, which written
notice may be executed in two or more identical counterparts, all of which shall be considered one
and the same agreement and shall become effective when counterparts have been signed by each party
and delivered to the other party.

ARTICLE II

ADVANCES

     Section 2.1 ADVANCES; SHARES TRANSFERS

               2.1.1 ADVANCES. On the first Trading Day after the Commencement Date (i.e., the first
“Advance Date”), the Company shall receive the Daily Advance Amount of

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$6,296,296.30, and on each of the nine (9) Trading Days (subject to the following proviso and
sentence) thereafter during the Offering Period the Company shall, unless the Company delivers an
Advance Notice to the Investor requesting a different Daily Advance Amount from zero to the Maximum
Daily Advance Amount in accordance with Section 2.3, receive a Daily Advance Amount of
$3,078,189.30; provided, however, that no Advance will be made, and no shares of Registered Stock
will be purchased, on October 13, 2005. Notwithstanding anything to the contrary contained herein,
no Advance will be made on any of such nine (9) Trading Days, and the Investor shall not direct the
Escrow Agent to disburse any funds, on any such Trading Day on which between 6:30 a.m. (Pacific
Time) and 11:00 a.m. (Pacific Time) the VWAP of the Company’s Common Stock is below ninety percent
(90%) of the closing VWAP for the immediately preceding Trading Day; provided, however, that the
Company may elect to sell the previously designated number of shares of Registered Stock and the
Investor shall direct the Escrow Agent to disburse the Daily Advance Amount on such a day if the
Company delivers written notice (including by electronic transmission) to that effect to the
Investor before 11:00 a.m. (Pacific Time) on such date. All Advances shall be made on the Advance
Date after the determination of the Purchase Price and the number of shares of Registered Stock to
be purchased with respect to such Advance.

               2.1.2 REGISTERED STOCK TRANSFERS. With respect to each Advance, the Investor shall receive
via DTC transfer to the Investor’s brokerage account on the next Trading Day after the Advance
Date, the number of shares of Registered Stock equal to the quotient obtained by dividing the Daily
Advance Amount disbursed to the Company with respect to such Advance by the per share Purchase
Price. No fractional shares shall be issued. Fractional shares shall be rounded to the next
higher whole number of shares. The maximum aggregate number of shares of Common Stock which the
Investor shall have the right or obligation to acquire hereunder shall not exceed the lesser of:
(i) 10,703,704 shares; and (ii) the number of shares of Common Stock that has an aggregate Purchase
Price equal to the Commitment Amount.

     Section 2.2 CLOSING. On the Commencement Date, (i) the Company shall give its transfer agent
instructions providing for the transfer to the account designated by the Escrow Agent of 10,703,704
shares of Registered Stock in accordance with the Escrow Agreement and (ii) the Investor shall
deliver (or shall have delivered) to the Escrow Agent $28,000,000 and by 6:30 a.m. (Pacific Time)
on October 12, 2005 the Investor shall deliver an additional $6,000,000 of the Commitment Amount by
wire transfer of immediately available funds to the account designated by the Escrow Agent in
accordance with the Escrow Agreement. The maximum aggregate number of shares of Common Stock which
the Company shall be required to sell hereunder shall not exceed the lesser of: (i) 10,703,704
shares; and (ii) the number of shares of Common Stock that has an aggregate purchase price equal to
the Commitment Amount. Each of the Company and the Investor shall deliver to the other all
documents, instruments and writings required to be delivered by either of them pursuant to this
Agreement in order to implement and effect the transactions contemplated herein. Disbursement of
Advances to the Company and transfer of the shares of the Company’s Registered Stock to the
Investor shall occur in accordance with the conditions set herein above and in the Escrow
Agreement.

     Section 2.3 ADVANCE NOTICE; WRITTEN DIRECTION TO DISBURSE. On or before 6:00 a.m. (Pacific
Time) on each Trading Day after the first Trading Day during the

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Offering Period, subject to all other terms and provisions herein, the Company shall deliver
to the Investor an Advance Notice setting forth the requested Daily Advance Amount (but not more
than the Maximum Daily Advance Amount) requested on such Advance Date. Subject to all other terms
and provisions herein, the Investor and the Company shall, after the close of the Principal Market
on each Trading Day including the first Trading Day during the Offering Period, deliver to the
Escrow Agent a Written Direction to Disburse, specifying the Daily Advance Amount to be disbursed
to the Company, the VWAP for the Common Stock on such Advance Date, the Purchase Price for the
shares of Registered Stock, and the number of shares of Registered Stock to be transferred to the
account of Investor. If the Company does not deliver an Advance Notice on or before 6:00 a.m.
(Pacific Time) with respect to an Advance Date other than the first Trading Day during the Offering
Period, the Daily Advance Amount for such Advance Date shall be $3,078,189.30.

     Section 2.4 TERMINATION OF INVESTMENT. The obligation of the Investor to make an Advance to
the Company pursuant to this Agreement shall terminate permanently (including with respect to each
Advance Date that has not yet occurred) in the event that (i) there shall occur any stop order or
suspension of the effectiveness of the Shelf Registration Statement or (ii) the Company shall at
any time fail materially to comply with the requirements of Article VI. The obligation of the
Company to transfer shares of Registered Stock to the Investor pursuant to this Agreement shall
terminate permanently (including with respect to each Advance Date that has not yet occurred) in
the event that the Investor shall at any time materially fail to comply with the requirements of
Article III.

     Section 2.5 AGREEMENT TO ADVANCE FUNDS. The Investor agrees to advance the Commitment Amount
to the Escrow Agent after the completion of each of the following conditions and the other
conditions set forth in this Agreement required to be completed prior to advancement of the
Commitment Amount:

	 	(a)	 	the execution and delivery by the Company, and the Investor, of
this Agreement and the Exhibits and Schedules hereto;
	 
	 	(b)	 	the Company’s transfer agent shall have set aside in reserve
the number of shares of Registered Stock required by Section 2.2(b) for the
benefit of the Investor;
	 
	 	(c)	 	there shall not have been any stop order or suspension of the
effectiveness of the Shelf Registration Statement;
	 
	 	(d)	 	the Company shall have obtained all material permits and
qualifications required by any applicable state for the offer and sale of the
Registered Stock, and the sale and issuance of the Registered Stock shall be
legally permitted by all laws and regulations to which the Company is subject;
	 
	 	(e)	 	the Company shall file with the Commission in a timely manner a
prospectus supplement under Securities Act Rule 424(b) describing the specific
plan of distribution (the “PROSPECTUS SUPPLEMENT”) and all reports, notices

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	 	 	 	and other documents required of a “reporting company” under the Exchange Act and
applicable SEC regulations; and
	 
	 	(f)	 	the conditions set forth in Section 7.2 shall have been
satisfied as of the time of the advancement of the Commitment Amount.

     Section 2.6 DAMAGES. In the event the Investor sells shares of the Company’s Common Stock
after receipt of an Advance Notice and the Company fails to perform its obligations as mandated in
Article II, and specifically the Company fails to effect through the Escrow Agent the transfer of
the shares of Registered Stock to the Investor, the Company acknowledges that the Investor shall
suffer financial loss and therefore shall be liable for any and all direct losses, commissions or
fees incurred by the Investor.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF INVESTOR

     Investor hereby represents to the Company that the following are true and correct as of the
date hereof:

     Section 3.1 ORGANIZATION AND AUTHORIZATION. The Investor is duly incorporated or organized
and validly existing in the jurisdiction of its incorporation or organization and has all requisite
power and authority to purchase and hold the securities issuable hereunder. The decision to invest
and the execution and delivery of this Agreement by such Investor, the performance by such Investor
of its obligations hereunder and the consummation by such Investor of the transactions contemplated
hereby have been duly authorized and requires no other proceedings on the part of the Investor.
The undersigned has the right, power and authority to execute and deliver this Agreement and all
other instruments, on behalf of the Investor. This Agreement has been duly executed and delivered
by the Investor and, assuming the execution and delivery hereof and acceptance thereof by the
Company, will constitute the legal, valid and binding obligations of the Investor, enforceable
against the Investor in accordance with its terms.

     Section 3.2 NO UNDERWRITER. The Investor is not acting and will not act as an “underwriter”
(as that term is defined in the Securities Act) with respect to the Company’s Common Stock.

     Section 3.3 NO STABILIZATION. Neither the Investor nor any of its directors, officers,
employees, agents, partners, members, controlling persons or shareholders holding 5% or more of the
Common Stock, has taken or will take, directly or indirectly, any actions designed, or that might
reasonably be expected to cause or result in the stabilization or manipulation of the price of the
Common Stock.

     Section 3.4 NO SHORTING. Neither the Investor nor any of its affiliates has, directly or
indirectly, offered to “short sell”, contracted to “short sell,” otherwise engaged in any “short
selling” or encouraged others to “short sell” the securities of the Company, including, without
limitation, shares of Common Stock that will be received as a result of the transactions
contemplated by this Agreement, and neither the Company nor any of its affiliates will engage in
any of the foregoing at any time any of them own shares of Common Stock acquired under this

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Agreement. For purposes of this Agreement, “short selling” shall include any short sale and
any similar hedging or derivative securities transaction; provided, however, that nothing contained
herein shall prohibit the Investor from selling any shares of Common Stock that will be received as
a result of the transactions contemplated by this Agreement “against the box.”

     Section 3.5 RESTRICTIONS ON RESALE. Investor shall not sell any shares of Common Stock
directly to any shareholder of the Company who owns of record or beneficially fifteen percent (15%)
or more, or any offeror for shares of Common Stock which is seeking to acquire fifteen percent
(15%) or more, of the Common Stock the Company; provided, however, that nothing herein shall
prevent the Investor from selling its Common Stock in an open-market transaction through a
registered broker or dealer (as such terms are defined in the Exchange Act).

     Section 3.6 INVESTOR OWNERSHIP OF COMMON STOCK. Immediately prior to the Commencement Date,
neither the Investor nor any of its affiliates owns (either directly or indirectly) any shares of
Common Stock of the Company. Neither the Investor nor any of its affiliates has, directly or
indirectly, entered into any agreement with any third party to sell shares, or offered to sell, any
shares of Common Stock to be acquired pursuant to this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Investor as follows:

     Section 4.1 In connection with the sale of the Registered Stock, the Company has made
available, as requested (including electronically via the SEC’s EDGAR system) to Investor its
periodic and current reports, forms, schedules, proxy statements and other documents (including
exhibits and all other information incorporated by reference) filed with the SEC under the Exchange
Act. The Company’s Annual Report on Form 10-K for the year ended March 31, 2005 and all subsequent
reports, forms, schedules, statements, documents, filings and amendments filed by the Company with
the SEC under the Exchange Act, are collectively referred to as the “DISCLOSURE DOCUMENTS.” All
references in this Agreement to financial statements and schedules and other information which is
“contained,” “included” or “stated” in the Disclosure Documents (or other references of like
import) shall be deemed to mean and include all such financial statements and schedules, documents,
exhibits and other information which is incorporated by reference in the Disclosure Documents. The
Disclosure Documents as of their respective dates did not, and will not as of the Commencement Date
or any Advance Date, contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading. The Disclosure Documents and the documents incorporated or deemed to be
incorporated by reference therein, at the time they were filed or hereafter are filed with the SEC,
complied and will comply, at the time of filing, in all material respects with the requirements of
the Securities Act and/or the Exchange Act, as the case may be, as applicable.

     Section 4.2 Schedule 4.2(A) attached hereto sets forth a complete list of the
subsidiaries of the Company (the “SUBSIDIARIES”). Each of the Company and its Subsidiaries has
been duly incorporated and each of the Company and the Subsidiaries is validly existing in good
standing as a corporation under the laws of its jurisdiction of incorporation, with the

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requisite corporate power and authority to own its properties and conduct its business as now
conducted as described in the Disclosure Documents and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions where the ownership or leasing of
its properties or the conduct of its business requires such qualification, except where the failure
to be so qualified would not, individually or in the aggregate, have a material adverse effect on
the business, condition (financial or other), properties or results of operations of the Company
and the Subsidiaries, taken as a whole (any such event, a “MATERIAL ADVERSE EFFECT”); as of the
Commencement Date, the Company will have the authorized, issued and outstanding capitalization set
forth in the Disclosure Documents (the “COMPANY CAPITALIZATION”); the Company does not have any
Subsidiaries or own directly or indirectly any of the capital stock or other equity or long-term
debt securities of or have any equity interest in any other person; all of the outstanding shares
of capital stock of the Company and the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and were not issued in violation of any preemptive or similar
rights and are owned free and clear of all liens, encumbrances, equities, and restrictions on
transferability (other than those imposed by the Securities Act and the state securities or “Blue
Sky” laws) or voting; except as set forth in the Disclosure Documents, all of the outstanding
shares of capital stock of the Subsidiaries are owned, directly or indirectly, by the Company;
except as set forth in the Disclosure Documents, no options, warrants or other rights to purchase
from the Company or any Subsidiary, agreements or other obligations of the Company or any
Subsidiary to issue or other rights to convert any obligation into, or exchange any securities for,
shares of capital stock of or ownership interests in the Company or any Subsidiary are outstanding;
and except as included in the Company’s public filings on file with the Securities and Exchange
Commission, there is no agreement, understanding or arrangement among the Company or any Subsidiary
and each of their respective stockholders or any other person relating to the ownership or
disposition of any capital stock of the Company or any Subsidiary or the election of directors of
the Company or any Subsidiary or the governance of the Company’s or any Subsidiary’s affairs, and,
if any, such agreements, understandings and arrangements will not be breached or violated as a
result of the execution and delivery of, or the consummation of the transactions contemplated by,
this Agreement.

     Section 4.3 The Company has the requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement. This Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company, will constitute a valid
and legally binding agreement of the Company, enforceable against the Company in accordance with
its terms except as the enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors’ rights generally or (B) general principles of equity and the
discretion of the court before which any proceeding therefore may be brought (regardless of whether
such enforcement is considered in a proceeding at law or in equity) (collectively, the
“ENFORCEABILITY EXCEPTIONS”).

     Section 4.4 The Common Stock of the Company conforms to the description thereof contained in
the Disclosure Documents. The stockholders of the Company have no preemptive or similar rights
with respect to the Common Stock.

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     Section 4.5 No consent, approval, authorization, license, qualification, exemption or order of
any court or governmental agency or body or third party is required for the performance of this
Agreement by the Company or for the consummation by the Company of any of the transactions
contemplated thereby, or the application of the proceeds of the issuance of the Registered Stock as
described in this Agreement, except for such consents, approvals, authorizations, licenses,
qualifications, exemptions or orders (i) as have been obtained on or prior to the Commencement
Date, (ii) as are not required to be obtained on or prior to the Commencement Date that will be
obtained when required, or (iii) the failure to obtain which would not, individually or in the
aggregate, have a Material Adverse Effect.

     Section 4.6 None of the Company or the Subsidiaries is (i) in material violation of its
articles of incorporation or bylaws (or similar organizational document), (ii) in breach or
violation of any statute, judgment, decree, order, rule or regulation applicable to it or any of
its properties or assets, which breach or violation would, individually or in the aggregate, have a
Material Adverse Effect, or (iii) except as described in the Disclosure Documents, in default (nor
has any event occurred which with notice or passage of time, or both, would constitute a default)
in the performance or observance of any obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate or agreement or instrument to which it is a party or to which it is
subject, which default would, individually or in the aggregate, have a Material Adverse Effect.

     Section 4.7 The execution, delivery and performance by the Company of this Agreement and the
consummation by the Company of the transactions contemplated thereby and the fulfillment of the
terms thereof will not (a) violate, conflict with or constitute or result in a breach of or a
default under (or an event that, with notice or lapse of time, or both, would constitute a breach
of or a default under) any of (i) the terms or provisions of any contract, indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate or
agreement or instrument to which any of the Company or the Subsidiaries is a party or to which any
of their respective properties or assets are subject, (ii) the Certificate of Incorporation or
bylaws of any of the Company or the Subsidiaries (or similar organizational document) or (iii) any
statute, judgment, decree, order, rule or regulation of any court or governmental agency or other
body applicable to the Company or the Subsidiaries or any of their respective properties or assets
or (b) result in the imposition of any lien upon or with respect to any of the properties or assets
now owned or hereafter acquired by the Company or any of the Subsidiaries; which violation,
conflict, breach, default or lien would, individually or in the aggregate, have a Material Adverse
Effect.

