United states securities and exchange commission



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Consolidated ” shall mean, when used to modify a financial term, test, statement, or report of a Person, the application or preparation of such term, test, statement or report (as applicable) based upon the consolidation, in accordance with GAAP, of the financial condition or operating results of such Person and its Subsidiaries.

Consolidated Subsidiaries ” shall mean, with respect to any Person at any time, all Subsidiaries of such Person which are required or permitted to be consolidated with such Person for financial reporting purposes in accordance with GAAP.

Consolidating Financial Information ” shall have the meaning given to such term in Section 5.1(a).

Contribution Agreement ” shall mean a Contribution Agreement, substantially in the form of Exhibit L , as the same may be amended, supplemented or otherwise modified, renewed or replaced from time to time.

Controlled Foreign Corporation ” shall mean a Subsidiary that is a “controlled foreign corporation” as defined in Section 957(a) of the Code or any successor provision thereto, so long as there is a reasonable expectation that such Subsidiary will have earnings and profits the U.S. taxation of which may be deferred.

Copyright Security Agreement ” shall mean a Copyright Security Agreement, substantially in the form of Exhibit B-1 that was filed in the U.S. Copyright Office, as the same may be amended, supplemented or otherwise modified, renewed or replaced from time to time by delivery of a Copyright Security Agreement Supplement or otherwise.

Copyright Security Agreement Supplement ” shall mean a Copyright Security Agreement Supplement substantially in the form of Exhibit B-2 to be filed in the U.S. Copyright


Office, as amended, supplemented or otherwise modified, renewed or replaced from time to time.

Credit Parties ” shall mean collectively, the Borrower and each of the Guarantors.

Default ” shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

Defaulting Lender ” shall mean any Lender, as determined by the Administrative Agent, that has (i) failed to fund any portion of its Loans within three (3) Business Days of the date required to be funded by it hereunder, unless determined by the Administrative Agent in its sole discretion to be the subject of a good faith dispute, (ii) notified the Administrative Agent, any Lender (subject to such Lender having given notice thereof to the Administrative Agent) or the Borrower (subject to the Borrower having given notice thereof to the Administrative Agent) in writing that it does not intend to comply with any of its funding obligations under this Credit Agreement or has made a public statement to the effect that it does not intend to comply with its funding obligations under this Credit Agreement or under other agreements in which it commits to extend credit, unless with respect to such other agreements, the Administrative Agent, in its sole discretion, determines there to be a good faith dispute, (iii) failed, within three (3) Business Days after request by the Administrative Agent, to confirm that it will comply with the terms of this Credit Agreement relating to its obligations to fund prospective Loans, (iv) otherwise failed to pay over to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within three (3) Business Days of the date when due, unless determined by the Administrative Agent in its sole discretion to be the subject of a good faith dispute, or (v) (A) become or is insolvent or has a parent company that has become or is insolvent, or (B) become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment or has a parent company that has become the subject of a bankruptcy or insolvency proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or appointment; provided that a Lender shall not become a Defaulting Lender pursuant to this clause (v) solely as a result of the acquisition or maintenance of an ownership interest in such Lender or Person controlling such Lender, or the exercise of control over such Lender or Person controlling such Lender, in each case by a Governmental Authority or instrumentality thereof.

DGA ” shall mean Directors Guild of America, Inc.

Disposition ” shall mean any sale, assignment, transfer or other disposition of any assets (whether now owned or hereafter acquired) by the Borrower or any of its Subsidiaries to any Person that is not a Credit Party, excluding (i) any sale, assignment, transfer or other disposition of any property sold or disposed of in the ordinary course of business and on ordinary business terms (including, without limitation, any sale of tax credits as permitted under Section 6.8), (ii) any Permitted Encumbrance, and (iii) any sale, license or transfer of distribution rights, including underlying rights, for a Picture in the ordinary course of business. For the avoidance of doubt, outright sales of foreign distribution rights in perpetuity for Pictures which are not subject to a Foreign Rights Loan are Dispositions hereunder.

Disqualified Capital Stock ” shall mean any Equity Interest other than any Equity Interests of the Borrower of the type currently outstanding and described in the Borrower LLC Agreement in effect as of the Closing Date, which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder or beneficial owner thereof, in whole or in part, at any time on or prior to the Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or other evidences of indebtedness or (ii) any Equity Interests referred to in (a) above, in each case at any time on or prior to the Maturity Date, (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations, (d) requires mandatory distributions or other mandatory payments, or (e) with respect to a Credit Party, other than the Borrower, a Non-Theatrical Subsidiary, a Special Purpose Producer, or a Co-Financing Venture Entity, provides the holder or beneficial owner of such Equity Interest the right to veto or consent to any matters or action by such Credit Party other than voting in proportion to, and without preference over, all Equity Interests of all classes of such Credit Party.

