United states securities and exchange commission



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SECTION 6.30      Overhead Covenant . Allow the aggregate Overhead of the Borrower and its Subsidiaries in any calendar year to exceed the amounts set forth below:













Year

Maximum Overhead

[**]

$[**]

[**]

$[**]

[**]

$[**]

[**]

$[**]

[**]

$[**]

; provided , that for purposes of this Section 6.30, calendar year 2012 shall include Overhead incurred from the Closing Date through and including December 31, 2012.

SECTION 6.31      Negative Covenants with respect to Excluded Subsidiaries and Co-Financing Joint Venture Entities . Fail to cause each of the Finance Parties to comply with the covenants contained in the following Sections (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 6.1, 6.2, 6.3, 6.4, 6.5, 6.8 (solely by Co-Financing Joint Venture Entities), 6.9 (solely by Co-Financing Joint Venture Entities and Foreign Rights Borrowers), 6.10 (solely with respect to Co-Financing Joint Venture Entities, and only counting the Credit Party’s share of the Capital Expenditures), 6.11, 6.12, 6.15, 6.16, 6.19, 6.21 (solely by Co-Financing Joint Venture Entities and Foreign Rights Borrowers), 6.22 (solely by Co-Financing Joint Venture Entities), 6.23 (solely by Co-Financing Joint Venture Entities), 6.24 (solely by Co-Financing Joint Venture Entities and Foreign Rights Borrowers) and 6.28.

7.      EVENTS OF DEFAULT

SECTION 7.1      Events of Default . In the case of the happening and during the continuance of any of the following events (herein called “ Events of Default ”):

(a)      any representation or warranty made by a Credit Party in this Credit Agreement or any other Fundamental Document to which it is a party or any statement or representation made by a Credit Party in any report, financial statement, certificate or other document furnished to the Administrative Agent or any Lender pursuant to this Credit Agreement or any other Fundamental Document, shall prove to have been false or misleading in any material respect when made or delivered;

(b)      default shall be made in the payment of principal of the Loans as and when due and payable, whether by reason of maturity, mandatory prepayment, acceleration or otherwise, and, solely with respect to a default in any payment required under Section 2.7(e), (f) or (g) such default shall continue unremedied for one (1) Business Day;


(c)      default shall be made in the payment of interest on the Loans or other monetary Obligations, when and as the same shall become due and payable, whether at the due date thereof or at a date fixed for prepayment thereof or by acceleration thereof or otherwise and such default shall continue unremedied for three (3) Business Days;

(d)      default shall be made by any Credit Party in the due observance or performance of any covenant, condition or agreement contained in (i) Section 5.1(a), (b), (f), (h), (k), (l) or (m), 5.2(a), 5.4, 5.8(b) or 5.17 or Article 6 (other than Sections 6.23 or 6.24) or (ii) Sections 5.1(g), 5.13, 6.23 or 6.24, and solely with respect to clause (ii), such default shall continue unremedied for five (5) Business Days;

(e)      default shall be made by any Credit Party in the due observance or performance of any other covenant, condition or agreement to be observed or performed pursuant to the terms of this Credit Agreement or any other Fundamental Document, and such default shall continue unremedied for thirty (30) days after the earlier of the applicable Credit Party (i) receiving written notice thereof and (ii) an Authorized Officer of either the Borrower or the applicable Credit Party obtaining knowledge of such occurrence;

(f)      (i) default shall be made with respect to any payment of any Indebtedness in excess of $5,000,000 in the aggregate at any one time outstanding of any Credit Party when due or (ii) default shall be made in the performance of any other obligation incurred in connection with any such Indebtedness if the effect of such default under this sub-clause (ii) is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to its stated maturity and such default shall not be remedied, cured, waived or consented to within the period of grace with respect thereto;