     Section 4.8 The audited consolidated financial statements included in the Disclosure Documents
present fairly the consolidated financial position, results of operations, cash flows and changes
in shareholders’ equity of the entities, at the dates and for the periods to which they relate and
have been prepared in all material respects in accordance with generally accepted accounting
principles applied on a consistent basis; the interim unaudited consolidated financial statements
included in the Disclosure Documents present fairly the consolidated financial position, results of
operations and cash flows of the entities, at the dates and for the periods to which they relate
subject to year-end audit adjustments and have been prepared in all material respects in accordance
with generally accepted accounting principles applied on a consistent basis with the audited
consolidated financial statements included therein; the selected financial

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data included in the Disclosure Documents present fairly the information shown therein and
have been prepared and compiled in all material respects on a basis consistent with the audited
financial statements included therein, except as otherwise stated therein; and each of the auditors
previously engaged by the Company or to be engaged in the future by the Company is an independent
certified public accountant as required by the Securities Act for an offering registered
thereunder.

     Section 4.9 Except as described in the Disclosure Documents, there is not pending or, to the
knowledge of the Company, threatened any action, suit, proceeding, inquiry or investigation,
governmental or otherwise, to which any of the Company or the Subsidiaries is a party, or to which
their respective properties or assets are subject, before or brought by any court, arbitrator or
governmental agency or body, that, if determined adversely to the Company or any such Subsidiary,
would, individually or in the aggregate, have a Material Adverse Effect or that seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or sale of the Securities
to be sold hereunder or the application of the proceeds therefrom or the other transactions
described in the Disclosure Documents.

     Section 4.10 The Company and the Subsidiaries own or possess adequate licenses or other rights
to use all patents, trademarks, service marks, trade names, copyrights and know-how that are
necessary to conduct their businesses as described in the Disclosure Documents. None of the
Company or the Subsidiaries has received any written notice of infringement of (or knows of any
such infringement of) asserted rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how that, if such assertion of infringement or conflict were
sustained, would, individually or in the aggregate, have a Material Adverse Effect.

     Section 4.11 Each of the Company and the Subsidiaries possesses all licenses, permits,
certificates, consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals presently required or necessary to
own or lease, as the case may be, and to operate its respective properties and to carry on its
respective businesses as now or proposed to be conducted as set forth in the Disclosure Documents
(“PERMITS”), except where the failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect and none of the Company or the Subsidiaries has received
any notice of any proceeding relating to revocation or modification of any such Permit, except as
described in the Disclosure Documents and except where such revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect.

     Section 4.12 Subsequent to June 30, 2005 and except as described in the Company’s Quarterly
Report on Form 10-Q for the quarter ended June 30, 2005 or in the Company’s Annual Report on Form
10-K for the year ended March 31, 2005, (i) the Company and the Subsidiaries have not incurred any
material liabilities or obligations, direct or contingent, or entered into any material
transactions not in the ordinary course of business or (ii) the Company and the Subsidiaries have
not purchased any of their respective outstanding capital stock, or declared, paid or otherwise
made any dividend or distribution of any kind on any of their respective capital stock or otherwise
(other than, with respect to any of such Subsidiaries, the purchase of capital stock by the
Company), (iii) there has not been any material increase in the long-term indebtedness of the
Company or any of the Subsidiaries, (iv) there has not occurred any event or

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condition, individually or in the aggregate, that has a Material Adverse Effect, and (v) the
Company and the Subsidiaries have not sustained any material loss or interference with respect to
their respective businesses or properties from fire, flood, hurricane, earthquake, accident or
other calamity, whether or not covered by insurance, or from any labor dispute or any legal or
governmental proceeding.

     Section 4.13 There are no material legal or governmental proceedings nor are there any
material contracts or other documents required by the Securities Act to be described in a
prospectus that are not described in the Disclosure Documents. Except as described in the
Disclosure Documents, none of the Company or the Subsidiaries is in default under any of the
contracts described in the Disclosure Documents, has received a notice or claim of any such default
or has knowledge of any breach of such contracts by the other party or parties thereto, except for
such defaults or breaches as would not, individually or in the aggregate, have a Material Adverse
Effect.

     Section 4.14 The Company and the Subsidiaries own no real property, and each has good and
marketable title to the leasehold estate in the real property described in the Disclosure Documents
as being leased by it, free and clear of all liens, charges, encumbrances or restrictions, except,
in each case, as described in the Disclosure Documents or such as would not, individually or in the
aggregate, have a Material Adverse Effect. All material leases, contracts and agreements to which
the Company or any of the Subsidiaries is a party or by which any of them is bound are valid and
enforceable against the Company or any such Subsidiary, are, to the knowledge of the Company, valid
and enforceable against the other party or parties thereto and are in full force and effect, in
each case subject to the Enforceability Exceptions.

     Section 4.15 Each of the Company and the Subsidiaries has filed all necessary federal, state
and foreign income and franchise tax returns, except where the failure to so file such returns
would not, individually or in the aggregate, have a Material Adverse Effect, and has paid all taxes
shown as due thereon; and other than tax deficiencies which the Company or any Subsidiary is
contesting in good faith and for which adequate reserves have been provided in accordance with
generally accepted accounting principles, there is no tax deficiency that has been asserted against
the Company or any Subsidiary that would, individually or in the aggregate, have a Material Adverse
Effect.

     Section 4.16 None of the Company or the Subsidiaries is, or immediately after any Advance Date
will be, required to register as an “investment company” or a company “controlled by” an
“investment company” within the meaning of the Investment Company Act of 1940, as amended (the
“INVESTMENT COMPANY ACT”).

     Section 4.17 None of the Company or the Subsidiaries or, to the knowledge of any of such
entities’ directors, officers, employees, agents or controlling persons, has taken, directly or
indirectly, any action for the purpose of causing the stabilization or manipulation of the price of
the Common Stock.

     Section 4.18 There is no strike, labor dispute, slowdown or work stoppage with the employees
of the Company or any of the Subsidiaries which is pending or, to the knowledge of the Company or
any of the Subsidiaries, threatened.

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     Section 4.19 Each of the Company and the Subsidiaries carries general liability insurance
coverage comparable to other companies of its size and similar business.

     Section 4.20 Except as disclosed in the Disclosure Documents, each of the Company and the
Subsidiaries maintains internal accounting controls which provide reasonable assurance that (A)
transactions are executed in accordance with management’s authorization, (B) transactions are
recorded as necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its material assets is permitted only in accordance
with management’s authorization and (D) the values and amounts reported for its material assets are
compared with its existing assets at reasonable intervals.

     Section 4.21 Other than the fee to Credit Suisse First Boston set forth in the Prospectus
Supplement, the Company does not know of any claims for services, either in the nature of a
finder’s fee or financial advisory fee, with respect to the offering of the Registered Stock and
the transactions contemplated by this Agreement.

     Section 4.22 The Common Stock is traded on the Principal Market. Except as described in the
Disclosure Documents, the Company currently is not in violation of, and the consummation of the
transactions contemplated by this Agreement will not violate, any rule of the Principal Market.

     Section 4.23 Set forth in the Prospectus Supplement is the Company’s intended use of the
proceeds from this transaction.

     Section 4.24 To the Company’s knowledge, none of the officers or directors of the Company (i)
has been convicted of any crime (other than traffic violations or misdemeanors not involving
fraud) or is currently under investigation or indictment for any such crime, (ii) has been found by
a court or governmental agency to have violated any securities or commodities law or to have
committed fraud or is currently a party to any legal proceeding in which either is alleged, (iii)
has been the subject of a proceeding under the bankruptcy laws or any similar state laws, or (iv)
has been an officer, director, general partner, or managing member of an entity which has been the
subject of such a proceeding.

ARTICLE V

INDEMNIFICATION

     Section 5.1 INDEMNIFICATION.

	 	(a)	 	In consideration of the Investor’s execution and delivery of
this Agreement, and in addition to all of the Company’s other obligations under
this Agreement, the Company shall defend, protect, indemnify and hold harmless
the Investor, and all of its officers, directors, partners, employees and
agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “INVESTOR
INDEMNITEES”) from and against any and all actions, causes of action, suits,
claims, losses, costs, penalties, fees, liabilities and damages, and expenses
in connection therewith (irrespective of whether any such Investor Indemnitee
is a party to the action for which indemnification hereunder is

-12-

 

	 	 	 	sought), and including reasonable attorneys’ fees and disbursements (the
“INDEMNIFIED LIABILITIES”), incurred by the Investor Indemnitees or any of them
as a result of, or arising out of, or relating to (i) any misrepresentation or
breach of any representation or warranty made by the Company in this Agreement
or any other certificate, instrument or document contemplated hereby or thereby,
or (ii) any breach of any covenant, agreement or obligation of the Company
contained in this Agreement or any other certificate, instrument or document
contemplated hereby or thereby. To the extent that the foregoing undertaking by
the Company may be unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of each of the Indemnified
Liabilities, which is permissible under applicable law.
	 
	 	(b)	 	In consideration of the Company’s execution and delivery of
this Agreement, and in addition to all of the Investor’s other obligations
under this Agreement, the Investor shall defend, protect, indemnify and hold
harmless the Company and all of its officers, directors, shareholders,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the “COMPANY INDEMNITEES”) from and against any and all Indemnified Liabilities
incurred by the Company Indemnitees or any of them as a result of, or arising
out of, or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Investor in this Agreement or the
Prospectus Supplement, or (ii) any breach of any covenant, agreement or
obligation of the Investor contained in this Agreement or any other
certificate, instrument or document contemplated hereby or thereby. To the
extent that the foregoing undertaking by the Investor may be unenforceable for
any reason, the Investor shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities, which is permissible under
applicable law.
	 
	 	(c)	 	The obligations of the parties to indemnify or make
contribution under this Section 5.1 shall survive termination.

ARTICLE VI

COVENANTS OF THE COMPANY

     Section 6.1 LISTING OF COMMON STOCK. The Company shall maintain the Common Stock’s
authorization for quotation on the Principal Market.

     Section 6.2 EXCHANGE ACT REGISTRATION. The Company will cause its Common Stock to continue to
be registered under Section 12(g) of the Exchange Act, will file in a timely manner all reports and
other documents required of it as a reporting company under the Exchange Act and will not take any
action or file any document (whether or not permitted by Exchange Act or the rules thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting and filing
obligations under said Exchange Act.

-13-

 

     Section 6.3 TRANSFER AGENT INSTRUCTIONS. The Company shall deliver or cause the Escrow Agent
to deliver instructions to the Company’s transfer agent to transfer shares of Registered Stock
equal to the Daily Advance Amount divided by the per share Purchase Price to the Investor on each
Advance Date.

     Section 6.4 CORPORATE EXISTENCE. The Company will take all steps necessary to preserve and
continue the corporate existence of the Company.

     Section 6.5 NOTICE OF CERTAIN EVENTS AFFECTING REGISTRATION; SUSPENSION OF RIGHT TO MAKE AN
ADVANCE. The Company will immediately notify the Investor upon its becoming aware of the
occurrence of any of the following events in respect of a registration statement or related
prospectus relating to an offering of Registrable Securities: (i) receipt of any request for
additional information by the SEC or any other federal or state governmental authority during the
period of effectiveness of the registration statement for amendments or supplements to the
registration statement or related prospectus; (ii) the issuance by the SEC or any other federal or
state governmental authority of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; (iii) receipt 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; (iv) the happening of any event that makes any statement made in the
registration statement or related prospectus of any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that requires the making of any
changes in the registration statement, related prospectus or documents so that, in the case of the
registration statement, it will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading, and that in the case of the related prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they were
made, not misleading; and (v) the Company’s reasonable determination that a post-effective
amendment to the registration statement would be appropriate; and the Company will promptly make
available to the Investor any such supplement or amendment to the related prospectus. The Company
shall not deliver to the Investor any Advance Notice during the continuation of any of the
foregoing events.

     Section 6.6 RESTRICTION ON SALE OF CAPITAL STOCK. During the Offering Period, the Company
shall not, without the prior written consent of the Investor, (i) issue or sell any Common Stock or
preferred stock without consideration or for a consideration per share less than the Bid Price of
the Common Stock determined immediately prior to its issuance, (ii) issue or sell any preferred
stock, warrant, option, right, contract, call, or other security or instrument granting the holder
thereof the right to acquire Common Stock without consideration or for a consideration per share
less than such Common Stock’s Bid Price determined immediately prior to its issuance, or (iii) file
any registration statement on Form S-8.

     Section 6.7 CONSOLIDATION; MERGER. The Company shall not, at any time after the date hereof,
effect any merger or consolidation of the Company with or into, or a transfer of all or
substantially all the assets of the Company to another entity (a “CONSOLIDATION EVENT”) unless the
resulting successor or acquiring entity (if not the Company) assumes by

-14-

 

written instrument the obligation to deliver to the Investor such shares of stock and/or
securities as the Investor is entitled to receive pursuant to this Agreement.

ARTICLE VII

CONDITIONS FOR ADVANCE AND CONDITIONS TO ADVANCES

     Section 7.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY. The obligation hereunder
of the Company to issue and sell the shares of Common Stock to the Investor incident to each
Advance is subject to the satisfaction, or waiver by the Company, at or before each Advance Date,
of each of the conditions set forth below.

	 	(a)	 	ACCURACY OF THE INVESTOR’S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Investor contained herein shall be true
and correct in all material respects.
	 
	 	(b)	 	PERFORMANCE BY THE INVESTOR. The Investor shall have
performed, satisfied and complied in all respects with all covenants,
agreements and conditions required by this Agreement the Commencement Date to
be performed, satisfied or complied with by the Investor at or prior to the
Commencement Date.

     Section 7.2 CONDITIONS PRECEDENT TO THE RIGHT OF THE COMPANY TO SELL REGISTERED STOCK AND THE
OBLIGATION OF THE INVESTOR TO PURCHASE REGISTERED STOCK. The right of the Company to receive an
Advance and the obligation of the Investor hereunder to acquire and pay for shares of the Company’s
Common Stock incident to an Advance is subject to the fulfillment by the Company, of each of the
following conditions on each Advance Date:

	 	(a)	 	ACCURACY OF COMPANY’S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Company contained herein shall be true
and correct in all material respects.
	 
	 	(b)	 	REGISTRATION OF THE COMMON STOCK WITH THE SEC. The Shelf
Registration Statement shall have previously become effective and shall remain
effective on each Advance Date and (i) neither the Company nor the Investor
shall have received notice that the SEC has issued or intends to issue a stop
order with respect to the Shelf Registration Statement or that the SEC
otherwise has suspended or withdrawn the effectiveness of the Shelf
Registration Statement, either temporarily or permanently, or intends or has
threatened to do so (unless the SEC’s concerns have been addressed and the
Investor is reasonably satisfied that the SEC no longer is considering or
intends to take such action), and (ii) no other suspension of the use or
withdrawal of the effectiveness of the Shelf Registration Statement or related
prospectus shall exist. The Prospectus Supplement must have been filed with
the SEC on or prior to the Commencement Date.
	 
	 	(c)	 	AUTHORITY. The Company shall have obtained all permits and
qualifications required by any applicable state for the offer and sale of the

-15-

 

	 	 	 	shares of Common Stock, or shall have the availability of exemptions therefrom.
The sale and issuance of the shares of Common Stock shall be legally permitted
by all laws and regulations to which the Company is subject.
	 
	 	(d)	 	FUNDAMENTAL CHANGES. There shall not exist any fundamental
changes to the information set forth in the Shelf Registration Statement which
would require the Company to file a post-effective amendment to the Shelf
Registration Statement.
	 