Distribution Agreement ” shall mean any distribution agreement or license agreement heretofore or hereafter entered into by a Credit Party, Foreign Rights Borrower, Co-Financing Venture Entity or Licensing Intermediary (or in either case a sales agent on its behalf), as licensor, with a Distributor, as licensee, with respect to the distribution, license or other exploitation of one or more Pictures in any medium, as any such agreement may be amended, supplemented or otherwise modified, renewed or replaced from time to time as permitted herein.

Distributor ” shall mean any entity which a Credit Party, Foreign Rights Borrower, Co-Financing Venture Entity or Licensing Intermediary (or, in each case, a sales agent on its behalf) engages to distribute, license or otherwise exploit any Picture in any medium.

Dollars ” and “ $ ” shall mean lawful money of the United States of America.

domestic ” shall mean in, of or relating to the United States of America, any State thereof, the District of Columbia, and its territories and possessions, and Canada, any province thereof, and its territories and possessions.

Environmental Laws ” shall mean any and all federal, state, local, provincial and foreign, civil and criminal laws, statutes, ordinances, orders, common law, codes, rules, regulations, environmental permits, judgments, decrees, injunctions, or agreements with any Governmental Authority, relating to the protection of health and the environment, worker health and safety, and/or governing the handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling, or Release of or exposure to Hazardous Materials, as now or at any time hereafter in effect, including without limitation, the Clean Water Act also known as the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq ., the Clean Air Act, 42 U.S.C. §§ 7401 et seq ., the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136 et seq ., the Surface Mining Control and Reclamation Act, 30 U.S.C. §§ 1201 et seq ., the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq ., the Superfund Amendments and Reauthorization Act of 1986, Public Law 99 499, 100

Stat. 1613, the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq ., the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq ., the Occupational Safety and Health Act as amended, 29 U.S.C. § 655 and § 657, together, in each case, with the publications promulgated thereunder and any and all analogous state, local and foreign laws.

Equity Interests ” shall mean shares of the capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in any Person or any warrants, options or other rights to acquire such interests.

ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as heretofore and hereafter amended, as codified at 29 U.S.C. § 1001 et seq.

ERISA Affiliate ” shall mean each Person (as defined in Section 3(9) of ERISA) which is treated as a single employer with any Credit Party under Section 414(b), (c), (m) or (o) of the Code.

Event of Default ” shall have the meaning given to such term in Article 7.

Excess Cash Flow ” shall mean, for any period, (x) the cash received by the Credit Parties from all sources in excess of (y) the aggregate cash disbursements for corporate purposes permitted hereunder (other than Permitted Distributions), as well as the Released Picture Expense Reserve Amount, the Unreleased Picture Expense Reserve Amount and the New Picture Expense Reserve Amount, in each case which is reserved pursuant to Section 7 of the Services Agreement; provided , that (1) Borrower shall maintain such reserve in a Credit Party account that is subject to an Account Control Agreement and (2) if any such reserved amounts are released pursuant to the Services Agreement, such reserved amounts shall be counted as cash received during the fiscal quarter in which such a determination is made. For the avoidance of doubt, (i) this amount is to be determined strictly on a cash basis (but shall include the reserved amounts set forth above), and (ii) cash paid by a foreign Distributor (whether paid to a Foreign Rights Borrower or to a Credit Party) in excess of amounts owed to the applicable Foreign Rights Agent (if any) shall be included in Excess Cash Flow.

Excluded Liens ” shall mean Liens (i) granted to SAG, DGA and WGA; (ii) unless they are the subject of UCC filings, Liens customarily granted or incurred in the ordinary course of business with regard to goods provided or services rendered by laboratories and production houses, record warehouses, common carriers, landlords, warehousemen, mechanics and suppliers of materials and equipment; provided such Liens are limited to the goods provided or to the goods relating to which services were rendered; (iii) granted to Distributors to secure distribution rights under Distribution Agreements where the amount anticipated to be received in respect of any such Distribution Agreement from and after the Closing Date is not reasonably anticipated to exceed $2,000,000; and (iv) securing the Existing Comerica Loan Facility.

Excluded Subsidiaries ” shall mean:

(a) Controlled Foreign Corporations;


(b) Immaterial Subsidiaries;

(c) Foreign Rights Borrowers and any production services company formed in respect of a Picture which is the subject of a Foreign Rights Loan;

(d) Special Purpose Producers;

(e) Non-Theatrical Subsidiaries; and

(f) Co-Financing Venture Entities and their Subsidiaries.

Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of a Credit Party hereunder, (i) income or franchise taxes imposed on (or measured by) such Person’s net income by the United States of America, or by the jurisdiction under the laws of which such Person is organized or in which its principal office is located or, in the case of any Lender, in which its applicable Lending Office is located, (ii) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which such Person is located, (iii) any withholding tax (in the case of a Foreign Lender) or backup withholding tax (in the case of any other Lender) that (x) is imposed on amounts payable to such Lender at the time such Lender becomes a party to this Credit Agreement (or designates a new Lending Office) or (y) is attributable to such Lender’s failure to comply with Section 2.11(e) or Section 2.11(f), except to the extent that such Lender (or its assignor, if any) was entitled, at the time of designation of a new Lending Office (or assignment), to receive additional amounts from a Credit Party with respect to such withholding tax pursuant to Section 2.11(a), and (iv) taxes imposed by Section 1471 through 1474 of the Code as in effect on the date of this Credit Agreement and any current or future regulations or official interpretations thereof.

Existing Credit Agreement ” shall have the meaning given to such term in the Introductory Statement hereto.

Existing Comerica Loan Facility ” shall mean that certain Ultimates Facility Credit Agreement, dated as of April 18, 2007, among the Borrower, the financial institutions party thereto, as lenders, and HSBC Bank USA, N.A., as Ultimates Facility Agent, as amended or otherwise modified from time to time through the Closing Date and, with the consent of the Administrative Agent, subsequent to the date hereof.

Facility ” shall have the meaning given to such term in the Introductory Statement.

Federal Securities Laws ” shall have the meaning given to such term in Section 10.7.

FFI ” shall mean Film Finances, Inc.

Finance Parties ” shall mean, collectively, the Credit Parties and the Excluded Subsidiaries.

First Cycle Period ” shall mean, for any Seasoned Picture, the ten year period commencing on the date of the first U.S. theatrical release of such Seasoned Picture.

Fixed Charge Coverage Ratio ” shall mean, for each applicable measurement period, the ratio of (a) the sum (without double counting) of all cash received from released Pictures and from sales agency fees, in each case of the Credit Parties, less the sum of (i) the amount of the obligations secured by minimum guarantees paid in cash, plus (ii) acquisition and production costs paid in cash, net of the proceeds of Foreign Rights Loans, subsidies and co-financings (including co-financings structured as revenue participations), plus (iii) cash distribution expenses (other than P&A expenditures), plus (iv) cash residuals and participations, plus (v) cash general and administrative expenses (as such term is ordinarily understood in the presentation of an income statement in accordance with GAAP), plus (vi) cash operational capital expenditures, plus (vii) cash development expenses (if not funded via discrete limited recourse production loans), plus (viii) tax obligations (which shall include amounts reserved for tax distributions to its members), to (b) the sum of (i) interest expense on the Facility, plus (ii) payments of the Loan required pursuant to Section 2.1(c), less the amount of any reduction to such payments (as a result of other mandatory prepayments, but not voluntary prepayments) pursuant to the penultimate sentence of Section 2.1(c); provided , that with respect to each of the first three quarters ending immediately following the Closing Date, clause (b) shall be calculated by annualizing each component thereof for each quarter ending after the Closing Date.

Foreign Lender ” shall mean any Lender that is not a United States person, within the meaning of Section 7701(a)(30) of the Code.

Foreign Rights Agent ” shall mean the administrative agent acting on behalf of the Foreign Rights Lenders under a Foreign Rights Loan.

Foreign Rights Borrower ” shall mean a special purpose Subsidiary (which may be a Co-Financing Venture Entity) created for the purpose of becoming the borrower of a Foreign Rights Loan.

Foreign Rights Lender ” shall mean the lender of a Foreign Rights Loan.

Foreign Rights Loan ” shall mean a production loan for a particular Picture that satisfies the following conditions: (i) the loan is made to a Foreign Rights Borrower which is a producer-for-hire but otherwise does not own any rights in such Picture (other than foreign distribution rights and, if such Foreign Rights Borrower will be used to obtain additional financing of the type referred to in Section 6.1(u), rights to the applicable subsidies or other soft money benefits); (ii) such Picture shall be owned by the Borrower or a Co-Financing Venture Entity and all distribution rights shall be licensed to Lions Gate Films, Inc. (as contemplated by the Services Agreement) or to Summit Distribution, LLC, other than the foreign distribution rights which may be licensed to or retained by the Foreign Rights Borrower; (iii) the loan shall be secured by the Foreign Rights Borrower’s rights in the Picture (but limited to foreign distribution rights (and, to the extent necessary to exploit such rights, a non-exclusive right of access to film elements) and, if such loan includes financing of the type referred to in Section 6.1(u), rights to the applicable subsidies or other soft money benefits), (iv) the loan may be secured by a pledge of foreign rights in the