(g)      any Credit Party shall generally not pay its debts as they become due or shall admit in writing its inability to pay its debts, or shall make a general assignment for the benefit of creditors; or any Credit Party shall commence any case, proceeding or other action seeking to have an order for relief entered on its behalf as a debtor or to adjudicate it a bankrupt or insolvent or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property or shall file an answer or other pleading in any such case, proceeding or other action admitting the material allegations of any petition, complaint or similar pleading filed against it or consenting to the relief sought therein; or any Credit Party shall take any action to authorize, or in contemplation of, any of the foregoing;

(h)      any involuntary case, proceeding or other action against any Credit Party shall be commenced seeking to have an order for relief entered against it as debtor or to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, liquidation, dissolution or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its property, and such case, proceeding or other action (i) results in the entry of any order for relief against it, or (ii) shall remain undismissed for a period of sixty (60) days;

(i)      final judgment(s) for the payment of money in excess of $5,000,000 in the aggregate shall be rendered against any Credit Party, and within fifteen (15) days from the entry of such judgment shall not have been discharged or stayed pending appeal or shall not have been discharged or bonded in full within thirty (30) days from the entry of a final order of affirmance on appeal;

(j)      (i) failure by any Finance Party or ERISA Affiliate to make any contributions required to be made to a Plan subject to Title IV of ERISA or Multiemployer Plan, (ii) any failure to satisfy the minimum funding standard (within the meaning of section 412 of the Code or section 302 of ERISA) shall occur with respect to any Plan (whether or not waived), (iii) the present value of all benefits under all Plans subject to Title IV of ERISA (based on those assumptions used to fund such Plans) exceeds, in the aggregate, as of the last annual valuation date applicable thereto, the actuarial value of the assets of such Plans allocable to such benefits, (iv) any Finance Party or ERISA Affiliate shall have been notified by the sponsor of a Multiemployer Plan that it has incurred withdrawal liability to such Multiemployer Plan, or that a Multiemployer Plan is in reorganization or is being terminated, (v) a Reportable Event with respect to a Plan shall have occurred, (vi) the withdrawal by any Finance Party or ERISA Affiliate from a Plan during a plan year in which it was a substantial employer (within the meaning of section 4001(a)(2) or 4062(e) of ERISA), (vii) the termination of a Plan, or the filing of a notice of intent to terminate a Plan, under section 4041(c) of ERISA, (viii) the institution of proceedings to terminate, or the appointment of a trustee with respect to, a Plan by the PBGC, (ix) any other event or condition which could constitute grounds under section 4042(a) of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or (x) the imposition of a Lien pursuant to section 430 of the Code or section 303 of ERISA as to any Finance Party or ERISA Affiliate, in each case only to the extent that any of the foregoing would, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;

(k)      this Credit Agreement, the Copyright Security Agreement, any Copyright Security Agreement Supplement, any Trademark Security Agreement, any Pledgeholder Agreement, any UCC financing statements or other applicable local law perfection filings, any Account Control Agreement or any other security agreement securing the Obligations (each a “ Security Document ”) shall, for any reason with respect to the Collateral or the Pledged Collateral not be or shall cease to be in full force and effect or shall be declared null and void or any of the Security Documents shall not give or shall cease to give the Administrative Agent the Liens, or cease to give the Administrative Agent the rights, powers and privileges purported to be created thereby in favor of the Administrative Agent (for the benefit of the Secured Parties), superior to and prior to the Liens and other rights of all third Persons (subject to Specified Permitted Encumbrances) and subject to no other Liens (other than Permitted Encumbrances), or the validity or enforceability of the Guaranties under Article 9 or the Liens granted, to be granted, or purported to be granted, by any of the Security Documents shall be contested by any Credit Party or any of their respective Affiliates; provided , that none of the foregoing with respect to any Security Document shall constitute an Event of Default hereunder unless the aggregate value of the related Collateral exceeds $2,000,000;

(l)      a Change in Management shall occur;

(m)      a Change in Control shall occur;

