United states securities and exchange commission



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(b)      During production of any Picture produced by any Credit Party, such Credit Party shall promptly deliver (or cause to be delivered) the daily rushes for such Picture to the appropriate Laboratory as soon as reasonably practicable, if applicable (e.g., if dailies are being developed at a Laboratory or are not digital).

(c)      With respect to Breaking Dawn 1 , Breaking Dawn 2 and all Pictures for which principal photography commences after the Closing Date, promptly after Completion, deliver to


the Administrative Agent and the Laboratories that are signatories to Pledgeholder Agreements a revised schedule of the Physical Materials therefor on deposit with such Laboratories to the extent applicable.

SECTION 5.12      Taxes and Charges; Indebtedness in Ordinary Course of Business . Duly pay and discharge, or cause to be paid and discharged, before the same shall become delinquent (after giving effect to applicable extensions), all taxes, assessments, levies and other governmental charges imposed upon any Credit Party or its properties, sales and activities, or any part thereof, or upon the income or profits therefrom, as well as all claims for labor, materials, or supplies which if unpaid might by law become a Lien (other than a Permitted Encumbrance) upon any property of any Credit Party; provided , however , that any such tax, assessment, levy or charge need not be paid if the validity or amount thereof is being contested in good faith by appropriate proceedings and such Credit Party shall have set aside on its books reasonable reserves (the presentation of which is segregated to the extent required by GAAP) adequate with respect thereto; and provided , further , that such Credit Party will pay all such taxes, assessments, levies or other governmental charges forthwith upon the commencement of proceedings to foreclose any Lien which may have attached as security therefor or post a bond or other security therefor acceptable to the Administrative Agent. Each Credit Party will promptly pay when due, or in conformance with customary trade terms, all other indebtedness incident to its operations.

SECTION 5.13      Liens . Defend the Collateral and Pledged Collateral against any and all Liens howsoever arising (other than Permitted Encumbrances) and the first priority status of the Lien in favor of the Administrative Agent (on behalf of the Secured Parties) therein prior to all Liens other than Specified Permitted Encumbrances in the case of all Collateral other than Pledged Collateral, and prior to all Liens in the case of the Pledged Collateral, and in any event defend against any attempted foreclosure (other than a foreclosure by the Administrative Agent under any Fundamental Document).

SECTION 5.14      Further Assurances; Security Interests .

(a)      Upon the reasonable request of the Administrative Agent, duly and promptly execute and deliver, or cause to be duly executed and delivered, at the cost and expense of the Credit Parties, such further instruments as may be necessary or desirable in the reasonable judgment of the Administrative Agent to carry out the provisions and purposes of the Fundamental Documents.

(b)      Upon the reasonable request of the Administrative Agent, (i) promptly execute and deliver or cause to be executed and delivered, at the cost and expense of the Credit Parties, such further instruments as may be necessary or desirable in the reasonable judgment of the Administrative Agent, to provide the Administrative Agent (for the benefit of the Secured Parties) a perfected Lien in the Collateral and the Pledged Collateral (with the priority contemplated by Section 3.18), and any and all documents (including, without limitation, the execution, amendment or supplementation of any financing statement and continuation statement or other statement) for filing under the provisions of the UCC and the rules and regulations thereunder, or any other Applicable Law, and (ii) perform or cause to be performed such other acts which are reasonably necessary or advisable, from time to time, in order to grant and maintain in favor of the Administrative Agent (for the benefit of the Secured Parties) the security interest in the Collateral and the Pledged

Collateral (with the priority contemplated by Section 3.18) contemplated under the Fundamental Documents.

(c)      Promptly undertake to deliver or cause to be delivered to the Administrative Agent from time to time such other documentation, consents, authorizations and approvals in form and substance reasonably satisfactory to the Administrative Agent, as the Administrative Agent shall deem reasonably necessary or advisable to perfect or maintain the Liens of the Administrative Agent (for the benefit of the Secured Parties).