Picture (and, to the extent necessary to exploit such rights, a non-exclusive right of access to film elements) from the Borrower and/or Summit Distribution, LLC, but the loan shall otherwise be non-recourse to any Credit Party (including the Borrower and Summit Distribution, LLC) and (v) the Foreign Rights Agent with respect to such loan shall have entered into an Interparty Agreement with the Administrative Agent (other than with respect to any such loans made prior to the Closing Date). Notwithstanding the foregoing, with respect to Foreign Rights Loan transactions entered into after the Closing Date, the Foreign Rights Borrower may also own or control domestic distribution rights in such Picture and the Foreign Rights Borrower, Borrower or Summit Distribution, LLC (as applicable) may pledge such rights to the Foreign Rights Lender, so long as such Foreign Rights Loan transaction is otherwise reasonably acceptable to the Administrative Agent (it being agreed that the Administrative Agent’s reasonable approval rights include the ability to require that, unless the payor of any minimum guaranty or similar payment to the Foreign Rights Borrower or Summit Distribution, LLC, as applicable, corresponding to the portion of the Foreign Rights Loan made in respect of the domestic rights is in default of such payment obligation, the Foreign Rights Lender may not claim against the domestic rights and it will release its lien on such domestic rights when such payment is made).

Fundamental Documents ” shall mean this Credit Agreement, the Notes, the Pledgeholder Agreements, Laboratory Access Letters (solely with respect to the Administrative Agent’s rights thereunder), the Copyright Security Agreement, the Copyright Security Agreement Supplements, Trademark Security Agreements (and any supplements thereto), the Notices of Assignment, the Instruments of Assumption and Joinder, the Account Control Agreements, each Interparty Agreement, the Contribution Agreement, each Co-Financing Intercreditor Agreement, all security documentation entered into by each Co-Financing Venture Entity and each Foreign Rights Borrower in favor of the Administrative Agent, the Co Financing Venture Interparty Agreements, each Borrowing Notice, all security documentation executed by a Licensing Intermediary in favor of the Administrative Agent in respect of a Picture, the Existing Comerica Loan Facility and all security documentation and intercreditor agreements executed in connection therewith, any fee letter and any commitment letter in respect of the Facility entered into by Lions Gate Entertainment Corp. and the Persons who are Lenders on the Closing Date, UCC financing statements and any other material ancillary documentation which is required to be or is otherwise executed by any Credit Party and delivered to the Administrative Agent in connection with this Credit Agreement or any of the documents listed above (including any amendments or modifications to any of the documents listed above).

Funding Office ” shall mean the offices of JPMorgan Chase Bank, N.A., JPMorgan Loan Services, 10 South Dearborn, 7th Floor, Chicago, Illinois 60603, Attention:  Darren Cunningham (telecopy no. (888) 292-9533) for credit to the JPMorgan Clearing Account (with a specific reference to “Summit Entertainment, LLC”).

GAAP ” shall mean generally accepted accounting principles in the United States of America in effect from time to time consistently applied (except for accounting changes in response to FASB releases, or other authoritative pronouncements).

Governmental Authorityshall mean any federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in


each case whether of the United States of America or any foreign jurisdiction.

Greenlit ” or “ Greenlight ” or “ Greenlighting ” shall mean, with respect to a Picture, that such Picture is or has been greenlit pursuant to the terms of the Borrower LLC Agreement.

Guarantors ” shall mean LGAC and any direct and indirect Subsidiaries of it and the Borrower which now exist and which may from time to time be created or acquired, but excluding the Excluded Subsidiaries.

Guaranty ” shall mean, as to any Person, any direct or indirect obligation of such Person guaranteeing or intended to guarantee any Indebtedness, Capital Lease, dividend or other monetary obligation (“ primary obligation ”) of any other Person (the “ primary obligor ”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (a) for the purchase or payment of any such primary obligation, or (b) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or (iii) to purchase property, securities or services, in each case, primarily for the purpose of assuring the performance by the primary obligor of any such primary obligation; provided , however , that the term Guaranty shall not include endorsements for collection or collections for deposit, in either case in the ordinary course of business. The amount of any Guaranty shall be deemed to be an amount equal to the lesser of (x) the stated or determinable amount of the primary obligation in respect of which such Guaranty is made (or, if the amount of such primary obligation is not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder)), or (y) the stated maximum liability under such Guaranty.




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