United states securities and exchange commission



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Reportable Event ” shall mean any reportable event as defined in Section 4043(c) of ERISA, other than a reportable event as to which provision for 30 day notice to the PBGC has been waived under applicable regulations.

Required Lenders ” shall mean Lenders holding greater than 50% of the total Loans, subject to adjustment as provided in Section 2.13, at such time.

Restricted Payment ” shall mean (i) any distribution, cash dividend or other direct or indirect payment on account of shares of any Equity Interest in any Finance Party, (ii) any redemption or other acquisition, re acquisition or retirement by a Finance Party of any Equity Interests in any Finance Party, now or hereafter outstanding, (iii) any payment made by any Finance

Party to retire, or obtain the surrender of, any outstanding warrants, puts or options or other rights to purchase or otherwise acquire any Equity Interest in any Finance Party, now or hereafter outstanding, (iv) any payment by a Finance Party of principal of, premium, if any, or interest on, or any redemption, purchase, retirement, defeasance, sinking fund or similar payment with respect to, any Subordinated Debt, (v) any payment under any Synthetic Purchase Agreement and (vi) any payment by a Finance Party in respect of any indebtedness owing by another Finance Party and which is non-recourse to the Finance Party making such payment (including but not limited to payments by a Credit Party in respect of a Foreign Rights Loan); provided that payments referred to in clause (vi) shall be excluded from the foregoing definition so long as (a) the indebtedness was incurred to finance such Finance Party’s share of the Negative Cost of a Picture owned directly by the Borrower, (b) making such payment shall not result in a violation of the exposure tests set forth in Section 4.2(a) and (b) with respect to the Picture in connection to which such indebtedness was incurred, and (c) the aggregate amount of such payments for all Pictures shall not exceed $5,000,000 (after taking into account any minimum guarantees and overages from non-U.S. territories which are paid to a Credit Party in respect of a Picture for which a Credit Party has repaid any portion of a Foreign Rights Loan).

S&P ” shall mean Standard & Poor’s Rating Services, a division of the McGraw Hill Companies, Inc.

SAG ” shall mean Screen Actors Guild, Inc.

Sales Expenses ” shall have the meaning given to such term in the Services Agreement.

Sales Fees ” shall have the meaning given to such term in the Services Agreement.

Schedule of Commitments ” shall mean the schedule of Commitments of the Lenders set forth on Schedule 1 .

Seasoned Picture ” shall mean a Picture that has been first released in the U.S. market for eight (8) weeks.

Secured Party ” or “ Secured Parties ” shall mean the Administrative Agent, the Lenders, any other Person which is the holder of an Obligation and any other Person which the Administrative Agent (in its sole discretion) specifically agrees upon Borrower’s request is to be secured by the Liens granted to the Administrative Agent under this Credit Agreement and/or under the other Fundamental Documents from time to time pursuant to the terms hereof and thereof.

Sellers ” shall have the meaning given to such term in the Purchase Agreement.

Servicer ” shall mean Lions Gate Films, Inc.

Services Agreement ” shall mean the Services Agreement, dated as of January 13, 2012 between the Borrower and the Servicer, as amended, restated or otherwise modified from time to time.


Solvency Certificate ” shall mean a solvency certificate substantially in the form of Exhibit O hereto, executed by the Chief Financial Officer of the Borrower and delivered to the Administrative Agent as required hereunder.

Sound Recordings ” shall mean all sound recordings (whether published or unpublished, registered or unregistered, presently existing or created or acquired in the future), including sound recordings embodied on Records, with respect to which the Borrower or any of its Subsidiaries now or in the future has any ownership interest or distribution right or which the Borrower or any of its Subsidiaries otherwise controls.