	 	(e)	 	PERFORMANCE BY THE COMPANY. The Company shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement to be performed, satisfied or
complied with by the Company at or prior to each Advance Date.
	 
	 	(f)	 	NO INJUNCTION. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction that
prohibits or directly and adversely affects any of the transactions
contemplated by this Agreement, and no proceeding shall have been commenced
that may have the effect of prohibiting or adversely affecting any of the
transactions contemplated by this Agreement.
	 
	 	(g)	 	NO SUSPENSION OF TRADING IN OR DELISTING OF COMMON STOCK. The
trading of the Common Stock is not suspended by the SEC or the Principal
Market. The issuance of shares of Common Stock with respect to the applicable
Advance, if any, shall not violate the shareholder approval requirements of the
Principal Market. The Company shall not have received any notice threatening
the continued listing of the Common Stock on the Principal Market.
	 
	 	(h)	 	MAXIMUM DAILY ADVANCE AMOUNT. The amount of an Advance
requested by the Company shall not exceed the Maximum Daily Advance Amount. In
addition, notwithstanding anything to the contrary contained herein, in no
event shall the number of shares the Investor is required or permitted to
purchase pursuant to an Advance equal or exceed the number of shares that would
cause the aggregate number of shares of Common Stock that are acquired as a
result of the transactions contemplated hereby and beneficially owned by the
Investor and its affiliates to exceed nine and 99/100 percent (9.99%) of the
then outstanding Common Stock of the Company. Shares owned by any other
investor pursuant to a Subscription Agreement referenced in this Agreement will
not be aggregated with shares owned by the Investor for purposes of determining
beneficial ownership. For the purposes of this Section beneficial ownership
shall be calculated in accordance with Section 13(d) of the Exchange Act.

-16-

 

	 	(i)	 	NO KNOWLEDGE. The Company has no knowledge of any event which
would be more likely than not to have the effect of causing the Shelf
Registration Statement to be suspended or otherwise ineffective.

ARTICLE VIII

NON-DISCLOSURE OF NON-PUBLIC INFORMATION

     Section 8.1 NON-DISCLOSURE OF NON-PUBLIC INFORMATION.

               Nothing herein shall require the Company to disclose non-public information to the Investor or
its advisors or representatives, and the Company represents that it does not disseminate non-public
information to any investors who purchase stock in the Company in a public offering, to money
managers or to securities analysts, provided, however, that notwithstanding anything herein to the
contrary, the Company will, as hereinabove provided, immediately notify the advisors and
representatives of the Investor of any event or the existence of any circumstance (without any
obligation to disclose the specific event or circumstance) of which it becomes aware, constituting
non-public information (whether or not requested of the Company specifically or generally during
the course of due diligence by such persons or entities), which, if not disclosed in the prospectus
included in the Shelf Registration Statement would cause such prospectus to include a material
misstatement or to omit a material fact required to be stated therein in order to make the
statements, therein, in light of the circumstances in which they were made, not misleading.
Nothing contained in this Section 8.1 shall be construed to mean that such persons or entities
other than the Investor (without the written consent of the Investor prior to disclosure of such
information) may not obtain non-public information in the course of conducting due diligence in
accordance with the terms of this Agreement and nothing herein shall prevent any such persons or
entities from notifying the Company of their opinion that based on such due diligence by such
persons or entities, that the Shelf Registration Statement contains an untrue statement of material
fact or omits a material fact required to be stated in the Shelf Registration Statement or
necessary to make the statements contained therein, in light of the circumstances in which they
were made, not misleading.

ARTICLE IX

CHOICE OF LAW/JURISDICTION

     Section 9.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS. THE
PARTIES FURTHER AGREE THAT ANY ACTION BETWEEN THEM SHALL BE HEARD IN AND EXPRESSLY CONSENT TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS LOCATED IN THE CITY OF LOS ANGELES,
CALIFORNIA FOR THE ADJUDICATION OF ANY CIVIL ACTION ASSERTED PURSUANT TO THIS PARAGRAPH.

-17-

 

ARTICLE X

ASSIGNMENT; TERMINATION

     Section 10.1 ASSIGNMENT. Neither this Agreement nor any rights of the Company hereunder may
be assigned to any other Person.

     Section 10.2 TERMINATION. Except for provisions which expressly survive termination, this
Agreement shall terminate upon the earliest to occur of the following:

               (i) The expiration of the Offering Period;

               (ii) Investor provides written notice to the Company that Investor is terminating the
Agreement due to a material inaccuracy of any representation or warranty of the Company or its
failure to comply with any covenant or obligation hereunder, or the Company provides written notice
to the Investor that the Company is terminating the Agreement due to a material inaccuracy of any
representation or warranty of the Investor or its failure to comply with any covenant or obligation
hereunder;

               (iii) immediately without further action by either party if the sale of Common Stock hereunder
is prohibited or enjoined by applicable law or governmental or self-regulatory body; and

               (iv) by written agreement of the parties.

ARTICLE XI

NOTICES

     Section 11.1 NOTICES. Any notices, consents, waivers, or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile or by other electronic transmission (including email); (iii) three (3) days after being
sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a
nationally recognized overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications shall be:

	 	 	 
	If to the Company, to:

	 	Capstone Turbine Corporation
	 

	 	21211 Nordhoff Street
	 

	 	Chatsworth, CA 91311
	 

	 	Attention: John R. Tucker
	 

	 	Telephone: 818-407-3611
	 

	 	Facsimile: 818-734-5321
	 

	 	Email: jtucker@capstoneturbine.com
	 
	 	 
	With a copy to:

	 	Waller Lansden Dortch & Davis, PLLC
	 

	 	511 Union Street, Suite 2700
	 

	 	Nashville, TN 37219
	 

	 	Attention: J. Chase Cole, Esq.

-18-

 

	 	 	 
	 

	 	Telephone: (615) 850-8476
	 

	 	Facsimile: (615) 244-6804
	 

	 	Email: chase.cole@wallerlaw.com
	 
	 	 
	If to the Investor(s):

	 	Asset Managers International Ltd
	 

	 	c/o Olympia Capital (Ireland) Ltd. Harcourt Center 6th Floor, Block 3
	 

	 	Harcourt Road Dublin 2, Ireland
	 

	 	Attention: Andrew Bennett
	 

	 	Facsimile: +353 (1) 478 6298
	 

	 	Email: abennett@olympiacapital.ie
	 
	 	 
	With a Copy to:

	 	Pentagon Capital Management Plc
	 

	 	88 Baker Street, London W1U 6TQ
	 

	 	Attention: Lewis Chester
	 

	 	Telephone: +44 20 7 299 9922
	 

	 	Facsimile: +44 20 7 299 9988
	 

	 	Email: lchester@pentagoncapital.com

Each party shall provide two (2) days’ prior written notice to the other party of any change in
address or facsimile number.

ARTICLE XII

MISCELLANEOUS

     Section 12.1 COUNTERPARTS. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. In
the event any signature page is delivered by facsimile transmission, the party using such means of
delivery shall cause four (4) additional original executed signature pages to be physically
delivered to the other party within five (5) days of the execution and delivery hereof, though
failure to deliver such copies shall not affect the validity of this Agreement.

     Section 12.2 ENTIRE AGREEMENT; AMENDMENTS. This Agreement supersedes all other prior oral or
written agreements between the Investor, the Company, their affiliates and persons acting on their
behalf with respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or therein, neither the
Company nor the Investor makes any representation, warranty, covenant or undertaking with respect
to such matters. No provision of this Agreement may be waived or amended other than by an
instrument in writing signed by the party to be charged with enforcement.

     Section 12.3 REPORTING ENTITY FOR THE COMMON STOCK. The reporting entity relied upon for the
determination of the trading price or trading volume of the Common Stock on any given Trading Day
for the purposes of this Agreement shall be Bloomberg, L.P. or any successor thereto. The written
mutual consent of the Investor and the Company shall be required to employ any other reporting
entity.

-19-

 

     Section 12.4 SURVIVAL. The representations and warranties of the Company set forth in this
agreement shall survive until the first (1st) anniversary of the Commencement Date.

     Section 12.5 BROKERAGE. Each of the parties hereto represents that it has had no dealings in
connection with this transaction with any finder or broker who will demand payment of any fee or
commission from the other party except as indicated in the Disclosure Documents. The Company on
the one hand, and the Investor, on the other hand, agree to indemnify the other against and hold
the other harmless from any and all liabilities to any person claiming brokerage commissions or
finder’s fees on account of services purported to have been rendered on behalf of the indemnifying
party in connection with this Agreement or the transactions contemplated hereby.

     Section 12.6 CONFIDENTIALITY. If for any reason the transactions contemplated by this
Agreement are not consummated, each of the parties hereto shall keep confidential any information
obtained from any other party (except information publicly available or in such party’s domain
prior to the date hereof, and except as required by court order) and shall promptly return to the
other parties all schedules, documents, instruments, work papers or other written information
without retaining copies thereof, previously furnished by it as a result of this Agreement or in
connection herein.

     Section 12.7 ATTORNEYS’ FEES. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party or parties shall be entitled to receive
from the other party or parties reasonable attorneys’ fees, costs and necessary disbursements in
addition to any other relief to which the prevailing party or parties may be entitled.

     Section 12.8 SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
Investor and the Company and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to give any other person
any legal or equitable right, remedy or claim under or in respect of this Agreement, or any
provisions herein contained; this Agreement and all conditions and provisions hereof being intended
to be and being for the sole and exclusive benefit of such persons and for the benefit of no other
person.

     Section 12.9 NO WAIVER. No failure or delay on the part of the Company or Investor in
exercising any right, power or remedy hereunder 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. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be available to the Company or
Investor at law or in equity or otherwise. No waiver of or consent to any departure by the Company
or Investor from any provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit thereof, provided that notice of any such waiver shall be given to
each party hereto as set forth below.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

-20-

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by the
undersigned, thereunto duly authorized, as of the date first set forth above.

	 	 	 	 	 
	 	COMPANY:
CAPSTONE TURBINE CORPORATION

 	 
	 	By:  	/s/ John R. Tucker
 	 
	 	Name:  	John R. Tucker 	 
	 	Title:  	President and Chief Executive Officer 	 
	 
 
	 	INVESTOR:

ASSET MANAGERS INTERNATIONAL LTD

 	 
	 	By:  	/s/ Carolynn D. Hiron
 	 
	 	Name:  	Carolynn D. Hiron 	 
	 	Title:  	Director 	 

-21-

 

	 	 	 	 	 

EXHIBIT A

ADVANCE NOTICE

     The undersigned, _______________ hereby certifies, with respect to the sale of shares of
Common Stock of CAPSTONE TURBINE CORPORATION (the “COMPANY”), issuable in connection with this
Advance Notice dated __________________ (the “NOTICE”), delivered pursuant to the Subscription
Agreement (the “AGREEMENT”), as follows:

     1. The undersigned is the duly elected _______________ of the Company.

     2. The representations and warranties of the Company contained in the Agreement are true and
correct in all material respects and the Company is in compliance with each of its obligations
under such Agreement as of the date hereof.

     3. The Daily Advance Amount requested on _______________, 2005, is $_______________.

     The undersigned has executed this Notice this _______________day of _______________, 2005.

	 	 	 	 	 
	 	COMPANY:

CAPSTONE TURBINE CORPORATION

 	 
	 	By:  	
 	 
	 	Name:  	
 	 
	 	Title:  	
 	 

-22-

 

EXHIBIT B

WRITTEN DIRECTION TO DISBURSE

     The undersigned, _______________, hereby certifies as follows, on behalf of ASSET MANAGERS
INTERNATIONAL LTD (the “INVESTOR”), pursuant to the Subscription Agreement dated as of even date
herewith (the “AGREEMENT”).

     1. The undersigned is the duly elected _______________of the Investor.

     2. The Investor received an Advance Notice from Capstone Turbine Corporation (the “Company”)
on _______________, 2005, requesting a Daily Advance Amount of $_______________.

     3. The VWAP of the shares of Common Stock is $_______________, and the Purchase Price per share for
such shares is $_______________.

     4. Pursuant to the Agreement, the Investor shall acquire the number of shares of Registered
Stock equal to $_______________ [amount from 2 above] divided by the per share Purchase Price.

     5. The Escrow Agent is directed to disburse immediately $_______________ to the account
designated by the Company in the Escrow Agreement.

     6. The Escrow Agent is directed to effect immediately the transfer of _______________ shares of
Registered Stock to the Investor’s account set forth in the Escrow Agreement.

     The undersigned has executed this Written Direction this _______________ day of _______________, 2005.

	 	 	 	 	 
	 	ASSET MANAGERS INTERNATIONAL LTD

 	 
	 	By:  	
 	 
	 	Name:  	
 	 
	 	Title:  	
 	 
	 

The signature below manifests the Company’s

agreement as to numbers 3, 4, 5 and 6 set

forth above.

	 	 	 	 	 
	CAPSTONE TURBINE CORPORATION

 	 	 
	By:  	
 	 	 
	Name:  	
 	 	 
	Title:  	
 	 	 

-23-

 

	 	 	 	 	 

Schedule 4.2(A)

Capstone Turbine International, Inc.

-24-exv10w1

 

Exhibit 10.1

LIONS GATE ENTERTAINMENT CORP.

LIONS GATE FILMS CORP.

and

BOSA DEVELOPMENT CORP.

0742102 B.C. LTD.

 

PARTNERSHIP INTEREST PURCHASE AGREEMENT

 

December 22, 2005

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE 1	 	INTERPRETATION	 	 	2
	 
	1.1
	 	 	 	Definitions	 	 	2	 
	1.2
	 	 	 	Headings and Table of Contents	 	 	8	 
	1.3
	 	 	 	Extended Meanings	 	 	8	 
	1.4
	 	 	 	Business Days	 	 	8	 
	1.5
	 	 	 	Currency and Payment Obligations	 	 	9	 
	1.6
	 	 	 	Statute References	 	 	9	 
	1.7
	 	 	 	§ and Schedule References	 	 	9	 
	ARTICLE 2	 	PURCHASE OF PARTNERSHIP INTEREST	 	 	10	 
	2.1
	 	 	 	Agreement to Purchase and Sell	 	 	10	 
	2.2	 	Excluded Assets	 	 	10	 
	2.3
	 	 	 	Amount of Purchase Price	 	 	10	 
	2.4
	 	 	 	Payment of Purchase Price	 	 	10	 
	2.5
	 	 	 	Application of Deposit	 	 	10	 
	2.6
	 	 	 	Items of Adjustment	 	 	11	 
	2.7
	 	 	 	Statement of Adjustments	 	 	12	 
	2.8
	 	 	 	Allocation of Purchase Price	 	 	12	 
	2.9
	 	 	 	Taxes	 	 	12	 
	ARTICLE 3	 	INITIAL APPROVAL PERIOD	 	 	13	 
	3.1
	 	 	 	Productions by Vendor	 	 	13	 
	3.2
	 	 	 	Searches and Examinations	 	 	13	 
	3.3
	 	 	 	Disclosure of Pre-Closing Transactions	 	 	13	 
	3.4
	 	 	 	Confidentiality	 	 	14	 
	ARTICLE 4	 	CONDITIONS	 	 	15	 
	4.1
	 	 	 	Purchaser’s Conditions During Initial Approval Period	 	 	15	 
	4.2
	 	 	 	Consideration For Conditions	 	 	15	 
	ARTICLE 5	 	REPRESENTATIONS, WARRANTIES AND COVENANTS	 	 	16	 
	5.1
	 	 	 	Representations and Warranties of the Vendor	 	 	16	 
	 
	 	(a)	 	Incorporation of Vendor	 	 	16	 
	 
	 	(b)	 	Authorization by Vendor	 	 	16	 
	 
	 	(c)	 	Residence of Vendor	 	 	16	 
	 
	 	(d)	 	Ownership of Partnership Interest	 	 	16	 
	 
	 	(e)	 	Existence of Partnership	 	 	16	 
	 
	 	(f)	 	Ownership of Shares	 	 	16	 
	 
	 	(g)	 	Title to Assets	 	 	16	 

2

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	(h)	 	Ownership of Real Property	 	 	17	 
	 