SECTION 5.15      ERISA Compliance and Reports . Furnish to the Administrative Agent (a) as soon as possible, and in any event within thirty (30) days after any executive officer of a Credit Party has knowledge that (i) any Reportable Event with respect to any Plan has occurred, a statement of an executive officer of the Credit Party, setting forth on behalf of such Credit Party details as to such Reportable Event and the action which it proposes to take with respect thereto, together with a copy of the notice, if any, required to be filed of such Reportable Event given to the PBGC, or (ii) a failure to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred with respect to a Plan or an application has been made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard or an extension of any amortization period under Section 412 of the Code with respect to a Plan, a Plan subject to Title IV of ERISA or Multiemployer Plan has been or is proposed to be terminated, reorganized, partitioned or declared insolvent under Title IV of ERISA, proceedings have been instituted to terminate a Plan subject to Title IV of ERISA or Multiemployer Plan, a proceeding has been instituted pursuant to Section 515 of ERISA to collect a delinquent contribution to a Multiemployer Plan, or any such Credit Party or ERISA Affiliate has incurred any material liability (including any contingent or secondary liability) to or on account of the termination of or withdrawal from a Plan or Multiemployer Plan under Sections 4062, 4063, 4201 or 4204 of ERISA, a statement of an executive officer of the Credit Party, setting forth details as to such event and the action the applicable Credit Party proposes to take with respect thereto, (b) promptly upon reasonable request of the Administrative Agent, copies of each annual and other report with respect to each Plan subject to Title IV of ERISA and (c) promptly after receipt thereof, a copy of any notice any Credit Party or ERISA Affiliate may receive from the PBGC relating to the PBGC’s intention to terminate any Plan or to appoint a trustee to administer any Plan.

SECTION 5.16      Environmental Laws .

(a)      Promptly notify the Administrative Agent upon an Authorized Officer of any Credit Party becoming aware of any violation or potential violation or non compliance with, or liability or potential liability under, any Environmental Laws which, when taken together with all other pending violations could reasonably be expected to have a Material Adverse Effect, and promptly furnish to the Administrative Agent all notices of any nature which any Credit Party may receive from any Governmental Authority or other Person with respect to any violation or potential violation or non compliance with, or liability or potential liability under any Environmental Laws which, in any case or when taken together with all such other notices, could reasonably be expected to have a Material Adverse Effect.

(b)      Comply with and use reasonable efforts to ensure compliance by all tenants,

subtenants and other Persons under any Credit Party’s control with all Environmental Laws, and obtain and comply in all respects with and maintain and use best efforts to ensure that all tenants, subtenants and other Persons under any Credit Party’s control obtain and comply in all respects with and maintain any and all licenses, approvals, registrations or permits required by Environmental Laws, except in each case where failure to do so could not have a Material Adverse Effect.

(c)      Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions required under all Environmental Laws and promptly comply in all material respects with all lawful orders and directives of all Governmental Authorities, except where failure to do so could not have a Material Adverse Effect. Any order or directive whose lawfulness is being contested in good faith by appropriate proceedings shall be considered a lawful order or directive when such proceedings, including any judicial review of such proceedings, have been finally concluded by the issuance of a final non appealable order; provided , however , that the appropriate Credit Party shall have set aside on its books reasonable reserves (the presentation of which is segregated to the extent required by GAAP) adequate with respect thereto if reserves shall be deemed necessary.

(d)      Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and their respective employees, agents, officers and directors, from and against any claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses of whatever kind or nature, known or unknown, contingent or otherwise, arising out of, or in any way related to: (i) any act or omission of any Credit Party arising under or related to Environmental Laws or Hazardous Materials, (ii) the violation of or non compliance by any Credit Party with any Environmental Laws, (iii) the presence, Release or threatened Release, of any Hazardous Materials or exposure of any Person to any Hazardous Materials relating in any manner to any Credit Party or any property currently or formerly owned, operated, occupied or leased by any Credit Party, (iv) any breach of any representation, or violation of any covenant, made hereunder relating to Environmental Laws or Hazardous Materials, or (v) any orders, requirements or demands of Governmental Authorities or any other Persons related thereto, including, without limitation, reasonable outside attorney and consultant fees, investigation and laboratory fees, court costs and litigation expenses, but excluding therefrom all claims, demands, penalties, fines, liabilities, settlements, damages, costs and expenses arising out of or resulting from (x) the gross negligence or willful acts or willful misconduct of any indemnified party, to the extent so found in a final judgment of a court of competent jurisdiction or (y) acts or omissions of any indemnified party in possession or control of any such assets.