Special Purpose Producer ” shall mean a special purpose Subsidiary of a Credit Party created solely for the purpose of producing a particular Picture or group of Pictures with production financing which is non-recourse to any Credit Party or any Subsidiary of a Credit Party other than such Special Purpose Producer; provided that if any Special Purpose Producer is part of an Approved Co-Financing Venture Transaction, it shall satisfy the requirements set forth in Schedule 3 ; provided further , that such Special Purpose Producer shall distribute all of its cash to a Credit Party to the extent not restricted from doing so by its production loan agreement (if any) or any applicable co-financing agreements or agreement with any third party holders of Equity Interests of such Special Purpose Producer; provided further , that if any Special Purpose Producer is created to produce more than one Picture, Summit Distribution, LLC shall be the U.S. Distributor for such Pictures.

Specified Assets ” shall mean the product of the Ultimates Advance Rate and the Credit Parties’ share of Ultimates; provided , that (i) no Specified Asset credit may be given with respect to Ultimates for any Picture unless the Administrative Agent shall have received the most recent Ultimates Report required pursuant to Section 5.1(g), and (ii) for the avoidance of doubt, Ultimates with respect to New Pictures and Unreleased Pictures (as each term is defined in the Services Agreement) shall be limited to the projected net amounts payable to and retained by the Borrower with respect to New Pictures and Unreleased Pictures (as applicable) pursuant to the Services Agreement; provided further , that, with respect to any Picture for which the Borrower determines not to finance any portion of the Negative Cost thereof with a Foreign Rights Loan, with the consent of the Administrative Agent, receivables in respect of such Picture may be included in “Specified Assets” on terms agreed by the Borrower and the Administrative Agent.

Specified Permitted Encumbrances ” shall mean those Liens permitted under Sections 6.2(b), (c), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o), (p) and (u).

Subordinated Debt ” shall mean any subordinated Indebtedness of any Credit Party or its Subsidiaries which is unsecured and has interest rates, payment terms, maturities, amortization schedules, covenants, defaults, remedies, subordination provisions and other material terms in form and substance satisfactory to the Required Lenders.

Subsidiary ” shall mean with respect to any Person, any corporation, association, joint venture, partnership or other business entity (whether now existing or hereafter organized) of which at least a majority of the voting stock or other ownership interests therein having ordinary voting power for the election of directors (or the equivalent) is, at the time as of which any


determination is being made, owned or controlled by such Person or one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such Person.

Swap Agreement ” shall mean any agreement with respect to any swap, forward, future or derivative transaction, financial exchange transaction or option or similar agreement involving, or settled by reference to, one or more rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value or any similar transaction or any combination of these transactions.

Syndication Agents ” shall mean J.P. Morgan Securities LLC, Barclays Capital, the investment banking division of Barclays Bank PLC, and Jefferies Finance LLC, in their capacities as joint syndication agents in connection with the Facility, and any successor thereof.

Synthetic Purchase Agreement ” shall mean any Swap Agreement or similar agreement or combination of agreements pursuant to which any Credit Party is or may become obligated to make (i) any payment in connection with a purchase by any third Person from a Person other than a Credit Party of any Equity Interest in any Credit Party or any Subordinated Debt, or (ii) any payment (other than on account of a permitted purchase by it of any Equity Interest in any Credit Party or any Subordinated Debt) the amount of which is determined by reference to the price or value at any time of any Equity Interest in any Credit Party or any Subordinated Debt.

Taxes ” shall mean any and all present or future taxes, levies, imposts, duties, deductions, charges, withholdings or other amounts in the nature of a tax imposed by any Governmental Authority, including any interest and penalties imposed with respect thereto.

Trademark Security Agreement ” shall mean the Trademark Security Agreement substantially in the form of Exhibit C that was filed in the U.S. Patent and Trademark Office, as such agreement may be amended, supplemented or otherwise modified, renewed or replaced from time to time.

Twilight Franchise ” shall mean the Completed Pictures Twilight , The Twilight Saga: New Moon , The Twilight Saga: Eclipse , Breaking Dawn 1 and the Uncompleted Picture Breaking Dawn 2 .