(n)      default shall be made with respect to any payment of any Indebtedness of any of Lions Gate Entertainment Inc. or its Subsidiaries (other than Borrower and its Subsidiaries) in excess of $15,000,000 in the aggregate when due, or in the performance of any other obligation incurred in connection with any such Indebtedness if the effect of such non-payment default is to accelerate the maturity of such Indebtedness or to permit the holder thereof to cause such Indebtedness to become due prior to its stated maturity and such default shall not be remedied, cured, waived or consented to within the period of grace with respect thereto; or

(o)      the Services Agreement shall have been terminated and not replaced within 30 days by a new servicer and servicing agreement approved by the Required Lenders;

then, in every such event (other than an event specified in clause (g) or (h) above) and at any time thereafter during the continuance of such event, the Administrative Agent may, or if directed by the Required Lenders, shall, by notice to the Borrower take any or all of the following actions, at the same or different times: (i) terminate forthwith the Commitments (subject to Section 12.1(b)(xiii), and/or (ii) declare the principal of and the interest on the Loans and the Notes and all other amounts payable hereunder or thereunder to be forthwith due and payable, whereupon the same shall become and be forthwith due and payable. Except as expressly provided above in this Section 7.1, presentment, demand, protest, and all other notice of any kind are hereby expressly waived by the Credit Parties, anything in this Credit Agreement or in the Notes to the contrary notwithstanding. If an Event of Default specified in clause (g) or (h) above shall have occurred, the Commitments shall automatically terminate and the principal of, and interest on, the Loans and the Notes and all other amounts payable hereunder and thereunder shall automatically become due and payable without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived, anything in this Credit Agreement or the Notes to the contrary notwithstanding. Such remedies shall be in addition to any other remedy available to the Administrative Agent or the Lenders pursuant to Applicable Law or otherwise.

SECTION 7.2      Right to Cure . Notwithstanding anything to the contrary in Section 7.1, if the Borrower fails (or, but for the performance of this Section 7.2, would fail) to comply with the minimum Fixed Charge Coverage Ratio set forth in Section 6.27, then until the tenth Business Day following the date on which the certificate calculating such ratio is required to be delivered pursuant to Section 5.1(f), such failure may be cured by cash equity contributions to the Borrower from its members, which shall be included as additional revenue in the last quarter of the applicable testing period (and in each testing period which includes such quarter) and which must be sufficient to cause compliance with Section 6.27; provided that (i) such contribution shall immediately be applied to prepay outstanding Loans, and (ii) such cure right may be exercised on up to four separate occasions, but no more than twice in any calendar year. Following any such cure, the Borrower shall be deemed to have satisfied Section 6.27 as of the relevant date of determination.

8.      GRANT OF SECURITY INTEREST; REMEDIES

SECTION 8.1      Security Interests . The Borrower, as security for the due and


punctual payment in full of the Obligations (including interest accruing on and after the filing of any petition in bankruptcy or of reorganization of the Borrower whether or not post filing interest is allowed in such proceeding), and each of the other Credit Parties, as security for its obligations under Article 9, hereby grant, mortgage, pledge, assign, transfer, set over, convey and deliver to the Administrative Agent (for the benefit of the Secured Parties) a security interest in the Collateral. For the avoidance of doubt, the Collateral includes each Credit Party’s rights to and interest in the claims described on Schedule 3.12 .

SECTION 8.2      Use of Collateral . So long as no Event of Default shall have occurred and be continuing, and subject to the various provisions of this Credit Agreement and the other Fundamental Documents, a Credit Party may use its Collateral (including cash in each Collection Account and proceeds of letters of credit in favor of the Credit Parties) in any lawful manner except as otherwise provided hereunder or thereunder.

SECTION 8.3      Collection Accounts .