SECTION 5.17      Use of Proceeds . Use the proceeds of the Facility on the Closing Date to repay loans, interest and fees owing under the Existing Credit Agreement or to pay transaction costs and expenses in connection with the Acquisition, the Initial 2012 Credit Agreement and this Credit Agreement.

SECTION 5.18      Distribution Agreements; Letters of Credit.

(a)      Notify the Administrative Agent promptly following the execution of (and provide true and complete copies to Administrative Agent and the Lenders (provided, the Borrower may require that the Lenders inspect such documents at the Borrower’s offices) promptly following any request) (i) each material new multi-picture domestic Distribution Agreement and multi-picture

foreign Distribution Agreement, and (ii) all material amendments and modifications to any such Distribution Agreement.

(b)      From time to time, furnish to the Administrative Agent such information and reports regarding the Distribution Agreements as the Administrative Agent (or any Lender, acting through the Administrative Agent) may reasonably request.

(c)      Promptly upon receipt thereof, deliver to the Administrative Agent to be held as part of the Collateral, the original of all letters of credit (including any amendments thereto) which are issued for the benefit of a Credit Party and have been received by a Credit Party (whether pursuant to a Distribution Agreement or otherwise) after the Closing Date, other than letters of credit for which a Foreign Rights Borrower or Co-Financing Venture Entity is the beneficiary and which are pledged to support Foreign Rights Loans or co-financing obligations; provided , that so long as no Event of Default shall have occurred and be continuing, the Administrative Agent shall, upon written request of such Credit Party, present such letter of credit at the time of a drawing on such Credit Party’s behalf.

(d)      Take all action on its part to be performed necessary to effect timely payments under all letters of credit, including, without limitation, timely preparation, acquisition and presentation of all documents, drafts or other instruments required to effect payment thereunder.

SECTION 5.19      Location of Production Accounts . Promptly inform the Administrative Agent of the location of the Production Account for each Picture produced by a Credit Party other than Production Accounts set forth on Schedule 5.19 attached hereto with respect to Pictures that have commenced production prior to the Closing Date.

SECTION 5.20      Subsidiaries .

(a)      Promptly following the creation or acquisition of a Subsidiary (other than, in each case, an Excluded Subsidiary) of a Credit Party (but in any event prior to commencement of operations of such Subsidiary), the Credit Parties shall deliver or cause such new Subsidiary to deliver to the Administrative Agent: (i) an Instrument of Assumption and Joinder duly executed by such Subsidiary, (ii) an appropriate UCC 1 financing statement naming such Subsidiary as debtor and the Administrative Agent as secured party, (iii) to the extent that 100% of the Equity Interests of such Subsidiary have not previously been pledged to the Administrative Agent (for the benefit of the Secured Parties) the certificates (if any) representing 100% of the Equity Interests of such Subsidiary owned by a Credit Party together with undated stock powers executed in blank (or any comparable documents for non corporate entities to the extent certificated), and (iv) organizational documents of such Subsidiary of the type described in Section 4.1(a); provided that each Foreign Rights Borrower and Special Purpose Producer that is wholly owned by a Credit Party shall either merge into a Credit Party or comply with this Section 5.20 promptly following the repayment of the applicable Foreign Rights Loan (unless such Foreign Rights Borrower is also a Co-Financing Venture Entity or is not wholly owned by a Credit Party) or production loan to the Special Purpose Producer (as applicable) if wholly owned by a Credit Party.