Type ”, when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or to LIBOR.

UCC ” shall mean the Uniform Commercial Code as in effect in the State of New York.

Ultimates ” shall mean with respect to any Seasoned Picture, the First Cycle Period amounts which are projected by Servicer to become payable to a Credit Party as determined by the Servicer from time to time in accordance with this paragraph and in a manner otherwise reasonably acceptable to the Administrative Agent. The Ultimates shall be calculated initially on the date which such Picture becomes a Seasoned Picture and thereafter on each date on which revised Ultimates

projections are delivered from time to time pursuant to Section 5.1(g). The computation of the Ultimates will be (i) computed in a manner consistent with ultimates prepared by Lions Gate Entertainment Inc. for accounting purposes, (ii) based, to the extent available, upon any supporting written material delivered to the Borrower under the relevant Distribution Agreement which will indicate the remaining uncollected amounts payable to a Credit Party, (iii) present valued at the rate used by Servicer for accounting purposes, (iv) after deduction for all distribution fees and other remaining amounts deductible or which may be offset by a distributor or licensee from its obligation to make payments to a Credit Party and any other remaining cost or expense incurred by a Credit Party for the distribution or other exploitation of such Picture, and (v) shall not include any amounts in which the Administrative Agent (for the benefit of itself, any Issuing Bank and the Group Lenders) does not have a first priority (subject to Specified Permitted Encumbrances) perfected security interest under the Uniform Commercial Code or other relevant personal property regime and applicable copyright law. If Services Agreement is terminated, then notwithstanding the foregoing, Ultimates shall be calculated in a manner acceptable to the Administrative Agent by an independent consultant selected by the Administrative Agent and approved and paid for by the Borrower, provided , that the following parties are hereby pre-approved by the Borrower: The Salter Group LLC, Cineval LLC, PricewaterhouseCoopers, Deloitte Touche Tohmatsu, Ernst & Young, KPMG and any Major Studio.

Ultimates Advance Rate ” shall initially be 0.80; provided that , if at any testing required under Section 5.1(h) hereof the Ultimates Ratio is less than 1.0 to 1.0, the Ultimates Advance Rate shall be 0.80 multiplied by such Ultimates Ratio for so long as the Ultimates Ratio is less than 1.0 to 1.0; provided that following any reduction in the Ultimates Advance Rate, the Ultimates Advance Rate may only be subsequently increased if at least two (2) additional Pictures have become eligible for inclusion in the Ultimates Ratio and the Ultimates Ratio for the last four (4) Seasoned Pictures (including the two (2) additional Seasoned Pictures) is at least 1.0 to 1.0. For the avoidance of doubt, the Ultimates Advance Rate may never be greater than 0.80.

Ultimates Ratio ” shall mean at any time, a ratio of (i) the sum of the Ultimates for the last four (4) Seasoned Pictures for which six (6) months has elapsed from their respective U.S. theatrical release dates plus the actual proceeds received by any Credit Party (and not payable to a third party) with respect to each such Picture after it became a Seasoned Picture and prior to such date of determination to (ii) the sum of the Ultimates for such Seasoned Pictures determined for each such Seasoned Picture on the date it became a Seasoned Picture.

Ultimates Report ” shall mean, with respect to a Picture, a written Ultimates report prepared by the Borrower in the manner contemplated for determining “Ultimates” in the definition thereof and in a form satisfactory to the Administrative Agent.

Uncompleted ” shall mean, with respect to any Picture, that such Picture is not Completed.

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

USA Patriot Act ” shall mean the USA PATRIOT Act (Title III of Pub. L. 107 56


(signed into law October 26, 2001)) as amended, and the rules and regulations thereunder and any successors thereto.

WGA ” shall mean, collectively, Writers Guild of America, West, Inc. and Writers Guild of America, East, Inc.

2.      AMOUNT AND TERMS OF THE COMMITMENTS AND LOANS

SECTION 2.1      Commitments and Loans .

