NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
26. Related Party Transactions Sobini Films In November 2011, the Company entered into a distribution agreement with Sobini Films pursuant to which the Company acquired certain North American distribution rights to the film Sexy Evil Genius . Scott Paterson, a director of the Company, is an investor in Sexy Evil Genius . During the year ended March 31, 2012, the Company did not make any payments to Sobini Films under this agreement.
Thunderbird Films In March 2012, the Company announced that it had entered into a partnership with Thunderbird Films, a television production, distribution and financing company, to produce programming for broadcast and cable networks. Frank Giustra, a director and former founder of the Company, owns an interest in Thunderbird Films. The venture, Sea To Sky Entertainment (“Sea to Sky”), will generate a broad range of scripted programming for mainstream commercial audiences in the U.S. and Canada. Sea To Sky, which will be jointly managed, will share production and distribution costs for series picked up by television networks, allowing co-funding of network television programming while mitigating risk. During the year ended March 31, 2012, the Company did not make any payments to Thunderbird Films under this arrangement.
Icon International In April 2012, the Company entered into a three year vendor subscription agreement (the “Vendor Agreement”) with Icon International, Inc. (“Icon”), a company which directly reports to Omnicom Group, Inc. Daryl Simm, a director of the Company, is the Chairman and Chief Executive Officer of Omnicom Media Group, a division of Omnicom Group, Inc. Under the Vendor Agreement, the Company agreed to purchase media advertising of approximately $7.6 million per year through Icon, and Icon agreed to reimburse the Company for certain operating expenses of approximately $1.3 million per year. The actual amount of media advertising to be purchased is determined using a formula based upon values assigned to various types of advertising, as set forth in the Vendor Agreement. For accounting purposes, the operating expenses incurred by the Company will continue to be expensed in full and the reimbursements from Icon of such expenses will be treated as a discount on media advertising and will be reflected as a reduction of advertising expense as the media advertising costs are incurred by the Company. The Vendor Agreement may be terminated by the Company effective as of any Vendor Agreement year end with six months' notice.
During the year ended March 31, 2012 , under a previous vendor agreement with Icon (which expired in the fourth quarter of fiscal 2012), Icon paid the Company $1.0 million ( 2011 — $1.3 million , 2010 — $1.2 million ). During the year ended March 31, 2012 , the Company incurred $8.6 million in media advertising expenses with Icon under the previous vendor Agreement ( 2011 — $7.8 million , 2010 — $7.2 million ).
Other Transactions with Equity Method Investees
FEARnet. During the year ended March 31, 2012 , the Company recognized $1.9 million in revenue pursuant to the five-year license agreement with FEARnet ( 2011 — $3.2 million , 2010 — $2.2 million ), and held accounts receivable due from FEARnet pursuant to the agreement of $0.5 million ( 2011 — $0.3 million ).
Roadside. During the year ended March 31, 2012 , the Company recognized $6.4 million in revenue from Roadside in connection with the release of certain theatrical titles ( 2011 — nil , 2010 — nil ), and held accounts receivable due from Roadside of $4.1 million ( 2011 — nil ). During the year ended March 31, 2012 , the Company recognized $12.1 million in distribution and marketing expenses paid to Roadside in connection with the release of certain theatrical titles ( 2011 — $0.5 million , 2010 — less than $0.1 million ). During the year ended March 31, 2012 , the Company made $5.7 million in participation payments to Roadside in connection with the distribution of certain theatrical titles ( 2011 — $10.4 million , 2010 — $3.1 million ).
Break Media. During the year ended March 31, 2012 , the Company recognized $1.9 million in interest income associated with a $15.7 million note receivable from Break Media, see Note 8 ( 2011 — $1.6 million , 2010 — $0.6 million ).
EPIX. During the year ended March 31, 2012 , the Company recognized $70.3 million of revenue from EPIX in connection with the licensing of certain theatrical releases and other films and television programs, see Note 7 ( 2011 — $89.4 million , 2010 — $38.6 million ). As of March 31, 2012 , the Company held $24.1 million of accounts receivables from EPIX ( 2011 — $25.9 million ). In addition, as of March 31, 2012 , the Company had $6.4 million in deferred revenue from EPIX ( 2011 — $2.4 million ).
Table of Contents
LIONS GATE ENTERTAINMENT CORP.