(b)      Promptly following the creation or acquisition of a Co-Financing Venture

Entity or another Excluded Subsidiary (but in any event prior to any Credit Party making any capital contribution or other Investment therein or loan thereto), the Credit Parties shall deliver or cause such Person to deliver to the Administrative Agent (unless expressly excluded from the definition of “Pledged Securities”): (i) to the extent that the Equity Interests of such Person owned by a Credit Party have not previously been pledged to the Administrative Agent (for the benefit of the Secured Parties), an executed pledge agreement, and the certificates (if any) representing the Equity Interests of such Person owned by a Credit Party together with undated stock powers executed in blank (or any comparable documents for non corporate entities to the extent certificated); and (ii) all documents in respect of such Person of the type described in Section 4.1(a) hereof that are applicable to such Person.

(c)      Promptly following the creation or acquisition of a Co-Financing Venture Entity or Foreign Rights Borrower (but in any event prior to any Credit Party making any capital contribution or other Investment therein or loan thereto), the Credit Parties shall deliver or cause such Person to deliver to the Administrative Agent: (i) in the case of a Co-Financing Venture Entity, an accommodation security agreement in accordance with paragraph 9 of Schedule 3 ; and (ii) in the case of a Foreign Rights Borrower, an Interparty Agreement with the applicable Foreign Rights Lender.

(d)      Following the Closing Date, to the extent that the Administrative Agent has determined that the cost to a Credit Party is not disproportionate to the benefit to be realized by the Secured Parties, all non-U.S. Credit Parties (and the Credit Parties which hold Equity Interests therein) shall comply with any reasonable request of the Administrative Agent to provide local law security grants and stock pledges in order to provide perfected, first priority (subject to Specified Permitted Encumbrances) security interests to the Administrative Agent for the benefit of the Secured Parties, in form and substance reasonably satisfactory to the Administrative Agent; provided , that any such security interest in copyrights, trademarks and/or service marks registered outside of the United States shall be subject to the terms of Section 5.7(c) hereof.

SECTION 5.21      Picture Documents . (a) With respect to Pictures being produced by a Credit Party, upon commencement of principal photography for such Picture and (b) with respect to Pictures acquired by a Credit Party, upon the making of any mandatory delivery payment with respect to such Picture, in each case, provide the Administrative Agent with the following:

(i)      if requested by the Administrative Agent, a list of all agreements executed in connection with such Picture that provide for deferments or participations, along with copies of such agreements as the Administrative Agent may reasonably request;

(ii)      certificates or binders of insurance for such Picture as required by Section 5.5 together with an endorsement naming the Administrative Agent as an “additional insured” or “loss payee,” as applicable;

(iii)      a Copyright Security Agreement Supplement for the screenplay for such Picture (and, if applicable, for the Completed Picture promptly following its U.S. commercial release);


(iv)      Pledgeholder Agreements or Laboratory Access Letters for such Picture, as applicable;

(v)      if the subject Picture is a Produced Picture, an Account Control Agreement for each Production Account for such Picture (to the extent not waived by the Administrative Agent in its sole discretion pursuant to Section 12.1(b)(xi));

(vi)      in the case of a Co-Financing Venture Entity, an accommodation security agreement in accordance with paragraph 9 of Schedule 3 ;

(vii)      in the case of a Foreign Rights Borrower, an Interparty Agreement with the applicable Foreign Rights Lender and a copy of the loan and security agreement among the Foreign Rights Agent, Foreign Rights Borrower, Borrower or a subsidiary of the Borrower if it owns or controls the foreign distribution rights;

(viii)      fully executed copies of intercreditor agreements with guilds to the extent required by Section 6.24;

(ix)      an Approved Completion Bond to the extent required by Section 6.24 (together with the Bonded Budget);

(x)      if requested by the Administrative Agent, copies of all agreements, instruments of transfer or other instruments (including, without limitation, the rights agreements) in each case necessary to establish, to the reasonable satisfaction of the Administrative Agent, the applicable Credit Party’s ownership of sufficient rights in such Picture to enable such Credit Party to produce and/or exploit such Picture and to grant to the Administrative Agent (for the benefit of the Secured Parties) the security interests in such Picture contemplated under the Fundamental Documents (the “Chain of Title”); provided , that an agreement or instrument which is both immaterial and not available to the Credit Parties need not be delivered;

(xi)      if such Picture is a Co-Financed Picture, fully executed copies of the applicable Co-Financing Agreement and any other applicable documentation reasonably requested by the Administrative Agent to evidence compliance with Section 6.23;