	 	(i)	 	Financial Statements	 	 	17	 
	 
	 	(j)	 	Material Contracts	 	 	17	 
	 
	 	(k)	 	Compliance with Applicable Law	 	 	17	 
	 
	 	(l)	 	Licences and Permits	 	 	17	 
	 
	 	(m)	 	Undisclosed Liabilities/Guarantees	 	 	17	 
	 
	 	(n)	 	Consents and Approvals and Notices	 	 	17	 
	 
	 	(o)	 	Absence of Conflicting Agreements	 	 	18	 
	 
	 	(p)	 	Litigation	 	 	18	 
	 
	 	(q)	 	Insurance	 	 	18	 
	 
	 	(r)	 	Tax Filings	 	 	18	 
	 
	 	(s)	 	Taxes Paid	 	 	19	 
	 
	 	(t)	 	Undepreciated Capital Cost	 	 	19	 
	 
	 	(u)	 	Withholdings and Remittances	 	 	19	 
	 
	 	(v)	 	Indebtedness	 	 	19	 
	 
	 	(w)	 	Incorporation of Registered Owner	 	 	19	 
	 
	 	(x)	 	Power, Capacity and Authority of Registered Owner	 	 	19	 
	 
	 	(y)	 	Minute Book of Registered Owner	 	 	19	 
	 
	 	(z)	 	Obligations	 	 	20	 
	 
	 	(aa)	 	Liabilities	 	 	20	 
	 
	 	(bb)	 	Services	 	 	20	 
	 
	 	(cc)	 	Encroachments	 	 	20	 
	 
	 	(dd)	 	Land Use	 	 	20	 
	 
	 	(ee)	 	Expropriation	 	 	20	 
	 
	 	(ff)	 	Environmental Laws	 	 	20	 
	 
	 	(gg)	 	Hazardous Substances	 	 	21	 
	 
	 	(hh)	 	Material Effect	 	 	21	 
	 
	 	(ii)	 	Employee Matters	 	 	21	 
	 
	 	(jj)	 	Absence of Certain Changes or Events	 	 	21	 
	 
	 	(kk)	 	Enforceability of Obligations	 	 	22	 
	5.2
	 	 	 	Representations and Warranties of the Purchaser	 	 	22	 
	 
	 	(a)	 	Incorporation and Power	 	 	22	 
	 
	 	(b)	 	Due Authorization	 	 	22	 
	 
	 	(c)	 	Enforceability of Obligations	 	 	23	 

3

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	(d)	 	GST Registration	 	 	23	 
	 
	 	(e)	 	Review Materials	 	 	23	 
	5.3
	 	 	 	Survival of Representations and Warranties	 	 	23	 
	5.4
	 	 	 	Covenants of the Purchaser	 	 	23	 
	 
	 	(a)	 	Employees	 	 	23	 
	 
	 	(b)	 	Lions Gate Studios	 	 	24	 
	5.5
	 	 	 	“As Is” Condition	 	 	24	 
	ARTICLE 6	 	CLOSING ARRANGEMENTS	 	 	24	 
	6.1
	 	 	 	Closing	 	 	24	 
	6.2
	 	 	 	Vendor’s Closing Deliveries	 	 	24	 
	6.3
	 	 	 	Purchaser’s Closing Deliveries	 	 	26	 
	6.4
	 	 	 	Preparation of Closing Documents	 	 	26	 
	6.5
	 	 	 	GST	 	 	26	 
	6.6
	 	 	 	Registration and Other Costs	 	 	26	 
	6.7
	 	 	 	Purchaser’s Post-Closing Deliveries	 	 	27	 
	6.8
	 	 	 	Purchaser’s Financing	 	 	27	 
	6.9
	 	 	 	Use of Name	 	 	27	 
	ARTICLE 7	 	INDEMNIFICATION	 	 	27	 
	7.1
	 	 	 	Indemnity by the Purchaser	 	 	27	 
	7.2
	 	 	 	Indemnity by the Vendor	 	 	28	 
	7.3
	 	 	 	Survival of Indemnification	 	 	29	 
	7.4
	 	 	 	Notice of Claim	 	 	29	 
	7.5
	 	 	 	Direct Claims	 	 	29	 
	7.6
	 	 	 	Third Party Claims	 	 	29	 
	7.7
	 	 	 	Settlement of Third Party Claims	 	 	30	 
	7.8
	 	 	 	Interest on Claims and GST	 	 	30	 
	ARTICLE 8	 	GENERAL	 	 	30	 
	8.1
	 	 	 	Arbitration	 	 	30	 
	8.2
	 	 	 	Public Announcements	 	 	31	 
	8.3
	 	 	 	Notices	 	 	31	 
	8.4
	 	 	 	Tender	 	 	32	 
	8.5
	 	 	 	Time of Essence	 	 	33	 
	8.6
	 	 	 	Entire Agreement	 	 	33	 
	8.7
	 	 	 	Waiver and Amendment	 	 	33	 
	8.8
	 	 	 	Severability	 	 	33	 
	8.9
	 	 	 	Further Assurances	 	 	33	 
	8.10
	 	 	 	Access to Books and Records	 	 	33	 

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	 	 	 	 	 	 	Page	 
	8.11
	 	 	 	Governing Law	 	 	33	 
	8.12
	 	 	 	Successors and Assigns	 	 	34	 
	8.13
	 	 	 	Counterparts	 	 	34	 

5

 

PARTNERSHIP INTEREST PURCHASE AGREEMENT

THIS
AGREEMENT is made as of the ___ day of December, 2005

BETWEEN:

LIONS GATE ENTERTAINMENT CORP., a company amalgamated under the laws of British
Columbia (“LGEC”) and LIONS GATE FILMS CORP., a company amalgamated under the laws
of Canada (“LGFC”)

(together, the “Vendor”)

AND:

BOSA DEVELOPMENT CORP., a company incorporated under the laws of British Columbia
and 0742102 B.C. LTD., a company incorporated under the laws of British Columbia

(together, the “Purchaser”)

WHEREAS:

A. LGEC and LGFC own a 66.66% interest and 33.33% interest, respectively (together the “Partnership
Interest”), in Lions Gate Studios Partnership, a general partnership formed under the laws of the
Province of British Columbia (the “Partnership”);

B. LGEC is the legal and beneficial owner of all of the issued and outstanding shares (the
“Shares”) in the capital of Lions Gate Studio Management Ltd. (the “Registered Owner”);

C. The Purchaser is willing to purchase and the Vendor is willing to sell the Partnership Interest
on the terms and conditions contained in this Agreement; and

D. The Purchaser is willing to purchase and LGEC is willing to sell all of the legal and beneficial
interest in and to the Shares on the terms and conditions contained in this Agreement

          NOW THEREFORE, in consideration of the mutual covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties
agree as follows:

 

 

ARTICLE 1

INTERPRETATION

1.1 Definitions. In this Agreement, the following terms shall have the meanings set out below:

          “Accounts Payable and Accrued Liabilities” means all accounts payable, bills payable, trade
accounts payable and book debts owing, amounts payable to and all accrued liabilities to Employees,
together with any unpaid interest accrued on such items and any Lien or collateral for such items,
up to the Closing Date.

          “Adjustments” shall have the meaning specified in § 2.6.

          “Affiliate” shall have the meaning ascribed thereto in the Business Corporations Act (British
Columbia).

          “Agent” means Avison Young Commercial Real Estate (B.C.) Inc.

          “Agreement” means this Agreement, including the Recitals and the Schedules to this Agreement,
as it or they may be amended or supplemented from time to time, and the expressions “hereof”,
“herein”, “hereto”, “hereunder”, “hereby” and similar expressions refer to this Agreement and not
to any particular § or other portion of this Agreement.

          “Applicable Law” means, with respect to any Person, property, transaction, event or other
matter, any law, rule, statute, regulation, order, judgement, decree, treaty or other requirement
having the force of law (collectively, the “Law”) relating or applicable to such Person, property,
transaction, event or other matter whether domestic or foreign, including without limitation,
Environmental Laws. Applicable Law also includes, where appropriate, policies, guidelines and
codes of, or any interpretation of the Law (or any part thereof), by any Person having jurisdiction
over it, or charged with its administration or interpretation, and includes all policies,
guidelines, codes and practices of or imposed by any Regulatory Body.

          “Assets” means all the properties, assets, interests and rights used in or arising out of the
Business including the following:

	 	(a)	 	the Real Property;
	 
	 	(b)	 	all machinery, equipment, furniture, computers, computer equipment,
telecommunications systems and other chattels used in the operation of the
Business;
	 
	 	(c)	 	all rights and interests under or pursuant to all warranties,
representations and guarantees, express, implied or otherwise, of or made by
suppliers or others in connection with the Assets;
	 
	 	(d)	 	the Contracts;
	 
	 	(e)	 	the Licences and Permits;

2

 

	 	(f)	 	the Books and Records;
	 
	 	(g)	 	all goodwill of the Partnership; and
	 
	 	(h)	 	all proceeds of any or all of the foregoing receivable after the
Closing Time,

and, for greater certainty, does not include the Excluded Assets.

          “Books and Records” means all books, records, files and papers relating to the Business
including software programs, manuals and data, sales and advertising materials, sales and purchases
correspondence, trade association files, research and development records, personnel, employment
and other records including the partnership records of the Partnership, and all copies and
recordings of the foregoing.

          “Business” means the business carried on by the Partnership which consists of the operation of
a television and film studio facility and any ancillary use of the Real Property.

          “Business Day” means any day except Saturday, Sunday or any day on which banks are generally
not open for business in the City of Vancouver, British Columbia, Canada.

          “Closing” means the completion of the purchase and sale of the Partnership Interest and the
Shares in accordance with the provisions of this Agreement.

          “Closing Date” means February 28, 2006 or such earlier or later date as may be agreed upon in
writing by the Parties.

          “Closing Time” means the time of Closing on the Closing Date provided for in § 6.1.

          “Conditions Precedent” shall have the meaning specified in § 4.1.

          “Confidential Information” shall have the meaning specified in § 3.3.

          “Consents and Approvals” means all consents and approvals required to be obtained in
connection with the execution and delivery of this Agreement and the completion of the transactions
contemplated by this Agreement.

          “Contracts” means all rights and interests of the Partnership in all existing, pending and/or
executory contracts, agreements, insurance policies, leases and arrangements to which the
Partnership is a party or by which the Partnership or any of the Assets or the Business is bound or
affected, and all amendments thereto, including the Material Contracts, but excluding the Contracts
listed as “Excluded Assets” in Schedule “A”.  

          “Direct Claim” shall have the meaning specified in § 7.4.

          “Employee” means an individual who is employed by the Registered Owner; and “Employees” means
every Employee, all of which are listed in Schedule “E” hereto.

3

 

          “Environmental Laws” means any laws, statutes, regulations or bylaws in effect and
applicable to the Vendor or the Real Property on the Closing Date which apply to environmental
matters or the pollution or the protection of the natural environment;

          “Excluded Assets” means the assets of the Partnership listed in Schedule “A” hereto.

          “Financial Statements” means, collectively, the annual financial statements of the Partnership
for the fiscal years ended March 31, 2001, March 31, 2002, March 31, 2003, March 31, 2004 and March
31, 2005 and the interim financial statements of the Partnership for the period ended on October
31, 2005.

          “First Deposit” shall have the meaning specified in § 2.4(a).

          “GAAP” means those accounting principles which are recognized as being generally accepted in
Canada from time to time as set out in the handbook published by the Canadian Institute of
Chartered Accountants, consistently applied.

          “Hazardous Substance” means any contaminant, pollutant, waste, hazardous material, toxic
substance, radioactive substance, petroleum, its derivatives, by-products and other hydrocarbons,
dangerous substance or dangerous goods, all as defined in any Environmental Laws including, without
limitation, urea formaldehyde insulation, asbestos and PCBs;

          “Improvements” means all buildings, fixtures, sidings, parking lots, roadways, structures,
erections, fixed machinery, fixed equipment and appurtenances situated on, in, under, or over the
Lands or forming part of the Lands.

          “Indemnified Party” means a Person whom the Vendor or the Purchaser, as the case may be, has
agreed to indemnify under Article 7.

          “Indemnifying Party” means, in relation to an Indemnified Party, the Party to this Agreement
that has agreed to indemnify that Indemnified Party under Article 7.

          “Initial Approval Period” means the period commencing upon the date on which the Purchaser
receives the last of the Review Materials and ending on the earlier of: (a) 5:00 p.m. P.S.T. on the
day which is 60 days after such date (but not later than January 20, 2006); or (b) the removal or
waiver of the Conditions Precedent.

          “Intellectual Property” means all of the Partnership’s rights to and interests in:

	 	(a)	 	all business and trade names, corporate names and the name
“Lions Gate Studios”;
	 
	 	(b)	 	all inventions and patents, patent rights and patent
applications (including all reissues, divisions, continuations,
continuations-in-part and extensions of any patent or patent application)
related to the Business set out in Schedule “B”;

4

 

	 	(c)	 	all industrial designs and industrial design rights, design
patents, industrial design registrations and applications for patent and
registration of industrial designs related to the Business set out in Schedule
“B”;
	 
	 	(d)	 	all trade-marks (whether used with wares or services and
including the goodwill attaching to such trade-marks) and registrations and
applications for registration of trade-marks related to the Business set out in
Schedule “B”;
	 
	 	(e)	 	internet domain addresses of the Partnership that include the
name “Lions Gate”;
	 
	 	(f)	 	all licences of the intellectual property listed in items (a)
to (e) above;
	 
	 	(g)	 	all future income and proceeds from any of the intellectual
property listed in items (a) to (e) above and the licences contemplated in item
(f) above; and
	 
	 	(h)	 	all rights to sue and otherwise enforce rights and obtain
remedies by way of injunction, delivery up, damages, profits and otherwise for
the past, present and future violation or infringement of any of the
intellectual property listed in items (a) to (e) above and the violation of the
licences contemplated in item (f) above.

          “Knowledge” — an individual shall be deemed to have knowledge of a particular fact or other
matter if:

	 	(a)	 	such individual is actually aware of such fact or other matter; or
	 
	 	(b)	 	a prudent individual could reasonably be expected to discover or
otherwise become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation concerning the existence of such fact or
other matter.

A Person (other than and individual) shall be deemed to have “Knowledge” of a particular fact or
other matter if any individual who is serving as a director, officer, partner, executor, or trustee
of such Person (or in any similar capacity), has, or at any time had, Knowledge of such fact or
other matter.

          “Lands” means the real property located at 555 Brooksbank Avenue, North Vancouver, British
Columbia and legally described in Schedule “D” hereto.

          “Liabilities” means all costs, expenses, charges, debts, liabilities and obligations, whether
primary or secondary, direct or indirect, accrued or actual, fixed, contingent, absolute or
otherwise, including under or in respect of any contract, guarantee, arrangement, commitment or
undertaking, Applicable Law or Taxes.

5

 

          “Licences and Permits” means all licences, permits, filings, authorizations, approvals or
indicia of authority issued to the Partnership.

          “Lien” means any lien, mortgage, charge, hypothec, pledge, security interest, prior
assignment, option, warrant, lease, sublease, right to possession, encumbrance, claim, right or
restriction of any kind or nature whatsoever.

          “Litigation” means, except with respect to the Intellectual Property, all claims, demands,
actions, suits or proceedings, or threats thereof, before any court, arbitrator, mediator,
Regulatory Body.

          “Material Adverse Effect” means any event, occurrence, fact, condition, effect or change (or
any condition, event or development involving a prospective change) or any combination of the
foregoing that is, either individually or in the aggregate, materially adverse to the Business,
operations, capital, prospects, results of operations, condition (financial or otherwise), Assets
or Liabilities of the Partnership, and any event, occurrence, fact, condition, effect or change (or
any condition, event or development involving a prospective change) that is adverse to the
Partnership and involves an amount in excess of $200,000, shall be deemed to have given rise to a
“Material Adverse Effect”.