NOTES TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
TV Guide Network. During the year ended March 31, 2012 , the Company recognized $2.9 million of revenue ( 2011 — $14.9 million , 2010 — $0.3 million ) from TV Guide Network in connection with the licensing of certain films and/or television programs, see Note 7. Additionally, the Company recognized $15.1 million of income for the accretion of the dividend and discount of the mandatorily redeemable preferred stock units as equity interest income ( 2011 — $14.1 million , 2010 — $10.5 million ). Also, during the year ended March 31, 2011 , the Company received a pay-out of accreted interest on the mandatorily redeemable preferred stock units of $10.2 million . As of March 31, 2012 , the Company held $13.5 million of accounts receivables from TV Guide Network ( 2011 — $12.7 million ).
Exhibit 10.7 Director Compensation Summary In April 2012, the Compensation Committee of the Board of Directors (the “Board”) engaged Pearl Meyer & Partners (“PM&P”) to review the compensation provided to members of the Company's Board who are not employees of Lionsgate (the “Non-Employee Directors”). In conducting its assessment, PM&P reviewed the following: (i) the components of the Company's then-current Non-Employee Director compensation program (which included an annual Non-Employee Director retainer, per meeting Board fees, committee compensation and past grants of equity awards); (ii) the Company's non-executive chairman compensation relative to the Company's Non-Employee director compensation; (iii) the general structure of the Board (including past and projected time commitments for service on the Board); and (iv) Non-Employee Director compensation among two comparator groups consisting of (a) a group of general industry companies with revenues ranging from $750 million to $3 billion and (b) a select group of eight companies within the broader media and leisure product industries. PM&P's assessment found the Company's then-current non-employee director compensation levels to be in the bottom quartile of the comparators.
Based on PM&P's assessment and as recommended and approved by the Compensation Committee and the Board at meetings held in May 2012, effective May 24, 2012, the Non-Employee Directors are entitled to receive an annual retainer of $50,000, an equivalent of $50,000 in the form of restricted share units to be granted annually on the date of the Company's Annual General Meeting of Shareholders and a fee of $1,400 for each meeting of a committee on which a Non-Employee Director is a member and attends, in person via teleconference or via videoconference. The restricted share units vest in annual installments over three years following the date of grant and are paid upon vesting in an equivalent number of Lionsgate common shares (the “Shares”). Additionally, the non-employee Chairman of the Board is entitled to receive an additional annual retainer of $52,000, the Chairman of the Audit Committee of the Board is entitled to receive an additional annual retainer of $15,000, and the Chairman of the Compensation Committee of the Board, the Chairman of the Nominating and Corporate Governance Committee of the Board, and the Chairman of the Strategic Advisory Committee of the Board are each entitled to receive an additional annual retainer of $10,000. Resulting fiscal year 2013 compensation levels are projected to be at the 30 th percentile of comparators,
The retainers and fees for the Non-Employee Directors are paid, at the director's election, either 50% in cash and 50% in the form of Lionsgate Shares or 100% in the form of Shares. Retainers are paid in two installments each year, with the number of Shares to be delivered in payment of any retainer to be determined by dividing the dollar amount of the retainer to be paid in the form of Shares by the average closing price of Shares for the previous five business days prior to payment.
Lionsgate requires that Non-Employee Directors maintain an ownership position in Lionsgate of at least $150,000 of Shares; provided, however, that new directors shall have three years from their initial election to the Board to reach this ownership threshold. Pursuant to Lionsgate's policies, directors are also reimbursed for reasonable expenses incurred in the performance of their duties.
Exhibit 10.87 Portions of this document have been redacted pursuant to a Request for Confidential Treatment filed with the
Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. Redacted portions are indicated with the notation “[**]”. EXECUTION VERSION
AMENDED AND RESTATED CREDIT, SECURITY,
GUARANTY AND PLEDGE AGREEMENT
Dated as of February 21, 2012
SUMMIT ENTERTAINMENT, LLC
THE GUARANTORS REFERRED TO HEREIN ,
THE LENDERS REFERRED TO HEREIN ,
JPMORGAN CHASE BANK, N.A.
as Administrative Agent
J.P. MORGAN SECURITIES LLC,
JEFFERIES FINANCE LLC
as Joint Syndication Agents, Co-Lead Arrangers and Joint Bookrunners