(a)      Commitments . Subject to the terms and conditions hereof, each Initial 2012 Lender made a term loan denominated in Dollars (a “ Loan ”) to the Borrower on the Closing Date in the amount of the Commitment of such Lender. Once repaid, amounts constituting the Commitments may not be reborrowed. The Loans may from time to time be LIBOR Loans or Alternate Base Rate Loans, as determined by the Borrower and notified to the Administrative Agent in accordance with Sections 2.1(b) and 2.6.

(b)      Procedure for Borrowing . The Borrower gave the Administrative Agent irrevocable notice in writing in the form of a Borrowing Notice requesting that the Initial 2012 Lenders make the Loans on the Closing Date. Such Borrowing Notice specified whether the Loans initially consisted of Alternate Base Rate Loans or LIBOR Loans and in the case of LIBOR Loans, the Interest Period or Interest Periods with respect thereto. If no election of an Interest Period was specified in such Borrowing Notice in the case of a Borrowing consisting of LIBOR Loans, such notice was deemed to be a request for an Interest Period of one (1) month. If no election was made as to the Type of Loan, such Borrowing Notice was deemed to be a request for a Borrowing consisting of Alternate Base Rate Loans. Upon receipt of such Borrowing Notice the Administrative Agent notified each Initial 2012 Lender thereof. Not later than 2:00 P.M., New York City time, on the Closing Date each Initial 2012 Lender made available to the Administrative Agent at the Funding Office an amount in immediately available funds equal to its Commitment. The Administrative Agent disbursed the aggregate of the amounts made available to the Administrative Agent by the Lenders by depositing such amount in immediately available funds to the account of the Borrower specified in the Borrowing Notice. Each Lender may, at its option, fulfill its obligation to make LIBOR Loans by causing a foreign branch or Affiliate of such Lender to fund such LIBOR Loans; provided , however , that any exercise of such option shall not affect the obligation of the Borrower to repay Loans in accordance with the terms hereof or increase the costs to the Borrower payable hereunder in respect of LIBOR Loans. Subject to the other provisions of this Section 2.1 and the provisions of Section 2.6, Loans of more than one Type may be outstanding at the same time.

(c)      Repayment of Loans . The Loan of each Lender shall mature (i) in equal consecutive quarterly installments on the last day of each March, June September and December (commencing on March 31, 2012), each in an amount equal to such Lender’s Percentage multiplied by $13,750,000 and (ii) on the Maturity Date in an amount equal to all remaining outstanding Loans of such Lender. The Loans shall be subject to mandatory prepayment as provided in Section 2.7 and acceleration as provided in Article 7. Any mandatory prepayments of the Loans pursuant to Sections 2.7(d), (e), (f) and (g) shall reduce, on a pro-rata basis the remaining required and scheduled amortization installment payments set forth above. Any voluntary prepayments of the Loans


pursuant to Section 2.7(a) shall reduce the remaining required and scheduled amortization installment payments set forth above in forward order of maturity.

SECTION 2.2      Notes .

(a)      At the request of any Lender, each Loan made by such Lender hereunder shall be evidenced by a promissory note in such Lender’s favor substantially in the form of Exhibit A (each a “ Note ” and collectively the “ Notes ”) in the face amount of such Lender’s Commitment payable to the order of such Lender, duly executed by an Authorized Officer of the Borrower and dated as of the Amendment and Restatement Effective Date.

(b)      Each Lender and the Administrative Agent on its behalf is hereby authorized by the Borrower, but not obligated, to enter the amount of each Loan and the amount of each payment or prepayment of principal or interest thereon in the appropriate spaces on the reverse of or on an attachment to any Notes; provided , however , that the failure of any Lender or the Administrative Agent to set forth such Loans, principal payments or other information shall not in any manner affect the obligations of the Borrower to repay such Loans.

SECTION 2.3      Interest on Loans .