(a)      The Credit Parties will establish or maintain one or more collection bank accounts (each, a “ Collection Account ”) at the office of the Administrative Agent, and, subject to Section 8.3(d) below, will direct, by Notice of Assignment (or by similar instructions satisfactory to the Administrative Agent contained within a Co-Financing Intercreditor Agreement, Interparty Agreement, Co-Financing Venture Interparty Agreement or other applicable agreement), all Persons who become Distributors, licensees, buyers or account debtors of any Credit Party to make payments under or in connection with the Distribution Agreements, license agreements, sales agreements or receivables directly to the Collection Account (or, in the case of payments under certain Distribution Agreements, an account of a Licensing Intermediary over which the Administrative Agent has a first priority perfected security interest, provided that the applicable proceeds will be remitted by such Licensing Intermediary to a Collection Account on terms reasonably acceptable to the Administrative Agent). Unless and until a separate Cash Collateral Account is established, the initial Collection Account established and maintained by the Administrative Agent may also serve as the Cash Collateral Account; provided , that each Collection Account is under the control (within the meaning of Section 9-104 of the UCC) of the Administrative Agent.

(b)      The Credit Parties will execute such documentation as may be required by the Administrative Agent in order to effectuate the provisions of this Section 8.3.

(c)      In the event a Credit Party receives payment from any Person or proceeds under a letter of credit or otherwise, which payment should have been remitted directly to the Collection Account, such Credit Party shall promptly remit such payment or proceeds to the appropriate Collection Account to be applied in accordance with the terms of this Credit Agreement.

(d)      Notwithstanding the foregoing, the Credit Parties may maintain collections accounts with Comerica Bank and any of the other banks specified as collection banks on Schedule 5.22(b) of the Existing Credit Agreement (or, in the case of accounts established in connection with Foreign Rights Loans, as otherwise reasonably approved by the Administrative Agent), in each case to the extent that such accounts (i) were in existence prior to the Closing Date or were established following the Closing Date in connection with one or more Foreign Rights Loans, (ii) are used


solely to continue to collect receipts from Pictures financed under the Existing Comerica Loan Facility or in connection with one or more Foreign Rights Loans and (iii) except as permitted in Section 6.14, are subject to Account Control Agreements in favor of the Administrative Agent or in favor of the Foreign Rights Agent with respect to a Foreign Rights Loan that provides that the Foreign Rights Agent will act as sub-agent for the benefit of the Administrative Agent for purposes of perfecting the Administrative Agent's security interest therein and that provides, further, that the Foreign Rights Agent’s Rights in such accounts are subject to the applicable Interparty Agreements.

(e)      All Breaking Dawn Cash Flow received in any period shall be paid directly, or swept weekly from other Collection Accounts (or, in the case of amounts credited to satisfy other obligations to third party, deposited), into a segregated account of a Credit Party maintained with the Administrative Agent and shall not be removed by a Credit Party until the required portion thereof in any period is applied to prepayments required under Section 2.7(e) (with the remainder from such period available to the Credit Parties); provided , that unless an Event of Default shall have occurred and be continuing, the Credit Parties shall be entitled to (i) remove the amount of third party cash expenses permitted to be netted from Breaking Dawn Cash Flow in order to make such payments when due, and (ii) invest amounts held in such account in Cash Equivalents.

(f)      Notwithstanding anything to the contrary contained in this Section 8.3, receivables paid in a manner permitted by the Services Agreement shall not violate this Section 8.3; provided , that this shall not affect the Servicer’s obligation to pay to the Borrower such proceeds as required by the Services Agreement.

SECTION 8.4      Credit Parties to Hold in Trust . Upon the occurrence and during the continuance of an Event of Default, each of the Credit Parties will, upon receipt by it of any revenue, income, profits or other sums in which a security interest is granted by this Article 8, payable pursuant to any agreement or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay any such sum, hold the sum or instrument in trust for the Administrative Agent (for the benefit of the Secured Parties), segregate such sum or instrument from their own assets and forthwith, without any notice, demand or other action whatsoever (all notices, demands, or other actions on the part of the Secured Parties being expressly waived), endorse, transfer and deliver any such sums or instruments or both, to the Administrative Agent to be applied to the repayment of the Obligations in accordance with the provisions of Section 8.7.