          “Material Contracts” means all Contracts which are not cancellable by the Partnership on less
than sixty (60) days’ written notice, which contain any “change of control” provision, any
provision purporting to bind Affiliates or related companies, any non-competition provision, any
exclusivity provision limiting the Partnership’s ability to carry on the Business in any
jurisdiction or part thereof, or which involve or relate to or which are anticipated to involve or
relate to (i) obligations of the Partnership for borrowed money where the amount of such
obligations exceeds $100,000 individually, (ii) the purchase or sale of goods or services with an
aggregate minimum price of more than $100,000 per annum, (iii) the purchase or sale of assets or
properties not in the ordinary course of the Business having a purchase price in excess of
$100,000, or (iv) individual capital expenditures or commitments in excess of $100,000.

          “Notices” means the notices required to be given to any Person under Applicable Law or
pursuant to any Contract in connection with the execution and delivery of this Agreement or the
completion of the transactions contemplated by this Agreement.

          “Partnership” shall have the meaning specified in Recital A hereto.

          “Partnership Agreement” means the Acknowledgement of Partnership dated April 1, 2005;

          “Partnership Interest” shall have the meaning specified in Recital A hereto.

          “Party” means a party to this Agreement and any reference to a Party includes its successors
and permitted assigns; and “Parties” means every Party.

          “Permitted Liens” means:

	 	(a)	 	Liens for Taxes if such Taxes are not due and payable;

6

 

	 	(b)	 	mechanics’, construction, carriers’, workers’, repairers’, storers’
or other similar Liens (inchoate or otherwise) which individually or in the
aggregate are not material, or which arise or are incurred in the ordinary course
of the Business which have not been filed, recorded or registered in accordance
with Applicable Law;
	 
	 	(c)	 	minor title defects or irregularities consisting of minor survey
exceptions, minor unregistered easements or rights of way, restrictions in the
original grant from the Crown, restrictions implied by Applicable Law and other
minor unregistered restrictions as to the use of the Real Property which title
defects, irregularities or restrictions do not, in the aggregate, materially
impair the operation of the Business or the continued use of the Real Property to
which they relate after the Closing on substantially the same basis as such Real
Property is currently being used and the Business is currently being operated;
	 
	 	(d)	 	easements, covenants, rights of way and other restrictions which
are registered, provided that they do not, in the aggregate, materially impair
the operation of the Business or the continued use of the Real Property to which
they relate after the Closing on substantially the same basis as the Business is
currently being operated and such Real Property is currently being used;
	 
	 	(e)	 	registered agreements with municipalities provided that they have
been complied with or adequate security has been furnished to secure compliance
and provided that they do not, in the aggregate, materially impair the operation
of the Business or the continued use of the Real Property to which they relate
after the Closing on substantially the same basis as the Business is being
operated and such Real Property is currently being used; and
	 
	 	(f)	 	the mortgages, charges and other Permitted Liens listed in Schedule
“F”.

          “Person” is to be broadly interpreted and includes an individual, a corporation, a
partnership, a trust, an unincorporated organization, any Regulatory Body and the executors,
administrators or other legal representatives of an individual in such capacity.

          “Prime Rate” means the prime rate of interest per annum quoted by from time to time by Bank of
Montreal as its reference rate of interest for Canadian dollar demand loans made to its commercial
customers in Canada and which it refers to as its “prime rate”, as such rate may be changed from
time to time.

          “Purchase Price” shall have the meaning specified in § 2.3.

          “Purchaser’s Solicitors” means McCarthy Tetrault, Attention: Keith Burrell.

          “Real Property” means the Lands and the Improvements.

7

 

          “Receivables” means all accounts receivable, bills receivable, trade accounts, book debts and
insurance claims together with any unpaid interest accrued on such items and any Lien or collateral
for such items, including recoverable deposits, up to the Closing Date.

          “Registered Owner” means Lions Gate Studios Management Ltd.

          “Regulatory Body” means any government, regulatory or administrative body, any governmental
department, agency, board or commission and any similar body, organization or association in any
jurisdiction.

          “Review Materials” means the documents listed in Schedule “C” hereto.

          “Second Deposit” shall have the meaning specified in § 2.3(b).

          “Shares” shall have the meaning specified in Recital B hereto.

          “Taxes” means all taxes, charges, fees, levies, imposts and other assessments, including all
income, sales, use, goods and services, value added, capital, capital gains, alternative, net
worth, transfer, profits, withholding, payroll, employer health, excise, franchise, real property
and personal property taxes, and any other taxes, customs duties, fees, assessments or similar
charges in the nature of a tax including Canada Pension Plan and provincial pension plan
contributions, employment insurance and unemployment insurance payments and workers’ compensation
premiums, together with any instalments with respect thereto, and any interest, fines and penalties
imposed by any Regulatory Body (including federal, state, provincial, municipal and foreign
Regulatory Bodies), and whether disputed or not.

          “Tax Returns” means declarations, remittances, information returns, reports and other
documents of every nature required to be filed by or on behalf of the Partnership in respect of any
Taxes.

          “Third Party Claim” shall have the meaning specified in § 7.4.

          “Vendor’s Solicitors” means Heenan Blaikie LLP, Attention: Anjili Bahadoorsingh.

1.2 Headings and Table of Contents. The division of this Agreement into Articles and §s, the
insertion of headings, and the provision of any table of contents are for convenience of reference
only and shall not affect the construction or interpretation of this Agreement.

1.3 Extended Meanings. Unless the context requires otherwise, words importing the singular include
the plural and vice versa and words importing gender include all genders and the terms “including”
and “include” shall mean “including without limitation” and “include without limitation”
respectively.

1.4 Business Days. If any payment is required to be made or other action is required to be taken
pursuant to this Agreement on a day which is not a Business Day, then such payment or action shall be made or taken on the next
Business Day thereafter.

8

 

1.5 Currency and Payment Obligations. Except as otherwise expressly provided in this Agreement:

	 	(a)	 	all dollar amounts referred to in this Agreement are stated in Canadian
Dollars; and
	 
	 	(b)	 	any payment contemplated by this Agreement shall be made by cash, certified
cheque, bank draft, wire transfer or any other method that provides immediately
available funds.

1.6 Statute References. Any reference in this Agreement to any statute or any § thereof shall,
unless otherwise expressly stated, be deemed to be a reference to such statute or § as amended,
restated or re-enacted from time to time.

1.7 Section and Schedule References. Unless the context requires otherwise, references in this
Agreement to Sections or Schedules are to Sections or Schedules of this Agreement. The Schedules
to this Agreement are as follows:

SCHEDULES

Schedule
“A” — Excluded Assets (Section 1.1)

Schedule
“B” — Intellectual Property (Section 1.1)

Schedule “C” — Review Materials (Section 1.1)

Schedule “D” — Lands (Section 1.1)

Schedule “E” — Employees (Section 1.1)

Schedule “F” — Permitted Liens (Section 1.1)

Schedule “G” — Shares: Liens (Section 5.1(f))

Schedule “H” — Material Contracts (Section 5.1(j))

Schedule “I” — Licenses and Permits (Section 5.1(l))

Schedule “J” — Consents, Approvals and Notices (Section 5.1(n))

Schedule “K” — Litigation (Section 5.1(p))

Schedule “L” — Insurance (Section 5.1(q))

Schedule “M” — Obligations (Section 5.1(z))

Schedule
“N”  —  Employee Benefit Plan (Section 5.1(ii))

9

 

ARTICLE 2

PURCHASE OF PARTNERSHIP INTEREST

2.1 Agreement to Purchase and Sell. At the Closing Time, subject to the terms and conditions of
this Agreement:

	 	(a)	 	the Vendor shall sell the Partnership Interest to the Purchaser,
and the Purchaser shall purchase the Partnership Interest from the Vendor; and

	 	(b)	 	LGEC shall sell the Shares to the Purchaser, and the Purchaser
shall purchase the Shares from LGEC.

2.2 Excluded Assets. The Excluded Assets shall not be included in the purchase and sale described
in this Agreement. The Vendor shall take all steps required, at its sole cost, to cause the
Partnership to transfer the Excluded Assets to a third party or otherwise eliminate them prior to
the Closing Time.

2.3 Amount of Purchase Price. The aggregate purchase price payable by the Purchaser to the Vendor
for the Partnership Interest and the Shares (the “Purchase Price”) shall be forty-two million
dollars ($42,000,000), subject to the Adjustments as set out in § 2.6 below.

2.4 Payment of Purchase Price. The Purchase Price shall be paid and satisfied by the Purchaser as
follows:

	 	(a)	 	an initial refundable deposit in the amount of $25,000 and a
non-refundable deposit in the amount of $25,000 (together, the “First Deposit”)
to be paid upon execution of this Agreement;

	 	(b)	 	a further deposit in the amount of $950,000 (the “Second Deposit”)
to be paid concurrently with the satisfaction or waiver of the Conditions
Precedent; and

	 	(c)	 	the balance to be paid at Closing.

The Purchaser shall deliver:

	 	(a)	 	the non-refundable portion of the First Deposit to the Vendor; and

	 	(b)	 	the refundable portion of the First Deposit and the Second Deposit
(together, the “Deposits”) to the Vendor’s Solicitors to be held in an interest
bearing trust account at a Canadian chartered financial institution.

2.5 Application of Deposit. The Deposits shall be:

	 	(a)	 	paid to the Vendor:

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	 	(i)	 	on the Closing Date on account of the Purchase
Price, if the Vendor and the Purchaser complete the Closing on the
Closing Date; or

	 	(ii)	 	together with accrued interest thereon, if the
Purchaser fails or refuses to complete the purchase and sale herein
contemplated after the Conditions Precedent have been satisfied or
waived, as liquidated damages as a genuine pre-estimate of its damages
in full and final settlement of any claim which the Vendor may have
against the Purchaser; or

	 	(b)	 	paid to the Purchaser:

	 	(i)	 	together with interest on the Deposit, if the
Purchaser does not satisfy or waive the Conditions Precedent in the
manner and within the time provided in this Agreement; or

	 	(ii)	 	if the Vendor does not satisfy or waive the
conditions precedent set out in § 4.2 in the manner and within the time
provided therein; or

	 	(iii)	 	if the Vendor is solely in default of its
obligation to complete the Closing on the Closing Date.

2.6 Items of Adjustment. The Purchaser and Vendor shall adjust as of the Closing Date, pursuant to
financial statements prepared as of the Closing Date, on account of the following items:

	 	(a)	 	Taxes, local improvement rates and charges with respect to the
Lands;

	 	(b)	 	prepaid charges, deposits, sums and fees;

	 	(c)	 	refunds;

	 	(d)	 	Accounts Payable and Accrued Liabilities;

	 	(e)	 	rents;

	 	(f)	 	utilities;

	 	(g)	 	property taxes with respect to the Lands;

	 	(h)	 	any amount payable under any Contract or Permitted Encumbrance;

	 	(i)	 	all other items reasonably capable of and, subject to the
provisions of this Agreement, properly the subject of adjustment in connection
with the ownership, operation and management of the Lands and the Business of

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	 	 	 	whatsoever nature and normally adjusted between a vendor and purchaser in
similar commercial transactions,

(collectively, the “Adjustments”) so that the Vendor shall bear and pay all expenses related to the
Lands and the Business which have accrued in respect of any time prior to the Closing Date and the
Purchaser shall bear and pay all expenses related to the Lands and the Business which accrue in
respect of any time from and including the Closing Date.

2.7 Statement of Adjustments. The Adjustments shall be made to the extent reasonably possible on
Closing. The Vendor shall prepare a Statement of Adjustments and a copy thereof shall be delivered
to the Purchaser at least 3 Business Days prior to the Closing Date. Those items which cannot be
either ascertained or finally made on Closing shall be made on the basis of estimates by the Vendor
acting reasonably. If adjustments have been made on estimates by the Vendor, the Vendor and
Purchaser shall, within 3 months of Closing, make readjustments when the actual items have been
determined.

2.8 Allocation of Purchase Price. The Parties agree that $10 of the Purchase Price is allocated on
account of the Shares and the balance of the Purchase Price is allocated to the Partnership
Interest.

2.9 Taxes. The federal and provincial taxable income of the Partnership for the fiscal period
commencing on January 1, 2006 and ending on December 31, 2006 shall be prorated such that the
Vendor shall be responsible for the portion accruing (on a simple average daily portion) for the
period commencing on January 1, 2006 and ending on the Closing Date and the Purchaser shall be
responsible for the remainder of the taxable income for the 2006 fiscal period subject to an
adjustment to take into account that all income and losses relating to the preclosing transactions
referred to in § 3.3 which are out of the usual and ordinary course of the Business are for the
account of the Vendor. For the purpose of computing the Partnership’s 2006 federal or provincial
taxable income, all discretionary deductions or credits available to the Partnership shall be
claimed to the maximum extent permitted by law. As contemplated in § 8.10 hereof, after closing the
Vendor and Purchaser shall provide each other with reasonable access to information and documents
relating to the 2006 fiscal period of the Partnership and any related Tax matters. Furthermore, the
Vendor and Purchaser shall each prepare and file their federal and provincial income tax returns
for their respective fiscal periods that include the Closing Date (together with any other filings
relating to Taxes incurred or arising during calendar 2006 that relate to the Partnership) on a
consistent basis. All such Tax returns and filings of the Vendor and Purchaser shall be consistent
with each other regarding the allocation of values among the assets of the Partnership for Tax
purposes, the method and timing of recognition of Partnership revenue, net income, deduction of
capital cost allowance and any other relevant deductions, tax balances, receipts, outlays,
expenses, source deductions, remittances or other Tax items relating to the Partnership or
interests in the Partnership. In order to ensure consistency of Tax reporting as between the
Vendor and the Purchaser, each Party shall provide reasonable co-operation and disclosure to the
other regarding the matters contemplated in this provision, provided that all information and
documents disclosed or provided pursuant to this section shall be kept confidential and shall be
treated as Confidential Information that is subject to the provisions of § 3.1 hereof, with such
modifications as the circumstances require.

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ARTICLE 3

INITIAL APPROVAL PERIOD

3.1 Productions by Vendor. The Vendor has provided the Purchaser with the Review Materials. The
Purchaser acknowledges and agrees that the Vendor has not made any representation or warranty,
express or implied, with respect to the accuracy or completeness of the Review Materials to the
extent the same has been prepared by third parties. To the best of the Vendor’s Knowledge, any
Review Materials prepared by the Vendor and delivered to the Purchaser shall be accurate and
complete. The Purchaser shall conduct its own investigations as to the accuracy of the Review
Materials and shall proceed or not proceed with the transaction described herein based solely on
its own due diligence.

3.2 Searches and Examinations. During the Initial Approval Period, the Vendor shall permit the
Purchaser, its agents and representatives, access to the Real Property at all reasonable times and
upon reasonable written notice by the Purchaser to the Vendor to carry out, at the Purchaser’s sole
expense and risk, such tests and inspections of the Real Property as the Purchaser may deem
reasonably necessary, provided that:

	 	(a)	 	such tests and inspections shall not damage the Real Property
or interfere in any material way with the Vendor’s use and enjoyment thereof;

	 	(b)	 	no sampling, boring, drilling or other physically intrusive
testing into the ground shall be made without the prior written consent of the
Vendor, such consent not to be unreasonably withheld;

	 	(c)	 	any damage or alteration to the Real Property caused by such
tests and inspections shall promptly be repaired by the Purchaser and restored
to its condition existing prior to such tests and inspections, subject to the
reasonable supervision of the Vendor;

	 	(d)	 	the Vendor shall be entitled to have a representative present
during such tests and inspections; and

	 	(e)	 	prior to entering upon the Lands, the Purchaser shall deliver
to the Vendor certificates of insurance evidencing coverage for the Purchaser’s
activities on the Lands with (i) limits of not less than $1,000,000 per
occurrence and $2,000,000 in the aggregate for personal injury, including
bodily injury and death, and property damage; and (ii) waiver of subrogation,
and further evidencing that such coverage may only be terminated or modified
upon not less than thirty (30) days prior written notice to the Vendor and
naming the Vendor as additional insured and loss payee.

