United states securities and exchange commission



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(ii)    casualty insurance proceeds actually received by a Credit Party, provided , that such proceeds shall be excluded from Net Available Proceeds to the extent required to pay Approved Co-Financiers or Approved Completion Guarantors as required pursuant to existing agreements; and

(iii)    cash proceeds actually received by a Credit Party from the incurrence, issuance or sale by the Borrower or any Subsidiary of any Indebtedness, net of all taxes, fees, commissions, costs and expenses incurred in connection with such issuance or sale; provided that the proceeds of Foreign Rights Loans, loans pertaining to tax credits or other soft money benefits as permitted under Section 6.8, production loans to Special Purpose Producers and other Indebtedness incurred, issued or sold by a Subsidiary that is not a Guarantor and which is non-recourse to the Credit Parties, in each case shall be excluded from Net Available Proceeds.

Net Cash Payments ” shall mean, with respect to any Disposition, the aggregate amount of all cash payments actually or constructively received by a Credit Party from a third party directly or indirectly in connection with such Disposition; provided that (a) Net Cash Payments shall be net of (i) the amount of any legal, title and recording tax expenses, commissions and other fees and expenses incurred or paid by the Borrower or any of its Subsidiaries to unaffiliated parties (or to Affiliates of Credit Parties for payment to unaffiliated third parties) in connection with such

Disposition, (ii) the amount of any closure, removal, relocation, reorganization and/or restructuring costs incurred by the Borrower or any of its Subsidiaries preparatory to or in consequence of such Disposition, (iii) any Federal, state, local and non-United States income or other taxes estimated to be payable by the Borrower (including its members) or any of its Subsidiaries as a result of such Disposition and (iv) all reasonable provisions made in relation to potential indemnity, warranty, post-closing adjustment and similar claims in connection with such Disposition ( provided , that once the liabilities for which such provisions are made terminate or are released, any remaining portion of such provisions shall be treated as included in the Net Cash Payments), and (b) Net Cash Payments shall be net of any repayments by the Borrower or any of its Subsidiaries of Indebtedness to the extent that (i) such Indebtedness is secured by a Lien on the property that is the subject of such Disposition and (ii) the transferee of (or holder of a Lien on) such property requires that such Indebtedness be repaid as a condition to the purchase of such property, and shall be net of any amounts contractually required to be paid to any unaffiliated third party as a result of such Disposition.

New Picture Expense Reserve Amount ” shall have the meaning set forth in the Services Agreement.

Non-Theatrical Subsidiary ” shall mean a Subsidiary created or acquired after the date hereof which is not capitalized with Loan proceeds, Collateral or Collateral proceeds (except as permitted in Section 6.4) and which is not used to produce or acquire Pictures (or rights therein or related thereto) intended for theatrical distribution.

Note ” or “ Notes ” shall have the meaning given to such term in Section 2.2(a).

Notice of Assignment ” shall mean a Notice of Assignment and Irrevocable Instruction which shall include language substantially in the form of Exhibit I which may be incorporated into an Interparty Agreement) or in such other form as shall be reasonably acceptable to the Administrative Agent; provided that any such Notice of Assignment may not be amended in a manner which adversely affects the rights of (or the benefit to) the Administrative Agent thereunder without the prior written consent of the Administrative Agent.

Obligations ” shall mean (i) the obligation of the Borrower to make due and punctual payment of principal and interest on the Loans, costs and attorneys’ fees and all other monetary obligations of the Borrower to the Administrative Agent, the Arrangers or any Lender under and to the extent required by this Credit Agreement, the Notes, any other Fundamental Document or any fee letter in respect of the Facility, (ii) all amounts payable by any Credit Party to JPMorgan Chase Bank, N.A., any Bookrunner, any Lender or any of their respective Affiliates under any Swap Agreement permitted under Section 6.18; provided , that the Administrative Agent shall have received written notice thereof from the applicable Lender (other than the Administrative Agent) or the applicable Bookrunner within ten (10) Business Days after execution of such Swap Agreement, (iii) amounts payable to a Lender or any of its Affiliates in connection with any bank account maintained by the Borrower or any other Credit Party at such Lender and its Affiliates or any other treasury, depositary, purchasing card, cash management or banking services provided to the Borrower or any other Credit Party by such Lender and its Affiliates, including any automated clearing house transfers of funds or similar services and (iv) any other monetary obligations of the

Borrower or a Guarantor to the Administrative Agent or any Lender (and their respective related indemnified parties) under and to the extent required by the Fundamental Documents.