(a)      In the case of a LIBOR Loan, interest shall be payable at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to LIBOR plus the Applicable Margin. Interest shall be payable on each LIBOR Loan in arrears on each applicable Interest Payment Date, on the Maturity Date, on the date of a conversion of such LIBOR Loan to an Alternate Base Rate Loan and on the date of any prepayment. The Administrative Agent shall determine the applicable LIBOR for each Interest Period as soon as practicable on the date when such determination is to be made in respect of such Interest Period and shall notify the Borrower and the Lenders of the applicable interest rate so determined. Such determination shall be conclusive absent manifest error.

(b)      In the case of an Alternate Base Rate Loan, interest shall be payable at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 365/366 days, as the case may be, during such times as the Alternate Base Rate is based upon the Prime Rate and over a year of 360 days at all other times) equal to the Alternate Base Rate plus the Applicable Margin. Interest shall be payable on each Alternate Base Rate Loan in arrears on each applicable Interest Payment Date, on the Maturity Date and on the date of any prepayment.

(c)      Interest in respect of any Loan hereunder shall accrue from and including the date such Loan is made to but excluding the date on which such Loan is paid or converted to a Loan of a different Type.

(d)      Anything in this Credit Agreement or the Notes to the contrary notwithstanding (but subject to Section 2.12), the interest rate on the Loans shall in no event be in excess of the maximum permitted by Applicable Law.

SECTION 2.4      Fees . The Borrower agrees to pay all fees that are then due and

payable pursuant hereto or pursuant to any fee letter agreement executed by any Credit Party with respect to the Facility.

SECTION 2.5      Default Interest; Alternate Rate of Interest .

(a)      If an Event of Default shall exist, then the rate of interest on all outstanding Loans shall be increased by 2.00% per annum and all other Obligations shall accrue interest from the date due at the rate for Alternate Base Rate Loans plus 2.00% per annum.

(b)      In the event, and on each occasion, that two (2) Business Days prior to the commencement of any Interest Period for a LIBOR Loan:

(i)     the Administrative Agent shall have determined (which determination shall be conclusive and binding upon the Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining LIBOR for such Interest Period, or

(ii)    the Administrative Agent shall have received notice from the Required Lenders that LIBOR determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and the relevant Lenders as soon as practicable thereafter. If such notice is given (x) any LIBOR Loans under the Facility requested to be made on the first day of such Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans under the Facility that were to have been converted on the first day of such Interest Period to LIBOR Loans shall be continued as Alternate Base Rate Loans and (z) any outstanding LIBOR Loans under the Facility shall be converted, on the last day of the then-current Interest Period, to Alternate Base Rate Loans. Until such notice has been withdrawn by the Administrative Agent, no further LIBOR Loans under the Facility shall be made or continued as such, nor shall the Borrower have the right to convert Loans under the Facility to LIBOR Loans.

SECTION 2.6      Continuation and Conversion of Loans . The Borrower shall have the right, at any time, (i) to convert any LIBOR Loan or portion thereof to an Alternate Base Rate Loan or to continue such LIBOR Loan or a portion thereof for a successive Interest Period, or (ii) to convert any Alternate Base Rate Loan or a portion thereof to a LIBOR Loan, subject to the following:

(a)      the Borrower shall give the Administrative Agent prior written, facsimile or telephonic (promptly confirmed in writing, including via electronic mail) notice of each continuation or conversion hereunder (i) at least three (3) Business Days for continuation as or conversion to a LIBOR Loan and (ii) one (1) Business Day for conversion to an Alternate Base Rate Loan; such notice shall be irrevocable and to be effective, must be received by the Administrative Agent not later than 2:00 p.m., New York City time, on the day required;


(b)      unless the Required Lenders otherwise consent, no Event of Default or Default shall have occurred and be continuing at the time of any conversion to a LIBOR Loan or continuation of any such LIBOR Loan into a subsequent Interest Period;




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