The Purchaser shall, forthwith upon same becoming available, and whether or not the Purchaser
satisfies or waives the Conditions Precedent, provide the Vendor with copies of the results of any
tests and inspections conducted by or on behalf of the Purchaser pursuant to this § 3.2.

3.3
Disclosure of Pre-Closing Transactions. At least 5 days prior to the end of the
Initial Approval Period, the Vendor shall use its best efforts to provide the Purchaser with a true
and complete list of all material transactions (including a description of the material terms

13

 

thereof) which the Vendor intends to complete prior to the Closing Date with respect to the
Partnership, the Business, the Assets and the Excluded Assets including, without limitation, those
contemplated in § 2.2.

3.4 Confidentiality.

	 	(a)	 	Until Closing (and in the event this Agreement is terminated for any reason
other than its completion, also from and after such termination), the Purchaser
and its prospective lenders, partners and investors, consultants, agents,
accountants, advisors and solicitors shall keep confidential all information,
documentation and records obtained from the Vendor or its consultants, agents,
accountants, advisors or solicitors with respect to the Assets, including
without limitation, the Review Materials, as well as any information arising
out of the Purchaser’s review and access to the Vendor’s records concerning the
Assets, the Excluded Assets and the Business and its due diligence with respect
thereto (collectively, the “Confidential Information”). In the event the
Purchaser wishes to provide any Confidential Information to partners and
investors, the Purchaser shall first notify the Vendor of its intention to
provide such Confidential Information to a partner or investor and the
Purchaser shall not provide any such Confidential Information without the
Vendor’s prior written approval, such approval not to be unreasonably withheld.
The Purchaser shall not use any Confidential Information for any purposes not
related to this transaction. Nothing herein contained shall restrict or
prohibit the Purchaser from disclosing the Confidential Information to its
prospective lenders, consultants, agents, accountants, advisors and solicitors
as long as such parties are informed by the Purchaser of the confidential
nature of such information or the Vendor receives such other assurances as are
acceptable to it.

	 	(b)	 	The Confidential Information referred to in this § 3.3 shall
not include:

	 	(i)	 	public information or information in the public
domain at the time of receipt by the Purchaser or its consultants,
agents, advisors and solicitors;

	 	(ii)	 	information which becomes public through no
fault or act of the Purchaser or its consultants, agents, advisors and
solicitors;

	 	(iii)	 	information required to be disclosed by law;
or

	 	(iv)	 	information received in good faith from a third
party lawfully in possession of the information and not in breach of
any confidentiality obligations.

	 	(c)	 	If this Agreement is terminated for any reason, the Purchaser
shall promptly return to the Vendor upon request all Confidential Information

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	 	 	 	(other than the Purchaser’s notes and due diligence materials), including all
copies, and shall destroy all of the Purchaser’s notes and due diligence
materials containing Confidential Information related to the transaction
described herein.

ARTICLE 4

CONDITIONS

4.1 Purchaser’s Conditions During Initial Approval Period. The Purchaser’s obligation to complete
the Closing shall be subject to the waiver or satisfaction by an instrument in writing from the
Purchaser, on or before the end of the Initial Approval Period or as otherwise described herein, of
the following conditions, each of which shall be for the sole benefit of the Purchaser
(collectively, the “Conditions Precedent”):

	 	(a)	 	the Purchaser is satisfied in its sole discretion with the
Review Materials; and

	 	(b)	 	the Purchaser is satisfied in its sole discretion with its due
diligence tests, inspections and investigations.

The Purchaser may, by notice in writing, notify the Vendor that the Conditions Precedent have been
satisfied or that it is waiving same. If no such notice is delivered on or before the end of the
Initial Approval Period, the Purchaser shall be deemed not to have satisfied itself. If a written
notice has been provided by the Purchaser to the Vendor within the Initial Approval Period that the
Conditions Precedent have not been satisfied, or if the Purchaser has not delivered any notice to
the Vendor, then this Agreement shall be null and void and of no further force and effect and,
except in the case of default by the Purchaser, the refundable portion of the First Deposit,
together with accrued interest thereon, shall be returned to the Purchaser.

4.2 Consideration For Conditions. In consideration of $1 paid by each Party to the other and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Purchaser and Vendor each agree not to revoke its acceptance of this Agreement
while it remains subject to the conditions contained in this Agreement which are for the sole
benefit of the other party.

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ARTICLE 5

REPRESENTATIONS, WARRANTIES AND COVENANTS

5.1 Representations and Warranties of the Vendor. As a material inducement to the Purchaser
entering into this Agreement and completing the transactions contemplated by this Agreement and
acknowledging that the Purchaser is entering into this Agreement in reliance upon the
representations and warranties of the Vendor set out in this § 5.1, the Vendor represents and
warrants to the Purchaser as follows:

	 	(a)	 	Incorporation of Vendor. Each of LGEC and LGFC is a corporation duly
amalgamated and validly subsisting under the laws of its governing jurisdiction. Each
Vendor has the corporate power and authority and is qualified to own and dispose of its
share of the Partnership Interest;
	 
	 	(b)	 	Authorization by Vendor. The Vendor has the corporate power, authority and
capacity to enter into this Agreement, and other instruments to be executed by it as
contemplated by this Agreement and to carry out its obligations under this Agreement,
and other instruments. The execution and delivery of this Agreement, and other
instruments and the completion of the transactions contemplated by this Agreement and
other instruments have been duly authorized by all necessary corporate action on the
part of each of LGEC and LGFC;
	 
	 	(c)	 	Residence of Vendor. The Vendor is not a non-resident of Canada for purposes
of § 116 of the Income Tax Act (Canada);
	 
	 	(d)	 	Ownership of Partnership Interest. LGEC and LGFC are the sole partners in the
Partnership and are the sole legal and beneficial holders of the Partnership Interest,
with good and marketable title thereto, free and clear of all Liens. No Person other
than the Purchaser has any right, agreement or option, or any right capable of becoming
a right, agreement or option for the purchase from the Vendor of the Partnership
Interest or any portion thereof;
	 
	 	(e)	 	Existence of Partnership. To the Vendor’s Knowledge, the Partnership was formed
on July 13, 1988 and the Partnership has continued to exist at all times since that
date;
	 
	 	(f)	 	Ownership of Shares. LGEC is the sole registered holder of the Shares, and
holds the Shares as agent, bare trustee and nominee for the Partnership as principal
and beneficial owner, with good and marketable title thereto, free and clear of all
Liens, except as set out in Schedule “G” hereto. No Person other than the Purchaser
has any right, agreement or option or any right capable of becoming a right, agreement or option for the
purchase from LGEC of the Shares or to require the Registered Owner to allot or
issue any further or other shares or any other instrument convertible or
exchangeable into shares of the Registered Owner;
	 
	 	(g)	 	Title to Assets. The Partnership has good and marketable title to all of the
Assets which it purports to own or which are reflected as owned in the Books and
Records including all property and assets reflected in the Financial Statements,

16

 

	 	 	 	free and clear of all Liens, except for Permitted Liens. The Real Property is registered in
the name of the Registered Owner as agent, bare trustee and nominee for the Partnership
as principal and beneficial owner.
	 
	 	(h)	 	Ownership of Real Property. The Registered Owner has no beneficial interest in
the Real Property and has carried on no business or activity of any kind whatsoever
other than holding legal title to the Real Property and other property in trust for the
Vendor and dealing with the Real Property and the Employees on behalf of and as
directed by the Partnership.
	 
	 	(i)	 	Financial Statements. To the Vendor’s Knowledge, the Financial Statements,
copies of which have been delivered to the Purchaser, are fair and accurate and are in
accordance with the Books and Records. The Financial Statements have been prepared in
accordance with GAAP. The balance sheets contained in such Financial Statements fairly
and accurately present the financial condition of the Partnership as of their
respective dates and the statements of earnings and retained earnings contained in the
Financial Statements fairly and accurately present the results of operations for the
periods indicated;
	 
	 	(j)	 	Material Contracts. Schedule “H” lists all of the Material Contracts. To the
Vendor’s Knowledge, each Material Contract is in full force and effect and the
Partnership is entitled to the full benefit and advantage of each Material Contract in
accordance with its terms. The Partnership is not in default under any Material
Contract and, to the Vendor’s Knowledge, no other party thereto is in default under any
Material Contract and there has not occurred any event which, with the lapse of time or
giving of notice or both would constitute a default under any Material Contract by the
Partnership or any other party thereto. Neither the Vendor nor the Partnership has
received any notice of a default under any Material Contract and there is no dispute
between the Partnership and any other party in respect of any Material Contract.
Except as disclosed in Schedule “H”, none of the Material Contracts has been assigned
or otherwise transferred by the Partnership in favour of any Person;
	 
	 	(k)	 	Compliance with Applicable Law. To the Vendor’s Knowledge, the Vendor and the
Partnership are in compliance with all Applicable Law;
	 
	 	(l)	 	Licences and Permits. Schedule “I” lists all the Licences and Permits of the
Partnership. To the Vendor’s Knowledge, the Business is being carried on in compliance
with all such Licences and Permits;
	 
	 	(m)	 	Undisclosed Liabilities/Guarantees. The Partnership does not have any
Liabilities which are not disclosed in the Financial Statements or disclosed herein,
other than Liabilities incurred in the usual and ordinary course of the Business;
	 
	 	(n)	 	Consents and Approvals and Notices. Except for the Consents and Approvals and
Notices listed in Schedule “J”, no Consent and Approval or Notice of or to any Person
is required in connection with the execution and delivery of this 

17

 

	 	 	 	Agreement and the
completion of the transactions contemplated by this Agreement or to permit the
Partnership to carry on the Business after the Closing as the Business is currently
carried on by the Partnership;
	 	 	 	 
	 	(o)	 	Absence of Conflicting Agreements. The execution, delivery and performance of
this Agreement by the Vendor and the completion (with any required Consents and
Approvals and Notices) of the transactions contemplated by this Agreement do not and
shall not result in or constitute any of the following:

	 	(a)	 	a default, breach or violation or an event that, with notice or
lapse of time or both, would be a default, breach or violation of any of the
terms, conditions or provisions of the constating documents of the Vendor;
	 
	 	(b)	 	an event which, pursuant to the terms of any Contract (other than
any Contract containing any provision entitling the party or parties thereto
other than the Partnership to consent to a change of control of the Partnership)
or any of the Licences and Permits, causes any right or interest of the
Partnership to come to an end or be amended in any way that is detrimental to the
Business or entitles any other Person to terminate or amend any such right or
interest;
	 
	 	(c)	 	the creation or imposition of any Lien on any Asset; or
	 
	 	(d)	 	the violation of any Applicable Law or order of a court or
Regulatory Body;

	 	(p)	 	Litigation. To the Vendor’s Knowledge, and except as disclosed in Schedule
“K”, there is no Litigation by or against the Partnership or the Registered Owner or
affecting the Business, the Assets or the operations or capital of the Partnership or
the Registered Owner or the transactions contemplated by this Agreement, which
adversely affects the Business or the Assets in a material way;
	 
	 	(q)	 	Insurance. Particulars of the policies of insurance maintained by or in
respect of the Partnership at the date of this Agreement (including the insurer, the
amount of coverage, the type of insurance, the policy number, the deductible and the
premiums payable) are set out in Schedule “L”. All such policies are in full force and
effect and neither the Vendor nor the Partnership is in default, whether as to the
payment of premiums or otherwise, under the terms of such policies or has failed to
give any notice or present any claim in a timely fashion under any such insurance
policy;
	 
	 	(r)	 	Tax Filings. The Partnership has prepared and filed with all appropriate
Regulatory Bodies all required Tax Returns for all fiscal periods ending prior to the
date hereof and shall continue to do so, in a timely manner, in respect of any fiscal
period ending on or before the Closing Date and any fiscal period commencing before and
ending after the Closing Date. All such Tax Returns are fair and accurate in all
material respects, and no material fact has been omitted therefrom. No extension of
time in which to file any such Tax Returns is in effect;

18

 

	 	(s)	 	Taxes Paid. The Partnership has paid in full all Taxes required to be paid on
or prior to the date hereof and all late filing penalties and interest or the
Partnership has made adequate provision in the Financial Statements for the payment of
all Taxes of the Partnership and all late filing penalties and interest in respect of
all fiscal periods ending on or before the Closing Date or which commence before and
end after the Closing Date;
	 
	 	(t)	 	Undepreciated Capital Cost. The undepreciated capital cost of the depreciable
property owned by the Partnership other than the Excluded Assets is not less than
$16,000,000;
	 
	 	(u)	 	Withholdings and Remittances. The Partnership has collected all Taxes required
by Applicable Law to be collected from third parties and the Registered Owner has
withheld from each payment made to any of its Employees or former employees, officers
and directors, and to all Persons who are non-residents of Canada for the purposes of
the Income Tax Act (Canada) all amounts required by Applicable Law to be withheld, and
furthermore, each of them has remitted such withheld amounts within the prescribed
periods to the appropriate Regulatory Body. The Registered Owner has remitted all
Canada Pension Plan contributions, provincial pension plan contributions, employment
insurance premiums, employer health taxes and other Taxes payable by it in respect of
its Employees and has remitted such amounts to the proper Regulatory Body within the
time required under the Applicable Law;
	 
	 	(v)	 	Indebtedness. Except for the payment of salaries and reimbursements for
out-of-pocket expenses in the ordinary and usual course (which will be adjusted between
the parties on Closing), neither LGEC nor LGFC (nor any director, officer, shareholder
or employee thereof) is indebted to
the Partnership and the Partnership is not indebted to either LGEC or LGFC (or any
director, officer, shareholder of employee thereof);
	 
	 	(w)	 	Incorporation of Registered Owner. The Registered Owner is a body corporate
duly incorporated and validly existing under the laws of British Columbia, has never
been dissolved and is in good standing with the Office of the Registrar of Companies
for British Columbia with respect to the filing of annual reports;
	 
	 	(x)	 	Power, Capacity and Authority of Registered Owner. The Registered Owner has
the corporate power, capacity and authority to hold legal title to the Real Property in
trust for the Partnership;
	 
	 	(y)	 	Minute Book of Registered Owner. The minute book of the Registered Owner has
been maintained as required by all governing laws, is accurate, complete and current
and contains complete and accurate minutes of all meetings of and all resolutions
passed by the directors and shareholders of the Registered Owner since the date of the
incorporation of the Registered Owner;

19

 

	 	(z)	 	Obligations. Except as set out in Schedule “M” hereto, neither the Registered
Owner nor the Real Property is subject to any guarantee, indemnity or other contingent
or indirect obligation with respect to the obligation of any other Person, other than
any Affiliate of the Registered Owner and any such guarantee, indemnity or other
contingent or indirect obligation shall be released on or before the Closing Date.
	 