(xii)      if such Picture is being produced pursuant to an Approved Co-Financing Venture Transaction,) fully executed copies of the Co-Financing Venture Agreement and any other applicable documentation reasonably requested and approved by the Administrative Agent (such approval not to be unreasonably withheld) to evidence satisfaction of the terms and conditions for qualification as an “Approved Co-Financing Venture Transaction” hereunder and (ii) if requested by the Administrative Agent, received a fully executed Co-Financing Venture Interparty Agreement;

(xiii)      a fully executed Interparty Agreement with respect to such Picture, if applicable; and

(xiv)      copies of Notices of Assignment, duly executed by the applicable Credit Party, with respect to each receivable attributable to such Picture and owing to a Credit Party and


countersigned by the applicable account debtor (unless otherwise agreed by the Administrative Agent).

SECTION 5.22      Facility Rating . Use commercially reasonable efforts to maintain a monitored public rating of the Facility and of the Borrower, in each case, by S&P and Moody’s.

SECTION 5.23      Residual Calculations . (a) Continue to calculate and pay all residuals owing to SAG, WGA and DGA under the terms of the intercreditor agreements entered into by and among, inter alia , the Borrower and/or its Affiliates and SAG, WGA and DGA, respectively, prior to the Closing Date and (b) send the Administrative Agent upon reasonable request the details of any such calculations.

SECTION 5.24      Affirmative Covenants with respect to Excluded Subsidiaries and Co-Financing Joint Venture Entities . Cause each of the Finance Parties to comply with the covenants contained in the following Sections, and each reference therein to a Credit Party shall be deemed to also include each Finance Party (unless otherwise specified below, and other than Co-Financing Venture Entities and their Subsidiaries which are neither controlled by a Credit Party nor for which production or exploitation of the related Picture is controlled by a Credit Party (in each case, as opposed to the applicable Approved Co-Financing Venture Counterparty)): Sections 5.1(e), 5.1(n), 5.2, 5.3, 5.4, 5.5 (solely with respect to maintenance of insurance and, in the case of Co-Financing Joint Venture Entities, clause (e) thereof), 5.7 (solely by Co-Financing Joint Venture Entities), 5.8, 5.10 (solely by Co-Financing Joint Venture Entities), 5.11 (solely by Co-Financing Joint Venture Entities), 5.15, 5.16, and 5.18 (other than, with respect to 5.18, by Non-Theatrical Subsidiaries).

SECTION 5.25      Third Party Agreements . With respect to any third party agreement for which a Refinancing Notice is sent pursuant to Section 4.1(aa), reasonably promptly following the request of the Administrative Agent, the Credit Parties shall deliver a fully-executed replacement agreement which expressly refers to this Credit Agreement rather than the Existing Credit Agreement and is otherwise substantially identical to such third party agreement.

SECTION 5.26      Post-Closing Requirements .

(a)      As soon as reasonably practical, but in no event later than 30 days following the Closing Date (or such longer period as may be agreed by the Administrative Agent in its sole discretion), (a) deliver to the Administrative Agent (i) an executed Instrument of Assumption and Joinder, and the organizational documents and resolutions and certificates required by Section 4.1(a) hereof, from Summit Entertainment Limited, (ii) confirmation that the Borrower has notified Hiscox Insurance Company Inc. (the “ E&O Insurer ”) of the Acquisition and that the Borrower has either confirmed with the E&O Insurer that Policy No. US UUA 2614862.11 (the “ E&O Policy ”) remains in full force and effect following the Acquisition (and Borrower has taken any additional action required by the E&O Insurer in connection therewith) or, if the E&O Insurer has disaffirmed Borrower’s coverage under the E&O Policy, Borrower shall have procured a replacement policy providing (at a minimum) substantially similar coverage, (iii) evidence from Companies House, in form and substance satisfactory to the Administrative Agent, that Proscenium Pictures Ltd. has filed its 2010 annual report and is in good standing as a corporation organized under the laws of England and Wales, and (iv) the certificated membership interests of the Borrower owned by LGAC, together




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