Original Closing Date ” shall have the meaning given to such term in the Introductory Statement hereof.

Other Taxes ” shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Credit Agreement except for any amounts imposed with respect to an assignment.

Overhead ” shall mean all cash selling, general and administrative expenses determined in accordance with GAAP consistently applied. For the avoidance of doubt, neither Sales Fees nor customary distribution expenses incurred for a particular motion picture shall constitute Overhead hereunder.

P&A ” shall mean theatrical print and advertising expenses with respect to a Picture.

PBGC ” shall mean the Pension Benefit Guaranty Corporation or any successor thereto.

Percentage ” shall mean with respect to any Lender, the percentage which the aggregate principal amount of such Lender’s Loans then outstanding constitutes of the aggregate principal amount of the Loans then outstanding; provided , that when a Defaulting Lender shall exist, the term “Percentage” shall mean the percentage of the total outstanding Loans (disregarding such Defaulting Lender’s Loans) represented by such Lender’s Loans, and such Defaulting Lender’s Percentage shall be 0%.

Performance Test ” shall mean, on any date of determination after the fifteenth Picture released theatrically in the United States by a Credit Party after the Closing Date becomes a Seasoned Picture, the ratio (expressed as a percentage) of (i) the aggregate amount of proceeds (net of all deductions for amounts payable to, or retainable by, third parties) received and projected to be received by the Credit Parties from the most recent fifteen (15) consecutive Seasoned Pictures released after the Closing Date but prior to the applicable testing date, calculated on the basis of their Ultimates, to (ii) the aggregate amount of the Credit Parties’ investment in the Negative Cost (net of all proceeds of Foreign Rights Loans, minimum guarantees (to the extent not payable to a third party), subsidies and Approved Co-Financings from any such Picture received prior to the date that such Picture became a Seasoned Picture) and P&A expenses for such Pictures; provided that (a) the Twilight Franchise shall be excluded from such calculation and (b) the amount of any minimum guaranty, subsidy, co-financing amount or similar payment shall not count toward proceeds received in clause (i) above, except with respect to Pictures for which the Credit Parties’ share of Negative Cost has already been reduced to zero by such payments, in which case any such additional payments with respect to such Pictures may count towards proceeds received in clause (i) above. If the percentage calculated above is equal to at least 75%, then the Performance Test shall be satisfied on such date.

Permitted Distributions ” shall mean distributions or payments (in addition to, for the avoidance of doubt, Permitted Tax Distributions) (i) made by the Borrower to the Sellers on the Closing Date (the “ Closing Date Permitted Distribution ”) and (ii) to the holders of Equity Interests of Borrower (other than LGAC) or LGAC, of up to $25,000,000 in the aggregate in any calendar year; provided , that no such distribution or payment may be made pursuant to the foregoing clause (ii) unless each of the following conditions is satisfied:

(a)      no Default or Event of Default shall have occurred or would result therefrom;

(b)      Breaking Dawn 2 shall have been released in the home entertainment market;

(c)      at least 75% of the Loan balance shall have been amortized following the Closing Date by payments made pursuant to Section 2.1(c) and/or prepayments made pursuant to Section 2.7(e), (f) or (g);

(d)      each such distribution or payment shall be funded solely from the portion of Adjusted Excess Cash Flow and Breaking Dawn Cash Flow which is not required to prepay the Loans pursuant to Section 2.7(e) or (f);

(e)      the Asset Coverage Ratio, as set forth in an Asset Coverage Certificate, calculated on a pro forma basis after giving effect to such distribution or payment, shall be at least 1.5 to 1.0; and

(f)      the Borrower has submitted to the Administrative Agent a certificate executed by an Authorized Officer of the Borrower, dated the date of the proposed distribution or payment, certifying that the foregoing requirements have been satisfied.