	 	(aa)	 	Liabilities. As of the Closing Date, neither the Partnership nor the
Registered Owner will have any direct or indirect material Liabilities of any kind
whatsoever, including, without limitation, in respect of claims by officers or
directors of the Registered Owner or the Vendor, whether or not accrued, and whether or
not known or, to the Vendor’s Knowledge, unknown, determined or undetermined,
contingent or otherwise, in respect of which the Partnership or the Registered Owner is
or may be liable on or after the Closing Date;
	 
	 	(bb)	 	Services. To the Vendor’s Knowledge, the Vendor has not received any notice or
advice of any proposed local improvement charges or special levies or assessments with
respect to the property taxes or utilities payable in connection with off-site
services, utilities or similar services in connection with the Real Property;
	 
	 	(cc)	 	Encroachments. To the Vendor’s Knowledge, there is no improvement on any land
adjoining the Real Property which encroaches upon the Real Property and no improvement
on the Real Property encroaches on any adjoining land;
	 
	 	(dd)	 	Land Use. To the Vendor’s Knowledge, the Real Property and the use thereof do
not contravene any applicable zoning or building bylaw, covenant, registered or
unregistered restriction, land use contract, law, ordinance or regulation (whether
relating to fire, safety, the environment, the building standards, health standards or
otherwise) of any governmental authority, all of which permit the present use and
occupation of the Real Property, and the Vendor has not received and has no Knowledge
of any notice or request from any government authority or official, insurance company
or board of fire underwriters that the Real Property is subject to any outstanding
municipal work orders, fire upgrading orders, health orders or other notices of
deficiencies in respect of the Real Property;
	 
	 	(ee)	 	Expropriation. The Vendor has received no notice of and has no knowledge of
any proposed expropriation of the Real Property or any part thereof;
	 
	 	(ff)	 	Environmental Laws. Except as disclosed in the Review Materials, the Vendor
has received no written notice of non-compliance, and does not know, or have reasonable
grounds to know, of any facts which could give rise to any notice of non-compliance
with respect to any Environmental Laws, orders, plans, remediation plans, approvals,
permits or conditions of their issuance;

20

 

	 	(gg)	 	Hazardous Substances. To the Vendor’s Knowledge, the Real Property does not
contain any Hazardous Substance and there are no underground storage tanks located
thereon, except as disclosed in the Review Materials;
	 
	 	(hh)	 	Material Effect. To the Vendor’s Knowledge, the Vendor has not failed to
disclose or make available to the Purchaser on a timely basis any information
concerning the Assets which would have a material effect on a reasonably prudent
institutional purchaser’s decision to purchase the Assets;
	 
	 	(ii)	 	Employment Matters.

	 	(a)	 	The Registered Owner does not have any full-time or part-time
Employees, other than the Employees listed in Schedule “E”.
	 
	 	(b)	 	None of the Employees is on short-term disability, long-term
disability or any other approved or statutory leave of absence.
	 
	 	(c)	 	Except as set out in Schedule “N” hereto, neither the Registered
Owner nor the Partnership is bound by or a party to:

	 	(i)	 	any union or collective bargaining
agreement; or
	 
	 	(ii)	 	any written or unwritten pension plan
or other benefit plan, program or arrangement maintained,
contributed to or provided by the Partnership or the Registered
Owner for the benefit of any of the Employees or for the benefit of
any of the dependants or beneficiaries of any of the Employees.

	 	(d)	 	No trade union, council of trade unions, employee bargaining agency
or affiliated bargaining agent:

	 	(i)	 	holds bargaining rights with respect to
any of the Employees by way of certification, interim
certification, voluntary recognition, designation or successor
rights; or
	 
	 	(ii)	 	has applied to be certified as the
bargaining agent of any of the Employees.

	 	(jj)	 	Absence of Certain Changes or Events. Since March 31, 2005, the Partnership
has not:

	 	(a)	 	suffered any Material Adverse Effect including any damage to the
Improvements that would cost in excess of $200,000 to repair;
	 
	 	(b)	 	sold, leased, transferred or otherwise disposed of any of the
Assets reflected on the balance sheet forming part of the Financial Statements,
except in the usual and ordinary course of business;

21

 

	 	(c)	 	changed any accounting or costing systems or methods in any
material respect;
	 
	 	(d)	 	granted, or agreed to grant, any bonus, increased, or agreed to
increase, any remuneration or compensation (other than for normal merit and cost
of living increases consistent with past practice) or made, or agreed to make,
any loans or advances to any director, officer or Employee, except as otherwise
disclosed to the Purchaser;
	 
	 	(e)	 	granted a Lien on any of the Assets, except in the ordinary course
of the Business and in amounts which, individually and in the aggregate are not
material to the financial condition of the Partnership or operation of the
Business;
	 
	 	(f)	 	entered into any transaction out of the usual and ordinary course
of business;
	 
	 	(g)	 	cancelled or amended any policy of insurance; or
	 
	 	(h)	 	agreed to do any of the foregoing;

	 	(kk)	 	Enforceability of Obligations. This Agreement constitutes a legal, valid and
binding obligation of the Vendor enforceable against the Vendor in accordance with its
terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors’ rights
generally and to the extent that equitable remedies such as specific performance and
injunctions are only available in the discretion of the court from which they are
sought.

5.2 Representations and Warranties of the Purchaser. As a material inducement to the Vendor
entering into this Agreement and completing the transactions contemplated by this Agreement and
acknowledging that the Vendor is entering into this Agreement in reliance upon the representations
and warranties of the Purchaser set out in this § 5.2, the Purchaser represents and warrants to the
Vendor as follows:

	 	(a)	 	Incorporation and Power. Each entity comprising the Purchaser is a corporation
duly incorporated and validly subsisting under the laws of the jurisdiction of its
incorporation;
	 
	 	(b)	 	Due Authorization. The Purchaser has the corporate power, authority and
capacity to enter into this Agreement and all other agreements and instruments to be
executed by it as contemplated by this Agreement and to carry out its obligations under
this Agreement and such other agreements and instruments. The execution and delivery
of this Agreement and such other agreements and instruments and the completion of the
transactions contemplated by this Agreement and such other agreements and instruments
have been duly authorized by all necessary corporate action on the part of the
Purchaser;

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	 	(c)	 	Enforceability of Obligations. This Agreement constitutes a legal, valid and
binding obligation of the Purchaser enforceable against the Purchaser in accordance
with its terms subject, however, to limitations on enforcement imposed by bankruptcy,
insolvency, reorganization or other laws affecting the enforcement of creditors’ rights
generally and to the extent that equitable remedies such as specific performance and
injunctions are only available in the discretion of the court from which they are
sought; and
	 
	 	(d)	 	GST Registration. The Purchaser is or shall be by the Closing Date a GST
registrant.
	 
	 	(e)	 	Review Materials. The Purchaser has received the Review Materials.

5.3 Survival of Representations and Warranties.

	 	(a)	 	Except as otherwise expressly provided for in this § 5.3, the representations
and warranties of the Vendor contained in § 5.1 shall survive the Closing and,
notwithstanding the Closing or any investigation made by or on behalf of the Purchaser,
shall continue in full force and effect for the benefit of the Purchaser for a period
of one (1) year subsequent to the Closing Date.
	 
	 	(b)	 	The representations and warranties of the Vendor contained in § 5.1 (r), § 5.1
(s) and § 5.1 (u) shall survive the Closing and, notwithstanding the Closing or any
investigation made by or on behalf of the Purchaser, shall continue in full force and
effect for the benefit of the Purchaser until the earlier of:

	 	(i)	 	the sixth anniversary of the Closing Date; and
	 
	 	(ii)	 	the expiration of the last limitation period under any
Applicable Law respecting Taxes subsequent to the expiration of which an
assessment, reassessment or other form of recognized document assessing
liability for any Tax for any fiscal period of the Partnership ending on or
prior to the Closing Date or beginning before and ending after the Closing Date
cannot be issued.

	 	(c)	 	The representations and warranties of the Purchaser contained in § 5.2 shall
survive the Closing and, notwithstanding the Closing or any investigation made by or on
behalf of the Vendor, shall continue in full force and effect for the benefit of the
Vendor for a period of one (1) year subsequent to the Closing Date.

5.4 Covenants of the Purchaser. The Purchaser covenants with the Vendor as follows:

	 	(a)	 	Employees. The Purchaser shall cause the Registered Owner to offer employment
to all of the Employees to continue as of the Closing Date on terms and conditions that
are no less favourable, in the aggregate, than the terms and conditions which applied
to such Employees prior to the Closing Date; and

23

 

	 	(b)	 	Lions Gate Studios. Subject to § 6.9, the Purchaser shall not refer to the
Real Property or the Business as “Lions Gate Studios” after the Closing Date and shall,
after the Closing, remove all signage in or on the Real Property bearing the words
“Lions Gate Studios” or any combination thereof.

5.5 “As Is” Condition. Except for the representations and warranties made by the Vendor herein,
the Purchaser acknowledges and agrees that it is purchasing the Partnership Interest, which
includes the Real Property, in an “as is, where is” physical and environmental condition and that
the Vendor makes no representations or warranties to the Purchaser with respect to either the
physical condition of the Property, or the environmental condition of the Real Property, except as
otherwise set out herein. The Purchaser further acknowledges and agrees that it is responsible for
investigating both the physical and
environmental condition of the Real Property to its satisfaction and that it is responsible for
satisfying itself, and is relying on its own investigations to verify, that both the physical and
environmental condition of the Real Property are satisfactory to the Purchaser. If the Vendor has
provided the Purchaser with copies of any third party reports, audits or studies relating to the
physical condition or the environmental condition of the Real Property, then the Vendor has done so
as a courtesy only and shall have no liability for any errors or inaccuracies in such third party
reports, audits or studies of which the Vendor did not have Knowledge.

ARTICLE 6

CLOSING ARRANGEMENTS

6.1 Closing. The Closing shall take place at 1:00 p.m. on the Closing Date at the offices of the
Vendor’s Solicitors, or at such other time on the Closing Date or such other place as may be agreed
orally or in writing by the Vendor and the Purchaser.

6.2 Vendor’s Closing Deliveries. At the Closing, the Vendor shall deliver or cause to be delivered
to the Purchaser the following documents:

	 	(a)	 	a transfer of the Partnership Interest, duly executed by the
Vendor;
	 
	 	(b)	 	a transfer of the Shares, duly executed by LGEC;
	 
	 	(c)	 	the Partnership books of the Partnership;
	 
	 	(d)	 	a certificate of the President or other senior officer of LGEC or
LGFC dated as of the Closing Date certifying that each of the warranties and
representations of the Vendor set out herein is true and accurate on the Closing
Date in all material respects;
	 
	 	(e)	 	evidence of those Consents and Approvals that have been obtained on
or prior to the Closing Date;
	 
	 	(f)	 	resolutions of the directors of LGEC and LGFC authorizing the
transfer of the Partnership Interest to the Purchaser;

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	 	(g)	 	resolutions of LGEC and LGFC, as partners of the Partnership,
authorizing the transfer of the Partnership Interest to the Purchaser and any
consents or waivers required under the Partnership Agreement;
	 
	 	(h)	 	resolutions of the directors of LGEC authorizing the transfer of
the Shares to the Purchaser;
	 
	 	(i)	 	resolutions of the directors of the Registered Owner authorizing
the transfer of the Shares to the Purchaser and the issuance of a new share
certificate in the name of the Purchaser or as otherwise directed by the
Purchaser;
	 
	 	(j)	 	resignations of all of the directors and officers of the Registered
Owner;
	 
	 	(k)	 	full releases from each of the current directors and officers of
the Registered Owner;
	 
	 	(l)	 	resolutions of the directors of the Registered Owner approving the
change of the registered and records office of the Registered Owner to an address
provided by the Purchaser;
	 
	 	(m)	 	a duly executed Notice of Change of Registered and Records Office
changing the address of the registered and records office of the Registered Owner
to the address provided by the Purchaser;
	 
	 	(n)	 	confirmation of a change of name of the Registered Owner to a
numbered company name or such other name as provided by the Purchaser to LGEC;
	 
	 	(o)	 	the share certificates representing the Shares duly endorsed for
transfer;
	 
	 	(p)	 	the Statement of Adjustments contemplated in § 2.7;
	 
	 	(q)	 	an adhesion instrument or instrument among the parties hereto
confirming that the Partnership is not dissolved or terminated by virtue of the
withdrawal and retirement of the Vendor and the admission of the Purchaser;
	 
	 	(r)	 	the licence referred to in § 6.9;
	 
	 	(s)	 	an opinion of the Vendor’s Solicitors regarding the due execution
and delivery of the closing documents; and
	 
	 	(t)	 	all such other assurances, consents, agreements, documents and
instruments as may be reasonably required by the Purchaser to complete the
transactions provided for in this Agreement.

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6.3 Purchaser’s Closing Deliveries. At the Closing, the Purchaser shall deliver or cause to be
delivered to the Vendor the following documents and payments:

	 	(a)	 	a certificate of the President or other senior officer of the
Purchaser dated as of the Closing Date certifying that each of the warranties and
representations of the Purchaser set out herein is true and accurate on the
Closing Date in all material respects;
	 
	 	(b)	 	an opinion of Purchaser’s Solicitors regarding the due execution
and delivery of the closing documents;
	 
	 	(c)	 	the balance of the Purchase Price as contemplated in § 2.4 (c);
	 
	 	(d)	 	copy of Change of Partnership evidencing the Purchaser as the
holder of the Partnership Interest;
	 
	 	(e)	 	certificate as to the Purchaser’s GST registered status;
	 
	 	(f)	 	indemnification sufficient to relieve the Vendor from any
obligation to collect and remit GST with respect to the transfer of the Real
Property to the Purchaser; and
	 
	 	(g)	 	all such other assurances, consents, agreements, documents and
instruments as may be reasonably required by the Vendor to complete the
transactions provided for in this Agreement.

6.4 Preparation of Closing Documents. The documents listed in § 6.2 and § 6.3 above shall be
prepared by the Vendor’s Solicitors and to the extent required, delivered to the Purchaser’s
Solicitors for execution by the Purchaser as soon as reasonably possible after expiry of the
Initial Approval Period and in any event at least 3 Business Days prior to the Closing Date.

6.5 GST. The Purchaser is responsible to account for and remit any Goods and Services Tax (“GST”)
in respect of the purchase and sale transaction contemplated herein and in accordance with the
Excise Tax Act (Canada) and shall provide the Vendor with an indemnity with respect to GST payable
in respect of this purchase and sale transaction, except that Vendor shall pay the applicable GST
on the broker commission payable to the Agent.

6.6 Registration and Other Costs.

	 	(a)	 	The Vendor shall be responsible for the costs of the Vendor’s
Solicitors in respect of the transactions contemplated in this Agreement.
	 
	 	(b)	 	The Purchaser shall be responsible for the costs of the
Purchaser’s Solicitors in respect of the transactions contemplated in this
Agreement.

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	 	(c)	 	The Purchaser shall be responsible for and pay any land
transfer taxes payable upon the transfer of the Real Property, all registration
fees payable in respect of registration by it of any documents on Closing and
all federal and provincial sales and other taxes payable by the Purchaser upon
or in connection with the conveyance or transfer of the Partnership Interest
and the Assets.
	 
	 	(d)	 	The Vendor shall be responsible for real estate commissions
which are payable to the Agent in connection with the Closing.

6.7 Purchaser’s Post-Closing Deliveries. The Purchaser shall provide the Vendor within 20 days
after the Closing Date with a copy of the Change of Partnership evidencing the Purchaser as the
holder of the Partnership Interest, with registration particulars noted thereon.

6.8 Purchaser’s Financing. If, as part of any financing arranged by the Purchaser, it is necessary
for the Registered Owner to execute any mortgage financing documents, the Vendor shall co-operate
with the Purchaser and shall cause the Registered Owner to execute such mortgage financing
documents and grant such charges over the Real Property as the lender may require the Registered
Owner to execute or grant in connection with the transactions contemplated herein. In addition,
the Vendor shall use its best efforts to cause the directors and shareholders of the Registered
Owner to execute and deliver to the Purchaser any resolutions which may be required in connection
with such financing prior to the Closing Date, provided that the Purchaser has delivered copies
thereof to the Vendor’s Solicitors for their review and approval no later than five (5) Business
Days prior to the Closing Date and that satisfactory arrangements are made to unwind any such
financing in the event that closing does not proceed as contemplated.

6.9 Use of Name. On the Closing Date, the Vendor shall grant or cause to be granted to the
Partnership, a licence for a fee of $1.00 to use the name “Lions Gate Studios” (including the use
of the domain name “lionsgatestudios.com”) in connection with the Business for a nine (9) month
period following closing for transition purposes, which license shall include an indemnity from the
Partnership and the Purchaser in favour of the Vendor in connection with the Partnership’s use of
such name, as well as a description of the uses of such name which the Partnership intends to
employ. The Purchaser shall cause the Partnership to decrease the use of the name over the course
of the transition period and cease to use the name on or before the date that is nine (9) months
following the Closing Date.