SECTION 8.5      Collections, etc. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent may, in its sole discretion, in its name (on behalf of the Secured Parties) or in the name of any Credit Party or otherwise, demand, sue for, collect or receive any money or property at any time payable or receivable on account of or in exchange for, or make any compromise or settlement deemed desirable with respect to, any of the Collateral, but shall be under no obligation to do so, or the Administrative Agent may extend the time of payment, arrange for payment in installments, or otherwise modify the terms of, or release, any of the Collateral, without thereby incurring responsibility to, or discharging or otherwise affecting any liability of, any Credit Party. The Administrative Agent will not be required to take any steps to preserve any rights against parties with prior claims on the Collateral. If any Credit Party fails to make any payment or take any action required hereunder which payment or action the Administrative


Agent has requested in writing to the Borrower to be made or taken, the Administrative Agent may make such payments and take all such actions as the Administrative Agent reasonably deems necessary to protect the Administrative Agent’s (on behalf of the Secured Parties) security interests in the Collateral and the value thereof, and the Administrative Agent is hereby authorized (without limiting the general nature of the authority hereinabove conferred) to pay, purchase, contest or compromise any Liens that in the judgment of the Administrative Agent appear to be equal to, prior to, or superior to, the security interest of the Administrative Agent (on behalf of the Secured Parties) in the Collateral (other than Specified Permitted Encumbrances) and any Liens not expressly permitted by this Credit Agreement.



SECTION 8.6      Possession, Sale of Collateral, etc. Upon the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders may enter upon the premises of any Credit Party or wherever the Collateral may be, and take possession of the Collateral (subject, in each case, to the terms of any applicable Interparty Agreement, Co-Financing Venture Interparty Agreement or Co-Financing Intercreditor Agreement), and may demand and receive such possession from any Person who has possession thereof, and the Administrative Agent and the Lenders may take such measures as they reasonably deem necessary or proper for the care or protection thereof, including the right to remove all or any portion of the Collateral, and with or without taking such possession may sell or cause to be sold, whenever the Administrative Agent and the Lenders shall decide, in one or more sales or parcels, at such prices as the Administrative Agent and the Lenders may reasonably deem appropriate, and for cash or on credit or for future delivery, without assumption of any credit risk, all or any portion of the Collateral, at any broker’s board or at public or private sale, without demand of performance but with at least ten (10) days’ prior written notice to the Credit Parties of the time and place of any such public sale or sales (which notice the Credit Parties hereby agree is reasonable) and with such other notices as may be required by Applicable Law and cannot be waived, and none of the Administrative Agent and the Lenders shall have any liability should the proceeds resulting from a private sale be less than the proceeds realizable from a public sale, and the Administrative Agent, on behalf of the Secured Parties or any other Person may be the purchaser of all or any portion of the Collateral so sold and thereafter hold the same absolutely, free (to the fullest extent permitted by Applicable Law) from any claim or right of whatever kind, including any equity of redemption, of any Credit Party, any such demand, notice, claim, right or equity being hereby expressly waived and released. At any sale or sales made pursuant to this Article 8, the Administrative Agent (on behalf of the Secured Parties) may bid for or purchase, free (to the fullest extent permitted by Applicable Law) from any claim or right of whatever kind, including any equity of redemption, of any Credit Party, any such demand, notice, claim, right or equity being hereby expressly waived and released, any part of or all of the Collateral offered for sale, and may make any payment on account thereof by using any claim for moneys then due and payable to the Administrative Agent and the Lenders by any Credit Party hereunder as a credit against the purchase price. The Administrative Agent (on behalf of the Secured Parties) shall in any such sale make no representations or warranties with respect to the Collateral or any part thereof, and none of the Administrative Agent and the Lenders shall be chargeable with any of the obligations or liabilities of any Credit Party. Each Credit Party hereby agrees that (i) it will indemnify and hold the Administrative Agent and the Lenders harmless from and against any and all claims with respect to the Collateral asserted before the taking of actual possession or control of the relevant Collateral by the Administrative Agent pursuant to this Article 8, or arising out of any act of, or omission to act on the part of, any Person (other than the Administrative Agent or the Lenders) prior to such taking of actual possession or control by the



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