Permitted Encumbrances ” shall mean Liens permitted under Section 6.2.

Permitted Tax Distributions ” shall mean distributions from the Borrower to the holder of its Equity Interests (other than LGAC) and from LGAC to the holders of its Equity Interests equal to the sum in the aggregate of:

(A)    the lesser of (i) the U.S. federal income tax liability of the Borrower and its Subsidiaries that would be owing if Borrower was a corporation and the parent of a U.S. federal consolidated return group (net of any such taxes owing on account of taxable income of the Excluded Subsidiaries, Co-Financing Joint Venture Entities and their Subsidiaries, unless such tax amount has been distributed to a Credit Party and such tax is not a liability of such Excluded Subsidiary, Co-Financing Joint Venture Entity and any of their Subsidiaries) and (ii) the actual consolidated U.S. federal consolidated return income tax liability of Lions Gate Entertainment Inc. or the applicable most senior U.S. tax paying entity that is a subsidiary of Lions Gate Entertainment Corp. (with the excess of (i) over (ii), if any, for any taxable year (or portion thereof) commencing on or after the Closing Date referred to as the “ Carryover U.S. Federal Amount ” for such taxable year, and the excess of (ii) over (i), if any, for any taxable year (or portion thereof) commencing on or after the Closing Date referred to as the “ Excess U.S. Federal Amount ” for such taxable year);

(B)    the lesser of (i) the California franchise tax liability of the Borrower and its Subsidiaries that would be owing if Borrower was a corporation and the parent of a California unitary group (net of any such taxes owing on account of taxable income of the Excluded Subsidiaries, Co-Financing Joint Venture Entities and their Subsidiaries, unless such tax amount has been distributed to a Credit Party and such tax is not a liability of such Excluded Subsidiary, Co-Financing Joint Venture Entity and any of their Subsidiaries) and (ii) the actual California unitary tax liability of Lions Gate Entertainment Inc. or the applicable most senior U.S. tax paying entity that is a subsidiary of Lions Gate Entertainment Corp. (with the excess of (i) over (ii), if any, for any taxable year (or portion thereof) commencing on or after the Closing Date referred to as the “ Carryover California Amount ” for such taxable year, and the excess of (ii) over (i), if any, for any taxable year (or portion thereof) commencing on or after the Closing Date referred to as the “ Excess California Amount ” for such taxable year);

(C)    if with respect to a taxable year there is an Excess U.S. Federal Amount, and in one or more prior taxable years there was a Carryover U.S. Federal Amount, an amount equal to the lesser of such Excess U.S. Federal Amount or the cumulative Carryover U.S. Federal amount for all prior years that has not been paid pursuant to this clause (C) for any prior year;

(D)    if with respect to a taxable year there is an Excess California Amount, and in one or more prior taxable years there was a Carryover California Amount, an amount equal to the lesser of such Excess California Amount or the cumulative Carryover California amount for all prior years that has not been paid pursuant to this clause (D) for any prior year; and