ARTICLE 7

INDEMNIFICATION

7.1 Indemnity by the Purchaser. The Purchaser agrees to indemnify and hold the Vendor, its
directors, officers, partners, trustees, beneficiaries, shareholders, members, managers, employees,
agents, advisors, representatives and their respective Affiliates and such Affiliates’ respective
directors, officers, partners, trustees, beneficiaries, shareholders, members, managers, employees
and representatives, harmless from and against any action, cause of action, claim,

27

 

demand, suit,
liability, damages, losses, costs, expenses and proceeding which may be made or brought against or
suffered by an Indemnified Party, or any Liability which it may suffer or incur directly or
indirectly, as a result of, in respect of or arising out of:

	 	(a)	 	any material inaccuracy in or material breach of any
representation or warranty of the Purchaser contained in § 5.2;
	 
	 	(b)	 	any breach or non-fulfilment of any covenant or agreement on
the part of the Purchaser under this Agreement by the Purchaser or any other
certificate or instrument executed and delivered by the Purchaser pursuant to
this Agreement; and
	 
	 	(c)	 	any activity of the Purchaser and its employees, consultants,
contractors, advisors or other agents relating to the Real Property, including
without limitation, mechanics liens, damage to the Real Property, injury to
persons or property resulting from such activities in connection therewith, but
not if and to the extent due to the gross negligence or wilful misconduct of
any of the Indemnified Parties.

Notwithstanding any other provision of this Agreement, the indemnity granted by the Purchaser
pursuant to this § 7.1 shall survive the Closing.

7.2 Indemnity by the Vendor. The Vendor agrees to indemnify and hold the Purchaser, its
directors, officers, partners, trustees, beneficiaries, shareholders, members, managers, employees,
agents, advisors, representatives and their respective Affiliates and such Affiliates’ respective
directors, officers, partners, trustees, beneficiaries, shareholders, members, managers, employees
and representatives, harmless from and against any action, cause of action, claim, demand, suit,
liability, damages, losses, costs, expenses and proceeding which may be made or brought against or
suffered by an Indemnified Party, or any Liability which it may suffer or incur directly or
indirectly, as a result of, in respect of or arising out of:

	 	(a)	 	any material inaccuracy in or material breach of any
representation or warranty of the Vendor contained in § 5.1;
	 
	 	(b)	 	any breach or non-fulfilment of any covenant or agreement on
the part of the Vendor under this Agreement by the Vendor or any other
certificate or instrument executed and delivered by the Vendor pursuant to this
Agreement; and
	 
	 	(c)	 	any activities of the Vendor, or its agents, employees or
contractors on the Real Property up to the Closing Date.

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7.3 Survival of Indemnification. Where either the Purchaser or the Vendor makes a claim or claims
pursuant to § 7.1 or 7.2 on account of any incorrectness in or breach of representation or warranty
set forth herein within the time period(s) applicable to such claim or claims set forth in § 5.3,
the right to indemnification in respect of such claim or claims shall continue in full force and
effect until the claim is finally settled or adjudicated and all payments to be made in respect of
any settlement or adjudication have been made.

7.4 Notice of Claim. If an Indemnified Party gains Knowledge of a claim in respect of which
indemnification is provided for pursuant to either of § 7.1 or 7.2, as the case may be, the
Indemnified Party shall provide written notice of the claim to the Indemnifying Party within 60
days after the date on which the Indemnified Party gains such Knowledge. Such notice shall specify
whether the claim arises as a result of a claim
by a Person against the Indemnified Party (a “Third Party Claim”) or whether the claim does not so
arise (a “Direct Claim”). For greater certainty, a Third Party Claim shall include any claim made
by any Regulatory Body relating to Taxes.

7.5 Direct Claims. In the case of a Direct Claim, the Indemnifying Party shall have 30 Business
Days from receipt of notice of the claim within which to review and settle the Direct Claim. If
both Parties agree at or before the expiration of such 30 Business Day period (or any mutually
agreed upon extension thereof) to the validity and amount of such claim, the Indemnifying Party
shall immediately pay to the Indemnified Party the full agreed upon amount of the claim, failing
which the matter shall be referred to binding arbitration in accordance with § 8.1.

7.6 Third Party Claims. In the case of a Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in but not control the negotiation, settlement or defence of
the Claim which control shall rest at all times with the Indemnified Party, unless the Indemnifying
Party:

	 	(a)	 	irrevocably acknowledges in writing complete responsibility for its
share of the Third Party Claim, and agrees to indemnify the Indemnified Party in
respect of, the Third Party Claim; and
	 
	 	(b)	 	furnishes evidence to the Indemnified Party which is satisfactory
to the Indemnified Party of its financial ability to indemnify the Indemnified
Party;

in which case the Indemnifying Party may assume such control through counsel of its choice and at
its expense. The Indemnified Party shall continue to have the right to participate in the
negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on its
behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified
Party unless the Indemnifying Party consents to the retention of such counsel at its expense or
unless the named parties to any action or proceeding include both the Indemnifying Party and the
Indemnified Party and a representation of both the Indemnifying Party and the Indemnified Party by
the same counsel would be inappropriate due to the actual or potential differing interests between
them (such as the availability of different defences), in which case the fees and disbursements of
such counsel shall be paid by the Indemnifying Party. If, having elected to

29

 

assume control of the
negotiation, settlement or defence of the Third Party Claim, the Indemnifying Party thereafter
fails to conduct such negotiation, settlement or defence with reasonable diligence, then the
Indemnified Party shall be entitled to assume such control and the Indemnifying Party shall be
bound by the results obtained by the Indemnified Party with respect to such Third Party Claim.

7.7 Settlement of Third Party Claims. If the Indemnifying Party fails to assume control of the
defence of any Third Party Claim, then the Indemnified Party shall have the exclusive right to
contest, settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control
of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall
not settle any Third
Party Claim without the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld or delayed.

7.8 Interest on Claims and GST. The amount of any claim submitted under § 7.1 or § 7.2 as damages
or by way of indemnification shall bear interest: (a) with respect to a Direct Claim, from and
including the date on which notice of the claim is given by the Indemnified Party; and (b) with
respect to a Third Party Claim, from and including the date on which a claim is paid by the
Indemnifying Party to the Indemnified Party, at the Prime Rate calculated from and including such
date to but excluding the date reimbursement of such claim by the Indemnifying Party is made, and
the amount of such interest shall be deemed to be part of such claim. Where the amount of a
payment in respect of any claim submitted under § 7.1 or § 7.2 as damages or by way of
indemnification is subject to GST, the Indemnifying Party shall pay such GST on the amount of such
payment.

ARTICLE 8

GENERAL

8.1 Arbitration.

	 	(a)	 	Any dispute, controversy or claim arising out of or in connection with, or
relating to, this Agreement, or the performance, breach, termination or validity
thereof, including the arbitrability of any such dispute, controversy or claim, shall
be finally settled by arbitration. Either Party may initiate arbitration by delivering
a written demand for arbitration upon the other Party. The arbitration shall be
conducted in accordance with the Commercial Arbitration Act (British Columbia), as
amended. The arbitration shall take place in Vancouver, British Columbia.
	 
	 	(b)	 	The arbitral tribunal shall, except as hereinafter provided, be composed of
three arbitrators appointed as follows:

	 	(i)	 	each party shall appoint an arbitrator,
and the two arbitrators so appointed shall appoint a third
arbitrator who shall act as Chair of the tribunal;
	 
	 	(ii)	 	if either Party fails to appoint an
arbitrator within 30 days of receiving notice of the appointment of
an arbitrator by the other

30

 

	 	 	 	Party, then the arbitral tribunal shall
be composed of one arbitrator who shall be the arbitrator appointed
by the other Party;
	 
	 	(iii)	 	if the two arbitrators appointed by
the Parties fail to agree upon a third arbitrator within 30 days of
the appointment of the second arbitrator, the third arbitrator
shall be appointed by the British Columbia Supreme Court, as
contemplated by the Commercial Arbitration Act (British Columbia),
as amended; and
	 
	 	(iv)	 	should a vacancy arise because any
arbitrator dies, resigns, refuses to act, or becomes incapable of
performing his or her functions, the vacancy shall be filled by the
method by which that arbitrator was originally appointed.

	 	(c)	 	The arbitral award shall be in writing, stating the reasons for the award and
be final and binding on the Parties with no rights of appeal. The award may include an
award of costs, including reasonable legal fees and disbursements and the fees and
expenses of the arbitral tribunal. Judgment upon the award may be entered by any court
having jurisdiction thereof or having jurisdiction over the relevant Party or its
assets.
	 
	 	(d)	 	The arbitration shall be kept confidential and the existence of the proceeding
and any element of it (including any pleadings, briefs or other documents submitted and
exchanged, and testimony or other oral submission and any awards) shall not be
disclosed beyond the arbitral tribunal, the Parties, their counsel and any Person
necessary to the conduct of the proceeding, except as may be lawfully required by law
relating to the arbitration or otherwise.

8.2 Public Announcements. Except as required by law, the Purchaser agrees to keep the terms and
conditions of this Agreement confidential and acknowledges that the Vendor shall have the right to
approve (acting reasonably), prior to release, the form and content of all public announcements of
the transactions contemplated hereby.

8.3 Notices. Every notice, consent, determination or other communication required or permitted to
be given or made under this Agreement (collectively, a “notice”) shall be written and directed to
the Party to whom delivered or given and shall be delivered or given at the following addresses:

	 	(a)	 	if to the Vendor, to:

Lions Gate Entertainment Corporation

2700 Colorado Avenue, Suite 200

Santa Monica, CA, U.S.A. 90404

Attention:    Ms. Marni Wieshofer

Fax:             (310)-255-3780

	 	(b)	 	if to the Purchaser, to:

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Bosa Development Corp.

1901 Rosser Avenue, Suite 500

Burnaby, B.C., Canada, V5C-6S3

Attention:    Mr. Richard Weir

Fax:             (604)-291-9120

Each such notice shall be:

	 	(i)	 	personally delivered;
	 
	 	(ii)	 	sent by telecopier or other direct written electronic means; or
	 
	 	(iii)	 	sent by registered mail; or
	 
	 	(iv)	 	sent by courier.

          Any notice sent by way of the means described in (i) above shall be deemed to have been given
and received on the Business Day on which it has been personally delivered provided that if such
notice has not been delivered on a Business Day, then it shall be deemed to have been given and
received on the next Business Day thereafter. Any notice sent by way of the means described in
(ii) above shall be deemed to have been given and received on the date on which it was transmitted
provided that if such notice has not been transmitted on a Business Day or if it was not
transmitted prior to 5:00 p.m. on the Business Day that it was transmitted, then it shall be deemed
to have been given and received on the next Business Day thereafter. Any notice sent by the means
described in (iii) above shall be deemed to have been given and received on the fifth Business Day
following the date upon which it has been mailed. If mail service is or is threatened to be
interrupted at any time when a notice is required to be given hereunder, then such notice shall be
given by the means described in (i), (ii) or (iv) above. Any notice sent by the means described in
(iv) above shall be deemed to have been received on the next Business Day following the date upon
which it was couriered. Each Party may change its address for the purposes of this §8.3 from time
to time by giving written notice of such change to the other Party in accordance with this §8.3.

8.4 Tender. The parties agree that, if the Purchaser is required by applicable legislation to
cause the amount set out in § 2.4(c) to be paid by electronic transfer, then the Purchaser shall
make all commercially reasonable efforts to ensure that such an amount shall be transferred to and
received by the solicitors for the Vendor on or before 3:00 p.m. (Vancouver time) on the Closing
Date. If for any reason out of the control of the Purchaser (which, for greater certainty, shall
not include any event which is a default by the Purchaser under this Agreement), the Purchaser
cannot ensure that such an amount shall be received by the Vendor’s Solicitors on or before the
time and date set out above, then the Purchaser shall be entitled to pay such amount on or before
3:00 p.m. (Vancouver time) on the next Business Day following the Closing Date so long as, in
addition to such amount, the Purchaser also pays to the Vendor at the same time interest on such
amount, at a rate equal to the Prime Rate plus one percent (1%) per annum, for each day from and
including the Closing Date to but not including the day such payment is made.

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8.5 Time of Essence. Time shall be of the essence of this Agreement in all respects.

8.6 Entire Agreement. This Agreement together with all Schedules and Exhibits hereto and all
agreements and documents to be delivered pursuant hereto, constitute the entire agreement between
the Parties pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and
discussions, whether oral or written of the Parties pertaining to the subject matter hereof
including the letter of intent from the Vendor to the Purchaser dated October 12, 2005 and accepted
by the Purchaser on October 28, 2005. There are no conditions, warranties, representations or
other agreements between the Parties in connection with the subject matter of this Agreement
(whether oral or written, express or implied, statutory or otherwise) except as specifically set
out in this Agreement and such Schedules, Exhibits, agreements and documents.

8.7 Waiver and Amendment. A waiver of any default, breach or non-compliance under this Agreement
is not effective unless in writing and signed by the Party to be bound by the waiver. No waiver
shall be inferred from or implied by any failure to act or delay in acting by a Party in respect of
any default, breach or non-observance or by anything done or omitted to be done by any other Party.
The waiver by a Party of any default, breach or non-compliance under this Agreement shall not
operate as a waiver of that Party’s rights under this Agreement in respect of any continuing or
subsequent default, breach or non-observance (whether of the same or any other nature). No
amendment of this Agreement shall be effective unless it is in writing and is signed by each of the
Parties.

8.8 Severability. Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such prohibition or
unenforceability and shall be severed from the balance of this Agreement, all without affecting the
remaining provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

8.9 Further Assurances. Each Party shall promptly do, execute, deliver or cause to be done,
executed and delivered all further acts, documents and things in connection with this Agreement and
the transactions contemplated hereby that another Party may reasonably require for the purposes of
giving effect to this Agreement and the transactions contemplated hereby.

8.10 Access to Books and Records. After the Closing, the Vendor shall be entitled to access to
all of the Books and Records of the Partnership, and to make copies of all such documents, for the
purpose of responding to any taxing authorities relating to a period prior to the Closing or for
the purpose of any actual or potential litigation or other dispute involving the Vendor and the
Partnership or for any other bona fide purpose relating to the operation of the Partnership prior
to the Closing Date. The Vendor shall comply with all applicable privacy legislation in respect of
any such Books and Records.

8.11 Governing Law. This Agreement shall be governed by and construed in accordance with the laws
of the Province of British Columbia and the laws of Canada applicable in that Province and shall be
treated, in all respects, as a British Columbia contract.

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8.12 Successors and Assigns. This Agreement shall ensure to the benefit of, and be binding on, the
Parties and their respective successors and permitted assigns. The Purchaser may assign or
transfer to an Affiliate, all or any part of its rights or obligations under this Agreement without
the prior written consent of the
Vendor, provided that the Purchaser shall remain jointly and severally liable for all of the
obligations of the assignee hereunder.

8.13 Counterparts. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original and all of which taken together shall be deemed to constitute one
and the same instrument. Counterparts may be executed either in original or faxed form and the
Parties adopt any signatures received by a receiving fax machine as original signatures of the
Parties; provided, however, that a Party providing its signature in such manner shall promptly
forward to the other Party an original of the signed copy of this Agreement which was so faxed.

        IN WITNESS WHEREOF the Parties have executed this Agreement as of the day and year first above
written.

	 	 	 	 	 
	 	 	LIONS GATE ENTERTAINMENT CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Wayne Levin
	 

	 	 	 	 
	 

	 	Name:	 	Wayne Levin 
	 

	 	Title:	 	Secretary 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	LIONS GATE FILMS CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Wayne Levin
	 

	 	 	 	 
	 

	 	Name:	 	Wayne Levin 
	 

	 	Title:	 	General Counsel 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	BOSA DEVELOPMENT CORP.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorinda Birch
	 

	 	 	 	 
	 

	 	Name:
	 	Dorinda Birch
	 

	 	Title:
	 	 Secretary

34

 

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	0742102 B.C. LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Dorina Birch
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	Dorina Birch

Secretary
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]