(E)    income and franchise taxes imposed by any jurisdiction other than the United States and California with respect to the income of the Borrower and its Subsidiaries (net of any such taxes owing on account of taxable income of the Excluded Subsidiaries, Co-Financing Joint Venture Entities and their Subsidiaries, unless such tax amount is a liability of a Credit Party and not a liability of such Excluded Subsidiary, Co-Financing Joint Venture Entity and any of their Subsidiaries) to the extent such taxes are imposed on the holder of Equity Interests in the Borrower and are not a liability of the Borrower or any of its Subsidiaries, but not in excess of the lesser of (i) the income or franchise tax liability to such jurisdiction of the Borrower and, if applicable, its Subsidiaries, that would be owing if Borrower was a corporation and, if applicable, the parent of a combined, unitary, consolidated or similar group (net of any such taxes owing on account of taxable income of the Excluded Subsidiaries, Co-Financing Joint Venture Entities and their Subsidiaries, unless such tax amount is a liability of a Credit Party and not a liability of such Excluded Subsidiary, Co-Financing Joint Venture Entity and any of their Subsidiaries) and (ii) the actual tax liability to such jurisdiction of the holder of Equity Interests in Borrower (with the excess of (i) over (ii), if any, for any taxable year (or portion thereof) commencing on or after the Closing Date referred to as the “ Carryover Other Jurisdiction Amount ” for such taxable year, and the excess of (ii) over (i), if any, for any taxable year (or portion thereof) commencing on or after the Closing date referred to as the “ Excess Other Jurisdiction Amount ” for such taxable year); and

(F)    if with respect to a taxable year there is an Excess Other Jurisdiction Amount, and in one or more prior taxable years there was a Carryover Other Jurisdiction Amount, an amount equal to the lesser of such Excess Other Jurisdiction Amount or the cumulative Carryover Other Jurisdiction Amount for all prior years that has not been paid pursuant to this clause (F) for any


prior year.



provided the following conditions are satisfied:

(a)    no Default or Event of Default shall have occurred and be continuing or would result therefrom;

(b)    such calculations with respect to Borrower and its Subsidiaries are computed after permitted deduction of all losses, loss and credit carryforwards and other deductions which may be claimed at such time in respect of such period or prior periods (in each case, commencing not earlier than the Closing Date), and after giving effect (on a cumulative basis) to any foreign tax credits or other credits or treaties the benefit of which any Credit Party or its Subsidiaries may avail itself, and on the basis that the first taxable year commences on the Closing Date;

(c)    such calculations with respect to Lions Gate Entertainment Inc. are computed after permitted deduction of all losses, loss and credit carryforwards and other deductions which may be claimed at such time in respect of such period or all prior periods, and after giving effect (on a cumulative basis) to any foreign tax credits or other credits or treaties the benefit of which any Lions Gate Entertainment Inc. or its Subsidiaries may avail itself; and

(d)    the Borrower has submitted to the Administrative Agent a certificate executed by an Authorized Officer of the Borrower, dated the date of the proposed distribution, certifying that the foregoing requirements have been satisfied.

Person ” shall mean any natural person, corporation, division of a corporation, limited liability company, partnership, trust, joint venture, association, company, estate, unincorporated organization or government or any agency or political subdivision thereof.

Physical Materials ” shall have the meaning given to such term in clause (iv) of the definition of the term “Collateral” herein.

Picture ” shall mean any motion picture, film or video tape, whether recorded on film, videotape, cassette, cartridge, disc or on or by any other means, method, process or device whether now known or hereafter developed, and with respect to which a Credit Party (i) has (either directly or through a Co-Financing Venture Entity) an ownership interest in the copyright under U.S. law, or (ii) acquires any distribution rights. The term “Picture” shall include, without limitation, the scenario, screenplay or script upon which such Picture is based, all of the properties thereof, tangible and intangible, and whether now in existence or hereafter to be made or produced, whether or not in possession of a Credit Party, and all rights therein and thereto, of every kind and character.

Plan ” shall mean an employee benefit plan within the meaning of Section 3(3) of ERISA, other than a Multiemployer Plan, maintained or contributed to by any Credit Party, or any ERISA Affiliate, or any other plan covered by Title IV of ERISA that covers employees of the Credit Parties.

Pledged Collateral ” shall mean the Pledged Securities and any proceeds (as defined


in Section 9 102(64) of the UCC) including cash proceeds (as defined in Section 9 102(9) of the UCC) of the Pledged Securities.

Pledged Securities ” shall mean all of the issued and outstanding Equity Interests, whether now formed or formed hereafter, owned directly or indirectly by LGAC or the Borrower of (i) the Borrower, (ii) the Guarantors, (iii) the Subsidiaries of the Guarantors (other than Immaterial Subsidiaries) and (iv) joint venture interests (including, without limitation, Co-Financing Venture Entities, but excluding any such entities formed in connection with the Pictures titled The Alibi and In the Valley of Elah to the extent such entities would qualify as Immaterial Subsidiaries based on the materiality thresholds set forth in the definition thereof); provided , however , that the definition of “Pledged Securities” with respect to any Controlled Foreign Corporation shall refer to 65% of the issued and outstanding Equity Interests in such Controlled Foreign Corporation.

Pledgeholder Agreement ” shall mean a laboratory pledgeholder agreement among (i) the applicable Credit Party (or Credit Parties), (ii) the Administrative Agent and, with respect to certain Produced Pictures which commenced principal photography prior to the Closing Date, the Comerica Agent, (iii) if appropriate, the applicable Distributor, (iv) if appropriate, the applicable Approved Completion Guarantor, (v) the applicable Laboratory and (vi) any other appropriate Persons, substantially in the form of Exhibit D-1 or Exhibit D-2 , or in such other form reasonably acceptable to the Administrative Agent, in each case, as the same may be amended, supplemented or otherwise modified from time to time.

Pledgors ” shall mean the Borrower and each Credit Party that from time to time owns any of the Pledged Securities.

Pro Rata Share ” shall mean (i) in the case of any Obligation owed or allocable to a Lender in respect of a Loan, such Lender’s pro rata share of such Obligation determined in accordance with such Lender’s Percentage and (ii) in the case of any other Obligation to a Person, such Person’s pro rata share of such Obligation determined in comparison to all pari passu Obligations of like kind, in either case as adjusted pursuant to Section 2.13.

Produced Picture ” shall mean a Picture for which a Credit Party is acting as “lead studio” and at least a portion of the Negative Cost is provided during the course of principal photography by a Credit Party.

Production Account ” shall mean individually or collectively, as the context so requires, each demand deposit account established by a Credit Party at a commercial bank acceptable to the Administrative Agent located in the United States of America or any other jurisdiction acceptable to the Administrative Agent, for the sole purpose of paying the Negative Cost of a particular Picture.

Production Services Agreement ” shall mean any production services agreement entered into between the Borrower and any Credit Party relating to production services to be rendered by such Credit Party in connection with the production of a Produced Picture, as the same may be amended, supplemented or otherwise modified, renewed or replaced from time to time.

Purchase Agreement ” shall mean the Membership Interest Purchase Agreement dated as of January 13, 2012 among LGAC, LGAC 3, LLC and Sellers (as such term is defined therein).

Quiet Enjoyment ” shall have the meaning given to such term in Section 8.12.

Records ” shall mean all forms of reproductions, transmissions, combinations of tracks or communications of Master Recordings, of any kind, nature or description, now known or hereafter devised, manufactured, distributed, transmitted or communicated on or at or through any medium or device primarily for home use, school use, juke box use, or use in any means of transportation, including records of sound alone and audiovisual records (including music videos and DVD), digital compact cassette tapes, analog cassettes, audio tapes, digital audio tapes, compact discs, videodiscs, minidiscs, vinyl records, SACD, DVD-Audio and CD-ROM, CD I and CD Plus recordings. For the avoidance of doubt, “Records” shall include the transmission or communication of a Master Recording directly to the consumer regardless of whether previously or subsequently embodied in a physical record configuration by any Person.

Refinancing Notice ” shall mean a notice substantially in the form of Exhibit N-1 or Exhibit N-2 , as applicable.

Register ” shall have the meaning given to such term in Section 13.3(e).

Regulation D ” shall mean Regulation D of the Board.

Related Fund ” shall have the meaning given to such term in Section 13.3(b).

Release ” shall mean any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of Hazardous Materials into the indoor or outdoor environment, including the movement of Hazardous Materials through ambient air, soil, surface water, ground water, wetlands, land or subsurface strata.

Released Picture Expense Reserve Amount ” shall have the meaning set forth in the Services Agreement.




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